UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549 Form 10-QSB (Mark One) xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period endedMarch 31, 2006 [
        ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to __________ Commission file number000-31503 EDEN ENERGY CORP.(Exact name of small business issuer as specified in its charter)  Nevada
        
        98-0199981(State or other jurisdiction of incorporation or organization)
        
        (IRS Employer Identification No.)  1925  200 Burrard Street, Vancouver, BC  V6C 3L6(Address of principal executive offices)  604.693.0179(Issuer's telephone number)  Not Applicable(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.     YesxNo [   ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the issuer has 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 practicable date:41,759,696 common shares issued and outstanding and nil preferred shares issued and outstanding as of May 3, 2006 Transitional Small Business Disclosure Format (Check one):
        Yes [
        ]
        Nox  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [
        ]
        No [ X  ]      2    PART I  -  FINANCIAL INFORMATION Item1.Financial Statements.  It is the opinion of management that the interim consolidated financial statements for the quarter ended March 31, 2006 include all adjustments necessary in order to ensure that the interim consolidated financial statements are not misleading.      F-1     EDEN ENERGY CORP.  (An Exploration Stage Company)  Interim Consolidated Financial Statements (Expressed in United States dollars)  March 31, 2006 (Unaudited)      F-2     Eden Energy Corp. (An Exploration Stage Company) Interim Consolidated Balance Sheets (Expressed in United States dollars)  March 31,
2006
        
        December 31,
2005Assets
        
        (Unaudited)Current AssetsCash and cash equivalents
        $
        31,305,328
        $
        18,082,596Prepaid expenses
        
        85,325
        
        2,200Current portion of deferred financing costs
        
        191,004
        
        191,004Total Current Assets
        
        31,581,657
        
        18,275,800Oil and gas properties, unproven (Note 5)
        
        7,480,174
        
        5,155,264Property and equipment, net of depreciation
        
        5,259
        
        5,569Deferred financing costs, net of amortization
        
        270,577
        
        318,328Total Assets
        $
        39,337,667
        $
        23,754,961Liabilities and Stockholders EquityCurrent LiabilitiesAccounts payable and accrued liabilities
        $
        267,221
        $
        414,507Total Current Liabilities
        
        267,221
        
        414,507Convertible Notes, less unamortized discount of $1,561,455 (2005 - $1,722,985) (Note 8)
        
        7,063,545
        
        6,902,015Total Liabilities
        
        7,330,766
        
        7,316,522Stockholders EquityPreferred Stock:10,000,000 preferred shares authorized, $0.001 par value
None issued
        
        
        
        Common Stock: (Note 9)100,000,000 shares authorized, $0.001 par value41,759,696 (December 31, 2005  34,135,676) shares issued and outstanding
        
        41,760
        
        34,136Additional paid-in capital
        
        38,930,900
        
        22,843,973Deficit accumulated prior to the exploration stage
        
        (555,139)
        
        (555,139)Deficit accumulated during the exploration stage
        
        (6,410,620)
        
        (5,884,531)Total Stockholders Equity
        
        32,006,901
        
        16,438,439Total Liabilities and Stockholders Equity
        $
        39,337,667
        $
        23,754,961         The accompanying notes are an integral part of these interim consolidated statements     F-3   Eden Energy Corp. (An Exploration Stage Company) Interim Consolidated Statements of Operations (Expressed in United States dollars) (Unaudited)  Three Months Ended
March 31,
2006
        
        Three Months Ended
March 31,
2005
        
        January 1, 2004
(Date of Inception of Exploration Stage) To
March 31,
2006ExpensesConsulting
        
        
        
        $
        21,000
        $
        46,880
        $
        572,030Depreciation
        
        
        
        
        48,061
        
        48
        
        112,368Filing fees and transfer agent
        
        
        
        
        9,959
        
        850
        
        30,640General and administrative
        
        
        
        
        158,501
        
        96,006
        
        568,096Interest expense (Note 8)
        
        
        
        
        289,146
        
        21,130
        
        4,786,456Management fees (Note 6)
        
        
        
        
        66,000
        
        18,000
        
        348,500Professional fees
        
        
        
        
        61,575
        
        25,239
        
        356,193Loss before other income
        
        
        
        
        (654,242)
        
        (208,153)
        
        (6,774,283)Other incomeInterest income
        
        
        
        
        128,153
        
        8,964
        
        363,663Net loss for the period
        
        
        
        $
        (526,089)
        $
        (199,189)
        $
        (6,410,620)Basic and diluted loss per share
        
        
        
        $
        (0.01)
        $
        (0.01)Weighted Average Common Shares Outstanding
        
        
        37,737,000
        
        23,856,000      The accompanying notes are an integral part of these interim consolidated statements     F-4   Eden Energy Corp. (An Exploration Stage Company) Interim Consolidated Statements of Cash Flows (Expressed in United States dollars) (Unaudited) Three Months Ended
March 31,
2006
        
        Three Months
Ended
March 31,
2005
        
        January 1, 2004
(Date of Inception of Exploration Stage) To
March 31, 2006Cash provided by (used in):Operating Activities:Net loss from operations
        $
        (526,089)
        $
        (199,189)
        $
        (6,410,620)Adjustments to reconcile net loss to net cash provided by operating activities:Interest expense relating to accretion of convertible debt
        
        161,530
        
        12,500
        
        4,399,539Interest expense paid by issue of common stock
        
        
        
        
        
        181,214Depreciation
        
        48,061
        
        48
        
        112,368Stock-based compensation
        
        
        
        
        
        309,881Changes in non-cash operating assets and liabilities:Prepaid expenses
        
        (83,125)
        
        (1,009)
        
        (85,325)Accounts payable and accrued liabilities
        
        (147,286)
        
        31,002
        
        307,568(546,909)
        
        (156,648)
        
        (1,185,375)Investing Activities:Net assets acquired of Frontier Explorations Ltd.
        
        
        
        
        
        (475)Purchase of property and equipment
        
        
        
        (2,895)
        
        (6,208)Oil and gas property acquisition and exploration
        
        (2,324,910)
        
        
        
        (6,029,399)(2,324,910)
        
        (2,895)
        
        (6,036,082)Financing Activities:Issuance of common stock
        
        16,094,551
        
        
        
        8,502,000Common stock subscriptions
        
        
        
        5,285,547
        
        30,024,78516,094,551
        
        5,285,547
        
        38,526,785Increase in cash and cash equivalents
        
        13,222,732
        
        5,126,004
        
        31,305,328Cash and cash equivalents, beginning of period
        
        18,082,596
        
        2,332,744
        
        Cash and cash equivalents, end of period
        $
        31,305,328
        $
        7,458,748
        $
        31,305,328Non-cash financing and investing activities:Issue of common stock for interest expense
        $
        
        $
        
        $
        181,214Issue of common shares for oil and gas properties
        $
        
        $
        
        $
        450,000Issue of convertible debenture, net of discount
        $
        
        $
        
        $
        400,000Debt assumed by previous management
        $
        
        $
        
        $
        19,846Supplementary disclosure:Interest paid
        $
        
        $
        
        $
        Income taxes paid
        $
        
        $
        
        $
              The accompanying notes are an integral part of these interim consolidated statements     F-5    1.
        Basis of Presentation The unaudited consolidated interim financial statements have been prepared by Eden Energy Corp. in accordance with generally accepted accounting principles in the United States for interim financial information and conforms with instructions to Form 10-QSB of Regulation S-B and reflects all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for fair presentation of the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending December 31, 2006. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted. These unaudited consolidated
financial statements and notes included herein should be read in conjunction with the Companys audited financial statements and notes for the year ended December 31, 2005, included in the Companys Annual Report on Form 10-KSB. The accounting principles applied in the preparation of these interim financial statements are consistent with those applied for the year ended December 31, 2005, except as described in Note 3. 2.
        Nature and Continuance of Operations The Company was organized on January 29, 1999 (inception) under the laws of the State of Nevada, United States of America as E-Com Technologies Corporation. On November 10, 2000, the Company became a fully registered issuer reporting with the Securities and Exchange Commission. On December 15, 2000, the Company began trading on the National Association of Securities Dealer  Over-the-Counter Bulletin Board.  On August 6, 2004, the Company changed its name to Eden Energy Corp. The Company, through its formerly wholly-owned Canadian subsidiary, E-Com Consultants (Canada) Corp., developed e-commerce solutions, web-based applications, performed Internet marketing and consulting services and designed and hosted web sites. On December 31, 2003, the Company disposed of this subsidiary and as at December 31, 2003 was inactive other than seeking new business opportunities. Consequently, effective December 31, 2003, the Company became an exploration stage company. The Company is primarily involved in oil and gas exploration activities in Alberta, Canada and Nevada, USA.  Pursuant to an Agreement dated August 5, 2004, the Company acquired certain oil and gas interests located in Nevada, USA. On June 13, 2005, the Company entered into a second agreement and acquired further oil and gas interests located in Nevada, USA.  On October 21, 2005 the Company entered into a separate Letter Agreement (formalized February 16, 2006) to acquire additional oil and gas interests located in Nevada.  On March 13, 2006, the Company entered into a farm-in arrangement with Suncor Energy Inc. of Calgary, Alberta.  Under the terms of its Participation Agreements, the Company has committed to fund ongoing leasehold and applicable exploration expenses including seismic programs required to take the prospects to drillable stages, currently estimated at net $3,865,663 over
the next 12 months.  Additionally, the Company has budgeted net $13,130,000 for drilling programs on its leases which are expected to commence in fiscal 2006 subsequent to the integration and review of all geophysical and seismic data. The Companys interim consolidated financial statements are prepared on a going concern basis in accordance with generally accepted accounting principles in the United States which contemplates the realization of assets and discharge of liabilities and commitments in the normal course of business. The Company is in the exploration stage of its resource business and has experienced negative cash flows from operations to date and has accumulated losses of $6,965,759. To date the Company has funded operations through the issuance of capital stock and debt. Managements plan is to continue raising additional funds through future equity or debt financings as needed until it achieves profitable operations from its oil and gas activities. During the three month period ended March 31, 2006, the Company completed a financing by way of a private placement of 7,366,520 units for gross
proceeds of $16,574,670.  The ability of the Company to continue its operations as a going concern is dependent on continuing to raise sufficient new capital to fund its exploration and development commitments and to fund ongoing losses if, as and when needed, and ultimately on generating profitable operations.       F-6    3.
        Adoption of New Accounting Policy Stock  Based Compensation The Company has a stock-based compensation plan (Note 9), whereby stock options are granted in accordance with the policies of regulatory authorities. Prior to January 1, 2006, the Company accounted for stock-based awards under the recognition and measurement provisions of Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees using the intrinsic value method of accounting, under which compensation expense was only recognized if the exercise price of the Companys employee stock options was less than the market price of the underlying common stock on the date of grant. Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123R Share Based Payments, using the modified prospective transition method. Under that transition method, compensation cost is recognized for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the
original provisions of SFAS No. 123, and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123R. Results for prior periods have not been restated. There was no change to the Company income from operations for the period ended March 31, 2006, than if it had continued to account for share-based compensation under APB No. 25. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. The following table illustrates the effect on net loss per share as if the fair value method had been applied to all outstanding and vested awards in the prior period. Three Months Ended
March 31, 2005Net loss, as reported
        $
        (199,189)Add:  Stock-based compensation expense included in reported net income, net of related tax effects
        
        Deduct:  Total stock-based compensation expense determined  under fair value based method for all awards, net of related tax effects
        
        Pro forma net loss
        $
        (199,189)Loss per share:Basic and Diluted - as reported
        $
        (0.01)Basic and Diluted - pro forma
        $
        (0.01)        F-7     4.
        Recent Accounting Pronouncements The Financial Accounting Standards Board has issued SFAS No. 155 Accounting for Certain Hybrid Financial Instruments and SFAS No. 156 Accounting for Servicing of Financial Assets, but they will not have any relationship to the operations of the Company. Therefore a description and its impact for each on the Companys operations and financial position have not been disclosed. 5.
        Oil and Gas Properties All of the Companys oil and gas properties are located in the United States and Canada and are unproven. The total costs incurred and excluded from depletion and amortization are as follows:  March 31,
2006
        
        December 31,
2005Acquisition costs
        $
        4,545,552
        $
        2,296,339Exploration costs
        
        2,934,622
        
        2,858,925Total
        $
        7,480,174
        $
        5,155,264 (a)
        The Company entered into an Assignment Agreement with Fort Scott Energy Corp. (Fort Scott) dated August 5, 2004 in which the Company acquired Fort Scotts interest in a Participation Agreement dated April 26, 2004 with Cedar Strat Corporation (Cedar Strat). The Participation Agreement provided for the acquisition of certain oil and gas leases and rights located in eastern Nevada, USA, held by Frontier Exploration Ltd. ("Frontier), which at the time was a wholly-owned subsidiary of Fort Scott. Pursuant to the terms of the Assignment Agreement, the Company acquired Fort Scotts interests in the oil and gas leases and rights by the acquisition of all the issued and outstanding shares in the capital of Frontier. Fort Scott retained a 2% over-riding royalty interest in the lands and all leases held by Frontier, or subsequently acquired by the Company.       F-8   5.Oil and Gas Properties (continued) To acquire its interest, the Company: (i)
        issued 500,000 shares of common stock to Fort Scott, (ii)
        issued a Promissory Note and Convertible Debenture (Debenture) to Fort Scott in the principal amount of $500,000. The Debenture bears interest at a rate of 7% per annum, and entitles Fort Scott to convert the principal and accrued interest into units at $0.25 per unit. Each unit consists of one share of common stock and one-half of one warrant. On July 15, 2005, the Company issued 2,131,944 shares of common stock and 1,065,972 share purchase warrants upon the conversion of the convertible debenture of $500,000 and accrued interest of $32,986 at $0.25 per unit. The unamortized balance of the embedded equity elements of $56,250 was charged to interest expense. Each warrant entitled the holder to acquire one additional share of common stock at a price of $0.50 per share on or before July 18, 2007. On September 27,
2005, the Company issued 1,065,972 shares of common stock upon the exercise of 1,065,972 share purchase warrants at $0.50 per share for proceeds of $532,986. (iii)
        for each 10,000,000 barrels of proven reserves developed on the lands underlying the leases, the Company must issue to Fort Scott 1,000,000 shares of common stock, up to a maximum of 10,000,000 shares. Under the Participation Agreement, the Company has the right of election to proceed with the development of the oil and gas property subsequent to the two-year exploration period, which commenced April 26, 2004. In the event of a positive election to develop the area, the Company is obliged to drill two wells, the first not later than one year after the two year exploration phase of the agreement, unless extended by the parties acting reasonably, the second in the succeeding 12 months, to the shallower of the base of the sub thrust Devonian Simonson formation or a depth of 17,000 feet.  The Company must maintain the rental payments on the leases during this 2-year development period. If the Company elects not to develop the property after the two year exploration period, the Company will, with Cedar Strats assistance, use their collective reasonable best efforts to sell the project as a prospect for development, in whole or in part.  Any fees to be paid by any third party in this circumstance shall be paid firstly to the Company in an amount equal to 75% of all lease acquisitions, lease rentals, lease maintenance, and exploration monies advanced on or in respect of that portion of the project being sold.  Exceptions to this include Company payments on delay rentals on the initial acreage or the after acquired acreage made after the expiry of the first two years of the Participation Agreement, and additional expenses, all which will be reimbursed at 100%.  Thereafter, all fees will be split 50/50 between the Company and Cedar Strat. Any other third party sales
or farm outs will retain drilling (1 well minimum) and lease rental payment obligations as set out and will include the Overriding Royalty Interest and back-in interest as described in the Participation Agreement. Under the terms of the Participation Agreement, the funding obligations of the Company include primary exploration payments to be made to Cedar Strat at a rate of $50,000 per month for 10 months of the first year and $50,000 per month for 10 months during the second year.  In the event exploration is progressing ahead of plan, management agreed to accelerate payments accordingly. The Company has advanced $1,000,000 to March 31, 2006 and unless additional exploration work is contracted for, this funding obligation is fulfilled.  An additional $500,000 was budgeted for commercial seismic data acquisition and processing, which now will be replaced by the Companys proprietary seismic program.       F-9   5.Oil and Gas Properties (continued) Upon fulfillment of the obligations of the Participation Agreement, the Company will have earned a 100% working interest (an 80.5% net revenue interest) in the lands underlying the leases. Cedar Strat will be vested with a 5% over-riding royalty interest and Fort Scott will be vested with a 2% overriding royalty interest. Cedar Strat will also retain a 5% back-in working interest after the Company has been reimbursed for 100% of its exploration expenses. This back-in working interest may be adjusted upwards should the Company elect not to proceed with the drilling election pursuant to the terms of the Participation Agreement and the drilling prospect is marketed to a third party. Under the terms of the agreement, the Company has committed to fund ongoing leasehold and applicable exploration expenses, which are expected to take the prospect to a drillable stage, currently estimated at
$2,000,000 (seismic program). In addition, the Company has increased its budget, due to increases in all industry related expenses, to $6,000,000 for the drilling and completion of the first well on the leases, which is expected to be drilled after the integration of all geophysical and seismic data is complete and a high quality drilling target is identified. The Company expects this to occur in fiscal 2006. Due to exploration programs still being active, the development program including related drilling commitments was extended to October 26, 2006. (b)
        On June 14, 2005, the Company, through a newly formed Nevada subsidiary Southern Frontier Explorations Ltd., acquired 50,000 acres of ten-year federal BLM oil and gas leases located in the Great Basin of Nevada, at an average cost of $2.25 per acre. A prospect fee of $750,000 was paid to Cedar Strat in connection with the acquisition of the leases. The leases require yearly rental fees of $1.50 per acre for the first five years, and $2.00 per acre for the remaining five years. Subsequent to June 14, 2005, another 52,757 acres were acquired on the same rental fee basis as the original acreage. The Company is committed to fund ongoing leasehold and applicable exploration expenses on these leases, which are expected to take the prospect to a drillable stage, currently estimated at $1,000,000 (seismic program). In addition, the
Company has budgeted $3,000,000 for an initial well drilling program on the leases, which is expected to commence in fiscal 2006. On March 14, 2006, the Company acquired approximately 76,459 acres of oil and gas lease lands at auction in Eastern Nevada as part of its Southern Frontier Explorations Ltd. project inventory (Northern Frontier project) in consideration for $852,055.  Subsequent to March 14, 2006, adjustments reduced the number of acres to approximately 69,982 acres. On November 1, 2005, the Company entered into a Participation Agreement with Eternal Energy Corp. (formerly Merganser Limited) (Eternal), in which the Company agreed to sell to Eternal a fifty percent (50%) interest in the oil and gas leases in consideration for $2,667,000. Eternal must pay $667,000 by November 7, 2005 (received).  Subject to drill election, both parties are committed to the drilling of a minimum of two wells (the Commitment Wells) after the exploration data has been collected, analyzed and reprocessed. Eternal must pay 66.67% of the costs to drill and complete the Commitment Wells, until total consideration of $2,667,000 has been paid, and 50% thereafter. This agreement is for a term of ten years. Pursuant to a Letter Agreement on April 14, 2006, Eternal is entitled to transfer its interests from our Southern Frontier project to our Northern Frontier project under the same terms and conditions. (c)
        Subsequent to a Letter Agreement dated October 21, 2005, the Company entered into a joint participation agreement dated January 24, 2006, with Cedar Strat.  Cedar Strat provided their acceptance to the joint participation agreement on February 16, 2006. Pursuant to the joint participation agreement the Company agreed to participate in Cedar Strats play included within the geographical boundaries of a confidential area, and pay Cedar Strat $750,000 as a prospect fee. The agreement allowed for the prospect fee of $750,000 paid by the Company to Cedar Strat for its Southern Frontier prospect to be applied to this Northern Frontier prospect. The Company also agreed to accept responsibility for acquiring and funding BLM leases and private fee leases, if applicable, in order to facilitate the exploration efforts. The Company
will assume the obligation to pay the annual rental on such leases.       F-10   5.Oil and Gas Properties (continued) (d)
        On March 13, 2006 the Company entered into a farm-in arrangement with Suncor Energy Inc. (Suncor) of Calgary, Alberta.  Under the terms of the arrangement the Company will participate, with a 50% working interest, in the cost to drill an exploratory well on approximately 18,000 acres of leases owned by Suncor. By drilling the first well, the Company will earn a 50% working interest in approximately 7,000 acres and will have the option to drill a second well in 2007 to earn its interest in the remaining lands. Suncor will retain a 12.5% gross overriding royalty on the lands. The Company is the majority participant with its 50% position in the arrangement.. The exploration target is a dolomitized Slave Point reef at a depth of approximately 8,900 feet. On March 17, 2006, operations were halted after setting and
cementing surface casing due to weather, safety and general access conditions, with plans to recommence in the following drilling season as conditions permit. 6.
        Related Party Transactions (a)
        The Company entered into a management agreement dated September 1, 2004 with a private company wholly-owned by the President of the Company. Under the terms of the agreement, the Company agreed to pay $5,000 per month. By amended management agreement dated May 1, 2005, the Company agreed to increase the monthly fee to $10,000 per month. By amended management agreement dated February 1, 2006, the Company agreed to increase the monthly fee to $15,000 per month. During the three month period ended March 31, 2006, management fees of $40,000 (2005 - $15,000) were incurred. (b)
        The Company entered into a management agreement dated May 1, 2005 with a director of the Company. Under the terms of the agreement, the Company agreed to pay $6,000 per month. By amended management agreement dated February 1, 2006, the Company agreed to increase the monthly fee to $10,000 per month. During the three month period ended March 31, 2006, management fees of $26,000 (2005 - $3,000) were incurred. 7.
        Commitments The Company entered into a management consulting agreement dated September 1, 2004 with a consultant. Under the terms of the agreement, the Company agreed to pay $2,000 per month for an initial term of one year, and, unless notice of termination is given by either party, is automatically renewed for a further term of one year. By amended management agreement dated May 1, 2005, the Company agreed to increase the monthly fee to $7,000 per month. During the three month period ended March 31, 2006, consulting fees of $21,000 (2005 - $6,000) were incurred. The Company entered into a consulting agreement dated July 5, 2005 for the provision of office administration services. Under the terms of the agreement, the Company agreed to pay $2,500 per month for an initial term of three months, and $3,000 per month thereafter. On the three month anniversary of the agreement, the Company paid a cash bonus of $3,000 and granted stock options to purchase up to 10,000 shares of common stock. By amended consulting agreement dated February 1, 2006, the Company agreed to increase the monthly fee to $3,500 per month. During the three month period ended March 31, 2006, consulting fees of $10,000 (2005 - $nil) were incurred. The Company entered into a consulting agreement dated February 1, 2006 with an individual to provide certain investor relations services. Under the terms of the agreement, the Company agreed to pay $2,250 per month until such time as the contract is terminated. Under the terms of its Participation Agreements with Cedar Strat, the Company has committed to fund ongoing leasehold and applicable exploration expenses required to take its prospects to drillable stages, currently estimated at net $2,366,630 which includes $33,330 of budgeted exploration costs, and an additional $2,333,300 budgeted for seismic programs, over the course of fiscal 2006. The Company must also pay approximately net $570,000 in lease renewal fees over the next twelve months.       F-11   8.Convertible Notes On August 25, 2005, the Company issued Convertible Promissory Notes (the Notes) to certain institutional investors with a principal amount of $9,075,000, and 907,500 Series A detachable share purchase warrants. The Notes bear interest at 6% per annum, mature on August 25, 2008, and may be converted into 1,815,000 shares of common stock on the basis of one share of common stock for every $5 in value of Notes (the Conversion Price). Each warrant is exercisable into one share of common stock at an exercise price of $6 per share (the Exercise Price) until August 25, 2008. The investors also had the option to make an additional investment of up to 30% of their original investment for 180 days after the closing date, on the same terms as the original investment. No additional investments were made. The Company paid cash placement fees of
$544,500, offering costs of $28,500 and issued 72,600 Broker Warrants. Each Broker Warrant is exercisable into one share of common stock at an exercise price of $6 per share until August 28, 2008. The securities were issued in a private placement transaction pursuant to Regulation D under the Securities Act of 1933, as amended. The Company filed a registration statement with the Securities and Exchange Commission that was declared effective on November 10, 2005, to register the resale of shares of the Company's common stock issuable upon conversion of the Notes and exercise of the warrants. The Conversion Price and the Exercise Price are subject to adjustments under certain conditions and events occurring, including the issue of common stock and common stock equivalents at a price per share less than the Conversion Price or Exercise Price.  Accordingly, upon the completion of the financing on February 24, 2006 as disclosed in Note 9(c), the Conversion Price was reduced from $5.00 to $4.32, and the Exercise Price was reduced from $6.00 to $5.04. In accordance with EITF 98-5 Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, the Company recognized the value of the embedded beneficial conversion feature of $3,854,490 as additional paid in capital as the debt was issued with an intrinsic value conversion feature. In addition, in accordance with EITF 00-27 Application of Issue No. 98-5 to Certain Convertible Instruments, the Company has allocated the proceeds of issuance between the convertible debt and the detachable warrants based on their relative fair values. Accordingly, the Company recognized the fair value of the detachable warrants of $2,039,490 as additional paid in capital. The Company will record further interest expense over the term of the Convertible Debentures of $2,039,490 resulting from the difference between the stated
value and carrying value at the date of issuance. During the year ended December 31, 2005, a debenture with a principal amount of $450,000 was converted into 90,000 shares of common stock. The unamortized balance of the embedded equity elements of $92,704 was charged to interest expense. The carrying value of the Convertible Debentures will be accrued to the face value of $8,625,000 to maturity. To March 31, 2006, accrued interest of $127,603 has been included in accrued liabilities, and interest expense of $161,530 has been accreted increasing the carrying value of the Convertible Debentures to $7,063,545. 9.
        Capital Stock The number of shares issued and outstanding has been restated to give retroactive effect for a reverse stock split on a two old shares for one new share basis approved by the directors of the Company on June 3, 2004.  On June 23, 2004, the Company increased its authorized capital stock to 100,000,000 shares of common stock with a par value of $0.001 and 10,000,000 shares of preferred stock with a par value of $0.001. (a)
        On February 6, 2006, the Company issued 57,500 shares of common stock upon the exercise of 57,500 share purchase warrants at $2.00 per share for proceeds of $115,000.(b)
        On February 17, 2006, the Company issued 50,000 shares of common stock upon the exercise of 50,000 stock options at $1.00 per share for proceeds of $50,000.        F-12   9.Capital Stock (continued) (c)
        On February 24, 2006, the Company closed a private placement of 7,366,520 units at $2.25 per unit resulting in gross proceeds of $16,574,670. Each unit consisted of one common share and two share purchase warrants. Each warrant entitles the holder to purchase one additional common share at a price of $3.25 per share and $5.25 per share, respectively, until February 16, 2009. The $5.25 Warrant is only exercisable if the $3.25 Warrant has been exercised.  After a registration statement qualifying the resale of the common shares has been filed with the SEC and declared effective, the Company has the right to advance the exercise date of the Warrants if the closing price of its shares averages at or above $4.00 or $6.25 for the corresponding Warrants for a period of twenty consecutive trading days. The Company paid a cash placement fee of 6% of the gross proceeds of the offering for
agent services in the transaction and issued 391,488 agents warrants which have the same terms and conditions as the investors warrants.(d)
        On March 8, 2006, the Company issued 100,000 shares of common stock upon the exercise of 100,000 stock options at $0.50 per share for proceeds of $50,000.(e)
        On March 9, 2006, the Company issued 50,000 shares of common stock upon the exercise of 50,000 stock options at $1.00 per share for proceeds of $50,000. Stock Option Plan Effective May 1, 2005, the Company amended its stock option plan (the Amended 2004 Stock Option Plan) to issue up to 3,000,000 shares of common stock. The plan allows for the granting of share purchase options at a price of not less than fair value of the stock and for a term not to exceed five years. The total number of options granted to any person shall not exceed 5% of the issued and outstanding common stock of the Company. During the three month period ended March 31, 2006, the Company granted stock options to directors and consultants to acquire up to 772,000 shares of common stock exercisable at $2.50 per share on or before February 28, 2011. One-third of the options vest on April 1, 2006, one-third vest on August 1, 2006 and the final one-third vest on December 1, 2006. The closing market price of the stock on the grant date was $2.50 per share. The fair value for options granted was estimated at the date of grant to be $1,739,934 using the Black-Scholes option-pricing model assuming an expected life of 2.5 years, a risk-free rate of 4.55% and an expected volatility of 205.47%. The weighted average fair value of stock options granted during the three month period ended March 31, 2006 was $2.25 per share.  No compensation expense was charged to operations as none of the stock options granted vested in the period. A summary of the Companys stock option activity is as follows:  Three months ended
March 31, 2006
        
        Three months ended
March 31, 2005Number of Options
        Weighted Average Exercise Price
        
        Number of Options
        Weighted Average Exercise PriceBalance, beginning of period
        910,000
        $              1.56
        
        1,330,000
        $              0.65Granted
        772,000
        2.50
        
        
        Cancelled / Forfeited
        
        
        
        
        Exercised
        (200,000)
        0.75
        
        
        Balance, end of period
        1,482,000
        $               1.56
        
        1,330,000
        $              0.65        F-13   9.Capital Stock (continued) As at March 31, 2006, the following options are outstanding:  Exercise Price
        Weighted Average Remaining Contractual Life
(in years)
        Outstanding
        
        ExercisableShares
        Weighted Average Exercise Price
        Shares
        Weighted Average Exercise Price$0.00  $0.50
        3.20
        250,000
        $ 0.50
        
        250,000
        $ 0.50$2.00  $2.50
        4.09
        1,232,000
        $ 2.50
        
        460,000
        $ 2.491,482,000
        $ 2.16
        
        710,000
        $ 1.79  Share Purchase Warrants The following table summarizes the continuity of the Companys warrants: Number of
Shares
        Weighted average exercise priceBalance, December 31, 2004
        
        
        Issued
        4,066,106
        
        $ 2.57Exercised
        (3,028,506)
        
        $ 1.47Expired
        
        
        Balance, December 31, 2005
        1,037,600
        
        $ 5.78Issued
        15,124,528
        
        $ 4.25Exercised
        (57,500)
        
        $ 2.00Balance, March 31, 2006
        16,104,628
        
        $ 4.36 At March 31, 2006, the following share purchase warrants were outstanding: Number of Warrants
        Exercise Price
        Expiry Date980,100
        $ 5.04
        August 28, 20087,562,264
        $ 3.25
        February 16, 20097,562,264
        $ 5.25
        February 16, 2009  10.
        Subsequent Events(a)
        The Company entered into a management consulting agreement dated May 1, 2006 with private company wholly-owned by the Chief Operating Officer (COO) of the Company. Under the terms of the agreement, the Company agreed to pay $10,000 per month. On May 1, 2006, the Company also granted stock options to the COO to purchase up to 150,000 shares of common stock exercisable at $2.50 per share for a period of five years.        3   Item2.Management's Discussion and Analysis or Plan of Operation. FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking
statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our consolidated unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report, particularly in the section entitled "Risk Factors" of this quarterly report. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "CDN$" refer to Canadian dollars and all references to "common shares" refer to the common shares in our capital stock. As used in this quarterly report, the terms "we", "us", "our" and "Eden" mean Eden Energy Corp., unless otherwise indicated. Overview We are an exploration stage oil and gas company engaged in the exploration for petroleum and natural gas in the State of Nevada and as of March 13, 2006 in the Province of Alberta, Canada.  We were previously involved in the business of providing internet and programming services through our former subsidiary company to clients located primarily in Canada.  Our principal products and services included the development of e-commerce web sites and strategies, web design and hosting, domain name registration, Internet marketing and consulting and custom programming of web based applications.  Due to the inability to run this business with a profit and the difficulty in attracting additional capital on terms favorable to existing shareholders, we ceased operation of this business in a prior year and disposed of our subsidiary company on December 31, 2003 for nominal consideration. Corporate History Our company, Eden Energy Corp., was incorporated in the State of Nevada on January 29, 1999, under the name E-Com Technologies Corp.  On June 16, 2004 we effected a 2 for 1 stock split of our common stock and our preferred stock.  On August 6, 2004 we changed our name to Eden Energy Corp. and increased our authorized capital to 100,000,000 shares of common stock having a $0.001 par value and 10,000,000 shares of preferred stock having a $0.001 par value. Our common shares were quoted for trading on the OTCBB on December 15, 2000 under the symbol "ECTC".  On June 18, 2004 our symbol changed to ECOM and on August 20, 2004 our symbol changed to EDNE.      4  Our Current Business Noah Project - Nevada  On August 31, 2004 we approved an Assignment Agreement with Fort Scott Energy Corp. dated August 5, 2004 pursuant to which we have acquired Fort Scotts interest in a Participation Agreement dated April 26, 2004 with Cedar Strat Corporation (Cedar Strat). The Participation Agreement provides for the acquisition of leases, reservations, permits, licenses, or other documents of title held by Fort Scott via its wholly owned subsidiary, Frontier Explorations Ltd., which have been or will be acquired in the area of mutual interest pursuant to the terms of the Participation Agreement, including any renewals or extensions thereof, by virtue of which the holder is entitled to enter, access, drill for and remove petroleum and natural gas on the lands pertaining to the leases. The assets which we have acquired are the petroleum and natural gas rights and leases held by Fort Scott through Frontier Explorations Ltd. The lands comprising the area of mutual interest are located in eastern Nevada. We accepted an assignment of the Participation Agreement, and the oil and gas leases held or to be acquired under the Participation Agreement from Fort Scott. Fort Scott retained a 2% over-riding royalty interest in the lands and all leases in the area of mutual interest currently held by Fort Scott / Frontier, or any leases subsequently acquired by us. Fort Scott holds its interests in the leases acquired under the Participation Agreement through its wholly owned subsidiary, Frontier Explorations Ltd. Pursuant to the terms of the Assignment Agreement, Fort Scott has agreed to transfer to us all of the issued and outstanding shares in the capital of Frontier, and, as a result, the leases held by Frontier. The consideration payable for the assignment of the Participation Agreement under the Assignment Agreement, and in consideration of Fort Scott transferring to us the Frontier Shares, and, as a result, the leases held by Frontier, consists of: (i)
        the issuance to Fort Scott of 500,000 shares of our common stock;(ii)
        the issuance to Fort Scott of a Promissory Note and Convertible Debenture in the principal amount of $500,000. The Convertible Debenture will bear interest at a rate of 7% per annum and will further entitle Fort Scott to convert payment of the principal amount and interest accruing thereon, in whole or in part, into units. The conversion rate under the Convertible Debenture will be $0.25 per unit, each unit entitling Fort Scott to the issuance of one common share in our capital stock and one half of one warrant, with each whole warrant entitling Fort Scott to acquire one additional common share at $0.50 per share; and(iii)
        for each 10 million barrels of proven reserves on the lands underlying the leases, we will issue to Fort Scott 1,000,000 shares of common stock, up to a maximum of 10,000,000 shares of common stock. As security for the payment of the $500,000 debt and interest accruing thereon, Fort Scott was to retain ownership of the Frontier Shares until the $500,000 debt and all interest accruing thereon has been paid in full or such debt has been converted in to the units. However, subsequent to the Assignment Agreement, Fort Scott transferred to us the one issued and outstanding share in the capital of Frontier, effective as at August 31, 2004, as a result of which Frontier became our wholly owned subsidiary. On July 14, 2005 Fort Scott elected to convert their debenture consisting of principal and interest into 2,131,944 common shares at $0.25 and 1,065,972 share purchase warrants exercisable at $0.50. On September 27, 2005, we issued 1,065,972 shares of common stock upon the exercise of 1,065,972 share purchase warrants at $0.50 per share for proceeds of $532,986. Fort Scottwill retain its 2% over-riding royalty interest on the lands underlying the leases, such that upon the fulfillment of the obligations set out in the Participation Agreement, we will have earned an 80.5% net revenue interest in the lands underlying the leases, and Cedar Strat will be vested with a 5% over-riding royalty interest. Cedar Strat will also retain a 5% back in working interest which may be adjusted upwards to as much as a 12.5% back in working interest should we elect not to proceed with the drilling election pursuant to the terms of the Participation Agreement.       5   To date we have acquired leases totaling approximately 211,000 acres on this project, which we have subsequently named the Noah Project. Due to exploration programs still being active, on December 16, 2005 the development program including related drilling commitments was extended from April 26, 2006 to October 26, 2006. Southern Frontier Project - Nevada On June 13, 2005, pursuant to a written agreement entered into on November 1, 2005, we entered into a separate Participation Agreement with Cedar Strat Corporation. The Participation Agreement entitles Eden Energy Corp. or its newly formed Nevada subsidiary, Southern Frontier Explorations Ltd. to acquire petroleum and natural gas rights and leases in an area of mutual interest (AMI). Pursuant to the terms of the Participation Agreement, these rights include any renewals or extensions thereof, by virtue of which the holder is entitled to enter, access, drill for and remove petroleum and natural gas on the lands pertaining to the leases. The lands comprising the area of mutual interest are located in eastern Nevada. The terms and conditions of the Participation Agreement for this project duplicate the earlier Cedar Strat Corporation Participation Agreement recited elsewhere in this registration statement and in our 2004 year end report, except for:  1.
        A prospect fee of $750,000 was paid directly to Cedar Strat Corporation for identifying the AMI and to supply related geophysical data. The over riding royalty interest to Cedar Strat is 5% with a 10% working interest back in after payout. No monthly payments as obligated under the first Participation Agreement with Cedar Strat are due and payable. No assignment or acquisition fees to any parties are due and payable.2.
        Subject to election to drill after the exploration period is complete and the data analyzed, our well commitment is to drill the first well within 2 years and 1 well each subsequent year thereafter. As a result of this agreement and related activities, we have acquired leases totaling approximately 82,000 acres on this Southern Frontier project. Subsequently, our lease acreage on this project has increased to approximately 102,757 acres. Pursuant to a Letter Agreement with Cedar Strat Corporation which was formally accepted as part of a Joint Participation Agreement on February 16, 2006, exploration activities on the Southern Frontier project have been suspended until March 31, 2008 in order to allow focused exploration efforts on the Northern Frontier prospect described below. Northern Frontier Project - Nevada On November 1, 2005, subsequent to a non-refundable deposit in the amount of US$100,000 being paid by Merganser Limited of London, England, we entered into a Participation Agreement with Merganser for the development of our Southern Frontier project. The terms and conditions of this agreement establish a joint venture whereby Merganser may earn a fifty percent (50%) interest in our Southern Frontier project subject to fulfillment of obligations and their payment of US$2,667,000 towards exploration, development and drilling costs on the first US$4,000,000 spent on the project. Thereafter, all subsequent project costs will be borne 50% by each party. As set out in the Participation Agreement, on November 8, 2005, we received Mergansers portion of the initial US$1,000,000 project acquisition cost, being US$667,000. (US$100,000 deposit plus US$567,000).   Pursuant to a Letter Agreement with Eternal Energy Corp. (formerly Merganser) on April 14, 2006 Eternal is entitled to transfer its interests from our Southern Frontier project to our Northern Frontier Project under the same terms and conditions. On October 21, 2005 we entered into a separate Letter Agreement with Cedar Strat Corporation for the exploration and development of a new prospect called Northern Frontier, subject to entering into a definitive form of agreement. This agreement entitles our company or our Nevada subsidiary, Southern Frontier Explorations Ltd. to acquire petroleum and natural gas rights and leases in an area of mutual interest (AMI) in northern Nevada.       6   Under the terms and conditions of this Letter Agreement, Cedar Strat will manage certain exploration programs within the AMI designed to bring the prospect to a drillable status. Cedar Strat will provide us with copies of the exploration data. Eden will pay for these exploration programs and to date we have advanced $216,000 to Cedar Strat for exploration expenses, which included gravity and field mapping and where field work is now complete. Subject to election to drill, we must commence drilling within the AMI within 24 months of receipt by us of all of the exploration data from Cedar Strat, and thereafter must drill at least one development well per year during the term of the agreement. Effective January 24, 2006, we entered into a formal Joint Participation Agreement with Chamberlain Exploration Development and Research Stratigraphic Corporation, dba Cedar Strat Corporation. Cedar Strat Corporation provided their acceptance to the formal Joint Participation Agreement on February 16, 2006.  Pursuant to the joint participation agreement we agreed to participate in Cedar Strats play included within the geographical boundaries of a confidential area, and pay Cedar Strat $750,000 as a prospect fee.  The agreement allowed for the prospect fee of $750,000 paid by our company to Cedar Strat for its Southern Frontier prospect to be applied to this Northern Frontier prospect with the temporary suspension of exploration activities on the Southern Frontier prospect.  We also agreed to accept responsibility for acquiring and funding BLM leases and private fee leases, if
applicable, in order to facilitate the exploration efforts.  We will assume the obligation to pay the annual rental on such leases. On March 14, 2006, we, through our representative at auction acquired approximately 76,459 acres of oil and gas lease lands in Eastern Nevada for this Northern Frontier project.  Subsequent to March 14, 2006, adjustments reduced the number of acres to approximately 69,982 acres. Chinchaga Project  Alberta On March 13, 2006, we entered into a farm-in arrangement with Suncor Energy Inc. of Calgary, Alberta. Under the terms of the arrangement Eden will participate, with a 50% working interest, in the cost to drill an exploratory well on approximately 18,000 acres of leases owned by Suncor. By drilling the first well, Eden will earn a 50% working interest in approximately 7,000 acres and will have the option to drill a second well in 2007 to earn its interest in the remaining lands. Suncor will retain a 12.5% gross overriding royalty on the lands. Eden is the majority participant with its 50% position in the arrangement.  The exploration target is a dolomitized Slave Point reef at a depth of approximately 8,900 feet in Northern Alberta.  Eden will pay its 50% share of the AFE for drilling the exploratory well, estimated at CDN$3,100,000 and to date has advanced CDN$1,550,000. On March 17, 2006, operations were halted after setting and cementing surface casing due to weather, safety and general access conditions, with plans to recommence in the following drilling season as conditions permit. PLAN OF OPERATIONS AND CASH REQUIREMENTS For the next 12 months we plan to continue to explore our leases in eastern Nevada, including additional gravity surveys, well studies, surface mapping and seismic studies in preparation for drilling.  We will continue to participate in our Alberta project as our 50% position provides for. Currently we hold approximately 211,000 acres pursuant to lease agreements on the Noah Project, approximately 102,757 acres pursuant to lease agreements on our Southern Frontier project, and approximately69,982acres pursuant to lease agreements on our Northern Frontier project. The expiration dates for the leases are in 2014, 2015, and 2016 respectively. The leases may be extended upon production from the leases. Under the terms of the Noah Participation Agreement, which is included in the Assignment Agreement with Fort Scott, filed herewith as exhibit 10.2, the funding obligations of our company include primary exploration payments to be made to Cedar Strat at a rate of $50,000 per month for 10 months of the first year and $50,000 per month for 10 months during the second year. In the event exploration is progressing ahead of plan, management of our company has agreed to accelerate payments accordingly. At December 31, 2005, approximately $111,450 remained outstanding under this obligation subject to completion of data acquisition on the part of Cedar Strat. On March 3, 2006 this amount was paid in full.       7   With the addition of our Southern Frontier project (now temporarily suspended), our Northern Frontier project (now accelerated), and our Chinchaga project in Alberta, the ongoing leasehold and applicable exploration expenses including Nevada seismic programs, which are expected to take our prospects to the drillable stage, are currently estimated at net $3,865,663 (see table following). While our early drilling estimate was $4,000,000 for the first well on the Noah Project, we now anticipate this to be higher due to cost increases in all areas of field and related service work in Nevada. We are budgeting for additional wells which include a well drilling program on our leases of our Northern Frontier prospect.  Combined, we have budgeted a net $13,130,000 for drilling programs on our projects, which we expect to commence with in the next 12 months.  This drilling program budget includes
our 50% share of estimated drilling costs on our Chinchaga project in Northern Alberta. With the funding support of our partner, Eternal Energy Corp. (formerly Merganser Limited), on our Northern Frontier project and with our Alberta expense projections, we anticipate a reallocation of exploration and development expenditures from our earlier estimates. Our net cash provided by financing activities during the year ended December 31, 2005 was $19,327,234 and for the three month period from January 1, 2006 to March 31, 2006 was $16,094,551. Our total net cash provided by financing since January 1, 2004, the date of inception of the exploration stage to March 31, 2006 was $38,526,785. We will require additional funds to implement our growth strategy in our oil and gas exploration operations. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable. In order to proceed with our plans we have raised funds by way of a private placement of equity and debt securities in our company. Our initial offering consisted of 6,190,000 shares at a price of $0.50 per share for gross proceeds of $3,095,000. We closed the private placement on November 12, 2004 and issued certificates on November 17, 2004. The net proceeds received have been used as working capital to allow us to finance our commitments under the assignment agreement previously discussed. On November 24, 2004, we issued a further 20,000 shares at a price of $0.50 per share for gross proceeds of $10,000. On April 5, 2005, we issued 3,840,067 shares and 1,920,035 share purchase warrants at a price of $1.50 per share for gross proceeds of $5,760,100. Each warrant entitles the holder to purchase an additional share of common stock of our company at a price of $2.00 per share until April 4, 2006. On April 27, 2005, we issued 200,000 shares and 100,000 share purchase warrants at a price of $1.50 per share for gross proceeds of $300,000. Each warrant entitles the holder to purchase an additional share of common stock of our company at a price of $2.00 per share until April 27, 2006. During the fiscal year ended December 31, 2005, 1,962,535 shares were issued on the exercise of 1,962,535 warrants, and on February 6, 2006 we issued the final 57,500 shares on the exercise of the final 57,500 warrants.  On August 25, 2005 we issued convertible promissory notes with a principal amount of $9,075,000, and 907,500 Series A detachable share purchase warrants. The notes bear interest at 6% per annum, mature on August 25, 2008, and may be converted into 1,815,000 shares of common stock on the basis of one share of common stock for every $5 in value of Notes. Each warrant is exercisable into one share of common stock at an exercise price of $6 per share until August 25, 2008. The investors also have the option to make an additional investment of up to 30% of their original investment for 180 days after the closing date, on the same terms as the original investment. No further investments were made under this option. On November 28, 2005, we issued 90,000 shares of common stock upon the conversion of a portion of our convertible promissory notes. On December 1, 2005 we issued 59,291
shares of common stock in lieu of a cash interest payment on the convertible promissory notes.   The Conversion Price and the Exercise Price are subject to adjustments under certain conditions and events occurring, including the issue of common stock and common stock equivalents at a price per share less than the Conversion Price or Exercise Price.  Upon the completion of the financing on February 24, 2006 the Conversion Price was reduced from $5.00 to $4.32, and the Exercise Price was reduced from $6.00 to $5.04. On September 27, 2005, we issued 1,065,972 shares of common stock upon the exercise of 1,065,972 share purchase warrants at $0.50 per share for proceeds of $532,986. On November 8, 2005, we received a portion of an initial project acquisition cos,t in the amount of US$667,000.       8   On February 16, 2006, we issued 7,366,520 shares and 14,733,040 share purchase warrants at a price of $2.25 per share for gross proceeds of $16,574,670. The warrant entitles the holders to purchase an additional 7,366,520 shares of common stock of our company at a price of $3.25 per share and an additional 7,366,520 shares of common stock at a price of $5.25 per share until February 16, 2009. Over the next twelve months we intend to use our available funds to expand on the exploration and development of our leases, as follows: Estimated Net Expenditures During the Next Twelve Months  General, Administrative and Corporate Expenses
        2,295,200Nevada Land  Noah, Southern, Northern projects
        567,344Alberta Land  Chinchaga project
        931,689Exploration Expenses  Northern Frontier project
        33,330Seismic Programs - Nevada
        2,333,300Drilling Program (commencing fiscal 2006)
        13,130,000Working Capital
        4,000,000Total
        23,290,863 As at March 31, 2006, we had $267,221 in current liabilities.  Our financial statements report a net loss of $526,089 for the three month period ended March 31, 2006 compared to a net loss of $199,189 for the three month period ended March 31, 2005.  Our accumulated losses increased to $6,965,759 for the period ending March 31, 2006, of which $6,410,620 relates to our current business of oil and gas exploration, and $555,139 relates to the early technology business prior to business change.  Our losses have increased primarily as a result of a non-cash interest expense allocation relating to the intrinsic value of the beneficial conversion feature of our convertible note and warrant financing ($4,415,858).  Additionally our general, administrative and corporate expenses increased to $654,242 for the three month
period ended March 31, 2006, as compared to $208,153 for the three month period ended March 31, 2005.  We realized an overall increase in most expense categories during the three month period ended March 31, 2006 as we were advancing our activities in the oil and gas business, as compared to the three month period ended March 31, 2005 when we were formulating our new business acquisitions and opportunities. Our total liabilities as of March 31, 2006 were $7,330,766, as compared to total liabilities of $7,316,522 as of December 31, 2005.  The slight increase was due to the decrease in accounts payable (from $414,507 as at December 31, 2005 to $267,221 as at March 31, 2006) being offset by an increase in allocation for our Convertible Notes from $6,902,015 as at December 31, 2005 to $7,063,545 as at March 31, 2006. During the three month period ended March 31, 2006 we spent $2,324,910 on exploration and acquisition of our oil and gas properties as compared to $294,400 during the three month period ended March 31, 2005.  Of this amount $2,249,213 was attributable to acquisition costs (2005 - $0), and $75,697 (2005 - $294,400) was attributable to exploration costs. We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. In this regard we have raised additional capital through the equity offerings noted above. The continuation of our business is dependent upon obtaining further financing, a successful program of exploration, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements.      9   There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations. Product Research and Development Our business plan is focused on a strategy for maximizing the long-term exploration and development of our oil and gas leases in Nevada and Alberta. To date, execution of our business plan has largely focused on acquiring prospective oil and gas leases and with early stage exploration. With this stage nearing completion we intend to use the results obtained from this dedicated research to establish a going forward exploratory drilling and development plan. Purchase of Significant Equipment We do not intend to purchase any significant equipment (excluding oil and gas activities) over the twelve months ending December 31, 2006 other than office computers and communication equipment as required. Employees Currently our only employees are our directors, officers, an office administrator and an investor relations consultant. We do not expect any material changes in the number of employees over the next 12 month period. We do and will continue to outsource contract employment as needed. However, with project advancement and if we are successful in our initial and any subsequent drilling programs we may retain additional employees. Effective May 1, 2006 Larry Kellison was appointed Chief Operating Officer and will provide these management services through Freestone Energy LLC, a company wholly-owned and controlled by him. Going Concern We have suffered recurring losses from operations. The continuation of our company as a going concern is dependent upon our company attaining and maintaining profitable operations and raising additional capital. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations. Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in their report on the annual financial statements for the year ended December 31, 2005, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. Recently Issued Accounting Standards The Financial Accounting Standards Board has issued SFAS No. 155 Accounting for Certain Hybrid Financial Instruments and SFAS No. 156 Accounting for Servicing of Financial Assets, but they will not have any relationship to the operations of the Company. Therefore a description and its impact for each on the Companys operations and financial position have not been disclosed.       10   Application of Critical Accounting Policies Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials. Oil and Gas Properties We utilize the full cost method to account for our investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, capitalized interest costs relating to unproved properties, geological expenditures, tangible and intangible development costs including direct internal costs are capitalized to the full cost pool. As of March 31, 2006, we have no properties with proven reserves. When we obtain proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. Investments in unproved properties and major development projects including capitalized interest, if any, are not depleted until proved
reserves associated with the projects can be determined. If the future exploration of unproved properties are determined uneconomical the amount of such properties are added to the capitalized cost to be depleted. As of March 31, 2006, all of our oil and gas properties were unproved and were excluded from depletion. At March 31, 2006, management believes none of our unproved oil and gas properties were considered impaired. The capitalized costs included in the full cost pool are subject to a "ceiling test", which limits such costs to the aggregate of the estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions plus the lower of cost and estimated net realizable value of unproven properties. Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations. Long-Lived Assets In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets", the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. We recognize impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. RISK FACTORS Much of the information included in this quarterly report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements".       11   Our common shares are considered speculative during our search for a new business opportunity. Prospective investors should consider carefully the risk factors set out below. We have had negative cash flows from operations. To date we have had negative cash flows from operations and we have been dependent on sales of our equity securities and debt financing to meet our cash requirements and have incurred losses totaling approximately $526,089 for the three month period ending March 31, 2006, and cumulative losses since the inception of the exploration stage of $6,410,620 to March 31, 2006.  As of March 31, 2006 we had working capital of $31,314,436 as a result of recent financing activities.  We do not expect positive cash flow from operations in the near term.  There is no assurance that actual cash requirements will not exceed our estimates.  In particular, additional capital may be required in the event that: - drilling and completion costs for further wells increase beyond our expectations; or - we encounter greater costs associated with general and administrative expenses or offering costs. The occurrence of any of the aforementioned events could adversely affect our ability to meet our business plans. We will depend almost exclusively on outside capital to pay for the continued exploration and development of our properties.  Such outside capital may include the sale of additional stock and/or commercial borrowing.  Capital may not continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to us.  The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders.  Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment. A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations. A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital.  Because our operations have been primarily financed through the sale of equity securities, a decline in the price of our common stock could be especially detrimental to our liquidity and our continued operations.  Any reduction in our ability to raise equity capital in the future would force us to reallocate funds from other planned uses and would have a significant negative effect on our business plans and operations, including our ability to develop new products and continue our current operations.  If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations. We have a history of losses and fluctuating operating results. From inception through to March 31, 2006, we have incurred aggregate losses of approximately $6,965,759.  Our loss from operations for the three month period ended March 31, 2006 was $526,089.  There is no assurance that we will operate profitably or will generate positive cash flow in the future.  In addition, our operating results in the future may be subject to significant fluctuations due to many factors not within our control, such as the unpredictability of when customers will purchase our services, the size of customers purchases, the demand for our services, and the level of competition and general economic conditions.  If we cannot generate positive cash flows in the future, or raise sufficient financing to continue our normal operations, then we may be forced to scale down or even close our operations.  Until such time as we generate revenues, we expect an increase in
development costs and operating costs.  Consequently, we expect to incur operating losses and negative cash flow until our properties enter commercial production.       12   We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations. We have no history of revenues from operations and have no significant tangible assets.  We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably.  Our company has a limited operating history and must be considered in the development stage. The success of our company is significantly dependent on a successful acquisition, drilling, completion and production program. Our companys operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history.  We may be unable to locate recoverable reserves or operate on a profitable basis.  We are in the development stage and potential investors should be aware of the difficulties normally encountered by enterprises in the development stage.  If our business plan is not successful,
and we are not able to operate profitably, investors may lose some or all of their investment in our company. Trading of our stock may be restricted by the SEC's "Penny Stock" regulations which may limit a stockholder's ability to buy and sell our stock The U.S. Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.  Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors."  The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form
prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account.  The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.  In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the
transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.  We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock. NASD sales practice requirements may also limit a stockholders ability to buy and sell our stock. In addition to the penny stock rules described above, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customers financial status, tax status, investment objectives and other information.  Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse
effect on the market for our shares. Trading in our common shares on the OTC Bulletin Board is limited and sporadic making it difficult for our shareholders to sell their shares or liquidate their investments Our common shares are currently listed for public trading on the OTC Bulletin Board.  The trading price of our common shares has been subject to wide fluctuations.  Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control.  The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation.  There can be no assurance that trading prices and price earnings ratios previously      13   experienced by our common shares will be matched or maintained.  These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted.  Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources. Because of the early stage of development and the nature of our business, our securities are considered highly speculative. Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of its development. We are engaged in the business of exploring and, if warranted, developing commercial reserves of oil and gas. Our properties are in the exploration stage only and are without known reserves of oil and gas. Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon locating and developing economic reserves of oil and gas, which itself is subject to numerous risk factors as set forth herein.  Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in
order to continue our business operations. As our properties are in the exploration and development stage there can be no assurance that we will establish commercial discoveries on our properties. Exploration for economic reserves of oil and gas is subject to a number of risk factors.  Few properties that are explored are ultimately developed into producing oil and/or gas wells. Our properties are in the exploration and development stage only and are without proven reserves of oil and gas.  We may not establish commercial discoveries on any of our properties. The potential profitability of oil and gas ventures depends upon factors beyond the control of our company. The potential profitability of oil and gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially affect our financial performance. Adverse weather conditions can also hinder drilling operations. A productive well may become uneconomic in the event water or other deleterious substances are encountered which impair or prevent the production of oil and/or gas from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances. The marketability of oil and gas which may be acquired or discovered will be affected by numerous factors beyond our control. These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental protection.  These factors cannot be accurately predicted and the combination of these factors may result in our company not receiving an adequate return on invested capital. Competition in the oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring the leases. The oil and gas industry is intensely competitive. We compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial and operational resources and staffs. Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds.  We cannot predict if the necessary funds can be raised or that any projected work will be completed. Our budget anticipates our acquisition of additional acreage in Nevada.  This acreage may not become available or if it is available for leasing, that we may not be successful in acquiring the leases. There are other competitors that have operations in the Nevada area and the presence of these competitors could adversely affect our ability to acquire additional leases.       14   The marketability of natural resources will be affected by numerous factors beyond our control which may result in us not receiving an adequate return on invested capital to be profitable or viable. The marketability of natural resources which may be acquired or discovered by us will be affected by numerous factors beyond our control. These factors include market fluctuations in oil and gas pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of oil and gas and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital to be profitable or viable. Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company. Oil and gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received.  Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on our activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus
causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which it may elect not to insure against due to prohibitive premium costs and other reasons.  To date we have not been required to spend any material amount on compliance with environmental regulations.  However, we may be required to do so in future and this may affect our ability to expand or maintain our operations. Exploration and production activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of our operations. In general, our exploration and production activities are subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations has not had a material effect on our operations or financial condition to date. Specifically, we are subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental
requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry. We believe that our operations comply, in all material respects, with all applicable environmental regulations. Our operating partners maintain insurance coverage customary to the industry; however, we are not fully insured against all possible environmental risks. Exploratory drilling involves many risks and we may become liable for pollution or other liabilities which may have an adverse effect on our financial position. Drilling operations generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour gas leakage, fire, inability to obtain suitable or adequate machinery, equipment or labour, and other risks are involved. We may become subject to liability for pollution or hazards against which it cannot adequately insure or which it may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations.       15   Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability. The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitably. Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them Our By-laws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or officers. Investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities Our constating documents authorize the issuance of 100,000,000 shares of common stock with a par value of $0.001 and 10,000,000 shares of preferred stock with a par value of $0.001.  In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold.  If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other shareholders.  Further, any such issuance may result in a change in our control. Our By-laws do not contain anti-takeover provisions which could result in a change of our management and directors if there is a take-over of our company We do not currently have a shareholder rights plan or any anti-takeover provisions in our By-laws.  Without any anti-takeover provisions, there is no deterrent for a take-over of our company, which may result in a change in our management and directors. As a result of a majority of our directors and officers are residents of other countries other than the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our company or our directors and officers We do not currently maintain a permanent place of business within the United States.  In addition, a majority of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our company or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Item3.Controls and Procedures. As required by Rule 13a-15 under the Exchange Act, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures as of the end of the period covered by this quarterly report, being March 31, 2006.  This evaluation was carried out under the supervision and with the participation of our company's management, including our company's president and chief executive officer and chief financial officer.  Based upon that evaluation, our company's president and chief executive officer and chief financial officer concluded that our company's disclosure controls and procedures are effective as at the end of the period covered by this report.  There      16   have been no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Exchange Act is accumulated and communicated to management, including our company's president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure. PART II-OTHER INFORMATION Item1.Legal Proceedings. We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 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. Item6.Exhibits.  Exhibit Number
        Description(3)
        (i) Articles of Incorporation; and (ii) Bylaws3.1
        Articles of Incorporation (incorporated by reference from our Registration Statement on Form 10-SB, filed on September 11, 2000).3.2
        Bylaws (incorporated by reference from our Registration Statement on Form 10-SB, filed on September 11, 2000).3.3
        Certificate of Amendment filed with the Secretary of State of Nevada on June 16, 2004 (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 22, 2004).3.4
        Certificate of Amendment filed with the Secretary of State of Nevada on August 6, 2004 (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 22, 2004).(4)
        Instruments defining rights of security holders, including indentures4.1
        2004 Stock Option Plan (incorporated by reference from our Form S-8, filed on October 8, 2004).        17    (10)
        Material Contracts10.1
        Purchase and Sale Agreement dated December 31, 2003 between E-Com Technologies Corporation and Ron Jorgensen (incorporated by reference from our Annual Report on Form 10-KSB filed on April 14, 2004).10.2
        Assignment Agreement with Fort Scott Energy Corp. dated the 5th day of August 2004 (incorporated by reference from our Current Report on Form 8-K filed on September 13, 2004).10.3
        Convertible Debenture dated August 31, 2004 with Fort Scott Energy Corp. (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 22, 2004).10.4
        Share Transfer Agreement dated August 5, 2004 with Fort Scott Energy Corp. (incorporated by reference from our Quarterly Report on Form 10-QSB filed on November 22, 2004).10.5
        Management Agreement dated September 1, 2004 with D. Sharpe Management Inc. (incorporated by reference from our Annual Report on Form 10-KSB filed on April 14, 2005).10.6
        Management Agreement dated September 1, 2004 with Neil Maedel (incorporated by reference from our Annual Report on Form 10-KSB filed on April 14, 2005).10.7
        Form of Subscription Agreement (incorporated by reference from our Form SB-2 filed on May 2, 2005).10.8
        Form of Subscription Agreement with RAB Special Situations LP and Paul Masters (incorporated by reference from our Form SB-2 filed on May 2, 2005).10.9
        Management Consulting Agreement dated May 1, 2005 with Drew Bonnell (incorporated by reference from our Current Report on Form 8-K filed on May 24, 2005).10.10
        Amended Management Consulting Agreement dated May 1, 2005 with D. Sharpe Management Inc. (incorporated by reference from our Current Report on Form 8-K filed on May 24, 2005).10.11
        Amended Management Consulting Agreement dated May 1, 2005 with Neil Maedel (incorporated by reference from our Current Report on Form 8-K filed on May 24, 2005).10.12
        Form of Stock Option Agreement entered into with the following individuals (incorporated by reference from our Quarterly Report on Form 10-QSB filed on August 12, 2005):
Donald SharpeJohn MartinNeil MaedelDrew Bonnell10.13
        Form of Note and Warrant Purchase Agreement dated August 18, 2005 entered into with the following persons (incorporated by reference from our Current Report on Form 8-K filed on August 31, 2005):
RAB Special Situations (Master) Fund Ltd.Cranshire Capital LPDouglas Campbell Jr.SDS Capital Group SPC, Ltd.Nite Capital LPOmicron Master TrustCapital Ventures InternationalCrestview Capital Master, LLCDouble U Master Fund LPIroquois Master Fund Ltd.JGB Capital LPEnable Growth Partners LPEnable Opportunity Partners LP        18    10.14
        Form of Registration Rights Agreement dated August 18, 2005 entered into with the following persons (incorporated by reference from our Current Report on Form 8-K filed on August 31, 2005);
RAB Special Situations (Master) Fund Ltd.Cranshire Capital LPDouglas Campbell Jr.SDS Capital Group SPC, Ltd.Nite Capital LPOmicron Master TrustCapital Ventures InternationalCrestview Capital Master, LLCDouble U Master Fund LPIroquois Master Fund Ltd.JGB Capital LPEnable Growth Partners LPEnable
Opportunity Partners LP10.15
        Form of Convertible Promissory Note entered into with the following persons (incorporated by reference from our Current Report on Form 8-K filed on August 31, 2005):
Cranshire Capital LPDouglas Campbell Jr.SDS Capital Group SPC, Ltd.Nite Capital LPOmicron Master TrustCapital Ventures InternationalCrestview Capital Master, LLCDouble U Master Fund LPIroquois Master Fund Ltd.JGB Capital LPEnable Growth Partners LPEnable Opportunity Partners LP10.16
        Form of Series A Share Purchase Warrant entered into with the following persons (incorporated by reference form our Current Report on Form 8-K filed on August 31, 2005):
Cranshire Capital LPDouglas Campbell Jr.SDS Capital Group SPC, Ltd.Nite Capital LPOmicron Master TrustCapital Ventures InternationalCrestview Capital Master, LLCDouble U Master Fund LPIroquois Master Fund Ltd.JGB Capital L.P.Enable Growth Partners LPEnable Opportunity Partners LP10.17
        Form of Convertible Promissory Note entered into with RAB Special Situations (Master) Fund Ltd. (incorporated by reference from our Registration Statement on Form SB-2 filed on September 28, 2005).10.18
        Form of Series A Share Purchase Warrant entered into with RAB Special Situations (Master) Fund Ltd. (incorporated by reference from our Registration Statement on Form SB-2 filed on September 28, 2005).        19    10.19
        Form of Broker Warrant entered into with the following (incorporated by reference from our Registration Statement on Form SB-2 filed on September 28, 2005):
H.C. Wainwright & Co., Inc.John R. ClarkeScott F. KochEnergy Equities, Inc.Ocean Equities Ltd.10.20
        Participation Agreement with Merganser Limited (incorporated by reference from our Current Report on Form 8-K filed on November 10, 2005).10.21
        Joint Participating Agreement with Chamberlain Exploration Development and Research Stratigraphic Corporation dba Cedar Strat Corporation (incorporated by reference from our Current Report on Form 8-K filed on February 21, 2006).*10.22
        Form of Subscription Agreement entered into with the following individuals (incorporated by reference from our Current Report on Form 8-K filed on February 24, 2006):Keith ReidJohn PevedorosStephen HansonPaul KingJason McCarrollArbutus Gardens Apartments Corp.Epsilon Management Ltd.Conrad WeissYingchun YeMaria PedrosaSara RellingBantry Bay Properties Inc.Barb TurnerC-Quest Holdings Ltd.Avtar DhillonHao TangNeil MaedelDonald RipponPeter RossJohn MartinGregg LaytonDolwar Invest & Trade Corp.Barry MaedelJohn TognettiClarion Finanz AG
        Keats Investments Ltd.Absolute East West FundAlpine Atlantic Asset Mgt., Ltd.La Roche & Co. BanquiersNorene BrownCredit Suisse Securities (USA) LLCStanley CaseChartwell Investment Services S.A.Donna ChudnowClearwaters Management Ltd.Cranshire Capital, LPSwell Capital LimitedCrescent International Ltd.Double U Master Fund Ltd.Andrea EggerEpson Investment Services NVEvergreen Investment CorporationGLG European Opportunity FundGeneral Research GmbHRalph HoggHSBC Guyerzeller Bank AGKaupthing Bank LuxembourgLombard Odier Darier HentschMoen Holdings Inc.Luce Lapointe
        Nite Capital LPGeorge S. PalfiParker Communication Corp.Carolyn Townshend862002 Alberta Ltd.Olivier TurrettiniVeronique RochetteRMB International (Dublin) Ltd.SDS Capital Group SPC, Ltd.Shalimar BusinessSynergy Resource FundUBS AGRupert Edward WilliamsChristian WeyerWinsome Capital Inc.Banque Vontobel Geneve, SAIroquois Master Fund Ltd.Wilma E. BonnellPierce Diversified Strategy Master Fund LLCEnable Opportunity Partners LPEnable Growth Partners LPKimberly LloydPaul Mitchell        20    10.23
        Amended Management Consulting Agreement dated February 28, 2006 and made effective February 1, 2006 with Drew Bonnell (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2006).10.24
        Amended Management Consulting Agreement dated February 28, 2006 and made effective February 1, 2006 with Donald Sharpe (incorporated by reference from our Current Report on Form 8-K filed on March 10, 2006).10.25
        Farmout and Option Agreement with Suncor dated March 7, 2006 (incorporated by reference from our Current Report on Form 8-K filed on March 17, 2006).**10.26
        Management Agreement with Freestone Energy LLC dated May 1, 2006 (incorporated by reference from our Current Report on Form 8-K filed on May 2, 2006)10.27
        Stock Option Agreement with Larry B. Kellison dated May 1, 2006 (incorporated by reference from our Current Report on Form 8-K filed on May 2, 2006)(14)
        Code of Ethics14.1
        Code of Business Conduct and Ethics (incorporated by reference from our Annual Report on Form 10-KSB filed on April 14, 2004).(21)
        SubsidiariesFrontier Explorations Ltd.Southern Frontier Explorations Ltd.(31)
        Rule 13a-14(a)/15d-14(a) Certifications31.1*
        Section 302 Certification under Sarbanes-Oxley Act of 2002 of Donald Sharpe31.2*
        Section 302 Certification under Sarbanes-Oxley Act of 2002 of Drew Bonnell(32)
        Section 1350 Certifications32.1*
        Section 906 Certification under Sarbanes-Oxley Act of 2002 * Filed herewith. **Certain parts of this document have not been disclosed and have been filed separately with the Secretary, Securities and Exchange Commission, and is subject to a confidential treatment request pursuant to Rule 24b-2 of the Securities Exchange Act of 1934. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EDEN ENERGY CORP. By:  /s/ Donald Sharpe Donald Sharpe, President (Principal Executive Officer) May 12, 2006  By:  /s/ Drew Bonnell Drew Bonnell, Secretary, Treasurer and CFO (Principal Financial Officer and Principal Accounting Officer) May 12, 2006