**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

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**FORM        10-QSB/A**

**Amendment      #1**

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**March      31, 2006**

**2-76219-NY**

**VICTORY      ENERGY CORPORATION**

| **NEVADA**                                                                    | **87-0564472**                               |
|-------------------------------------------------------------------------------|----------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) | (I.R.S.                Employer I.D. Number) |

**27762      Antonio Parkway, Suite L1-497, Ladera Ranch, CA 92694**

**(866)      279-9265**

**Victory      Capital Holdings Corporation**

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*Table          of Contents*

**INDEX**

|                                                                                                              | **Page                No.** |
|-------------------------------------------------------------------------------------------------------------------|-----------------------------|
|                                                                                                              |                        |
| **PART                1. FINANCIAL INFORMATION**                                                                  |                        |
|                                                                                                              |                        |
| Item                1. Financial                Statements                                              | 3                           |
|                                                                                                              |                        |
| Consolidated                Balance Sheet, March 31, 2006 (unaudited) and                                         |                        |
| December                31, 2005 (audited)                                                                   | 3                           |
|                                                                                                              |                        |
| Consolidated                Statement of Operations, for the three months                ended March 31, 2006     |                        |
| and                2005, and cumulative from inception to March 31, 2006                (unaudited)          | 4                           |
|                                                                                                              |                        |
| Consolidated                Statement of Stockholders’ Equity (Deficit) for                the period from  |                        |
| January                7, 1982 (inception) through March 31, 2006 (unaudited)                                | 5                           |
|                                                                                                              |                        |
| Consolidated                Statements of Cash Flows, for the three months                ended                   |                        |
| March                31, 2006 and 2005 and cumulative from inception (Jan. 7,                1982)                |                        |
| to                March 31, 2006 (unaudited)                                                                 | 6                           |
|                                                                                                              |                        |
| Notes                to Condensed Financial Statements (unaudited)                                           | 7                           |
|                                                                                                              |                        |
| Item                2. Management’s                Discussion and Analysis or Plan of Operation   | 14                          |
|                                                                                                              |                        |
| Item                3. Controls                and Procedures                                           | 17                          |
|                                                                                                              |                        |
| **PART                II. OTHER INFORMATION**                                                                     |                        |
|                                                                                                              |                        |
| Item                1. Legal                Proceedings                                                 | 18                          |
|                                                                                                              |                        |
| Item                2. Unregistered                Sales of Equity Securities and Use of Proceeds       | 18                          |
|                                                                                                              |                        |
| Item                3. Defaults                Upon Senior Securities                                   | 18                          |
|                                                                                                              |                        |
| Item                4. Submission                of Matters to a Vote of Security Holders               | 18                          |
|                                                                                                              |                        |
| Item                5. Other                Information                                                 | 18                          |
|                                                                                                              |                        |
| Item                6. Exhibits                and Reports on Form 8-K                                  | 19                          |
|                                                                                                              |                        |

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*Table          of Contents*

| VICTORY                ENERGY CORPORATION AND SUBSIDIARIES |
|------------------------------------------------------------|
| (A                Development Stage Company)               |
| Consolidated                Balance Sheets                 |

| **ASSETS**                                                                        |   |   |                         |   |   |                            |   |
|-----------------------------------------------------------------------------------|--------|--------|------------------------------|--------|--------|---------------------------------|--------|
|                                                                                   |   |   | March                    31, |   |   | December                    31, |   |
|                                                                              |   |   | 2006                         |   |   | 2005                            |   |
|                                                                              |   |   | (Unaudited)                  |   |   |                            |   |
| CURRENT                    ASSETS                                                 |   |   |                         |   |   |                            |   |
|                                                                              |   |   |                         |   |   |                            |   |
| Cash                    and Cash Equivalents                                      |   | $      | 28,098                       |   | $      | 4,074                           |   |
| Short                    Term Investments                                         |   |   | 88,300                       |   |   | 88,300                          |   |
| Total                    Curent Assets                                            |   |   | 116,398                      |   |   | 92,374                          |   |
|                                                                              |   |   |                         |   |   |                            |   |
| FIXED                    ASSETS, NET                                              |   |   | 1,096                        |   |   | 1,096                           |   |
|                                                                              |   |   |                         |   |   |                            |   |
| OTHER                    ASSETS                                                   |   |   |                         |   |   |                            |   |
| Deposits                                                                          |   |   | -                            |   |   | -                               |   |
|                                                                              |   |   |                         |   |   |                            |   |
| TOTAL                    ASSETS                                                   |   | $      | 117,494                      |   | $      | 93,470                          |   |
| **LIABILITIES                    & STOCKHOLDERS' DEFICIT**                    |   |   |                         |   |   |                            |   |
|                                                                              |   |   |                         |   |   |                            |   |
|                                                                              |   |   |                         |   |   |                            |   |
| CURRENT                    LIABILITES                                             |   |   |                         |   |   |                            |   |
|                                                                              |   |   |                         |   |   |                            |   |
| Accounts                    Payable                                               |   | $      | 330,970                      |   | $      | 330,970                         |   |
| Accrued                    Liabilities                                            |   |   | -                            |   |   | 11,416                          |   |
| Accrued                    Payroll and Payroll Taxes                              |   |   | 316,006                      |   |   | 240,000                         |   |
| Short                    term notes                                               |   |   | 149,458                      |   |   |                            |   |
| Total                    Curent Liabilities                                       |   |   | 796,434                      |   |   | 582,386                         |   |
|                                                                              |   |   |                         |   |   |                            |   |
| LONG                    TERM LIABILITIES                                          |   |   |                         |   |   |                            |   |
| Notes                    Payable                                                  |   |   | 146,431                      |   |   | 146,431                         |   |
|                                                                              |   |   |                         |   |   |                            |   |
| OTHER                    LIABILITIES                                              |   |   |                         |   |   |                            |   |
| Loan                    from Officer                                              |   |   | 141,721                      |   |   | 83,367                          |   |
| Account                    Payable - Related Party                                |   |   | 172,179                      |   |   | 172,179                         |   |
| Accrued                    Liabilities - Related                                  |   |   | 121,000                      |   |   | 121,000                         |   |
| Total                    Other Liabilities                                        |   |   | 434,900                      |   |   | 376,546                         |   |
|                                                                              |   |   |                         |   |   |                            |   |
| Total                    Liabilities                                              |   |   | 1,377,765                    |   |   | 1,105,363                       |   |
|                                                                              |   |   |                         |   |   |                            |   |
| Commitments                    and contingencies (Note 6)                         |   |   |                         |   |   |                            |   |
|                                                                              |   |   |                         |   |   |                            |   |
| STOCKHOLDERS'                    DEFICIT                                          |   |   |                         |   |   |                            |   |
| Common                    Stock, $0.001 par value, 200,000,000 shares authorized, |   |   |                         |   |   |                            |   |
| 59,543,592                    issued and outstanding                              |   |   | 59,544                       |   |   | 41,960                          |   |
| Additonal                    paid-in capital                                      |   |   | 3,202,020                    |   |   | 2,692,104                       |   |
| Deficit                    accumulated in the development stage                   |   |   | (4,521,835                   | )      |   | (3,745,957                      | )      |
|                                                                              |   |   |                         |   |   |                            |   |
| Total                    Stockholders' Deficit                                    |   |   | (1,260,271                   | )      |   | (1,011,893                      | )      |
|                                                                              |   |   |                         |   |   |                            |   |
| TOTAL                    LIABILITIES AND STOCKHOLDERS' DEFICIT                    |   | $      | 117,494                      |   | $      | 93,470                          |   |

----

*Table          of Contents*

| VICTORY                ENERGY CORPORATION AND SUBSIDIARIES |
|------------------------------------------------------------|
| (A                Development Stage Company)               |
| Consolidated                Statement of Operations        |
| (Unaudited)                                                |

| ** **                                                     | ** ** | ** **                                      | ** ** | ** **                                   | ** ** | **For                          the period** | ** ** |
|----------------------------------------------------------------|------------|-------------------------------------------------|------------|----------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                                     | ** ** | ** **                                      | ** ** | ** **                                   | ** ** | **of                          Inception,**  | ** ** |
| ** **                                                     | ** ** | **For                          the**            |       | **from                          January 2,** |       |
|                                                           |       | **Three                          Months Ended** |       | **1982                          through**    |       |
|                                                           |       | **March                          31,**          |       | **March                          31,**       |       |
|                                                           |       | **2006**                                        |       | **2005**                                     | ** ** | **2006**                                    |       |
|                                                           |       |                                            |       |                                         |       |                                        |       |
|                                                           |       |                                            |       |                                         |       |                                        |       |
| Revenues                                                       |       | $                                               | -          |                                         | $          | -                                           |       | $ | 20,207 |   |
|                                                           |       |                                            |       |                                         |       |                                        |       |   |   |   |
| Costs                          and Expenses                    |       |                                            |       |                                         |       |                                        |       |   |   |   |
|                                                           |       |                                            |       |                                         |       |                                        |       |   |   |   |
| Consulting                          Expense                    |       |                                            | 600,240    |                                         |       |                                        |       |   | 3,339,831 |   |
| Land                          Leases                           |       |                                            | 25,000     |                                         |       |                                        |       |   | 25,000 |   |
| Wages                          and Salaries                    |       |                                            | 22,500     |                                         |       |                                        |       |   | 270,500 |   |
| General                          & Administrative          |       |                                            | 128,138    |                                         |       | 26,421                                      |       |   | 809,544 |   |
|                                                           |       |                                            |       |                                         |       |                                        |       |   |   |   |
| Total                          Expenses                        |       |                                            | 775,878    |                                         |       | 26,421                                      |       |   | 4,444,875 |   |
|                                                           |       |                                            |       |                                         |       |                                        |       |   |   |   |
| Operating                          Loss                        |       |                                            | (775,878   | )                                            |       | (26,421                                     | )          |   | (4,424,668 | ) |
|                                                           |       |                                            |       |                                         |       |                                        |       |   |   |   |
| Other                          Income and (expenses)           |       |                                            |       |                                         |       |                                        |       |   |   |   |
|                                                           |       |                                            |       |                                         |       |                                        |       |   |   |   |
| Loss                          on abandonment of subsidiary     |       |                                            |       |                                         |       |                                        |       |   | (50,900 | ) |
| Loss                          from reduction in debt           |       |                                            |       |                                         |       |                                        |       |   | (48,363 | ) |
| Other                          Income                          |       |                                            |       |                                         |       | (177                                        | )          |   | 2,096 |   |
|                                                           |       |                                            |       |                                         |       |                                        |       |   |   |   |
| Net                          Loss                              |       | $                                               | (775,878   | )                                            | $          | (26,598                                     | )          | $ | (4,521,835 | ) |
|                                                           |       |                                            |       |                                         |       |                                        |       |   |   |   |
| Basic                          and Dilutive net loss per share |       | $                                               | (0.01      | )                                            | $          | (0.00                                       | )          | $ |  |   |
|                                                           |       |                                            |       |                                         |       |                                        |       |   |   |   |
| Weighted                          average number               |       |                                            |       |                                         |       |                                        |       |   |   |   |
| of                          shares outstanding                 |       |                                            | 55,574,019 |                                         |       | 22,100,258                                  |       |   |   |   |

----

*Table          of Contents*

| VICTORY                ENERGY CORPORATION AND SUBSIDIARIES              |
|-------------------------------------------------------------------------|
| (A                Development Stage Company)                            |
| Consolidated                Statement of Stockholders' Equity (Deficit) |

|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|-------------|--------|-----------------|--------|-----------------|-----------|-----------|--------|
|                                                                                                                     |   |                              |       |        |   |            |   | **Accumulated** |      |      |   |
|                                                                                                                     |   |                              |       |        |   |            |   | **Deficit**     |      |      |   |
|                                                                                                                     |   |                              |       |        |   | **Additional**  |   | **During**      |      |      |   |
|                                                                                                                     |   | **Common                  Stock** |       | **Paid-in** |   | **Development** |   |            |      |
|                                                                                                                     |   | **Shares**                        |       | **Amount**  |   | **Capital**     |   | **Stage**       |      | **Total** |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |
| Balances                  at January 7, 1982                                                                             |   |                              | -          |        | $      | -               |   | $               | -         |      | $      | - |   | $ | - |   |
| Common                  stock issued for cash at $7.50 per share                                                         |   |                              | 6,000      |        |   | 6               |   |            | 45,000    |      |   | - |   |   | 45,006 |   |
| Common                  stock issued for cash at $0.39 per share                                                         |   |                              | 168,503    |        |   | 169             |   |            | 65,819    |      |   | - |   |   | 65,988 |   |
| Net                  loss from inception Jan 7, 1982 to Dec. 31, 1982                                                    |   |                              | -          |        |   | -               |   |            | -         |      |   | (39,597 | ) |   | (39,597 | ) |
| Balances                  at Dec. 31, 1982                                                                               |   |                              | 174,503    |        |   | 175             |   |            | 110,819   |      |   | (39,597 | ) |   | 71,397 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss for the year ended Dec. 31, 1983                                                               |   |                              | -          |        |   | -               |   |            | -         |      |   | (71,397 | ) |   | (71,397 | ) |
| Balances                  at Dec. 31, 1983                                                                               |   |                              | 174,503    |        |   | 175             |   |            | 110,819   |      |   | (110,994 | ) |   | (0 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Common                  stock issued for cash at $25.00 per share                                                        |   |                              | 57         |        |   | 0               |   |            | 1,425     |      |   | - |   |   | 1,425 |   |
| Common                  stock issued for cash at $25.00 per share                                                        |   |                              | 3          |        |   | 0               |   |            | 75        |      |   | - |   |   | 75 |   |
| Common                  stock issued for cash at $0.025 per share                                                        |   |                              | 1,580,000  |        |   | 1,580           |   |            | 38,373    |      |   | - |   |   | 39,953 |   |
| Net                  loss - FYE 12/31/84                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1984                                                                               |   |                              | 1,754,563  |        |   | 1,755           |   |            | 150,692   |      |   | (110,994 | ) |   | 41,453 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Cancellation                  of common stock                                                                            |   |                              | (1,296,132 | )           |   | (1,297          | )      |            |      |      |   |   |   |   | (1,297 | ) |
| Net                  loss - FYE 12/31/85                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1985                                                                               |   |                              | 458,431    |        |   | 458             |   |            | 150,692   |      |   | (110,994 | ) |   | 40,156 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/86                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1986                                                                               |   |                              | 458,431    |        |   | 458             |   |            | 150,692   |      |   | (110,994 | ) |   | 40,156 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/87                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1987                                                                               |   |                              | 458,431    |        |   | 458             |   |            | 150,692   |      |   | (110,994 | ) |   | 40,156 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/88                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1988                                                                               |   |                              | 458,431    |        |   | 458             |   |            | 150,692   |      |   | (110,994 | ) |   | 40,156 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/89                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1989                                                                               |   |                              | 458,431    |        |   | 458             |   |            | 150,692   |      |   | (110,994 | ) |   | 40,156 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/90                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1990                                                                               |   |                              | 458,431    |        |   | 458             |   |            | 150,692   |      |   | (110,994 | ) |   | 40,156 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/91                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1991                                                                               |   |                              | 458,431    |        |   | 458             |   |            | 150,692   |      |   | (110,994 | ) |   | 40,156 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/92                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1992                                                                               |   |                              | 458,431    |        |   | 458             |   |            | 150,692   |      |   | (110,994 | ) |   | 40,156 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/93                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | - |   |   | - |   |
| Balances                  at Dec. 31, 1993                                                                               |   |                              | 458,431    |        |   | 458             |   |            | 150,692   |      |   | (110,994 | ) |   | 40,156 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Cancellation                  of common stock                                                                            |   |                              | (316,000   | )           |   | (316            | )      |            |      |      |   |   |   |   | (316 | ) |
| Net                  loss - FYE 12/31/94                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (6,656 | ) |   | (6,656 | ) |
| Balances                  at Dec. 31, 1994                                                                               |   |                              | 142,431    |        |   | 142             |   |            | 150,692   |      |   | (117,650 | ) |   | 33,184 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Common                  stock issued for cash at $0.001 per share                                                        |   |                              | 2,357,895  |        |   | 2,359           |   |            | -         |      |   | - |   |   | 2,359 |   |
| Net                  loss - FYE 12/31/95                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (49,097 | ) |   | (49,097 | ) |
| Balances                  at Dec. 31, 1995                                                                               |   |                              | 2,500,326  |        |   | 2,500           |   |            | 150,692   |      |   | (166,747 | ) |   | (13,555 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Common                  stock issued for cash at $0.001 per share                                                        |   |                              | 120,000    |        |   | 120             |   |            | -         |      |   | - |   |   | 120 |   |
| Net                  loss - FYE 12/31/96                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (1,681 | ) |   | (1,681 | ) |
| Balances                  at Dec. 31, 1996                                                                               |   |                              | 2,620,326  |        |   | 2,620           |   |            | 150,692   |      |   | (168,428 | ) |   | (15,116 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/97                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (3,517 | ) |   | (3,517 | ) |
| Balances                  at Dec. 31, 1997                                                                               |   |                              | 2,620,326  |        |   | 2,620           |   |            | 150,692   |      |   | (171,945 | ) |   | (18,633 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/98                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (2,479 | ) |   | (2,479 | ) |
| Balances                  at Dec. 31, 1998                                                                               |   |                              | 2,620,326  |        |   | 2,620           |   |            | 150,692   |      |   | (174,424 | ) |   | (21,112 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/99                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (6,307 | ) |   | (6,307 | ) |
| Balances                  at Dec. 31, 1999                                                                               |   |                              | 2,620,326  |        |   | 2,620           |   |            | 150,692   |      |   | (180,731 | ) |   | (27,419 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/00                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (9,011 | ) |   | (9,011 | ) |
| Balances                  at Dec. 31, 2000                                                                               |   |                              | 2,620,326  |        |   | 2,620           |   |            | 150,692   |      |   | (189,742 | ) |   | (36,430 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Net                  loss - FYE 12/31/01                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (19,461 | ) |   | (19,461 | ) |
| Balances                  at Dec. 31, 2001                                                                               |   |                              | 2,620,326  |        |   | 2,620           |   |            | 150,692   |      |   | (209,203 | ) |   | (55,891 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Contributed                  capital for rent and other compensation                                                     |   |                              | -          |        |   | -               |   |            | 1,950     |      |   | - |   |   | 1,950 |   |
| Net                  loss - FYE 12/31/02                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (13,960 | ) |   | (13,960 | ) |
| Balances                  at Dec. 31, 2002                                                                               |   |                              | 2,620,326  |        |   | 2,620           |   |            | 152,642   |      |   | (223,163 | ) |   | (67,901 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Contributed                  capital for rent and officer compensation                                                   |   |                              | -          |        |   | -               |   |            | 488       |      |   | - |   |   | 488 |   |
| Capital                  contributed by shareholders through forgiveness                                                 |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| of                  accounts payable and interest                                                                        |   |                              |       |        |   | -               |   |            | 77,415    |      |   | - |   |   | 77,415 |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Common                  stock issued for services $0.025 per share                                                       |   |                              | 13,389,932 |        |   | 13,390          |   |            | 321,358   |      |   | - |   |   | 334,748 |   |
| Common                  stock issued for legal services at $0.61 per sh.                                                 |   |                              | 100,000    |        |   | 100             |   |            | 60,900    |      |   | - |   |   | 61,000 |   |
| Common                  stock issued for consulting services at $0.47                                                    |   |                              | 10,000     |        |   | 10              |   |            | 4,690     |      |   | - |   |   | 4,700 |   |
| Net                  loss - FYE 12/31/03                                                                                 |   |                              | -          |        |   | -               |   |            | -         |      |   | (592,962 | ) |   | (592,962 | ) |
| Balances                  at Dec. 31, 2003                                                                               |   |                              | 16,120,258 |        |   | 16,120          |   |            | 617,493   |      |   | (816,125 | ) |   | (182,512 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Common                  stock issued for services at $0.16 per share                                                     |   |                              | 1,000,000  |        |   | 1,000           |   |            | 159,000   |      |   | - |   |   | 160,000 |   |
| Common                  stock issued for services at $0.17 per share                                                     |   |                              | 1,800,000  |        |   | 1,800           |   |            | 304,200   |      |   | - |   |   | 306,000 |   |
| Common                  stock issued for services at $0.165 per share                                                    |   |                              | 800,000    |        |   | 800             |   |            | 131,200   |      |   | - |   |   | 132,000 |   |
| Common                  stock issued for services at $0.215 per share                                                    |   |                              | 30,000     |        |   | 30              |   |            | 6,420     |      |   | - |   |   | 6,450 |   |
| Common                  stock issued for debt at $0.45 per share                                                         |   |                              | 150,000    |        |   | 150             |   |            | 67,350    |      |   | - |   |   | 67,500 |   |
| Common                  stock issued for services at $0.40 per share                                                     |   |                              | 300,000    |        |   | 300             |   |            | 119,700   |      |   | - |   |   | 120,000 |   |
| Common                  stock issued for services at $0.34 per share                                                     |   |                              | 700,000    |        |   | 700             |   |            | 237,300   |      |   | - |   |   | 238,000 |   |
| Common                  stock issued for services at $0.41 per share                                                     |   |                              | 300,000    |        |   | 300             |   |            | 122,700   |      |   | - |   |   | 123,000 |   |
| Common                  stock issued for services at $0.27 per share                                                     |   |                              | 300,000    |        |   | 300             |   |            | 80,700    |      |   | - |   |   | 81,000 |   |
| Common                  stock issued for services at $0.22 per share                                                     |   |                              | 600,000    |        |   | 600             |   |            | 131,400   |      |   | - |   |   | 132,000 |   |
| Net                  loss - FYE 12/31/04                                                                                 |   |                              |       |        |   |            |   |            |      |      |   | (1,606,057 | ) |   | (1,606,057 | ) |
| Balances                  at Dec. 31, 2004                                                                               |   |                              | 22,100,258 |        |   | 22,100          |   |            | 1,977,463 |      |   | (2,422,182 | ) |   | (422,619 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Contributed                  capital for general and administrative expenses                                             |   |                              |       |        |   |            |   |            | 138,701   |      |   |   |   |   | 138,701 |   |
| Common                  stock issued for services at $0.03 per share                                                     |   |                              | 19,860,000 |        |   | 19,860          |   |            | 575,940   |      |   |   |   |   | 595,800 |   |
| Net                  loss for the year ended December 31, 2005                                                           |   |                              |       |        |   |            |   |            |      |      |   | (1,323,775 | ) |   | (1,323,775 | ) |
| Balances                  at December 31, 2005                                                                           |   |                              | 41,960,258 |        |   | 41,960          |   |            | 2,692,104 |      |   | (3,745,957 | ) |   | (1,011,893 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| Common                  stock issued for services at $0.09 per share                                                     |   |                              | 17,583,334 |        |   | 17,584          |   |            | 509,916   |      |   |   |   |   | 527,500 |   |
| Net                  loss for the three months ended March 31, 2006                                                      |   |                              |       |        |   |            |   |            |      |      |   | (775,878 | ) |   | (775,878 | ) |
| Balances                  at March 31, 2006                                                                              |   |                              | 59,543,592 |        |   | 59,544          |   |            | 3,202,020 |      |   | (4,521,835 | ) |   | (1,260,271 | ) |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
|                                                                                                                     |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these consolidated financial                  statements |   |                              |       |        |   |            |   |            |      |      |   |   |   |   |   |   |

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| VICTORY                ENERGY CORPORATION AND SUBSIDIARIES |
|------------------------------------------------------------|
| (A                Development Stage Company)               |
| Consolidated                Statements of Cash Flows       |

|                                                                             |   |   |                                                |   |   |                                  |   |   | **From**                               |   |
|----------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------|--------|--------|---------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                             |   |   |                                                |   |   |                                  |   |   | **Inception                      on**  |   |
|                                                                             |   |   | **For                      the Three Months Ended** |   |   | **Jan.                      7, 1982** |   |
|                                                                             |   |   | **March                      31,**                  |   |   | **Through**                           |   |
|                                                                             |   |   | **2006**                                            |   |   | **2005**                              |   |   | **Mar.                      31, 2006** |   |
| CASH                      FLOWS FROM OPERATING ACTIVITIES:                       |   |   |                                                |   |   |                                  |   |   |                                   |   |
| Net                      Loss                                                    |   | $      | (775,878                                            | )      | $      | (26,598                               | )      | $      | (4,521,835                             | )      |
| Adjustments                      to reconcile net loss to net cash               |   |   |                                                |   |   |                                  |   |   |                                   |   |
| used                      by operating activities:                               |   |   |                                                |   |   |                                  |   |   |                                   |   |
| Depreciation                                                                |   |   |                                                |   |   | 115                                   |   |   | 1,198                                  |   |
| Loss                      on extinguishment of debt                         |   |   |                                                |   |   |                                  |   |   | 48,363                                 |   |
| Decrease                      (Increase) in Prepaid Expenses                |   |   |                                                |   |   | 247                                   |   |   |                                   |   |
| Increase                      in accounts payable                           |   |   |                                                |   |   |                                  |   |   | 330,970                                |   |
| Increase                      (Decrease) in accrued liabilities             |   |   | (11,416                                             | )      |   | 177                                   |   |   |                                   |   |
| Increase                      in Accrued Payroll and Payroll Taxes          |   |   | 76,006                                              |   |   |                                  |   |   | 316,006                                |   |
| Repayment                      of long term debt                            |   |   |                                                |   |   |                                  |   |   | (13,569                                | )      |
| Increase                      in Accrued Liabilities - Related              |   |   |                                                |   |   | 16,122                                |   |   | 121,000                                |   |
| Common                      Stock issued for services rendered              |   |   | 527,500                                             |   |   |                                  |   |   | 2,804,876                              |   |
| Non-cash                      contributed capital                           |   |   |                                                |   |   |                                  |   |   | (524                                   | )      |
|  Net                      Cash provided by (used by)                        |   |   |                                                |   |   |                                  |   |   |                                   |   |
|  Operating                      Activities                                  |   |   | (183,788                                            | )      |   | (9,937                                | )      |   | (913,515                               | )      |
| CASH                      FLOWS FROM INVESTING ACTIVITIES                        |   |   |                                                |   |   |                                  |   |   |                                   |   |
| Purchase                      of Fixed Assets                                    |   |   |                                                |   |   |                                  |   |   | (2,294                                 | )      |
| Purchase                      of Marketable Securities                           |   |   |                                                |   |   |                                  |   |   | (88,300                                | )      |
|  Net                      Cash (used by) Investing Activities               |   |   | 0                                                   |   |   | 0                                     |   |   | (90,594                                | )      |
|                                                                             |   |   |                                                |   |   |                                  |   |   |                                   |   |
| CASH                      FLOWS FROM FINANCING ACTIVITIES                        |   |   |                                                |   |   |                                  |   |   |                                   |   |
| Proceeds                      of Note Payable                                    |   |   |                                                |   |   |                                  |   |   | 160,000                                |   |
| Proceeds                      from Loans                                         |   |   |                                                |   |   | 10,000                                |   |   |                                   |   |
| Proceeds                      of Loan from Officer                               |   |   | 58,354                                              |   |   |                                  |   |   | 141,721                                |   |
| Proceeds                      of Note Payable-Related Party                      |   |   |                                                |   |   |                                  |   |   | 172,179                                |   |
| Issuance                      of common stock for cash                           |   |   | 149,458                                             |   |   |                                  |   |   | 41,960                                 |   |
| Proceeds                      from the sale of Common Stock                      |   |   |                                                |   |   |                                  |   |   | 300,231                                |   |
| Contributed                      Capital by shareholders                         |   |   |                                                |   |   | -                                     |   |   | 216,116                                |   |
|  Net                      Cash provided by Financing Activities             |   |   | 207,812                                             |   |   | 10,000                                |   |   | 1,032,207                              |   |
|                                                                             |   |   |                                                |   |   |                                  |   |   |                                   |   |
| NET                      INCREASE IN CASH                                        |   |   | 24,024                                              |   |   | 63                                    |   |   | 28,098                                 |   |
| CASH                      AT BEGINNING OF PERIOD                                 |   |   | 4,074                                               |   |   | -                                     |   |   | -                                      |   |
| CASH                      AT END OF PERIOD                                       |   | $      | 28,098                                              |   | $      | 63                                    |   | $      | 28,098                                 |   |
|                                                                             |   |   |                                                |   |   |                                  |   |   |                                   |   |
| CASH                      PAID FOR:                                              |   |   |                                                |   |   |                                  |   |   |                                   |   |
|  Interest                                                                   |   | $      | -                                                   |   | $      | -                                     |   | $      | -                                      |   |
|  Income                      Taxes                                          |   | $      | -                                                   |   | $      | -                                     |   | $      | -                                      |   |
|                                                                             |   |   |                                                |   |   |                                  |   |   |                                   |   |
| SUPPLEMENTAL                      DISCLOSURE OF CASH FLOW INFORMATION            |   |   |                                                |   |   |                                  |   |   |                                   |   |
|  Proceeds                      from the sale of Common Stock                |   | $      | -                                                   |   | $      | -                                     |   | $      | 300,231                                |   |
|  Contributed                      Capital by shareholders                   |   |   |                                                |   |   | -                                     |   |   | 216,116                                |   |
|  Stock                      issued for services                             |   |   |                                                |   |   |                                  |   |   | 2,804,876                              |   |
|  Contributed                      capital for rent and officer compensation |   |   | -                                                   |   |   | -                                     |   |   | 2,438                                  |   |
|  Other                      contributed capital                             |   |   | -                                                   |   |   | -                                     |   |   | 45,401                                 |   |

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**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS **

** **

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|                                                        |   | **2006** |                       | **2005** |   |
|-------------------------------------------------------------|--------|----------|----------------------------|----------|--------|
| Numerator:                                                  |   |     |                       |     |   |   |   |
|                                                        |   |     |                       |     |   |   |   |
| Basic                  and diluted net loss per share:      |   |     |                       |     |   |   |   |
| Net                  Loss               |   | $        | (                  775,878 | )        | $      | (                  26,598 | ) |
|                                                        |   |     |                       |     |   |   |   |
| Denominator                                                 |   |     |                       |     |   |   |   |
|                                                        |   |     |                       |     |   |   |   |
| Basic                  and diluted weighted average         |   |     |                       |     |   |   |   |
| number                  of shares outstanding     |   |     | 55,574,019                 |     |   | 22,100,258 |   |
|                                                        |   |     |                       |     |   |   |   |
|                                                        |   |     |                       |     |   |   |   |
| Basic                  and Diluted Net Loss Per Share  |   | $        | (0.01                      | )        | $      | (0.00 | ) |

| **Description**                               | **Years** |
|-----------------------------------------------|-----------|
|                                          |      |
| Furniture                and fixtures         | 7         |
| Computer                hardware and software | 3-5       |

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

**Our      Business**

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**Current      Business of the Company**

|   | 1. | A                percentage of the Company’s ownership interest may be sold off until we                own a percentage of the prospect with no out-of-pocket expenses required                from us; or |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | We                may seek to raise between $1 million and $4 million to finance each                respected prospect in its entirety. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------|

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**Plan      of Operation**

**Results      of Operations for Period Ended March 31, 2006**

**Liquidity      and Capital Resources**

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**Item      3. Controls and Procedures**

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**PART      II - OTHER INFORMATION**

**Item      1. Legal Proceedings**

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

**Item      3. Defaults Upon Senior Securities**

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

**Item      5. Other Information.**

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**Item      6. Exhibits and Reports on Form 8-K**

|   | **Exhibit              No.** |   | **Description of              Exhibit** |
|--------|------------------------------|--------|-----------------------------------------|
|   | 31 |   | Certification                of Chief Executive/Financial Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002 |
|--------|----|--------|--------------------------------------------------------------------------------------------------------------------------------------------|
|   | 32  |   | Certification                of Chief Executive/Financial Officer pursuant to Section                906 |
|--------|----------|--------|----------------------------------------------------------------------------------------------------------|

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**SIGNATURE**

|                            |                                                                                                          |                                 |
|---------------------------------|---------------------------------------------------------------------------------------------------------------|--------------------------------------|
|                            | **Victory                Energy Corporation**                                                                 |
|                       |                                                                                                     |                            |
| Date:              May 23, 2006 | By:                                                                                                 | /s/ Jon              Fullenkamp |
|                            | Jon              Fullenkamp                                                                                   |
|                            | Chief                Executive Officer, Principal Financialand                Accounting Officer and Director |

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