UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

 [xx] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
              OF 1934 FOR THE TRANSITION PERIOD FROM ____ TO ____

                        Commission file Number: 000-33499

                               FIDELIS ENERGY INC.
                 (Name of small business issuer in its charter)
                                     Nevada
         (State or other jurisdiction of incorporation or organization)

                                   16-1599721
                     (I.R.S. Employer Identification Number)

            9595 Wilshire Blvd., Suite 900, Beverly Hills, CA, 90212
                    (Address of principal executive offices)
                                 (310) 300-4062
                           (Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Shares

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. [X] Yes [ ] No

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the best of Issuer's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.
[X]

At March 1, 2006, the aggregate  market value of the voting and non-voting stock
held by non-affiliates of the registrant was approximately $ 13,174,921 based on
the closing  trade  reported on the OTC BB.  Shares of common stock held by each
officer and  director  and by each  person who owns five  percent or more of the
outstanding common stock have been excluded from this calculation as such person
may be considered to be affiliated  with the Company.  As of March 1, 2006,  the
number of shares  outstanding of the  registrant's  Common Stock was 148,584,354
including 54,000,000 of treasury stock issued on November 17, 2005.

Transitional Small Business Disclosure Format (Check one):  Yes ____; No __X__




<PAGE>


                                TABLE OF CONTENTS




PART I                                                                         1

Item 1.  Business                                                              1

Item 1a.  Risk Factors                                                         1

Item 2.  Properties                                                            9

Item 3.  Legal Proceedings                                                    13

Item 4.  Submission of Matters to a Vote of Security Holders                  13

PART II                                                                       14

Item 5.  Market for Registrant's Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities                             14

Item 6.  Selected Financial Data                                              15

Item 7.  Management's discussion and analysis of Financial
Condition and Results of Operations                                           16

Item 7A. Quantitative and Qualitative Disclosures about market risk           19

Item 8.  Financial Statements                                                 19

Item 9.  Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure                                           39

Item 9A.  Controls and Procedures                                             39

PART III                                                                      39


Item 10.  Directors and Executive Officers of the Registrant.                 39

Item 11. Executive Compensation                                               42

Item 12.  Security Ownership of Certain Beneficial owners and Management      43

Item 13.  Certain  Relationships and Related Transactions                     43

Item 14.  Principal Accounting Fees and Services                              44

PART IV                                                                       44

Item 15. Exhibits and Reports on 8-K                                          44









<PAGE>



PART I

Item 1.  Business

COMPANY HISTORY

Fidelis Energy Inc. ("Fidelis" or "the Company") was incorporated under the laws
of the State of Nevada on November 6, 2000. The Company was originally formed to
engage primarily in the business of providing comparative automobile information
via the Internet and printed  materials.  The Company was not  successful in its
plans and during the 2nd quarter of 2003 changed the business plan.

The Company is in the oil and gas industry.  The Company's  primary objective is
to  identify,  acquire  and develop  working  interest  percentages  in smaller,
underdeveloped oil and gas projects in California,  Texas and Canada that do not
fit the  portfolio  requirements  of the larger  producers and  developers.  The
Company intends to acquire smaller,  underdeveloped  working interests,  royalty
interests and/or producers,  often under control of small family-owned operators
who are  interested  in selling  out.  Through  analyzing  information  obtained
through  modern  development  techniques  such as  horizontal  drilling  and 3-D
seismic,  production from these under developed and under utilized  projects can
often be  increased.  The  Company  acquires  projects  following  positive  due
diligence examinations.

Item 1a.  Risk Factors

GENERAL RISK FACTORS

WE WILL NOT BE ABLE TO DEVELOP OUR  PROPERTIES  OR MAKE  ACQUISITIONS  IF WE ARE
UNABLE TO GENERATE SUFFICIENT CASH FLOW OR RAISE CAPITAL.

We will be  required to make  substantial  capital  expenditures  to develop our
existing  reserves and to discover new oil and gas  reserves.  Historically,  we
have financed these  expenditures  primarily with proceeds from the sale of debt
and equity  securities.  As of  December  31,  2005,  we had cash on hand in the
amount of $232,758.  These funds are not  sufficient to meet our  obligations in
connection with the oil and gas  exploration  and development  interests that we
have  purchased.  In order to meet these  obligations  or acquire any additional
business  interest,  we will have to raise additional funds. We also make offers
to  acquire  oil and  natural  gas  properties  in the  ordinary  course  of our
business.  If  these  offers  are  accepted,  our  capital  needs  may  increase
substantially.

We have  arrangements for limited financing and we can provide no assurance that
we will be able  to  obtain  the  additional  required  financing  when  needed.
Obtaining additional  financing will be subject to a number of factors,  such as
market conditions, investor acceptance of potential business assets and investor
sentiment.  These factors may make the timing,  amount,  terms and conditions of
additional financing unattractive or unavailable to us. If we are not successful
in achieving  financing in the amount necessary to meet our present  obligations
in connection  with the oil and gas interests  that we have acquired or business
interests that we may acquire,  implementation  of our business plan may fail or
be delayed.

WE DO NOT CONTROL ALL OF OUR OPERATIONS

We do not operate any of our properties and we therefore have limited  influence
over the testing, drilling and production operations of our properties. Our lack
of control could result in the following:

                                                                               1
<PAGE>

1.                  the operator  initiating  exploration  or  development  on a
                    faster or slower pace than we prefer;

2.                  the  operator  proposing  to drill  more wells or build more
                    facilities  on a project  than we have  funds for or that we
                    deem  appropriate,  which  could  mean that we are unable to
                    participate   in  the  project  or  share  in  the  revenues
                    generated  by the  project  even though we paid our share of
                    exploration  costs,  and we could have our working  interest
                    ownership  in  the  related  lands  and  petroleum  reserves
                    reduced  as a  result  of  our  failure  to  participate  in
                    development expenditures; and;

3.                  losses from an operator  refusing to initiate a project on a
                    timely basis.

Any of these events could materially reduce the value of our properties.


WE MAY NOT BE ABLE TO FINANCE FUTURE NEEDS OR ADAPT OUR BUSINESS PLAN TO CHANGES
BECAUSE OF RESTRICTIONS PLACED ON US BY THE INSTRUMENTS GOVERNING OUR DEBT.

Our agreements  with the selling  stockholders  who purchased our senior secured
convertible  promissory  notes contain various  covenants that limit our ability
to, among other things:

1.                  pay dividends on our common stock,  redeem or repurchase our
                    common stock or other equity security;

2.                  sell assets; and

3.                  issue any  securities  that rank pari passu or senior to the
                    senior secured  convertible  promissory notes that we issued
                    to the selling stockholders.

Our ability to comply with such  covenants  may be affected by events beyond our
control,  including  prevailing  economic,  financial  and industry  conditions.
Additionally,  our agreements  with the selling  stockholders  contain  numerous
affirmative covenants,  including covenants regarding reporting requirements and
compliance with applicable laws and regulations. Additional debt we incur in the
future may subject us to future covenants.

Our failure to comply with these  covenants  could result in a default under the
agreements governing the relevant debt. In addition,  if any such default is not
cured or waived, the default could result in an acceleration of debt under other
debt  instruments that contain cross  acceleration or cross-default  provisions,
which  could  require us to repay or  repurchase  debt,  together  with  accrued
interest,  prior to the date it otherwise is due and that could adversely affect
our  financial  condition.  If a default  occurs  under the notes,  the  selling
stockholders could cause all of the outstanding debt obligations under the notes
to  become  due and  payable.  Upon a  default  or  cross-default,  the  selling
stockholders could proceed against the collateral. Even if we are able to comply
with all of the applicable covenants,  the restrictions on our ability to manage
our  business in our sole  discretion  could  adversely  affect our business by,
among other  things,  limiting  our  ability to take  advantage  of  financings,
mergers, acquisitions and other corporate opportunities that we believe would be
beneficial to us.

                                                                               2
<PAGE>

IF WE ARE  UNABLE TO ACCESS OUR  PROPERTIES  OR CONDUCT  OUR  OPERATIONS  DUE TO
SURFACE CONDITIONS, OUR BUSINESS WILL BE ADVERSELY AFFECTED.

Our  exploitation  and development of oil and natural gas reserves  depends upon
access to the areas  where our  operations  are to be  conducted.  We  conduct a
portion of our operations in northern regions where we are only able to do so on
a seasonal basis.  Unless the surface is sufficiently  frozen,  we are unable to
access our properties,  drill or otherwise conduct our operations as planned. In
addition,  if the  surface  thaws  earlier  than  expected,  we must  cease  our
operations for the season  earlier than planned.  Our operations are affected by
road bans  imposed  from time to time during the break-up and thaw period in the
spring.  Road bans are also imposed due to snow, mud and rock slides and periods
of high  water,  which  can  restrict  access to our well  sites and  production
facility  sites. In recent years,  winters in our northern  operating areas have
been warmer than normally  experienced and, as a result,  our operating  seasons
have been shorter than in the past. Our inability to access our properties or to
conduct our  operations as planned will result in a shutdown or slow down of our
operations, which will adversely affect our business.

IF WE ARE NOT ABLE TO EFFECTIVELY  MANAGE OUR ANTICIPATED  EXPANSION AND GROWTH,
OUR BUSINESS AND FINANCIAL CONDITION WILL BE NEGATIVELY AFFECTED.

We have  recently  expanded our business  operations.  Any future  growth in our
business may place significant  strain on our limited managerial and operational
resources.  We  cannot  assure  you that we will be able to  implement  adequate
controls over the risks associated with our planned expansion.  If we are unable
to effectively  manage expanded  operations,  our revenues may not  concurrently
increase  with rising costs of  operations  and our business  will be negatively
affected.

OUR COMPLIANCE WITH THE  SARBANES-OXLEY  ACT AND SEC RULES  CONCERNING  INTERNAL
CONTROLS MAY BE TIME CONSUMING, DIFFICULT AND COSTLY FOR US.

It may be time  consuming,  difficult and costly for us to develop and implement
the internal controls and reporting  procedures  required by the  Sarbanes-Oxley
Act. We may need to hire additional financial  reporting,  internal controls and
other  finance  staff in order to develop  and  implement  appropriate  internal
controls and reporting procedures.  If we are unable to comply with the internal
controls  requirements of the  Sarbanes-Oxley  Act, we may not be able to obtain
the independent  accountant  certifications that the Sarbanes-Oxley Act requires
publicly-traded companies to obtain.

RISKS RELATED TO OUR INDUSTRY

OIL AND NATURAL GAS PRICES ARE VOLATILE AND LOW PRICES WILL ADVERSELY AFFECT OUR
BUSINESS.

Fluctuations  in the prices of oil and natural  gas will affect many  aspects of
our business, including:

                  1. revenues, cash flow and earnings;

                  2. ability to attract capital to finance our operations;

                  3. cost of capital; and

                  4. the value of our oil and natural gas properties.

                                                                               3
<PAGE>

Both  oil and  natural  gas  prices  are  extremely  volatile.  Oil  prices  are
determined  by  international   supply  and  demand.   Political   developments,
compliance or  non-compliance  with self-imposed  quotas, or agreements  between
members of the  Organization of Petroleum  Exporting  Countries can affect world
oil supply and  prices.  Prices  obtained  for our natural  gas  production  are
determined by supply and demand factors within North America.

Any material  decline in prices  could  result in a reduction  of our  potential
revenue and our overall value.  The economics of producing from some wells could
change as a result of lower prices.  As a result,  we could elect not to produce
from certain wells.

YOU SHOULD NOT UNDULY RELY ON RESERVE  INFORMATION  BECAUSE RESERVE  INFORMATION
REPRESENTS ESTIMATES.

Estimates  of oil and natural gas reserves  involve a great deal of  uncertainty
because they depend in large part upon the reliability of available geologic and
engineering data, which is inherently  imprecise.  Geologic and engineering data
are used to determine  the  probability  that a reservoir of oil and natural gas
exists at a particular location, and whether oil and natural gas are recoverable
from a reservoir.  Recoverability is ultimately  subject to the accuracy of data
regarding, among other factors:

         1. geological characteristics of the reservoir structure;

         2. reservoir fluid properties;

         3. the size and boundaries of the drainage area; and

         4. reservoir pressure and the anticipated rate of pressure depletion.

The evaluation of these and other factors is based upon available  seismic data,
computer modelling,  well tests and information  obtained from production of oil
and natural gas from adjacent or similar properties,  but the probability of the
existence and recoverability of reserves is less than 100% and actual recoveries
of proved reserves usually differ from estimates.

Estimates of oil and natural gas  reserves  also  require  numerous  assumptions
relating to operating conditions and economic factors, including, among others:

         1. the price at which recovered oil and natural gas can be sold;

         2. the costs associated with recovering oil and natural gas;

         3. the prevailing environmental conditions associated with drilling and
         production sites;

         4. the availability of enhanced recovery techniques;

         5. the ability to transport oil and natural gas to markets; and

         6.  governmental  and  other  regulatory  factors,  such as  taxes  and
         environmental laws.

A change in any one or more of these factors could result in known quantities of
oil  and  natural  gas  previously   estimated  as  proved   reserves   becoming

                                                                               4
<PAGE>

unrecoverable.  For example, a decline in the market price of oil or natural gas
to an amount  that is less than the cost of recovery of such oil and natural gas
in  a  particular   location   could  make   production   thereof   commercially
impracticable.  The risk  that a decline  in price  could  have  that  effect is
magnified  in  the  case  of  reserves  requiring   sophisticated  or  expensive
production  enhancement  technology and  equipment,  such as some types of heavy
oil. Each of these factors,  by having an impact on the cost of recovery and the
rate of  production,  will also affect the present value of future net cash flow
from estimated reserves.

In addition,  estimates of reserves and future net cash flows expected from them
prepared  by  different  independent  engineers  or by  the  same  engineers  at
different times, may vary substantially.

DRILLING  AND  OTHER  CAPITAL  ACTIVITIES  ARE  SUBJECT  TO MANY  RISKS  AND ANY
INTERRUPTION OR LACK OF SUCCESS IN OUR DRILLING ACTIVITIES WILL ADVERSELY AFFECT
OUR BUSINESS.

Drilling  activities  are  subject  to many  risks,  including  the risk that no
commercially productive reservoirs will be encountered.  New wells that we drill
may  not be  productive  or we  may  not  recover  all  or  any  portion  of our
investment. Drilling for oil and natural gas could involve unprofitable efforts,
not only from dry wells,  but from wells that are  productive but do not produce
enough net revenue to return a profit after drilling, operating and other costs.
The cost of drilling,  completing and operating  wells is often  uncertain.  Our
drilling,  completion,  well  workover and  pipeline  and facility  construction
operations  could be  curtailed,  delayed or  cancelled  as a result of numerous
factors, many of which are beyond our control, including:

         1. adverse weather conditions;

         2. compliance with governmental regulations; and

         3.  mechanical  difficulties  or shortages or delays in the delivery of
         equipment and services.

OUR  OPERATIONS  ARE AFFECTED BY  OPERATING  HAZARDS AND  UNINSURED  RISKS AND A
SHUTDOWN OR SLOWDOWN OF OUR OPERATIONS WILL ADVERSELY AFFECT OUR BUSINESS.

There are many  operating  hazards in drilling for and producing oil and natural
gas, including:

         1.  encountering  unexpected  formations or pressures  that could cause
         damage to equipment or personal injury;

         2.  blowouts,  accidents,  oil spills,  fires or other damage to a well
         that could require us to redrill it or take other corrective action;

         3. equipment failures that curtail or stop production; and

         4. poor weather that interrupts drilling operations.

Any of these events could result in damage to or  destruction of oil and natural
gas wells,  production  facilities or other property,  or injury to persons.  In
addition,  any of the  above  events  could  result in  environmental  damage or

                                                                               5
<PAGE>

personal  injury for which we will be liable.  The  occurrence  of a significant
event  not  fully  insured  or  indemnified  against  could  seriously  harm our
financial condition and operating results.

OUR  BUSINESS  IS  SUBJECT  TO  ENVIRONMENTAL  AND  OTHER  GOVERNMENT  LAWS  AND
REGULATIONS IN ALL  JURISDICTIONS  IN WHICH WE OPERATE AND OUR  COMPLIANCE  WITH
SUCH  REGULATIONS  COULD BE COSTLY AND COULD  NEGATIVELY  IMPACT OUR  RESULTS OF
OPERATIONS AND PRODUCTION.

Our operations  are governed by numerous U.S. laws and  regulations at the state
and  federal  levels.  These  laws and  regulations  govern  the  operation  and
maintenance of our  facilities,  the discharge of materials into the environment
and other  environmental  protection issues. The laws and regulations may, among
other potential consequences:

                  1.       require  that we acquire  permits  before  commencing
                           drilling;


                  3.       limit or prohibit  drilling  activities  on protected
                           areas, such as wetlands or wilderness areas;

                  4.       require that reclamation measures be taken to prevent
                           pollution from former operations;

                  5.       require remedial measures to mitigate  pollution from
                           former  operations,  such as plugging abandoned wells
                           and remediating  contaminated  soil and  groundwater;
                           and

                  6.       require  remedial  measures be taken with  respect to
                           property designated as a contaminated site, for which
                           we are a responsible person.

Under  these  laws and  regulations,  we could be liable  for  personal  injury,
clean-up  costs  and  other  environmental  and  property  damages,  as  well as
administrative,  civil and criminal penalties.  We do not believe that insurance
coverage for the full potential liability of environmental  damages is available
at a reasonable cost.  Accordingly,  we could be liable, or could be required to
cease production on properties, if environmental damage exists or occurs.

The costs of complying with environmental laws and regulations in the future may
have that kind of  effect.  Furthermore,  changes  could  occur  that  result in
stricter  standards and enforcement,  larger fines and liability,  and increased
capital  expenditures  and operating  costs,  any of which could have a material
adverse effect on our financial condition or results of operations.

ESSENTIAL EQUIPMENT MIGHT NOT BE AVAILABLE.

Oil and natural gas  exploitation  and  development  activities  depend upon the
availability  of drilling and related  equipment in the  particular  areas where
those  activities  will be  conducted.  Demand  for  that  equipment  or  access
restrictions  may affect the  availability of that equipment to us and delay our
exploitation and development activities.




                                                                               6
<PAGE>

WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY.

The oil and natural gas industry is highly competitive.  Our competitors include
companies and other entities that have greater financial and personnel resources
than we do.  Our  ability  to  acquire  additional  properties  and to  discover
reserves in the future depends upon our ability to evaluate and select  suitable
properties and to complete transactions in a highly competitive environment.

RISKS RELATED TO OUR CAPITAL STRUCTURE

INSIDERS  HAVE  SUBSTANTIAL  CONTROL  OVER US, AND THEY COULD DELAY OR PREVENT A
CHANGE IN OUR  CORPORATE  CONTROL  EVEN IF OUR OTHER  STOCKHOLDERS  WANTED IT TO
OCCUR.

Our executive  officers,  directors,  and principal  stockholders who hold 5% or
more of the outstanding common stock and their affiliates  beneficially owned as
of September 30, 2005, in the aggregate,  approximately  53% of our  outstanding
common stock.  These stockholders will be able to exercise  significant  control
over all matters  requiring  stockholder  approval,  including  the  election of
directors and approval of significant corporate  transactions.  This could delay
or prevent an outside party from  acquiring or merging with us even if our other
stockholders wanted it to occur.

THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE.

The market  price of our common  stock has been and will  likely  continue to be
highly  volatile,  as is the stock  market in  general,  and the  market for OTC
Bulletin  Board  quoted  stocks  in  particular.  Some of the  factors  that may
materially  affect the market  price of our common stock are beyond our control,
such as changes in  financial  estimates by industry  and  securities  analysts,
conditions or trends in the oil and gas  industries,  announcements  made by our
competitors or sales of our common stock. These factors may materially adversely
affect the market price of our common stock, regardless of our performance.

In addition, the public stock markets have experienced extreme price and trading
volume volatility.  This volatility has significantly affected the market prices
of  securities  of  many  companies  for  reasons  frequently  unrelated  to the
operating performance of the specific companies. These broad market fluctuations
may adversely affect the market price of our common stock.

FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE.

Sales of a substantial number of shares of our common stock in the public market
could cause a decrease in the market price of our common stock.  At December 31,
2005, we had 148,584,354 shares of common stock  outstanding.  Substantially all
of our  outstanding  shares either are eligible for resale to the public without
restriction  pursuant  to Rule 144(k) or are  eligible  for resale to the public
pursuant to Rule 144.  Warrants or other rights to purchase  9,000,000 shares of
our common stock were  outstanding  and senior  secured  convertible  promissory
notes to purchase  3,646,380  shares of our common  stock were  outstanding.  In
addition,  an  aggregate  $1,250,000  principal  amount of  secured  convertible
debentures are  outstanding.  The  outstanding  principal  amount of the secured
convertible debentures is convertible into shares of our common stock based on a
conversion  price equal to the lesser of $0.2708 or 80% of the trading  price of
our common stock on the date of conversion.  We may also issue additional shares
of stock and securities  convertible into or exercisable for stock in connection
with our  business.  If a  significant  portion of these shares were sold in the
public market, the market value of our common stock could be adversely affected.

                                                                               7
<PAGE>

IF WE FAIL TO REMAIN CURRENT IN OUR REPORTING REQUIREMENTS,  WE COULD BE REMOVED
FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF  BROKER-DEALERS  TO
SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR  SECURITIES IN
THE SECONDARY MARKET.

Companies  trading on the OTC  Bulletin  Board,  such as us,  must be  reporting
issuers  under  Section  12 of the  Exchange  Act,  and must be current in their
reports under Section 13, in order to maintain price quotation privileges on the
OTC Bulletin Board. If we fail to remain current on our reporting  requirements,
we could be  removed  from the OTC  Bulletin  Board.  As a  result,  the  market
liquidity for our securities  could be severely  adversely  affected by limiting
the  ability  of  broker-dealers  to sell  our  securities  and the  ability  of
stockholders to sell their securities in the secondary market.

OUR COMMON  STOCK IS SUBJECT TO THE "PENNY  STOCK" RULES OF THE  SECURITIES  AND
EXCHANGE  COMMISSION AND THE TRADING MARKET IN OUR SECURITIES IS LIMITED,  WHICH
MAKES  TRANSACTIONS  IN OUR  STOCK  CUMBERSOME  AND MAY  REDUCE  THE VALUE OF AN
INVESTMENT IN OUR STOCK.

The Securities and Exchange  Commission has adopted Rule 15g-9 which establishes
the  definition  of a "penny  stock,"  for the  purposes  relevant to us, as any
equity  security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions.  For
any transaction involving a penny stock, unless exempt, the rules require:

         1.       that a  broker  or  dealer  approve  a  person's  account  for
                  transactions in penny stocks; and

         2.       the  broker  or dealer  receive  from the  investor  a written
                  agreement to the  transaction,  setting forth the identity and
                  quantity of the penny stock to be purchased.

In order to approve a person's  account for  transactions  in penny stocks,  the
broker or dealer must:

         1.       obtain   financial   information  and  investment   experience
                  objectives of the person; and

         2.       make a reasonable determination that the transactions in penny
                  stocks  are  suitable  for  that  person  and the  person  has
                  sufficient knowledge and experience in financial matters to be
                  capable  of  evaluating  the  risks of  transactions  in penny
                  stocks

The broker or dealer  must also  deliver,  prior to any  transaction  in a penny
stock, a disclosure  schedule prescribed by the Commission relating to the penny
stock market, which, in highlight form:

         1.       sets  forth the basis on which the  broker or dealer  made the
                  suitability determination; and

         2.       that the broker or dealer received a signed, written agreement
                  from the investor prior to the transaction

                                                                               8
<PAGE>

Generally,  brokers may be less willing to execute  transactions  in  securities
subject  to the  "penny  stock"  rules.  This  may  make it more  difficult  for
investors to dispose of our common stock and cause a decline in the market value
of our stock.

Disclosure  also has to be made about the risks of  investing in penny stocks in
both public offerings and in secondary trading and about the commissions payable
to both the broker-dealer and the registered representative,  current quotations
for the securities and the rights and remedies available to an investor in cases
of fraud in penny stock  transactions.  Finally,  monthly  statements have to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.

Item 2.  Properties

The  executive  offices of the Company are located at 9595 Wishire  Blvd.,  Ste.
900,  Beverly Hills,  CA  90212-2509.  The Company  currently  rents this shared
office facility on a month-to-month basis for $2,400 per month for all services.
This arrangement  began on January 1, 2006. The telephone number at this address
is (310) 300-4062.

DESCRIPTION OF PROPERTIES

COMANCHE POINT PROSPECT - CALIFORNIA -HEAVY OIL

On  March  16,  2004,  the  Company  entered  into  a  purchase   agreement  for
participation  and acquisition of an 80% working  interest in the Comanche Point
Producing  Company,  Tejon Lease on 400 acres for lands in Sections 28,29,32 and
33, R18W, S.B.B.M, Kern County, California.

Under the terms of the Agreement,  Fidelis paid $305,000 and a further  $200,000
thereafter to commence implementation of the pilot study. Following full payback
of the Company's investment, the Company' partner will increase to a 30% working
interest as the Company  decreases to a 70% interest.  Both partners are subject
only to a 12.5%  royalty to Tejon Ranch on the  production.  The Company,  along
with its working  partner  implemented a steam-flood  extraction  pilot study in
mid-September,  2004, to determine viability of extraction with this method. The
steam-flood  extraction pilot project of existing  production wells should allow
Fidelis to analyze the daily oil production  rates from each well. We anticipate
a  significant  increase  to  the  production  at  Comanche.   At  the  time  of
implementation the field was producing 12-15 barrels per day. As at December 31,
2004,  the field is  producing  an  estimated 45 to 50 barrels per day after the
fully completed steam flooding of 2 wells.  Accurate  projections of income from
the  effects  of the steam  flood  are  unavailable  until  the  pilot  study is
complete. Development of this property is continuing.

HIDALGO PROSPECT- TEXAS-NATURAL GAS

On January 28,  2005,  the Company  executed a Lease  Purchase  and  Development
Agreement  and Joint  Operating  Agreement  with  Miramar  Petroleum,  Inc. on a
farm-in with Miramar on the "Southeast Hidalgo Prospect,  Hidalgo County Texas".
The Hidalgo  Field was  discovered  in 1946 by The Texas  Company's #1 El Texano
Land Company well. As gas markets became available,  numerous wells were drilled
to develop the field.  The Hidalgo Field  produces gas from depths of 6,200 feet
to 8,100 feet. Texaco was the major operator in the field until the late 1980's.

                                                                               9
<PAGE>

Presently  Miramar  Petroleum  Inc., PI Energy and Discorbis Oil Company are the
companies   active  in  the  field.   The  Hidalgo  Prospect  has  under  lease,
approximately 312 gross acres. Under the terms of the farm-in agreement, Fidelis
advanced  $260,000  to Miramar,  the  operator of the  project,  representing  a
two-thirds  share of the costs for the drilling to  completion of the 7,500 foot
"Lepovitz A" natural gas well.  Fidelis has  acquired a 50% working  interest in
the play. Miramar Petroleum is the operator of the project. The well was drilled
over a 15 day  period  and on March 12,  2005 was  tested  for  resistivity  and
pressure.  The target sands were not located in an up-dip  position as indicated
by 3-D seismic  logs and were  actually 16'  down-dip  from the  adjacent  well,
negating the target  objectives  from being viable sources of gas.  However,  an
interesting  spike on both the initial  mudlog and  down-hole  electronic  tests
performed  by  Sclumberger  turned  up a 5 foot  thick  sand  with a  bottomhole
pressure of 2,500 psi. Based on this find,  the partners in the well,  including
Fidelis,  determined  to case the hole and produce the well. It is believed that
the well should initially flow  approximately 500- 750Mcf per day. Fields in the
area tend to flow steady with shallow decline curves.

In May of 2005, Fidelis received notice from the operator of the Hidalgo project
of the intention to plug and abandon the well.  The Company  subsequently  wrote
off $270,962 in capitalized costs as a dry hole expense.  Following an extensive
completion  program,  the Frio  sands  that  initially  flowed on tests of up to
750mcf/day, appear to be depleted or water filled. Fidelis plans to execute this
plan  immediately  and will work with  Miramar  Petroleum on future plans in the
Hidalgo-MacAllen area of Texas.

NORTH FRANKLIN PROSPECT- CALIFORNIA-NATURAL GAS

On January 31, 2005, we updated shareholders as to the process of permitting the
North  Franklin  pipeline  project.  Fidelis  was  informed by the office of the
Congressional  Representative  from the Third District of California that he had
confirmation  from the office of the Secretary of the Interior and the U.S. Fish
and Wildlife  that the final  government  permit  covering the easement over the
last 177' of  pipeline  will be posted in the  Federal  Register  on February 2,
2005. On February 2, 2005, the easement  permit  required prior to tie-in of the
North  Franklin  Gas  Field was  posted to the  Federal  Register.  The  Federal
Register  states  that any public  comments  on the permit are to be received by
March 3, 2005. The Company was in regular contact with the Congressman's  office
of the 3rd district of California and with the Fish and Wildlife  service office
in Sacramento  since late December,  and hoped to be able to tie-in the pipeline
as soon as  possible.  The  previous  comment  period  at the  local  level  was
accomplished and ended December 26, 2004.

Fidelis  announced on March 7, 2005 that its long anticipated  government permit
allowing the completion of  construction  of the North Franklin gas pipeline had
been  received  from the U.S.  Fish and  Wildlife  Service.  The permit  covered
approval for a 177' underground boring to connect a 6 inch gas pipeline with the
North Franklin Gas Field.  The operator of the North Franklin  project  informed
the Company that the  installation  and final  construction  of the short tie-in
piece of  pipeline  would  begin  immediately.  On March 14,  2005,  the Company
reported  that the  tie-in  of the  North  Franklin  Gas Field was under way and
expected to be completed and flowing gas that week.  The Company was informed on
March 18, 2005, that the gas pipeline connecting the North Franklin Gas Field to
the buyers' delivery system pipeline had been completed.  After a lengthy delay,
the  Archer-Whitney  No. 1 well  was tied  into the  pipeline  for  initial  gas
production.

The Company announced on March 24, 2005, that the pipeline  connecting the North
Franklin  Gas Field to the gas  buyers'  delivery  system was flowing  gas.  The
operator of the project had choked down and metered the flow at an initial  rate
of 2.0MMcf.  The operator was increasing the flow in small  increments until the
pressures  from the  reservoir  stabilized,  in order to  prevent  damage to the
casing or productive  sand layer.  It was the expectation of the Company and its
partners that a final flow rate of 2MMcf to 3MMcf would be achieved.

                                                                              10
<PAGE>

On April 7, Fidelis  announced that it had executed an authority for expenditure
(A.F.E.) for the "Archer-Wildlands #1" gas well, the next well planned under the
overall development plan for the North Franklin project.  Fidelis advanced funds
in  full to the  operator  totalling  $133,000  for the  Company's  35%  working
interest  cost of the well to  completion.  The  "Archer-Wildlands  #1" well was
licensed,  permitted and the well site preparations ongoing for a tentative spud
date  upcoming  later in April.  A drill  contract was signed and a drilling rig
secured for the well. The third and fourth wells into the field were to be sited
and permitted upon receipt of information from the 2nd well that was expected to
yield trend data as to sand thickness,  porosity and permeability.  The operator
of the  Archer-Whitney  #1  indicated  that the  behind-pipe  pressure  has been
increasing  and is above the 2900 psi level and was expected to open up the flow
incrementally  within the next few days. The Company  previously  indicated that
the  development  of volume  flows  for the field is an often a lengthy  process
which must be undertaken with extreme caution to avoid damaging the reservoir or
well.  On April 22, the Company was informed  that the date has been set for the
spud of the  Archer-Wildlands  #1 well.  The drilling was planned to commence in
the first week of May.  The  Archer-Wildlands  #1 was said to be the second in a
series of  natural  gas  wells to be  drilled  during  2005  under  the  overall
development plan for the North Franklin gas reservoir.

 On  April  25,   Fidelis   reported  on  the  success  at  the  North  Franklin
"Archer-Whitney  #1" well.  The  Company had  completed  its first full month of
production at the North Franklin Gas Field from its "Archer-Whitney #1" well and
the average daily gross earnings for the well amounted to roughly $11,000.00 per
day, or  $330,000 in total for all  partners.  The initial gas  production  flow
rates averaged 1.4 Mmcf per day over the month.

On May 25,  Fidelis  announced  that it had begun  discussions  with Silver Star
Energy,  Inc.  regarding the possible future  amalgamation of the two companies.
Fidelis and Silver Star currently  have common working  interests in various oil
and gas projects and the  amalgamation of these interests would provide a larger
and stronger entity for future growth.  The proposed  amalgamation would combine
all assets of both oil and gas companies into one entity,  which would then have
in the portfolio a combined  working  interest in 5 projects,  these being North
Franklin, Joarcam, Comanche Point, Evi and Verdigris Lake. The recent management
changes  of Fidelis  brought  new  strength  of both  corporate  and oil and gas
expertise and Fidelis approached Silver Star with this proposal.

On May 26,  2005,  Fidelis  announced  details of the deep gas  potential in the
Forbes (F-zone) at the Company's North Franklin gas reservoir,  Sacramento Basin
California.  North  Franklin  is situated in the  southern  Sacramento  Basin of
California  between the cities of  Sacramento  and Stockton that has produced in
excess of 9 Tcf of gas. The deep Forbes  F-zone has the  potential to contain 60
billion cubic feet of gas. Combined with the producing Winters formation,  North
Franklin now had the potential to contain in excess of 100 billion cubic feet of
gas.  The deep Forbes  F-zone lies  beneath  the younger  Winters  sand that was
currently  producing  from the  "Archer-Whitney  #1 well".  After an  aggressive
land-leasing  program by the  partners  over the last year,  the North  Franklin
project  under  lease,  3,465  gross  acres.  North  Franklin  deep  F-zone  had
approximately  1,200 acres of  structural  and  stratigraphic  closure  based on
mapping of the seismic anomaly.  It was defined by regional well control and 2-D
seismic data from three seismic lines. The strong AVO anomaly present  indicated
that gas may be present. The prospect potential is based on net pay averaging 50
feet over this closure and recovery  factor of 1,000 million cubic feet per acre
foot.  The prospect  reserves are estimated at 60 billion cubic feet of gas. Gas
quality is anticipated to be greater than 900 Btu. The nearest F-zone production
at the Clarksburg gas field, located with in five miles of the prospect,  is 930
Btu. Gas was expected to be contained in permeable, Upper Cretaceous, deep-water
F-zone  sandstones  that are of equivalent age to sandstones  that are the major


                                                                              11
<PAGE>

producing zones in the northern portion of the Sacramento  Valley.  An estimated
75 feet of net  reservoir  sandstones  were said to be expected to be present in
the upper and middle  F-zone  fans at the  proposed  test  location.  Equivalent
Forbes  sandstones  were reported as being the chief producing gas reservoirs in
the northern  Sacramento  Valley having  produced in excess of 2 trillion  cubic
feet of gas. Drill depth through the prospective  upper and middle fans at North
Franklin Deep is 11,000 feet. The well would offset the productive upper Winters
sand  discovered in 2004 and penetrate the both the upper and middle F-zone fans
at a  structural  favorable  position.  In the  event  that  the  F-zone  is was
productive  at this  location,  the well could be put into  production  from the
Winters  sands.  The 11,000  foot well was  estimated  to cost $1.5  million and
Fidelis would have a 35% working interest in the project.

On June 2, 2005,  the Company  announced that the  "Archer-Whitney  #1" well had
produced 98.5 Mmcf gas in 70 days at an average rate of 1.41 Mmcf per day. Total
production to-date had generated $591,000 to the partners.

On  June  20,   2005,   Fidelis   announced   its   preparations   to  spud  the
"Archer-Wildlands #1" well at the North Franklin Project in the Sacramento Basin
of  California.  On June 27  Fidelis  announced  "Archer-Wildlands  #1" well had
spudded at the North Franklin Project, Sacramento Basin of California.

On July 5, Fidelis announced that the June gas production at the "Archer-Whitney
#1" well at had totalled  44.859 Mmcf for the 30 days in June. The average daily
production was 1.50 Mmcf per day

On July 18,  Fidelis  announced that the  "Archer-Wildlands  #1" gas well at the
Company's North Franklin Project reached a total depth of 7,736 feet on July 15.
The operator had called for a completion rig.

On August 2, Fidelis  announced  the progress of the  completion  program at the
"Archer-Wildlands #1" gas well.

On  August  3,  Fidelis   reported   that  the  July  gas   production   at  the
"Archer-Whitney  #1" well  totalled  46.212  Mmcf  for the 31 days in July.  The
average daily production was 1.49 Mmcf per day.

On August 8, Fidelis  announced the commencement of commercial gas production at
the "Archer-Wildlands #1" well.

 On  August  10,  Fidelis  announced  that  the  daily  gas  production  at  the
"Archer-Whitney #1" well had been stepped up to 1.8 Mmcf per day.

On August  24,  Fidelis  announced  that the daily gas  production  at the North
Franklin gas reservoir had surpassed 3.0 Mmcf per day from production at the two
wells.

On September 22, Fidelis reported on the first weeks of September gas production
from the North Franklin gas reservoir.

On December 6, 2005, Fidelis reported that average daily production rate for the
month of November  totalled  2.93 Mmcf per day, up from 2.83 in October and 2.56
Mmcf in September.

On January 5, 2006,  Fidelis  reported  that the December gas  production at the
North Franklin Project, Sacramento California. Production from the Company's two
gas wells, the  "Archer-Whitney  #1" and  "Archer-Wildlands  #1" totalled 92.443
Mmcf. The average daily production rate for the month of November totalled 2.982
Mmcf per day.



                                                                              12
<PAGE>

KANSAS- GAS AND LIGHT OIL

On August 10, 2005,  Fidelis  announced  that it had  executed a  memorandum  of
understanding  (M.O.U.) to acquire a 25% working  interest in a very prospective
Kansas oil and gas play from a private  company.  Mr. William S.  Marshall,  the
President  of  Fidelis,  is a  director  of the  private  company  that sold the
interest to Fidelis. Fidelis and partners have now acquired participation rights
in a large data base that includes a geophysical  survey covering  approximately
one million  acres,  located in central  Kansas,  covering  parts of  Ellsworth,
Salina,   McPherson,   Reno,  Harvey,  Kingman,  and  Sedgwick  counties.  Total
cumulative  oil  production  through  1999 from these  counties is more than 978
million  barrels  of  oil.  The  geophysical  survey  utilized  proprietary  RAM
technology,  owned by Paramount Energy Corp., which is a geophysical methodology
used to  highlight  oil and gas  deposits.  (see exhibit 10.1 to the 8K filed on
October 3, 2005 for a copy of the contract for data sharing)  Unlike 2-D and 3-D
seismic methods,  which gather information based upon artificially induced sonic
responses recorded at surface,  RAM technology  identifies "unique bright spots"
using its  proprietary  software  to  process  certain  aspects  of the  earth's
magnetic  field.  Data is  collected  by a low  flying  aircraft  equipped  with
specialized  equipment  and the data is then  analyzed  by RAM  software.  These
"unique  bright spot"  anomalies can be correlated to  near-surface  alterations
caused  by the slow  geochemical  processes  that  occur  over  both oil and gas
deposits. The RAM technology is an indirect hydrocarbon indicator independent of
structure with the result that it is useful in situations  where seismic date is
either unavailable or unreliable.  Since RAM data is collected from an aircraft,
large  areas  may  be  surveyed  much  faster  and  more  cost-effectively  than
traditional modalities.  Several identified RAM anomalies interpreted within the
survey area are believed to have hydrocarbon  potential over  multi-sections  of
lands that have never been tested by drilling.

Most  nearby  production  within  this  region of the  Central  Kansas  Platform
produces from  Mississippian  age and older  limestone  rocks above the Arbuckle
dolomite   formation.   Some   of  the   accumulations   of   hydrocarbons   are
stratagraphically  trapped and  unrelated to structure  and therefore not easily
identifiable by traditional  seismic  testing and analysis.  The magnetic survey
and  interpretation  of the region  appears  to  management  to be of  excellent
quality.  Oil wells will be drilled to test the most promising  prospects to the
deepest known petroleum  formation,  the Arbuckle,  generally less than 4000' in
depth in the Central Kansas  Platform.  Drilling costs have been estimated to be
in the order of $200,000  for a cased and  completed  well.  The Central  Kansas
Platform  covered  by the survey and  interpretation  contains  some of the most
prolific production from shallow depths in that part of the United States. There
are many  established  oil fields within the  boundaries of the survey area. The
survey indicates "bright spots" that could be hydrocarbon  accumulations not yet
discovered  by  traditional  seismic or other  older  exploration  technologies.
Multiple  prospects  are expected to be  generated  after more  extensive  field
tests.  Fidelis  and  partners  are  proceeding  to  further  evaluate  the most
prospective oil and gas targets for drilling utilizing complimentary geochemical
and geophysical  methodologies  in their  field-testing.  The operator will then
recommend  leases for  acquisition  and the  exploration  program will commence.
Fidelis,  with a 25% working interest,  will be participating with other working
interest partners who include Silver Star Energy,  Inc. (20% working  interest),
and Cascade Energy, Inc. (25% working interest).

Item 3.  Legal Proceedings

We are not a party to any  legal  proceedings.  Management  is not  aware of any
legal proceedings  proposed to be initiated against the Company.  However,  from
time to time, the Company may become subject to claims and litigation  generally
associated with any business venture operating in the ordinary course.

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

None


                                                                              13
<PAGE>

PART II

Item 5.  Market for  Registrant's  Equity and  Related  Stockholder  Matters and
Issuer Purchases of Equity Securities

The  Company's  common stock is traded on the  Over-the-Counter  Bulletin  Board
under the symbol  "FDEI".  The  following  table  sets  forth,  for the  periods
indicated,  the high and low bid prices of a share of common  stock for the last
two years.

                                          HIGH BID            LOW BID
2005
Quarter Ended March 31, 2005                $1.08               $0.52
Quarter Ended June 30, 2005                 $0.81               $0.31
Quarter Ended September 30, 2005            $0.47               $0.32
Quarter Ended December 31, 2005             $0.36               $0.13
2004
Quarter Ended March 31, 2004                $038                $0.03
Quarter Ended June 30, 2004                 $0.50               $0.29
Quarter Ended September 30, 2004            $0.33               $0.19
Quarter Ended December 31, 2004             $1.04               $0.17

The above  quotations are taken from  information  provided by Yahoo Finance and
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.

Holders of Common Equity

At December 31, 2005, the Company had 57 shareholders of record,  and an unknown
number of additional  holders whose stock is held in "street form". The transfer
agent of our common stock is Holladay Stock Transfer.

Dividends

The  Company  has never paid a cash  dividend  on its  Common  Stock nor does it
anticipate  paying cash dividends on its Common Stock in the near future.  It is
the present  policy of the Company not to pay cash dividends on the Common Stock
but to retain  earnings,  if any, to fund growth and  expansion.  Any payment of
cash  dividends  on the Common  Stock in the future will be  dependent  upon the
Company's financial  condition,  results of operations,  current and anticipated
cash  requirements,  plans for expansion,  as well as other factors the Board of
Directors deems relevant.

The Company issued a stock dividend on December 11th, 2004 to those shareholders
of record at the close of trading on  December  8, 2004.  The  dividend  was .66
shares for each share  owned and had the effect of a forward  split of the stock
of 1.66:1.  The  announcement  was made on the Company's Web site on the 28th of
November and was  disseminated  over  Business  Wire to provide for the broadest
public disclosure. The company took this action in an effort to maximize overall
long-term shareholder value.

Recent Sales of Unregistered Securities

On January 26, 2004, the Company issued 14,608,000 common shares for cash.

                                                                              14
<PAGE>

On February  25, 2004,  the Company  purchased  17,430,000  shares of its common
shares for a loan  payable of $105,000.  These shares were  returned to treasury
and cancelled.

On August 1, 2004, the Company  authorized  the issuance of 1,250,000  shares of
common stock which, with the stock dividend described above, had the effect of a
1.66:1  forward split to 2,075,000  shares of common stock to its five directors
for services  rendered.  As a result of this issuance,  $425,000 in compensation
expense was recorded.

On November 17, 2005,  the Company issued  54,000,000  common shares as Treasury
Stock that is being held as collateral as part of the convertible debenture with
Cornell  Capital  Partners,  LP  pending  clearance  of  the  SB-2  registration
statement, filed, January 27,2006.

Item 6.  Selected Financial Data

The following selected consolidated financial data should be read in conjunction
with the audited Consolidated Financial Statements and Notes thereto included in
Item 8,  with  "Item  6.  Management's  Discussion  and  Analysis  of  Financial
Condition  and Results of  Operations"  and with other  financial  data included
elsewhere in this Form 10-KSB. The consolidated statement of operations data for
the year ended  December 31,  2005,  the year ended  December 31, 2004,  and the
consolidated  balance  sheet data as of  December  31, 2005 and 2004 are derived
from our audited financial  statements included in Item 7 of this report,  which
have been audited by Robison Hill & Co.

The independent  auditors' report  appearing  elsewhere in this document contain
disclosures  that the Company's  losses and negative cash flows from  operations
raise concern about our ability to continue as a going concern. The consolidated
financial  statements  and  the  selected  financial  data  do not  include  any
adjustments that might result from the outcome of that uncertainty.

<TABLE>
<CAPTION>
                             Year Ended December 31
                                                                             2005                      2004
STATEMENT OF OPERATIONS DATA:

<S>                                                                             <C>                          <C>
Revenue                                                                         $  1,395,849                 $ 48,735
Cost of revenue                                                                      231,508                   33,722
                                                                   -------------------------------------------------------
Gross profit                                                                       1,164,341                   15,013
Operating expenses                                                               (1,313,973)                (830,084)
Interest expense                                                                   (134,772)                 (18,172)
Write off leasehold improvements                                                    (55,168)                        -
Beneficial conversion expense                                                    (2,503,507)                        -
                                                                   -------------------------------------------------------
Net loss                                                                      $  (2,843,079)              $ (833,243)
                                                                           =================         ================
Basic and diluted loss per share                                                $     (0.03)               $   (0.01)
                                                                   -------------------------------------------------------
Weighted average common shares outstanding                                       101,076,187               95,698,605
                                                                           =================          ================
</TABLE>

                                                                              15
<PAGE>

<TABLE>
<CAPTION>

BALANCE SHEET DATA:
<S>                                                                             <C>                          <C>
Cash and cash equivalents                                                                  $                  $     -
                                                                                     232,758
Working capital (deficit)                                                            205,671                (658,490)
Total assets                                                                       3,232,102                1,388,702
Total liabilities                                                                  6,567,304                1,880,825
Total stockholders' equity                                                       (3,335,202)                (492,123)
                                                                   -------------------------------------------------------
</TABLE>

Item 7. Management's  discussion and analysis of Financial Condition and Results
of Operations

The  information  contained  in this  Management's  Discussion  and  Analysis of
Financial   Condition  and  Results  of  Operation   contains  "forward  looking
statements."  Actual results may materially  differ from those  projected in the
forward-looking  statements as a result of certain risks and  uncertainties  set
forth in this report. Although management believes that the assumptions made and
expectations  reflected in the forward looking statements are reasonable,  there
is no assurance  that the  underlying  assumptions  will,  in fact,  prove to be
correct or that actual future results will not be materially  different from the
expectations expressed in this Annual Report. The following discussion should be
read in  conjunction  with the audited  Consolidated  Financial  Statements  and
related  Notes  thereto  included  in Item 7, with "Item 5.  Selected  Financial
Data,"  with the Risk  Factors  section  of Item 1,  and with the  Special  Note
regarding forward-looking statements included elsewhere in this report.

Overview

The Company is  primarily  in the  business of  acquiring  and  operating,  as a
working interest  partner,  smaller oil and gas leases,  and exploratory oil and
gas wells. The Company maintains  relatively low overhead by contracting certain
operating and investigative  functions out to experienced,  licensed geologists,
geophysicists and private oil and gas operators.

Normally  only those  projects that are in close  proximity to delivery  systems
such as pipelines or refineries will be pursued. Whereas there are large oil and
gas fields that could be  aggressively  engaged,  the  management of the Company
believes  that the  production  required  to warrant  the  investment  into such
capital intensive infrastructures is of greater risk than the Company is willing
to bear at present, and the necessary capital for such is currently  unavailable
to the Company.  Hence,  in the near future,  the Company will only pursue those
projects  that  can be tied  into  pipelines  or  trucked  from  onsite  storage
facilities to proximate refineries with minimal costs involved.

CORPORATE EVENTS

On September 24, 2004,  Fidelis  announced the election of Mr. Dan Hodges to the
position of President  and CEO. Mr.  Hodges  replaced  Mr.  Frank  Anjakos,  who
remained on the Board of Directors of the Company.  The Board of Directors  also
appointed Mr. Hodges to the position of Board Chairman on the same date.

On September  27, 2004 Fidelis  announced  the  appointment  of the new CFO, Mr.
Sterling Klein. Mr. Klein is an accounting  professional with a proven record of
accomplishment in corporate financial analysis and administration. Mr. Klein has
extensive petroleum industry experience, working with "Shell," and "Chevron." As
an Inventory  Analyst with Shell,  Mr. Klein  travelled  extensively  to various
production   locations  in  order  to  conduct   physical   asset   inventories.

                                                                              16
<PAGE>

Subsequently, in his role as Production Accountant, Mr. Klein's responsibilities
included  financial  analysis,  assessment  of monthly  revenues / costs and the
generation of summary reports for management specific to production  facilities.
Mr. Klein then moved to Chevron as a credit  analyst.  In this role, he assisted
in the  corporate  development  and  implementation  of several  new systems and
control procedures. Mr.Klein holds titles of Secretary, Treasurer and Director.

Effective  May 31, 2005,  Mr. Dan Hodges  resigned as President and Chairman and
Mr. Robert D. Hadley resigned from his position as Director.  On this same date,
Mr. William Marshall and Mr. Brian Wildes were welcomed to the Company.

Mr.  William  Marshall was appointed to the position of President of the Company
and  joined  the Board of  Directors  as its new  Chairman.  Mr.  Marshall  is a
financial consultant with over 15 years of venture capital experience in private
and  public  companies.  He has  served on various  public  company  boards as a
director,  with duties ranging from Chairman and President,  to Chief  Executive
Officer and Corporate Secretary.

Mr.  Brian  Wildes  joined  the  Fidelis  operational  team  as  Operations  and
Engineering  Consultant,  directly responsible for the overseeing of all oil and
gas operations at North Franklin,  Joarcam,  and Comanche Point as well as other
projects.  Mr.  Wildes  is an oil  and  gas  professional  with  over  40  years
experience. He possesses a Wharton MBA and was an oil and gas tax specialist for
Deloitte,  Haskins,  and Sells in Denver  from 1976  through  1980.  He has been
actively involved in the exploration for oil and gas in Oklahoma and Texas since
leaving  Deloitte in 1980.  From 1980 through  1986, he managed  Neitzel  Wildes
Investment  Company's (Dallas, TX) drilling activities and their capital markets
activities.  Recently,  he created Wildes Exploration in 2004 to explore for oil
in  Oklahoma  and  Kansas  utilizing  proprietary  and  new  state  of  the  art
technologies. His operating company is presently drilling 5 exploratory wells in
southwest Oklahoma.

Effective June 8, 2005, Jeff Paro, Julianne DeGrendele and Frank N. Anjakos, III
resigned from their positions as Directors of the Company.

On September 12, 2005,  Fidelis  announced that it had suspended the discussions
with  Silver  Star  Energy,  Inc.  that  began in May 2005 (in  relation  to the
possible  amalgamation  of the two companies) for a period of at least one year.
Fidelis and Silver Star Energy, Inc. will continue to separately develop,  along
a parallel path,  their own working  interests in the North Franklin Project and
the recently  announced  Kansas Play.  Fidelis  management feels that the recent
increases in commodity  prices and the increased  cash flow from the natural gas
production in  California,  have  positioned the Company  independently  to move
forward aggressively on its own to develop its interests in its projects.

Results of Operations

Revenue

Revenue increased to $1,395,849 in 2005 from $48,735 in 2004. This increase is a
result of our  properties in Comanche  Point  increasing  production  revenue to
$135,373  in 2005 and the  addition of our  properties  in North  Franklin  that
produced $1,203,993 in revenue.





                                                                              17
<PAGE>

Cost of Revenue

The Company  recorded cost of revenue of $231,508 during the year ended December
31, 2005 and $33,722 during the year ended  December 31, 2004.  This increase is
reflective of the increased activity and costs with producing wells.

General and Administrative expenses

General and  administrative  expenses  consist  primarily of Accounting,  Legal,
depreciation and selling and marketing expenses.  The general and administrative
expenses for the year are $278,159 and included $46,783 of selling and marketing
expenses. This is a significant increase over 2004 of $101,674 and is reflective
of increased operations of our company.

Consulting  and Salaries and Directors fees of $247,152 is comparable to 2004 at
$229,556 net of $425,000 in non cash expense of a stock  issuance to  directors.
Other  operational  expenses for the year include  corporate  finance of fees of
$257,500 in connection with our convertible  debenture,  production royalties of
$136,063,  depletion  expenses  of  124,137  and dry hole costs  written-off  of
$270,962.

We expect to continue to incur  general and  administrative  expenses to support
the business,  and there can be no  assurances  that the Company will be able to
generate  sufficient revenue to cover these expenses.  The Company will may rely
on equity financing to support its business.

Interest expense

Interest expense increased  materially for the year ended December 31, 2005 with
$134,772  compared  to $18,172 for the year ended  December  31,  2004.  This is
reflective  of the Credit Line Note  payable and the  convertible  debenture  in
2005.

Loss per share and net loss

The Company ended the year with a net loss of ($2,843,079) in 2005,  compared to
($833,243)  in 2004.  The net loss position for 2005 includes a non cash expense
of $2,503,024 in beneficial  conversion  expense  related to the warrants issued
and the  convertible  debenture  issued  to  Cornell  Capital  Partners,  LP and
reflects  a  ($0.03)  per share  loss  compared  to the 2004 per  share  loss of
($0.01).  The  2004  net loss  also  includes  a non  cash  amount  of  $425,000
attributed to a stock issuance.

Liquidity and capital resources

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

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

                                                                              18
<PAGE>




The Company  recorded a net loss from  operations of $149,632 for the year ended
December  31, 2005  compared  to a net loss of  $815,071  for the same period in
2004.  Decrease in the net loss is attributable to production  revenues from the
Company's oil and gas leases.

The Company had cash and cash  equivalents  of $232,758  and working  capital of
$205,671 at December 31, 2005.  This  compares to cash and cash  equivalents  of
($82.00) and working capital deficiency of ($658,408) at December 31, 2004.

During the year ended  December 31,  2005,  the Company used cash of $485,239 in
operating  activities  compared  to using  $256,673  in the  prior  year.  As at
December 31, 2005 the company had an outstanding receivable of $704,532.

Net cash provided by financing activities was $1,823,572 in 2005, which compares
to $1,535,947 in 2004.  During the year ended  December 31, 2005,  $1,250,000 in
convertible  debentures  were  granted by Cornell  Capital  Partners  LLP and an
increase of the credit line of $843,167.

The auditors' report on the Company's  December 31, 2005 consolidated  financial
statements  contains an  explanatory  paragraph that states that the Company has
suffered losses and negative cash flows from  operations that raise  substantial
doubt about the Company's ability to continue as a going concern.  The financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

Item 7A. Quantitative and Qualitative Disclosures about market risk

The Company has no financial  instruments for trading purposes, or derivative or
other financial  instruments  with off balance sheet risk. The fair value of all
financial  instruments  at December 31, 2005 is not  materially  different  from
their carrying value.

To December 31, 2005,  substantially  all revenues are incurred In United States
dollars and cash costs have been realized in both United  States  dollars and as
such, are not subject to material foreign currency  exchange rate risk. To date,
the Company has not entered into  foreign  currency  contracts to hedge  against
foreign  currency  risks  between  other  foreign  currencies  and our reporting
currency, the United States dollar.

Item 8.  Financial Statements

The financial  statements of the Company and related  schedules  described under
"Item 15. Financial  Statements and Financial Statement  Schedules" are included
following this page.



                                                                              19
<PAGE>











                   FIDELIS ENERGY INC.


                    Audited Financial Statements
                   (EXPRESSED IN U.S. DOLLARS)

                    December 31, 2005 and 2004

                    Index

                    Report of Independent Registered Public Accounting Firms

                    Consolidated Balance Sheets

                    Consolidated Statement of Stockholders' Deficiency

                    Consolidated Statements of Operations

                    Consolidated Statements of Cash Flows

                    Notes to Consolidated Financial Statement












                                                                              20
<PAGE>






                          INDEPENDENT AUDITOR'S REPORT


To the Shareholders and Board of Directors
Fidelis Energy, Inc.


         We have audited the accompanying balance sheets of Fidelis Energy, Inc.
as of December  31, 2005 and 2004,  and the related  statements  of  operations,
stockholders'  equity and cash flows for the years ended  December  31, 2005 and
2004.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

         We conducted our audits in accordance  with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects, the financial position of Fidelis Energy, Inc.
as of December 31, 2005 and 2004 and the results of its  operations and its cash
flows for the years  then ended  December  31,  2005 and  December  31,  2004 in
conformity with accounting principles generally accepted in the United States of
America.

         The accompanying  financial statements have been prepared assuming that
the Company  will  continue as a going  concern.  As  discussed in Note 1 to the
financial statements,  the Company has suffered recurring losses from operations
and has a net capital  deficiency that raise substantial doubt about its ability
to continue as a going  concern.  Management's  plans in regard to these matters
are also  described  in Note 1. The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

         As  discussed in Note 16 to the  financial  statements,  the  Company's
December 31, 2004 operating expenses  previously  reported as $505,084 have been
changed  to  $830,084,  due to a  change  in  estimate.  This  change  was  made
subsequent to the issuance of the financial statements. The financial statements
have been restated to reflect this change.


                                           Respectfully Submitted,


                                           /s/ Robison, Hill & Co.
                                           Certified Public Accountants

Salt Lake City, Utah
March 31, 2006

                                                                              21
<PAGE>

<TABLE>
<CAPTION>
FIDELIS ENERGY INC.
Balance Sheets
December 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)                                                                                          Restated
                                                                                                2005                     2004
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                         <C>
ASSETS
CURRENT
  Cash and cash equivalents                                                     $            232,758        $               -
  Accounts receivable                                                                        704,532                        -
------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                                         937,290                        -
OIL AND GAS PROPERTIES, USING SUCCESSFUL EFFORTS METHOD
  Oil and Gas Leases                                                                         812,723                  516,526
  Oil and Gas Exploration Costs                                                            1,549,150                  768,645
  Less: Depletion                                                                          (124,137)                        -
------------------------------------------------------------------------------------------------------------------------------
TOTAL OIL AND GAS PROPERTIES                                                               2,237,715                1,285,171
OTHER ASSETS
  Prepaid                                                                                      5,173                    5,173
  Property and Equipment - net                                                                51,924                   98,358
------------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS                                                                            57,097                  103,531
------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                                                       $       3,232,102        $       1,388,702
==============================================================================================================================
LIABILITIES
CURRENT
  Accounts Payable                                                                 $          21,756        $          82,302
  Accrued Liabilities                                                                        136,063                   61,550
  Overdrawn Cash                                                                                   -                       82
  Note Payable                                                                               424,390                  402,765
  Related Party Note                                                                         146,279                  108,802
  Shareholder loan                                                                             3,130                    2,989
------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                                                    731,618                  658,490
NON CURRENT LIABILITIES
  Asset Retirement Obligation                                                                285,000                        -
  Credit Line Note Payable                                                                 1,790,501                1,222,335
  Convertible Debenture                                                                    1,256,678                        -
  Beneficial Conversion Liability                                                          2,503,507                        -
------------------------------------------------------------------------------------------------------------------------------
TOTAL NON CURRENT LIABILITIES                                                              5,835,686                1,222,335
------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES
                                                                                           6,567,304                1,880,825
------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' DEFICIENCY
SHARE CAPITAL
  Authorized:
           100,000,000 shares of common stock  par value  $0.001
  Issued, allotted and outstanding:
           148,584,354 shares of common stock (2004 - 94,584,354)                            148,584                   94,584
TREASURY STOCK ISSUED  (2005 - 54,000,000   2004 - 0)                                   (10,800,000)                        -
ADDITIONAL PAID-IN CAPITAL                                                                11,106,584                  360,584
DEFICIT ACCUMULATED                                                                      (3,790,370)                (947,291)
------------------------------------------------------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' DEFICIENCY                                                           (3,335,202)                (492,123)
------------------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                     $       3,232,102        $       1,388,702
==============================================================================================================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                                                              22
<PAGE>

<TABLE>
<CAPTION>
FIDELIS ENERGY INC.

Statement of Stockholders' Deficiency
Years ended December 31, 2005 and 2004                                                                                Page 1 of 2
(EXPRESSED IN U.S. DOLLARS)
                                                                                                                         Total
                                                                         Additional                                      Stock-
                                              Common stock                  paid-in     Treasury        Deficit         holders'
                                      ------------------------------
                                         Shares         Amount              capital        Stock    accumulated     (deficiency)
---------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                 <C>           <C>           <C>           <C>              <C>
BALANCE, December 31, 2003               95,331,354          95,331        (48,163)                   (114,048)         (66,880)

January 26, 2004, Shares
Issued for Cash                          14,608,000          14,608          73,392                                       88,000

February 25, 2004, Shares
Repurchased                            (17,430,000)        (17,430)        (87,570)                                    (105,000)

August  1, 2004, Shares Issued
to Directors for Services                 2,075,000           2,075         422,925                                      425,000

                                                                                                                               -

  - net loss for the year                                                                             (833,243)        (833,243)
---------------------------------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2004 - RESTATED    94,584,354   $      94,584    $    360,584              $    (947,291) $      (492,123)
=================================================================================================================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.







                                                                              23
<PAGE>


<TABLE>
<CAPTION>
FIDELIS ENERGY INC.

Statement of Stockholders' Deficiency
Years ended December 31, 2005 and 2004                                                                                Page 2 of 2
(EXPRESSED IN U.S. DOLLARS)
                                                                                                                            Total
                                                                          Additional                                         Stock-
                                                 Common stock                paid-in        Treasury         Deficit       holders'
                                         ------------------------------
                                            Shares         Amount            capital           Stock     accumulated   (deficiency)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                 <C>          <C>                           <C>            <C>
BALANCE, December 31, 2004                  94,584,354          94,584       360,584                       (947,291)      (492,123)


November 17, 2005 Treasury Stock @ $0.20    54,000,000          54,000    10,746,000    (10,800,000)               -              -


  - net loss for the year                                                                                (2,843,079)    (2,843,079)


------------------------------------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2005                 148,584,354   $     148,584   $11,106,584    (10,800,000)   $ (3,790,370) $  (3,335,202)
====================================================================================================================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.









                                                                              24
<PAGE>

<TABLE>
<CAPTION>
FIDELIS ENERGY INC.
Statements of Operations
Years ended December 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)                                                                                      Restated
                                                                                           2005                      2004
--------------------------------------------------------------------------------------------------------------------------
REVENUE
<S>                                                                         <C>                        <C>
  Production Income                                                         $         1,395,849        $           48,735
--------------------------------------------------------------------------------------------------------------------------

TOTAL REVENUE                                                                         1,395,849                    48,735

  Cost of operations                                                                    231,508                    33,722
--------------------------------------------------------------------------------------------------------------------------

GROSS PROFIT                                                                          1,164,341                    15,013

  Corporate Finance fees                                                                257,500                         -
  Consulting                                                                            127,354                   110,056
  Depletion and amortization                                                            124,137                         -
  Exploration expenses                                                                  270,962                         -
  General and Admin fees                                                                278,159                   101,674
  Production Royalties                                                                  136,063                         -
  Salaries and Directors fees                                                           119,798                   544,500
  Selling & Marketing                                                                         -                    73,854
--------------------------------------------------------------------------------------------------------------------------

OPERATING LOSS                                                                        (149,632)                 (815,071)
OTHER EXPENSE

  Beneficial conversion expense                                                     (2,503,507)
  Interest Expense                                                                    (134,772)                  (18,172)
  Write off leasehold improvements                                                     (55,168)
--------------------------------------------------------------------------------------------------------------------------

NET LOSS FOR THE YEAR                                                       $       (2,843,079)        $        (833,243)
==========================================================================================================================

LOSS PER SHARE - basic and diluted


Loss from operations                                                        $            (0.00)        $           (0.01)


Net loss                                                                    $            (0.03)        $           (0.01)
==========================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING - basic and diluted                                            101,076,187                95,698,605
==========================================================================================================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                                                              25
<PAGE>


<TABLE>
<CAPTION>
FIDELIS ENERGY INC

Statements of Cash Flows
Years Ended December 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)                                                                                      Restated
                                                                                           2005                      2004
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                       <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
  Net loss for the year                                                      $      (2,843,079)        $        (833,243)
  Adjustments to reconcile net loss to net cash
    Used in operating activities:
    - depletion                                                                         124,137                         -
    - depreciation of fixed assets                                                       20,161                     7,262
    -  asset retirement obligation                                                      285,000
    - beneficial conversion expense                                                   2,503,507                         -
    - shares issuance for services                                                            -                   425,000
    - write off leasehold improvements                                                   55,168                         -
    - accredited to convertible debenture                                                 6,678
  Changes in assets and liabilities:
    - (Increase) Decrease in Accounts Receivable                                      (704,532)                         -
    - (Increase) Decrease in Deposits                                                         -                   (5,173)
    - Increase (Decrease) in Accounts Payable                                          (60,547)                    69,759
    - Increase (Decrease) in Accrued Expenses                                            74,512                    61,550
    - Increase (Decrease) in Note Payable                                                53,756                    18,172
--------------------------------------------------------------------------------------------------------------------------
                                                                                      (485,239)                 (256,673)
--------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Purchase of Capital Assets                                                             (28,894)                 (105,620)
Purchase of Oil & Gas Leases                                                          (296,177)                 (505,000)
Oil & Gas Exploration costs                                                           (780,504)                 (768,645)
--------------------------------------------------------------------------------------------------------------------------

                                                                                    (1,105,575)               (1,379,265)
--------------------------------------------------------------------------------------------------------------------------
                                                                                                                        -
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from convertible debenture                                                   1,250,000                         -
Proceeds from Credit Line                                                               568,167                 1,213,250
Issuance of common shares                                                                     -                    88,000
Proceeds from Note Payable                                                                5,345                  (70,385)
Proceeds from Shareholder  loan                                                             142                         -
Overdrawn cash                                                                             (82)                        82
Proceeds from Related Party Note                                                              -                   305,000
--------------------------------------------------------------------------------------------------------------------------

                                                                                      1,823,572                 1,535,947
--------------------------------------------------------------------------------------------------------------------------

INCREASE IN CASH AND CASH EQUIVALENTS                                                   232,758                  (99,991)
--------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE ON CASH
                                                                                              -                         -

CASH AND CASH EQUIVALENTS, beginning of year                                                  -                    99,991
--------------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS , end of year                                      $          232,758        $                -
==========================================================================================================================

CASH AND CASH EQUIVALENTS  REPRESENTED BY:
  Cash                                                                       $          232,758        $                -
--------------------------------------------------------------------------------------------------------------------------
                                                                             $          232,758        $                -
==========================================================================================================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

SUPPLEMENTAL CASH FLOW INFORMATION

On February 25, 2004, the Company purchased  17,430,000 of its common shares for
a loan  payable  of  $105,000.  These  shares  were  returned  to  treasury  and
cancelled.  On November 17, 2005 the Company issued 54,000,000 as treasury stock
held as collateral on the convertible debenture.

                                                                              26
<PAGE>



1.       ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

         Nature of Operations and Going Concern

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

         As of  December  31,  2005 the  Company's  cash  flow  from  operations
         exceeded its general and administrative and other operational expenses.
         Also the Company is actively  pursuing  alternative  financing  and has
         renegotiated  a  $5,000,000  convertible  debenture  credit  line  to a
         conventional debt credit line with no convertible  feature.  Further, a
         $1,250,000  convertible  debenture,  with  $1,250,000  advanced  as  of
         December 31, 2005 has also been negotiated.

         The  Company's  future  capital  requirements  will  depend on numerous
         factors including,  but not limited to, acquiring  interests in various
         exploration and production  opportunities  and the continued success of
         its current oil and gas operations.

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

         Nature of Business

         The Company was  incorporated  under the laws of the State of Nevada on
         November  6, 2000.  Since  November  6, 2000,  the  Company  was in the
         development stage, and had not commenced planned principal  operations.
         On June 10,  2003,  the Company  changed its name to Eagle Star Energy,
         Inc. to reflect the current  direction of the company.  On February 24,
         2004, the Company changed its name to Fidelis Energy,  Inc. The Company
         operated as a  development  stage  company  until the first  quarter of
         2004,  when it began  exploration  for oil and gas.  During  the second
         quarter  of 2004,  the  Company  acquired  a proven  well field and was
         setting up the  extraction  process with some  revenue  generated as at
         December 31, 2004.

         The Company is  presently  in the  production  stage of the oil and gas
         industry.  The Company's primary objective is to identify,  acquire and
         develop working interest percentages in smaller, underdeveloped oil and
         gas projects in California and Canada that do not meet the requirements
         of the larger producers and developers.  The Company intends to acquire
         smaller,  underdeveloped  producers  generally  under  control of small
         family-owned operators who are interested in selling out.

2.         SIGNIFICANT ACCOUNTING POLICIES

          (A)     ACCOUNTING ESTIMATES

                  The  preparation  of financial  statements in conformity  with
                  generally accepted  accounting  principles requires management
                  to make  estimates  and  assumptions  that affect the reported
                  amount of assets and  liabilities and disclosure of contingent
                  assets and liabilities at the date of the financial statements
                  and the reported  amount of revenues  and expenses  during the
                  period.


                                                                              27
<PAGE>

2.         SIGNIFICANT ACCOUNTING POLICIES (continued)

                  Actual results may differ from those estimates.

         (B)      CASH EQUIVALENTS

                  For purposes of the  statement of cash flows cash  equivalents
                  usually consist of highly liquid investments which are readily
                  convertible  into cash with  maturity of three  months or less
                  when purchased.

         (C)      RECLASSIFICATION

                  Certain reclassifications have been made in the 2004 financial
                  statements to conform with the 2005 presentation.

         (D)      CONCENTRATION OF CREDIT RISK

                  The    Company    has   no    significant    off-balance-sheet
                  concentrations   of  credit  risk  such  as  foreign  exchange
                  contracts,   options   contracts  or  other  foreign   hedging
                  arrangements.  The Company  maintains the majority of its cash
                  balances with one financial institution, in the form of demand
                  deposits.

         (E)      FIXED ASSETS

                   Property and Equipment are stated at cost.  Depreciation  and
                  amortization is calculated on a  straight-line  basis over the
                  estimated useful lives of the assets as follows:

                                          Asset                  Rate
                      Computer hardware                      3 - 5 years
                      Office Equipment                       3 - 5 years
                      Office furniture and equipment         5 - 7 years
                      Leasehold improvements                 Term of Lease

                  Maintenance and repairs are charged to operations; betterments
                  are  capitalized.  The  cost of  property  sold  or  otherwise
                  disposed  of  and  the  accumulated  depreciation  thereon  is
                  eliminated   from  the   property   and  related   accumulated
                  depreciation  accounts,  and  any  resulting  gain  or loss is
                  credited  or  charged to  income.  During the year  $55,168 of
                  un-amortized   leasehold  improvements  was  written  off  and
                  expensed.

                  Depreciation expense for the years ended December 31, 2005 and
                  2004 was $20,161 and $7,262, respectively.



                                                                              28
<PAGE>


2.       SIGNIFICANT ACCOUNTING POLICIES (continued)


          (F) OIL AND GAS ACTIVITIES - SUCCESSFUL EFFORTS METHOD OF ACCOUNTING
                  On April 4, 2005, the FASB adopted FASB Staff Position FSP FAS
                  19-1 that amends Statement of Financial  Accounting  Standards
                  No. 19 (FAS 19), Financial Accounting and Reporting by Oil and
                  Gas   Producing    Companies,    to   permit   the   continued
                  capitalization  of  exploratory  well costs beyond one year if
                  (a) the  well  found a  sufficient  quantity  of  reserves  to
                  justify its  completion as a producing well and (b) the entity
                  is making sufficient  progress  assessing the reserves and the
                  economic and operating viability of the project

                  The Company accounts for its crude oil exploration and natural
                  gas development  activities  utilizing the successful  efforts
                  method of accounting.  Under this method,  costs of productive
                  exploratory wells,  development dry holes and productive wells
                  and  undeveloped  leases  are  capitalized.  Oil and gas lease
                  acquisition  costs are also  capitalized.  Exploration  costs,
                  including personnel costs,  certain geological and geophysical
                  expenses and delay rentals for oil and gas leases, are charged
                  to  expense  as  incurred.   Exploratory  drilling  costs  are
                  initially capitalized,  but charged to expense if and when the
                  well is  determined  not to have found  reserves in commercial
                  quantities.  The  sale  of a  partial  interest  in  a  proved
                  property is  accounted  for as a cost  recovery and no gain or
                  loss  is  recognized  as  long  as  this  treatment  does  not
                  significantly affect the unit-of-production amortization rate.
                  A gain or loss is recognized  for all other sales of producing
                  properties.   During  the  year   $270,962   was   charged  to
                  exploration expense for dry hole costs.

                  The application of the successful efforts method of accounting
                  requires   managerial   judgment  to  determine   that  proper
                  classification   of  wells   designated  as  developmental  or
                  exploratory   which  will  ultimately   determine  the  proper
                  accounting treatment of the costs incurred. The results from a
                  drilling  operation can take  considerable time to analyze and
                  the   determination   that   commercial   reserves  have  been
                  discovered  requires  both  judgment and industry  experience.
                  Wells may be completed  that are assumed to be productive  and
                  actually deliver oil and gas in quantities  insufficient to be
                  economic,  which may result in the abandonment of the wells at
                  a later date.  Wells are drilled that have  targeted  geologic
                  structures  that are both  developmental  and  exploratory  in
                  nature and an  allocation  of costs is  required  to  properly
                  account  for the  results.  Delineation  seismic  incurred  to
                  select  development  locations  within an oil and gas field is
                  typically  considered a development cost and capitalized,  but
                  often these  seismic  programs  extend beyond the reserve area
                  considered  proved and management must estimate the portion of
                  the seismic  costs to expense.  The  evaluation of oil and gas
                  leasehold  acquisition costs requires  managerial  judgment to
                  estimate  the fair  value of these  costs  with  reference  to
                  drilling activity in a given area.  Drilling  activities in an
                  area by other companies may also effectively condemn leasehold
                  positions.

                  The  successful  efforts  method  of  accounting  can  have  a
                  significant  impact on the operational  results  reported when
                  the  Company is  entering a new  exploratory  area in hopes of
                  finding  an oil and gas field that will be the focus of future
                  development  drilling activity.  The initial exploratory wells
                  may be unsuccessful and will be expensed. Seismic costs can be
                  substantial  which  will  result  in  additional   exploration
                  expenses when incurred.






                                                                              29
<PAGE>


2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

                                RESERVE ESTIMATES

                  Estimates  of  oil  and  gas  reserves,   by  necessity,   are
                  projections  based on geologic and engineering  data and there
                  are uncertainties  inherent in the interpretation of such data
                  as well as the  projection of future rates of  production  and
                  the timing of development expenditures. Reserve engineering is
                  a subjective process of estimating  underground  accumulations
                  of oil and gas that are difficult to measure.  The accuracy of
                  any reserve estimate is a function of the quality of available
                  data, engineering and geological interpretations and judgment.
                  Estimates of economically recoverable oil and gas reserves and
                  future  net cash  flows  necessarily  depend  upon a number of
                  variable   factors  and   assumptions,   such  as   historical
                  production  from the area compared with  production from other
                  producing   areas,  the  assumed  effects  of  regulations  by
                  governmental agencies and assumptions governing future oil and
                  gas  prices,   future   operating   costs,   severance  taxes,
                  development  costs and workover gas costs, all of which may in
                  fact  vary  considerably  from  actual  results.   The  future
                  drilling  costs  associated  with reserves  assigned to proved
                  undeveloped  locations may  ultimately  increase to the extent
                  that these reserves may be later  determined to be uneconomic.
                  For these reasons,  estimates of the economically  recoverable
                  quantities of oil and gas attributable to any particular group
                  of properties,  classifications of such reserves based on risk
                  of  recovery,  and  estimates  of the  future  net cash  flows
                  expected  therefrom may vary  substantially.  Any  significant
                  variance  in  the  assumptions  could  materially  affect  the
                  estimated  quantity  and value of the  reserves,  which  could
                  affect the carrying value of our oil and gas properties and/or
                  the rate of  depletion of the oil and gas  properties.  Actual
                  production,  revenues  and  expenditures  with  respect to our
                  reserves will likely vary from  estimates,  and such variances
                  may be material.

                  Total depletion  expense for the years ended December 31, 2005
                  and 2004 was $124,137 and $0 respectively.


         (G)      ASSET RETIREMENT OBLIGATIONS

                  In the fourth quarter 2005, we adopted FASB Interpretation No.
                  47,  "Accounting for Contingent Asset Retirement  Obligations"
                  ("FIN  47"),  an  interpretation  of FASB  Statement  No. 143,
                  "Asset Retirement  Obligations" ("SFAS 143"). FIN 47 clarifies
                  that the term  "conditional  asset  retirement  obligation" as
                  used in SFAS 143  refers to a legal  obligation  to perform an
                  asset retirement  activity in which the timing and (or) method
                  of settlement  are  conditional  on a future event that may or
                  may not be within  the  control  of the  entity.  An entity is
                  required  to  recognize  a  liability  for the fair value of a
                  conditional  asset retirement  obligation if the fair value of
                  the liability can be reasonably estimated, even if conditional
                  on a future event.  For existing  contingent  asset retirement
                  obligations which are determined to be recognizable  under FIN
                  47, the company has  recognized  an  estimated  obligation  of
                  $285,000 for potential  plugging,  abandonment and/or remedial
                  costs of our operations.

         (H)      STOCK-BASED COMPENSATION

                  In December 2002,  the Financial  Accounting  Standards  Board
                  issued Financial  Accounting Standard No. 148, "ACCOUNTING FOR
                  STOCK-BASED  COMPENSATION - TRANSITION AND DISCLOSURE"  ("SFAS
                  No. 148"), an amendment of Financial  Accounting  Standard No.
                  123  "ACCOUNTING  FOR  STOCK-BASED  COMPENSATION"  ("SFAS  No.
                  123").  The  purpose  of  SFAS  No.  148  is to:  (1)  provide
                  alternative   methods  of   transition   for  an  entity  that
                  voluntarily   changes  to  the  fair  value  based  method  of
                  accounting for stock-based  employee  compensation,  (2) amend
                  the  disclosure  provisions  to require  prominent  disclosure
                  about the effects on reported net income of an

                                                                              30
<PAGE>

2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

                  entity's   accounting   policy   decisions   with  respect  to
                  stock-based   employee   compensation,   and  (3)  to  require
                  disclosure of those effects in interim financial  information.
                  The  disclosure  provisions of SFAS No. 148 were effective for
                  the Company commencing December 31, 2002.

                  The Company has  elected to account for  stock-based  employee
                  compensation arrangements in accordance with the provisions of
                  Accounting  Principles  Board Opinion No. 25,  "ACCOUNTING FOR
                  STOCK ISSUED TO EMPLOYEES", ("APB No. 25") and comply with the
                  disclosure  provisions  of SFAS No. 123 as amended by SFAS No.
                  148 as described above. Under APB No. 25, compensation expense
                  is recognized based on the difference,  if any, on the date of
                  grant between the estimated fair value of the Company's  stock
                  and the  amount an  employee  must pay to  acquire  the stock.
                  Compensation  expense  is  recognized   immediately  for  past
                  services   and   pro-rata   for  future   services   over  the
                  option-vesting period.

                  The Company accounts for equity instruments issued in exchange
                  for the receipt of goods or services from other than employees
                  in accordance with SFAS No. 123 and the conclusions reached by
                  the Emerging Issues Task Force in Issue No. 96-18, "ACCOUNTING
                  FOR EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES
                  FOR  ACQUIRING  OR  IN  CONJUNCTION   WITH  SELLING  GOODS  OR
                  SERVICES" ("EITF 96-18").  Costs are measured at the estimated
                  fair  market  value  of  the  consideration  received  or  the
                  estimated  fair  value  of  the  equity  instruments   issued,
                  whichever  is more  reliably  measurable.  The value of equity
                  instruments  issued  for  consideration  other  than  employee
                  services  is  determined  on  the  earlier  of  a  performance
                  commitment  or completion  of  performance  by the provider of
                  goods or services as defined by EITF 96-18.

                  The Company has also adopted the  provisions  of the Financial
                  Accounting Standards Board Interpretation  No.44,  "ACCOUNTING
                  FOR CERTAIN  TRANSACTIONS  INVOLVING  STOCK  COMPENSATION - AN
                  INTERPRETATION  OF APB  OPINION  NO.  25"  ("FIN  44"),  which
                  provides guidance as to certain applications of APB 25. FIN 44
                  is  generally  effective  July 1, 2000 with the  exception  of
                  certain events occurring after December 15, 1998.

                  In  December  2004,   FASB  issued   Statement  No.  123  (R),
                  SHARE-BASED  PAYMENT,  which establishes  accounting standards
                  for transactions in which an entity receives employee services
                  in exchange  for (a) equity  instruments  of the entity or (b)
                  liabilities  that are based on the fair value of the  entity's
                  equity  instruments  or that may be settled by the issuance of
                  equity  instruments.  Effective  for periods  beginning  after
                  December  15,  2005,  SFAS 123(R) will require us to recognize
                  the  grant-date  fair value of stock  options and equity based
                  compensation   issued  to  employees   in  the   statement  of
                  operations. The statement also requires that such transactions
                  be accounted for using the  fair-value-based  method,  thereby
                  eliminating use of the intrinsic value method of accounting in
                  APB No. 25,  ACCOUNTING  FOR STOCK ISSUED TO EMPLOYEES,  which
                  was permitted  under Statement 123, as originally  issued.  We
                  currently  are  evaluating  the impact of Statement 123 (R) on
                  our financial condition and results of operations.

         (I)      LOSS PER SHARE

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

         (J)      PERVASIVENESS OF ESTIMATES

                  The  preparation  of financial  statements in conformity  with
                  generally accepted  accounting  principles required management
                  to make  estimates  and  assumptions  that affect the reported
                  amounts of assets and liabilities and disclosure of contingent
                  assets and liabilities at the date of

                                                                              31
<PAGE>

2.        SIGNIFICANT ACCOUNTING POLICIES (continued)

                  the financial  statements and the reported amounts of revenues
                  and expenses during the reporting period. Actual results could
                  differ from those estimates.

         (K)      REVENUE RECOGNITION

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

3.       CONCENTRATIONS

                  At  December  31,  2005,  approximately  90% of the  Company's
                  revenues come from three gas wells in California.  The loss of
                  these wells,  or a disruption in production  from these wells,
                  would adversely effect the operations of the Company.

4.        INCOME TAXES

                  As of December 31, 2005,  the Company had a net operating loss
                  carryforward   for   income   tax   reporting    purposes   of
                  approximately  $1,313,000  that may be offset  against  future
                  taxable income through 2025. Current tax laws limit the amount
                  of loss  available to be offset  against future taxable income
                  when a substantial change in ownership occurs.  Therefore, the
                  amount  available  to  offset  future  taxable  income  may be
                  limited.  No tax  benefit has been  reported in the  financial
                  statements,  because  the Company  believes  there is a 50% or
                  greater   chance  the   carryforwards   will  expire   unused.
                  Accordingly,   the   potential   tax   benefits  of  the  loss
                  carryforwards are offset by a valuation  allowance of the same
                  amount.

5.        NOTE PAYABLE

                  On  November  17,  2003,  the Company  repurchased  25,232,000
                  shares of its common  stock from the  previous  president  and
                  treasurer.  In  connection,  with this  purchase  the  Company
                  agreed  to  pay   $150,000   for  the  common  stock  and  the
                  outstanding  shareholder  loan of $52,638 payable on or before
                  March 15, 2004,  at an interest  rate of 6%. The loan due date
                  has  been  extended  and  principal  and  interest  are due on
                  demand.  As of December 31, 2005 and  December  31, 2004,  the
                  Company owed $91,687 and $86,240 on this loan.

                  On April 2, 2004, the Company  borrowed  $305,000 from a third
                  party for direct payment on oil and gas  properties.  The loan
                  had an original  due date of April 2, 2005 and bears  interest
                  of 5%. The note has been extended indefinitely. As at December
                  31, 2005 the outstanding  amount is $332,703 including $16,177
                  of accrued interest. As of December 31, 2004, the Company owed
                  $316,526 on this loan.

6.       SHAREHOLDER LOAN

                  The Company has borrowed  money from a shareholder in order to
                  pay general and administrative expenses. For purposes of these
                  financial  statements,  interest  has  been  calculated  at an
                  imputed  interest  rate of 6 percent.  As of December 31, 2005
                  and  December  31,  2004,  the Company owed $3,130 and $2,989,
                  respectively, relating to these notes.

                                                                              32
<PAGE>

7.        CREDIT LINE NOTE PAYABLE

                  During the year ended December 31, 2004, the Company  received
                  $1,122,250  for  a  stock  subscription  of  1,122,250  common
                  shares.  On October 25, 2004,  the Company  renegotiated  this
                  transaction in the form of a Convertible Debenture Credit Line
                  of up to $5 million. In 2004 this amount was reclassified from
                  Common Stock to be Issued to a Current  Liability.  The Credit
                  Line bares  interest  annual rate of Libor plus 2% percent and
                  shall be  payable 2 years  from the  issuance.  The  principal
                  amount  shall be  convertible,  in part  for $1 per  Preferred
                  Series A Shares, at the option of the Company within the first
                  six months  and  thereafter  by the  lender  until the loan is
                  satisfied  or  liquidated.   The  Preferred  Shares  shall  be
                  convertible  to Common Stock on a basis  equivalent  to 20% of
                  Common Stock of the Company then  outstanding.  As of December
                  31, 2004,  the total amount due on the  Convertible  Debenture
                  Credit Line was $1,222,335.

                  On November 15, 2005, we entered into a replacement promissory
                  note in the amount of $2,050,000 with Chunuk  Financial Corp.,
                  which  replaces  the  variable  rate  convertible  credit line
                  agreement  we entered  into with Chunuk on October 24, 2004 in
                  the principal  amount of up to $5,000,000.  As at December 31,
                  2005,  $1,790,501 was outstanding  including  accrued interest
                  amounts.

8.       CONVERTIBLE DEBENTURE

                  On November  18, 2005,  we entered into a securities  purchase
                  agreement with Cornell Capital for an aggregate purchase price
                  of  $2,500,000,  of  which  we have  issued  (i) a  $1,250,000
                  secured convertible debenture,  convertible into shares of our
                  common stock, par value $0.001, and (ii) a warrant to purchase
                  an  aggregate  of  9,000,000  additional  shares of our common
                  stock at an exercise  price of $0.2708  per share  exercisable
                  until  November 18, 2010.  An  additional  $1,250,000  secured
                  convertible  debenture  was issued on January 19,  2006,  just
                  prior to the filing of a registration statement.

                  The secured  convertible  debenture is convertible into shares
                  of our common stock at any time by dividing the dollar  amount
                  being  converted  by the lower of $0.2708 or 80% of the lowest
                  volume weighted  average trading price per share of our common
                  stock  for  five  trading  days   immediately   preceding  the
                  conversion  date.  The interest on the  convertible  debenture
                  shall accrue on the outstanding principal balance at a rate of
                  5% per annum.  As at December 31, 2005 $6,678 has been charged
                  as an interest expense.

                  The Warrant's to purchase  9,000,000 of the  Company's  common
                  stock will expire on November 21, 2010.  The exercise price of
                  the warrant is $0.02708 and an exercise  period of five years.
                  The Company  accounts for the fair value of these  outstanding
                  warrants to purchase  common stock and the conversion  feature
                  of its  convertible  notes in  accordance  with  SFAS No.  133
                  "Accounting For Derivative Instruments And Hedging Activities"
                  and EITF Issue No. 00-19 "Accounting For Derivative  Financial
                  Instruments  Indexed To And Potentially Settled In A Company's
                  Own  Stock;"  which  requires  the  Company to  bifurcate  and
                  separately  account for the conversion feature and warrants as
                  embedded  derivatives  contained in the Company's  convertible
                  notes.

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

                                                                              33
<PAGE>

8.       CONVERTIBLE DEBENTURE (continued)

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

                  Beneficial  Conversion expense of the debenture was calculated
                  by the Company  based upon the  difference  between the market
                  price  of  shares  of the  Company's  stock  as of the date of
                  issuance  and  the   conversion   price   applicable   to  the
                  convertible debentures.

                  The  value of the  warrants  have  been  calculated  using the
                  Black-Scholes  method  as of the  date of  grant  based on the
                  following  assumptions:  an average  risk free rate of 3.25; a
                  dividend yield of 0.00%; an average  volatility  factor of the
                  expected market price of the Company's  common stock of 2,184%
                  for 2004; and an expected life of 5 years.

                  In  addition  1,823,190  warrants  have  been  issued  to  H.C
                  Wainwright and First SB Inc. respectively, each exercisable at
                  $0.30 with terms of 5 years from November 28, 2005.  The value
                  of  these  warrants  have  also  been  calculated   using  the
                  Black-Scholes  method  as of the  date of  grant  based on the
                  following  assumptions:  an average  risk free rate of 3.25; a
                  dividend yield of 0.00%; an average  volatility  factor of the
                  expected market price of the Company's common stock of 2,184%;
                  and an expected life of 5 years.

<TABLE>
<CAPTION>
                                                                  CONVERSION
                                                 WARRANTS          DEBENTURE                TOTAL

<S>                                          <C>                 <C>                   <C>
         Cornell Capital Partners, LP        $  (1,260,000.00)   $ (733,013.34)        $(1,993,013.34)
         H.C. Wainwright                     $  (255,246.60)                           $  (255,246.60)
         1st SB Partners Ltd.                $  (255,246.60)                           $  (255,246.60)

                        TOTAL BENEFICIAL CONVERSION EXPENSE                            $ (2,503,506.54)
</TABLE>

9.       COMMITMENTS

         On January 22, 2004, the Company entered into a lease for office space.
         The rental charges are approximately $4,300 per month commencing May 1,
         2004. The lease expires April 30, 2008.

         As of July 1, 2005 the Company had its above lease  obligation  assumed
         by another  party and  relocated to new premises  within the same metro
         area. This move will precipitate a write-off of leasehold  improvements
         in the amount of  $67,182,  which were  written  off during the quarter
         ended  September  30,  2005.  The  rent  for  the  new  office  is on a
         month-to-month basis.

         On January 1, 2006, the Company relocated its executive offices to 9595
         Wishire  Blvd.,  Ste. 900,  Beverly Hills,  CA 90212-2509.  The Company
         currently  rents this shared office facility on a month-to- month basis
         for $2,400 per month for all services.

                                                                              34
<PAGE>


10.      RELATED PARTY TRANSACTIONS

         Silver Star Energy,  Inc.  ("Silver  Star") is a partner in many of the
         Company's  projects.  On March 12, 2004, Fidelis entered into a Farmout
         Proposal on the North Franklin Prospect in California,  under the terms
         of which Fidelis invested  $250,000 and received a 20% Working Interest
         in the Prospect.  In April, 2004, Fidelis entered into a second Farmout
         Proposal, on the same prospect,  and acquired an additional 15% Working
         Interest  for an  additional  $250,000  contribution,  for an aggregate
         total interest of 35%.

         On February 25, 2004,  the Company  purchased  17,430,000 of its common
         shares for a loan  payable of $105,000.  These shares were  returned to
         treasury  and  cancelled.  Interest at a rate of 6% has been imputed on
         the loan.  As of December 31, 2005 and 2004,  the Company owes $114,147
         and $108,802 on this loan.

11.      COMMON STOCK

         On November 17, 2003, the Company  approved a 38:1 forward stock split.
         On March 26, 2004, the Company  approved a 10:1 forward stock split. On
         December 10, 2004,  the Company  approved a 1.66:1 forward stock split.
         All references to common stock in the financial  statements reflect the
         effects of these stock splits.

         On January 26, 2004,  the Company issued  14,608,000  common shares for
cash.

         On February 25, 2004,  the Company  purchased  17,430,000 of its common
         shares for a loan  payable of $105,000.  These shares were  returned to
         treasury and cancelled.

         On April 1, 2004,  the Company  authorized  the  issuance of  2,075,000
         shares of common stock to its three directors for services rendered. As
         a  result  of this  issuance,  $425,000  in  compensation  expense  was
         recorded.

         On November 17, 2005,  the Company issued  54,000,000  common shares as
         treasury  stock held as collateral on the  convertible  debenture.  The
         shares were  recorded  at the market  value of the stock on the date of
         issuance, which was $0.20 per share.

12.       STOCK OPTIONS

         Pursuant to a 2004 Stock Option and Compensation Plan, grants of shares
         can  be  made  to  employees,  officers,  directors,   consultants  and
         independent  contractors of non-qualified  stock options as well as for
         the grant of stock options to employees that qualify as incentive stock
         options  under  Section 422 of the Internal  Revenue Code of 1986 or as
         non-qualified  stock options.  The Plan is administered by the Board of
         Directors ("Board"),  which has, subject to specified limitations,  the
         full  authority to grant options and establish the terms and conditions
         for vesting and exercise thereof.

         In order to exercise an option  granted  under the Plan,  the  optionee
         must pay the full exercise price of the shares being purchased. Payment
         may be made  either:  (i) in  cash;  or (ii) at the  discretion  of the
         Board,  by  delivering  shares of  common  stock  already  owned by the
         optionee that have a fair market value equal to the applicable exercise
         price;  or (iii) with the approval of the Board,  with monies  borrowed
         from us.

         Subject to the  foregoing,  the Board has broad  discretion to describe
         the terms and conditions  applicable to options granted under the Plan.
         The Board may at any time  discontinue  granting options under the Plan
         or otherwise  suspend,  amend or terminate  the Plan and may,  with the
         consent of an optionee, make





                                                                              35
<PAGE>

12.       STOCK OPTIONS (continued)

         such modification of the terms and conditions of such optionee's option
         as the Board shall deem advisable.

         On March 17, 2004, the Board of Directors  approved a stock option plan
         whereby  8,000,000  common  shares  have been set aside for  employees,
         officers, directors and third party service providers to be distributed
         at the  discretion  of the  Board  of  Directors.  On March  17,  2004,
         1,250,000  options were granted to the five  officers/directors  of the
         Company for an exercise price of $0.10 per share,  increasing  annually
         at 6% per annum from the grant date of March 17, 2004.  The term of the
         options is 10 years.  On April 1, 2004,  the option grant was cancelled
         and replaced with an award for services of restricted stock.

         The following table sets forth the options and warrants  outstanding as
         of December 31, 2005 and December 31, 2004:

<TABLE>
<CAPTION>
                                                                             December 31,            December 31,
                                                                             2005                    2004
                                                                             -------------------     ------------------
<S>                                                                          <C>                     <C>
         Options Outstanding, Beginning of year                                               -                      -
                  Granted                                                                     -                      -
                  Expired                                                                     -                      -
                  Exercised                                                                   -                      -
                                                                             -------------------     ------------------
         Options Outstanding, End of year                                                     -                      -
                                                                             ===================     ==================
         Exercise price for options outstanding, end of period               $                -      $               -
                                                                             ===================     ==================
</TABLE>

13.       OIL AND GAS ACTIVITIES

         As of December 31, 2005,  the Company had revenues of $135,373 from the
         Comanche Point property.

         In March of 2005,  the Company  received final approval to complete and
         has completed  the tie in of the pipeline for the first North  Franklin
         Gas Well in  California.  The Well has  been in  production  for  seven
         months   now.   Also  a  second  well  at  the  North   Franklin,   the
         Archer-Wildlands  #1 well has been completed and has been in production
         since August,  2005. As of December 31, 2005,  the Company had revenues
         of $1,203,993 from the North Franklin property.

<TABLE>
<CAPTION>
   Property           Reserve               Revenue                 Depletion               Capitalized Costs        Dry Hole
   ------------------ ------------- ------------------------- ----------------------- ------------------------------ ---------------
                                        2005         2004        2005        2004          2005           2004            2005
<S>                   <C>            <C>            <C>          <C>         <C>        <C>            <C>             <C>
   Comanche PT        Unproved       $    135,373   $ 15,013            -          -    $    812,703    $   516,526               -
   North Franklin     Proved         $  1,203,993          -     $124,137          -    $  1,481,293    $   768,645               -
   Kansas             Unproved                             -                       -    $     67,857                              -
   Hidalgo            Expensed                  -          -            -          -               -                    ($ 270,962)
   ------------------ ------------- -------------- ---------- ------------ ---------- --------------- -------------- ---------------
                                                                 $124,137               $  2,361,853    $ 1,285,171
</TABLE>

         The reserve information presented below is based on reports prepared by
         independent  petroleum engineers,  Chapman Petroleum  Engineering Ltd.,
         for the proved property, North Franklin.

         The information is presented in accordance with regulations  prescribed
         by  the  Securities  and  Exchange  Commission  and  based  on  Reserve
         definitions  found in Rule 4-10(a) of Regulation S-X. Reserve estimates
         are inherently imprecise.

         Proved oil and gas reserves are the estimated  quantities of crude oil,
         natural gas and gas  liquids  which  geological  and  engineering  data
         demonstrate with reasonable certainty to be recoverable in future years
         from known reservoirs under existing economic and operating conditions,
         ie.,  prices  and  costs as of the date the  estimate  is made.  Prices
         include  consideration  of changes in existing  prices provided only by
         contractual  arrangements,  but not on  escalations  based upon  future
         conditions.

                                                                              36
<PAGE>

13.       OIL AND GAS ACTIVITIES (continued)

         Reservoirs are considered proved if economic  producibilty is supported
         by either actual production or conclusive formation test. The area of a
         reservoir  considered  proved  includes (A) that portion  delineated by
         drilling and defined by gas-oil and/or oil-water contacts,  if any; and
         (B) the immediately  adjoining portions not yet drilled,  but which can
         be  reasonably  judged  as  economically  productive  on the  basis  of
         available   geological  and   engineering   data.  In  the  absence  of
         information on fluid contacts,  the lowest known structural  occurrence
         of hydrocarbons controls the lower proved limit of the reservoir.

<TABLE>
<CAPTION>
                                          Summary of Company Reserves (Unaudited)
                                           OIL                            SALES GAS                         NGL
     Proved Developed                     MSTB                              MMscf                          Mbbls
     ------------------------- ---------------------------- ----- --------------------------- -- ---------------------------
                                   Gross          Net                Gross          Net             Gross          Net
                               -------------- ------------- ----- ------------- ------------- -- ------------- -------------
<S>                            <C>            <C>                 <C>           <C>              <C>           <C>
     Archer Whitney #1               -             -                 2,000         1,500              -             -
     Archer Whitney #1               -             -                 1,143          858               -             -
                               -------------- ------------- ----- ------------- ------------- -- ------------- -------------
                                     -             -                 3,143         2,358              -             -
</TABLE>

The  standardized  measure of discounted  future net cash flows,  related to the
above oil and gas reserves, is calculated in accordance with the requirements of
SFAS No 69.  Estimated  future cash  inflows  from  production  are  computed by
applying  year-end  prices for oil and gas to year-end  quantities  of estimated
proved  reserves.  Adjustment  in this  calculation  for future price changes is
limited to those required by contractual arrangements in existence at the end of
each  reporting  period.  Future  development  and  production  costs  are those
estimated future  expenditures  necessary to develop and produce year-end proved
reserves  based on year-end  cost  indices,  assuming  continuation  of year end
economic  conditions.  Estimated  future income taxes are calculated by applying
appropriate   year-end  statutory  tax  rates.  These  rates  reflect  allowable
deductions  and tax credits and are applied to  estimated  future  pre-tax  cash
flows,  less the tax bases of related assets.  Discounted  future net cash flows
have  been  calculated  using a 10%  discount  factor.  Discounting  requires  a
year-by-year  estimate of when  future  expenditures  will be incurred  and when
reserves will be produced.

The information provided in tables set out below does not represent management's
estimate of the Company's  expected  future cash flows or of the value Company's
proved  oil and gas  reserves.  Estimates  of  proved  reserves  quantities  are
imprecise and change over time, as new information becomes available.  Moreover,
probable  and  possible  reserves,  which may become  proved in the future,  are
excluded from the calculations.  The arbitrary  valuation  prescribed under SFAS
No.69 requires assumptions as to the timing and the amount of future development
and  production  costs.  The  calculations  should  not  be  relied  upon  as an
indication of the Company's future cash flows or of the value of its oil and gas
reserves.

                                               (Unaudited)        (Unaudited)
                                                  2005                2004
Future Cash inflows                               2,280,000                -
Future production and development costs           (192,000)                -
Future income tax expenses                                -                -
Future net cash flows                             2,088,000                -
Less effect of a 10% discount factor              (208,800)                -
Discounted future net cash flows                  1,879,200                -














                                                                              37
<PAGE>

13.       OIL AND GAS ACTIVITIES (continued)

Principal  sources of changes in standardized  measure of discounted  future net
cash flows

<TABLE>
<CAPTION>
                                                                                (Unaudited)               (Unaudited)
                                                                                   2005                       2004
<S>                                                                              <C>                      <C>
Discounted present value as at beginning of year                                   2,039,606                       -
Sales and transfers of oil and gas, net of production costs                      (1,200,000)                       -
Changes in future development costs                                                   44,000                       -
Extensions and discoveries and revisions, net of future production                   481,454                       -
and development costs
Net change in price and production costs                                             396,550                       -
Change in estimated net profit payments                                               96,000                       -
Accretion of discount                                                                 21,590                       -
Standardized measure, end of period                                                1,879,200                       -
</TABLE>

<TABLE>
<CAPTION>
                                                                              (Unaudited)            (Unaudited)
                                                                                 2005                     2004
Costs incurred in Oil and Gas Acquisition, Exploration and Development
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                      <C>
Development costs                                                                   1,220,351                211,526
Exploration costs                                                                     270,962
Acquisition costs
         Proved                                                                       768,645                768,645
         Unproved                                                                     372,857                305,000
                                                                      ------------------------ ----------------------
Total                                                                              $2,632,815              1,285,171
                                                                      ------------------------ ----------------------
</TABLE>

14.       NON-CASH ACTIVITIES

         During the fiscal  year  2005,  the  Company  recognized  a  beneficial
         conversion  expense of $2,503,507  related to a  convertible  debenture
         issued to Cornell  Capital  Partners,  LP and the  associated  warrants
         issued.

15.       SUBSEQUENT EVENTS

         We announced that we had been informed by the operator that a tentative
         spud date for the  "Archer-F-1"  deep  Forbes gas well has been set for
         February  18th.  Fidelis has been  waiting for a drilling rig and it is
         now  expected  to be  onsite  at  the  North  Franklin  Project  on the
         aforementioned  date. The site and road have been prepared,  casing and
         tubing  purchased  and all  necessary  permits and  licenses  have been
         received.  The 12,000 foot  "Archer-F-1" well has been designed to test
         both the  producing  Winters  sands as well as the Forbes;  the primary
         objective of this well. All parties have advanced funds in full for the
         drilling  costs of the well. We also updated the timing for drilling of
         the "Archer-F-1" deep Forbes gas well. Fidelis has been informed by the
         operator that the drilling rig is being mobilized to the North Franklin
         project site tomorrow,  Wednesday,  February  22nd.  After an estimated
         several  day period for rig up,  drilling  of the 12,000 foot well will
         commence.  The "Archer-F-1" drilling pad location,  site facilities and
         all weather  access road are prepared.  The required  casing and tubing
         have been purchased and are onsite.  As well, all the necessary permits
         and licenses are in place. The 12,000 foot  "Archer-F-1"  well has been
         designed  to test  both  the  producing  Winters  sands  as well as the
         Forbes;  the primary  objective of this well. All parties have advanced
         funds in full for the drilling costs of the well.

         On March 7, 2006 we announced  that the  "Archer-F-1"  gas well spudded
         March 5th and is drilling  at the North  Franklin  Project,  Sacramento
         California.  Fidelis has been informed by the operator that the surface
         casing has now been set and the depth has reached 1,400 feet. The delay
         in the start date was due to heavy rain and wind in the Sacramento area
         causing a slower than expected rig up at the well site.


                                                                              38
<PAGE>

16.       RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS


         We have restated our balance sheet at December 31, 2004, and statements
         of operations,  stockholders'  equity and cash flows for the year ended
         December 31, 2004. The restatement  impacts the year ended December 31,
         2004,  but has no effect on the  financial  statements  issued in prior
         fiscal  years.  The  restatement  is  the  result  of a  change  in the
         estimated  market value of 2,075,000  (1,250,000  pre-split)  shares of
         common stock issued for services. The services were originally recorded
         at $.08 per  share  ($100,000).  The  value of the  services  have been
         restated to $.34 per share ($425,000). The impact of the restatement on
         the net income is a reduction  of $325,000,  from  $508,243 to $833,243
         net of tax for the year ended  December  31,  2004.  Earnings per share
         remained the same.


Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

           None.

Item 9A.  Controls and Procedures

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

         (a) Evaluation of Disclosure Controls and Procedures

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

         (b) Changes in Internal Controls

Based on his  evaluation  as of December  31,  2005,  there were no  significant
changes in the Company's  internal  controls over financial  reporting or in any
other areas that could  significantly  affect the  Company's  internal  controls
subsequent to the date of his most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

As of this date, given the small size of the Company and its limited  operations
and over the last year, the Company utilized a preliminary and basic standard of
internal  controls and  procedures  related to its  financial  reporting for the
period  covered by this report.  Management is in the process of developing  and
adopting new and more stringent  controls and procedures  and  anticipates  such
controls  and  procedures  to be in place  prior to the end of fiscal year 2006.
Management expects to be in compliance with the internal control requirements of
Section 404 of the Sarbanes-Oxley  Act prior to the required  compliance date in
2007.

PART III

Item 10.  Directors and Executive Officers of the Registrant.

           The following table contains information regarding the members of the
           Board of Directors  and the Executive of the Company as of the Record
           Date:

                                                                              39
<PAGE>

<TABLE>
<CAPTION>
         NAME                                        AGE            POSITION(S)
         ---------------------------------- ----------------------- ---------------------------------------------

<S>                                         <C>                     <C>
         William Marshall                             46            President, CEO and Director
         ---------------------------------- ----------------------- ---------------------------------------------

         Sterling Klein                               41            CFO/Secretary/Treasurer and Director
         ---------------------------------- ----------------------- ---------------------------------------------

         Gordon A. Samson                             47            Director (Independent)
         ---------------------------------- ----------------------- ---------------------------------------------

         Glen Harder                                  46            Director (Independent)
         ---------------------------------- ----------------------- ---------------------------------------------

         Thomas Herdman                               45            Director
         ---------------------------------- ----------------------- ---------------------------------------------
</TABLE>

         All of the officers  identified  above serve at the  discretion  of the
         Board  and  have  consented  to act as  officers  of the  Company.  The
         biographies for the above individuals are presented below.

         MR. WILLIAM MARSHALL, PRESIDENT, CEO

         William  Marshall  was  appointed  to his  position on May 31, 2005 and
         devotes  approximately 30% of his time to the Company. Mr Marshall is a
         financial  consultant with over 15 years of venture capital  experience
         in private and public  companies.  With an extensive history in natural
         resource markets, Mr. Marshall brings a wealth of experience to Fidelis
         in the form of financings,  corporate filings,  management, and company
         structure from his duties with several public companies.  He has served
         on five public company  boards as a director,  with duties ranging from
         Chairman  and  President,  to Chief  Executive  Officer  and  Corporate
         Secretary.

         MR. STERLING KLEIN, CFO

         Sterling  Klein was appointed to his position on September 27, 2004 and
         devotes  approximately  40% of his  time to the  Company.  Mr  Sterling
         received  his  Bachelor  of  Business   Administration  &  Co-operative
         Education  Degrees from Simon Frasier  University  in Burnaby,  British
         Columbia in 1990. Mr. Klein began his career in the petroleum  industry
         with Shell  Canada Ltd.  as an  Inventory  Analyst and as a  Production
         Accountant  with  Shell  Canada,  Mr.  Klein  was  responsible  for the
         division and analysis of petroleum  products for a production  facility
         to book monthly  revenues and provides  summary reports for management.
         Mr. Klein went on to work with Chevron Canada Ltd. as a credit analyst.
         In this role,  Mr.  Klein was  involved  with a  development  team that
         implemented new systems and procedures  company-wide.  From 1997 to the
         present,  he has been a Consultant to both public and private companies
         providing services in financial management,  corporate  administration,
         accounting  and  reporting  and held the position of Portfolio  Manager
         with a mortgage investment corporation. He also holds certificates from
         the  Canadian  Securities  Institute  and  the  University  of  British
         Columbia Professional Programs (Real Estate Finance).

         MR. GORDON A. SAMSON, DIRECTOR

         Gordon  Samson was  appointed to his  positions on February 1, 2006 and
         devotes  approximately 20% of his time to the Company. Mr. Samson is an
         accredited  accountant with approximately 20 years of experience in the
         financial  arena  including  positions  with Canada Customs and Revenue
         Agency ("CRA") (formerly Revenue Canada); a major Canadian  institution
         as a senior banker; a regional,  full service  brokerage  house;  Chief
         Financial  Officer and Chief Executive Officer positions in both the US
         and Canada serving as a director of a number of public  corporations as
         well as being a member of  various  audit  committees.  Mr.  Samson has
         further   served  as  a  consultant,   performing   due  diligence  for
         acquisitions  and other corporate  transactions  for various  reporting
         companies.  Mr. Samson's  background spans both resource and technology
         firms.


                                                                              40
<PAGE>

         MR. GLEN HARDER, DIRECTOR

         Mr.  Harder was  appointed  to his  position  on  February  1, 2006 and
         devotes  approximately 20% of his time to the Company.  Mr. Harder is a
         senior  securities and corporate  finance lawyer with  approximately 20
         years  of   experience   in,  among  other  things,   structuring   and
         capitalizing   early   stage   corporations,   acquisitions,   mergers,
         takeovers,  arrangements,  corporate  governance  issues and public and
         private  debt  or  equity  financing  transactions.  Mr.  Harder's  law
         practice  is  presently  focused  on  the  natural  resource  sector  -
         primarily  oil  and  gas  exploration  and  production.   He  currently
         represents reporting companies in both the United States and Canada.

         MR. THOMAS HERDMAN, DIRECTOR

         Mr.  Herdman  was  appointed  to his  position  on February 1, 2006 and
         devotes approximately 30% of his time to the Company. Thomas Herdman is
         a  management  consultant  and  financial  translator  for  Pacific Rim
         companies.  Until  recently,  he was  based in Tokyo,  Japan,  where he
         worked with  companies in the Asian  Pacific area for 16 years and also
         held the position of Lecturer at Chuo Law University in Tokyo, Japan.

         There are no family  relationships  among the  directors  or  executive
         officers of the Company.

         No  director  or  executive  officer  of ours  has been a  director  or
         executive  officer  of any  business,  which  has  filed  a  bankruptcy
         petition, or had a bankruptcy petition filed against it. No director or
         executive  officer of ours has been convicted of a criminal  offence or
         is the  subject  of a  pending  criminal  proceeding.  No  director  or
         executive  officer of ours has been the subject of any order,  judgment
         or decree of any court permanently or temporarily  enjoining,  barring,
         suspending  or  otherwise  limiting  his  involvement  in any  type  of
         business, securities or banking activities.

         No  director  or  officer  of ours  has  been  found by a court to have
         violated a federal or state securities or commodities law.

         DIRECTOR COMPENSATION

         Directors currently do not receive cash compensation for their services
         as members of the Board of Directors,  although  members are reimbursed
         for  expenses  in  connection  with  attendance  at Board of  Directors
         meetings  and specific  business  meetings.  Directors  are eligible to
         participate  in our stock option plans.  Option grants to directors are
         at the discretion of the Board of Directors.  Compensation  received by
         officers,  directors,  and management personnel will be determined from
         time  to time by our  Board  of  Directors.  Officers,  directors,  and
         management personnel will be reimbursed for any out-of-pocket  expenses
         incurred on our behalf.

         Other than as described above, our directors have consulting agreements
         with the Company as filed on Form 8-K February  13, 2006.  The salaries
         shown in the following table are for the year ending December 31, 2005.

         COMMITTEES OF THE BOARD OF DIRECTORS

         It is intended that Messrs.  Samson, Harder and Klein will serve on the
         Company's s audit committee.  The audit committee  reports to the Board
         of  Directors  regarding  the  appointment  of our  independent  public
         accountants, the scope and results of our annual audit, compliance with
         our accounting and financial  policies and management's  procedures and
         policies relative to the adequacy of our internal accounting controls.

         SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
         Company's  directors and executive  officers,  and persons who own more

                                                                              41
<PAGE>

         than  ten  percent  of a  registered  class  of  the  Company's  equity
         securities,  to file with the Securities and Exchange  Commission  (the
         "SEC") initial reports of ownership and reports of changes in ownership
         of common stock and other equity securities of the Company.

         Officers,  directors  and  greater  than ten percent  stockholders  are
         required by SEC  regulation  to furnish the Company  with copies of all
         Section 16(a) forms they file.

         To the  Company's  knowledge,  based  solely on review of the copies of
         such reports furnished to the Company and representations that no other
         reports were  required  during the year ended  December  31, 2005,  and
         except as disclosed elsewhere in this document, the Company's officers,
         directors and greater than ten percent  beneficial owners have complied
         with all Section 16(a) filing requirements in a timely manner.

Item 11. Executive Compensation

         SUMMARY COMPENSATION TABLE.

         The following  summary  compensation  table shows certain  compensation
         information for services rendered in all capacities for the years ended
         December 31, 2005,  2004 and 2003.  Other than as set forth herein,  no
         executive  officer's cash salary and bonus exceeded  $100,000 in any of
         the applicable  years.  The following  information  includes the dollar
         value of base salaries,  bonus awards,  the value of restricted  shares
         issued in lieu of cash compensation and certain other compensation,  if
         any, whether paid or deferred:

<TABLE>
<CAPTION>
                                ANNUAL COMPENSATION                                LONG-TERM COMPENSATION
                                                                RESTRICTED
     NAME &                                                     STOCK
     PRINCIPAL                                  OTHER ACCRUED   AWARDS IN                                        ALL OTHER
     POSITION         YEAR    SALARY   BONUS    COMPENSATION      SHARES        OPTIONS/SARS     LTIP PAYOUTS   COMPENSATION
<S>                   <C>    <C>       <C>      <C>              <C>            <C>              <C>            <C>
     Dan Hodges       2005         --      --               --          --                  --              --            --
                      2004   110,056-      --               --          --                  --              --            --
                      2003         --      --               --          --                  --              --            --
     Frank Anjakos    2005         --      --               --          --                  --              --            --
                      2004     81,333                              250,000
                      2003     18,000      --               --                              --              --            --
     James Marshall   2005         --      --               --          --                  --              --            --
                      2004     29,000      --               --     250,000                  --              --            --
                      2003
     Julianne
     Degrendele       2005         --      --               --          --                  --              --            --
                      2004     53,167      --               --     250,000                  --              --            --
                      2003         --      --               --          --                  --              --            --
     Jeff Paro        2005         --      --               --          --                  --              --            --
                      2004     28,000      --               --     250,000                  --              --            --
                      2003         --      --               --          --                  --              --            --
     Robert Hadley    2005         --      --               --          --                  --              --            --
                      2004     28,000      --               --     250,000                  --              --            --
                      2003         --      --               --          --                  --              --            --
     William
     Marshall         2005     47,000      --               --          --                  --              --            --
                                           --               --                              --              --            --
     Sterling Klein   2005     76,000      --               --          --                  --              --            --

-------------------------------------------------------------------------------------------------------------------
</TABLE>

         OPTIONS/SAR GRANTS OR EXERCISES AND LONG TERM INCENTIVE PLAN

         There are no stock option  grants,  Stock  Appreciation  Rights (SAR's)
         grants,  options/SAR  exercises or Long Term  Incentive  Plans (LTIP's)
         awarded to the named  executive  officers  in the last three  financial
         years.

         DEFINED BENEFIT OF ACTUARIAL PLAN

         The Company does not have a defined benefit or actuarial plan in place.

                                                                              42
<PAGE>

Item 12.  Security Ownership of Certain Beneficial owners and Management

         The following table contains information about the beneficial ownership
         of our common stock as of December 31, 2005, for:

         (i) each  person who  beneficially  owns more than five  percent of the
common stock;

         (ii) each of our directors;

         (iii)  the  named  executive  officers;  and  (iv)  all  directors  and
executive officers as a group.
<TABLE>
<CAPTION>
TITLE OF CLASS                 NAME AND ADDRESS OF BENEFICIAL   AMOUNT AND NATURE OF        PERCENT OF CLASS (1)
                               OWNER                            BENEFICIAL OWNERSHIP
<S>                            <C>                              <C>                         <C>
Common Stock                   TMC Capital Trust       2720 -
                               200 Granville St.  Vancouver,                                 1.8 %
                               B.C.  Canada Thomas Herdman,     20,584,000
                               Trustee for William Marshall                                 2
Common Stock                   SNK Capital Trust
                               P.O. Box N-8198                                               1.8 %
                               Nassau, Bahamas
                               Gaye Knowles, Trustee            20,584,000
                               for Sak Narwal                                               2
Common Stock                   Sterling Klein
                               6421 Chaucer Place Burnaby,      716,667                      .8 %
                               B.C.  Canada                                                 0
Common Stock                   James Marshall
                               14455 N. Hayden Road #206        0
                               Scottsdale, AZ   85260                                       0
Common Stock                   Daniel Hodges / Joshua  & Grace
                               Investments LLC                                               .8 %
                               PO Box 393                       8,300,000
                               Sonoita  AZ   85637                                          8
Common Stock                   All Officers and Directors as a  21,300,667                  22.5 %
                               group
---------------------------------------------------------------------------------------------------------------------------
Total                                                           50,184,667                  53.2 %
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) BASED UPON 94,584,354 SHARES OF COMMON STOCK OUTSTANDING AT THE DATE OF THIS
REPORT.


Item 13.  Certain  Relationships and Related Transactions

The Company has borrowed  money from a  shareholder  in order to pay general and
administrative  expenses.  For purposes of these financial statements,  interest
has been calculated at an imputed interest rate of 6 percent. As of December 31,
2005 and December 31,  2004,  the Company owed $3,130 and $2,989,  respectively,
relating to these notes.

On February 25, 2004, the Company purchased  17,430,000 of its common shares for
a loan  payable  of  $105,000.  These  shares  were  returned  to  treasury  and
cancelled.  Interest  at a rate of 4.22% has been  imputed  on the  loan.  As of
December 31, 2005, the Company owes $114,147 on this loan.

The Company has a "working interest"  relationship with Silver Star Energy, Inc.
(SVSE:  OTC:  BB).  Both  companies  have an interest in the North  Franklin gas
project in Sacramento, California. The management of both companies work closely
together on projects  and have  contemplated,  or are  contemplating  additional
jointly operated projects in the future.  Also, the two companies share a common
origin  in  that  certain   beneficial   shareholders  of  both  companies  have
contributed to their formation.

                                                                              43
<PAGE>

Item 14.  Principal Accounting Fees and Services

The following  table sets forth the fees billed to the Company for  professional
services  rendered by the  Company's  principal  accountant,  for the year ended
December31, 2004 and December 31, 2003:

         SERVICES                          2005                      2004
         Audit fees                        29,880                    8,925
         Audit related fees                                          -
         Tax fees                          200                       -
         All other fees                                              -

         Total fees                        30,080                    8,925

AUDIT FEES.  Consist of fees billed for professional  services  rendered for the
audits  of  our  financial  statements,  reviews  of  our  interim  consolidated
financial  statements  included in  quarterly  reports,  services  performed  in
connection  with filings with the  Securities & Exchange  Commission and related
comfort letters and other services that are normally provided by Robison, Hill &
Company in connection with statutory and regulatory filings or engagements.

TAX FEES.  Consist of fees billed for professional  services for tax compliance,
tax  advice  and tax  planning.  These  services  include  assistance  regarding
federal,  state and local tax compliance  and  consultation  in connection  with
various transactions and acquisitions.


Audit  Committee  Pre-Approval of Audit and  Permissible  Non-Audit  Services of
Independent Auditors

The Audit Committee is to pre-approve all audit and non-audit  services provided
by  the  independent  auditors.  These  services  may  include  audit  services,
audit-related  services,  tax services  and other  services as allowed by law or
regulation.  Pre-approval  is  generally  provided  for up to one  year  and any
pre-approval  is detailed as to the  particular  service or category of services
and is generally  subject to a specifically  approved  amount.  The  independent
auditors  and  management  are  required  to  periodically  report  to the Audit
Committee regarding the extent of services provided by the independent  auditors
in accordance  with this  pre-approval  and the fees incurred to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.

The  Audit  Committee  pre-approved  100%  of the  Company's  2004  audit  fees,
audit-related  fees,  tax fees,  and all other fees to the  extent the  services
occurred  after May 6, 2004,  the effective  date of the Securities and Exchange
Commission's final pre-approval rules.

PART IV

Item 15. Exhibits and Reports on 8-K

The following  documents are filed herewith or have been included as exhibits to
previous  filings  with  the  Commission  and are  incorporated  herein  by this
reference:

                  (A)      Exhibits

Exhibit No.            Exhibit

3i       Articles of Incorporation (1)
3ii      Bylaws (1)
31.1     Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.
31.2     Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.
32.1     Certification  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
         2002.
32.2     Certification  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
         2002.

                                                                              44
<PAGE>

         (1)  Incorporated  by  reference  to  the   Registrant's   registration
         statement on Form 10-SB filed on January 14, 2002.

                  (B) Reports on Form 8-K

                           1.       On June 13,  2005 the  Company  filed a Form
                                    8-K   relating   to   the   resignation   of
                                    directors.

                           2.       On June 15,  2005 the  Company  filed a Form
                                    8-K relating to the resignation of directors


                           3.       On October 3, 2005 the Company  filed a Form
                                    8-K relating to a Data Sharing  Agreement

                           4.       On October 19, 2005 the Company filed a Form
                                    8-K   relating  to  a  variety  of  material
                                    agreements/contracts.

                           5.       On November  15,  2005 the  Company  filed a
                                    Form 8-k relating to a replacement financing
                                    note first file October 19, 2005.








































                                                                              45

<PAGE>

                                  SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
         Registrant  caused  this  report  to be  signed  on its  behalf  by the
         undersigned, thereunto duly authorized.

                                             FIDELIS ENERGY INC.

         Dated:   March 31, 2006       Per:     /s/ William Marshall
                                       ------------------------------------
                                       William Marshall, CEO and Director

         In accordance  with the Exchange Act, this report has been signed below
         by  the  following  person  on  behalf  of  the  Registrant  and in the
         capacities and on the dates indicated.

                                       /s/ William Marshall
                                       --------------------
                                       William Marshall, CEO and Director




         Dated:   March 31, 2006       Per:     /s/ Sterling Kleinl
                                       ------------------------------------
                                       Sterling Klein, CFO and Director

         In accordance  with the Exchange Act, this report has been signed below
         by  the  following  person  on  behalf  of  the  Registrant  and in the
         capacities and on the dates indicated.

                                       /s/ Sterling Klein
                                       ------------------
                                       Sterling Kleinl, CFO and Director



/S/     Gordon Samson
---------------------
Gordon Samson
Director


Glen Harder
Director


Tom Herdman
Director








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