CIRCLE STAR ENERGY CORP. - FORM 10-Q

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - CIRCLE STAR ENERGY CORP.	Financial_Report.xls
EX-10.15 - CIRCLE STAR ENERGY CORP.	ex10-15.htm
EX-10.16 - CIRCLE STAR ENERGY CORP.	ex10-16.htm
EX-10.17 - CIRCLE STAR ENERGY CORP.	ex10-17.htm
EX-10.19 - CIRCLE STAR ENERGY CORP.	ex10-19.htm
EX-10.18 - CIRCLE STAR ENERGY CORP.	ex10-18.htm
EX-10.21 - CIRCLE STAR ENERGY CORP.	ex10-21.htm
EX-31.1 - CIRCLE STAR ENERGY CORP.	ex31-1.htm
EX-10.20 - CIRCLE STAR ENERGY CORP.	ex10-20.htm
EX-32.2 - CIRCLE STAR ENERGY CORP.	ex32-2.htm
EX-32.1 - CIRCLE STAR ENERGY CORP.	ex32-1.htm
EX-31.2 - CIRCLE STAR ENERGY CORP.	ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2012
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-53868

CIRCLE STAR ENERGY CORP.

(Exact name of registrant as specified in its charter)

Nevada		30-0696883
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7065 Confederate Park Road, Suite 102
Fort Worth, Texas		76108
(Address of principal executive offices)		(Zip Code)

(817) 744-8502

(Registrant’s telephone number, including area code)

N/A

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) o Yes x No

Number of common shares outstanding at March 16, 2012: 29,893,571.

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TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	32
Item 4.	[Removed and Reserved]	32
Item 5.	Other Information	32
Item 6.	Exhibits	33

SIGNATURES		34

EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CIRCLE STAR ENERGY CORP.

(FORMALLY DIGITAL VALLEYS CORP.)

CONSOLIDATED BALANCE SHEETS (unaudited)


	Jan 31, 2012			April 30, 2011
ASSETS
CURRENT ASSETS:
Cash	$	96,775		$	6,696
Trade accounts receivable		188,247			-
Prepaid expenses		11,104			99
Total Current Assets		296,126			6,795

OTHER ASSETS:
Investment in partnership		134,334			-
Furniture and fixtures		5,368
Oil and gas properties, net		3,476,429			-
Total Other Assets		3,616,131			-
Total Assets	$	3,912,257		$	6,795

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	499,532		$	25,074
Salaries and taxes payable		23,863
Due to related party		24,521			24,521
Interest payable		46,687			-
Deposit		100,000
Seller note payable, net of unamortized discount		4,883,874			-
Total Current Liabilities		5,578,477			49,595
Convertible notes payable, net of unamortized discount		1,176,968			-
Total Liabilities		6,755,445			49,595
STOCKHOLDERS' DEFICIT
Common stock, 100,000,000, par value $0.001 shares authorized, 29,690,000 and 41,400,000 common shares issued and outstanding at January 31, 2012 and April 30, 2011, respectively		29,690			41,400
Common stock, 203,571 shares not issued for Redfish acquisition		380,678
Additional paid in capital		5,437,935			13,600
Accumulated deficit		(8,691,491	)		(97,800	)
Total Stockholders' Deficit		(2,843,188	)		(42,800	)

Total Liabilities and Stockholders' Deficit	$	3,912,257		$	6,795

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CIRCLE STAR ENERGY CORP.

(FORMALLY DIGITAL VALLEYS CORP.)

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended Jan 31, 2012			Three Months Ended Jan 31, 2011			Nine Months Ended Jan 31, 2012			Nine Months Ended Jan 31, 2011
Revenues
Oil sales	$	242,908		$	-		$	560,460		$	-
Gas sales		13,027			-			205,446			-
Total Revenues		255,935			-			765,906			-

Operating Expenses
Lease operating expense		32,154			-			69,944			-
Production taxes		10,878			-			39,830			-
Depreciation, depletion, and amortization		130,554			-			400,718			-
Impairment charges		-			-			3,397,693			-
Dry hole/abandonment costs		-			-			2			-
General and administrative expenses		1,734,886			9,757			4,211,767			20,929
Total Operating Expenses		1,908,472			9,757			8,119,954			20,929
Loss from Operations		(1,652,537	)		(9,757	)		(7,354,048	)		(20,929	)
Other Expense:
Interest expense		(406,962	)		-			(1,167,210	)		-
Net Loss	$	(2,059,499	)	$	(9,757	)	$	(8,521,258	)	$	(20,929	)

Net Loss Per Share: Basic and Diluted	$	(0.07	)	$	(0.00	)	$	(0.26	)	$	(0.00	)

Weighted Average Number of Shares Outstanding: Basic and Diluted		29,961,739			41,400,000			33,205,326			41,400,000

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CIRCLE STAR ENERGY CORP.

(FORMALLY DIGITAL VALLEYS CORP.)

CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited)

	Nine Months Ended January 31, 2012			Nine Months Ended January 31, 2011
Cash flows from operating activities
Net loss for the period	$	(8,521,258	)	$	(20,929	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation, depletion, and amortization		400,718			-
Accretion of discount on note payable to seller		866,338			-
Accretion of discount on convertible notes payable		46,968			-
Employee stock compensation		3,082,625
Impairment charge		3,397,693			-
Changes in operating assets and liabilities
Trade accounts receivable		106,696			-
Prepaid expenses		(8,827	)		250
Accounts payable		174,348			(339	)
Interest payable		46,687			-
Salaries payable		23,863			-
Due to stockholder		-			26,850
Net cash provided by (used in) operating activities		(384,149	)		5,832
Cash flows from investing activities
Purchase of JHE assets		(995,397	)		-
Cash from investment		3,270			-
Deposit		100,000
Capital expenditures		(121,210	)		-
Net cash used in investing activities		(1,013,337	)		-
Cash flows from financing activities
Partner distributions		(72,435	)		-
Proceeds from the issuance of common stock		1,560,000			-
Payments on note issued to seller		(1,500,000	)		-
Proceeds from convertible notes		1,500,000			-
Net cash provided by financing activities		1,487,565			-
Net increase in cash		90,079			5,832
Cash
Beginning of period		6,696			2,840
End of period	$	96,775		$	8,672
Supplemental Cash Flow Information:
Cash paid for interest	$	107,219		$	-
Cash paid for income taxes	$	-		$	-
Supplemental Non-Cash Investing and Financing Information:
Common stock for acquisition of Redfish Prospect working interest - unissued	$	380,678
Common stock issued for acquisition of JHE assets	$	400,000		$	-
Promissory note assumed for acquisition of JHE assets	$	5,517,536		$	-

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CIRCLE STAR ENERGY CORP.

(FORMALLY DIGITAL VALLEYS CORP.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Circle Star Energy Corp. (the “Company” or “Circle Star”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report on Form 10-K, as amended, for the year ended April 30, 2011. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements as reported in the 2011 annual report on Form 10-K, as amended, have been omitted.

Income or Loss per Share

Basic income or loss per common share is net income or loss available to common stockholders divided by the weighted average of common shares outstanding during the period. Diluted income or loss per common share is calculated in the same manner, but also considers the impact to net income and common shares outstanding for the potential dilution from in-the-money common stock options and warrants, and convertible debentures and preferred stock.

We have issued potentially dilutive instruments in the form of common stock options and warrants. The total number of potentially dilutive securities at January 31, 2012 was 5,103,971. We did not include the potentially dilutive securities in our calculation of diluted loss per share during either period because to include them would be anti-dilutive due to our net loss during those periods.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

There is substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon continued financial support from the Company’s shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company can give no assurance that future financing will be available to it on acceptable terms if at all or that it will attain profitability. These factors raise substantial doubt about our ability to continue as a going concern.

The Company's activities to date have been supported by both equity and debt financing. It has sustained losses in all previous reporting periods with an inception to date loss of $8,619,058 as of January 31, 2012. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan. In the alternative, the Company may be amenable to a sale, merger or other acquisition in the event such transaction is deemed by management to be in the best interests of the shareholders. There is no assurance the Company will be able to secure sufficient funding to fund future operations or meet existing debt obligations.

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of Circle Star and our wholly-owned subsidiary, and JHE Holdings, LLC, a Texas limited liability company (“JHE” or “Subsidiary”).

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates are based on information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from those estimates under different assumptions and conditions. Significant estimates are required for proved oil and gas reserves which may have a material impact on the carrying value of oil and gas properties.

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Critical Accounting Policies

Critical accounting policies are defined as those significant accounting policies that are most critical to an understanding of a company’s financial condition and results of operations. We consider an accounting estimate or judgment to be critical if (i) it requires assumptions to be made that were uncertain at the time the estimate was made, and (ii) changes in the estimate or different estimates that could have been selected, could have a material impact on our results of operations or financial condition.

We use the successful efforts method of accounting for oil and gas property acquisition, exploration, development and producing activities. Acquisition costs, exploration well costs, and development costs are capitalized as incurred. Net capitalized costs of unproved property and exploration well costs are reclassified as proved property and well costs when related proved reserves are found. If an exploration well is unsuccessful in finding proved reserves, the capitalized costs are charged to expense. Other exploration costs, including geological and geophysical costs, and the costs of carrying unproved property are charged to expense as incurred. Costs to operate and maintain wells and field equipment are expensed as incurred. Capitalized proved property acquisition costs are amortized by field using the unit-of-production method, based on proved reserves. Capitalized exploration well costs and development costs (plus estimated future equipment dismantlement, surface restoration, and property abandonment costs, net of equipment salvage values) are amortized similarly by field based on proved developed reserves. JHE accounts for its interest in the partnership using the equity method of accounting.

Share Based Compensation

The Company estimates the fair value of share-based payment awards made to employees and directors, including stock options, restricted stock and employee stock purchases related to employee stock purchase plans, on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service periods. Awards that vest only upon achievement of performance criteria are recorded only when achievement of the performance criteria is considered probable. We estimate the fair value of each share-based award using the Black-Scholes option pricing model. These models are highly complex and dependent on key estimates by management. The estimates with the greatest degree of subjective judgment are the estimated lives of the stock-based awards, the estimated volatility of our stock price, and the assessment of whether the achievement of performance criteria is probable.

NOTE 4 — NEW ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amended guidance changes several aspects of the fair value measurement guidance in ASC 820, Fair Value Measurement, further clarifying how to measure and disclose fair value. This guidance amends the application of the “highest and best use” concept to be used only in the measurement of fair value of nonfinancial assets, clarifies that the measurement of the fair value of equity-classified financial instruments should be performed from the perspective of a market participant who holds the instrument as an asset, clarifies that an entity that manages a group of financial assets and liabilities on the basis of its net risk exposure can measure those financial instruments on the basis of its net exposure to those risks, and clarifies when premiums and discounts should be taken into account when measuring fair value. The fair value disclosure requirements also were amended. The amendment is effective for the Company at the beginning of January 2012, with early adoption prohibited. The adoption of this amendment is not expected to materially affect the Company’s financial statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income which amended requirements for the presentation of other comprehensive income (OCI), requiring presentation of comprehensive income in either- a single, continuous statement of comprehensive income or on separate but consecutive statements, the statement of operations and the statement of OCI. The amendment is effective for the Company at the beginning of fiscal year 2013 with early adoption permitted. The adoption of this guidance will not impact the Company’s financial position, results of operations or cash flows and will only impact the presentation of OCI on the financial statements.

NOTE 5 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standards also establish a framework for measuring fair value and a valuation hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation hierarchy contains three levels:

	•		Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets

	•		Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable

	•		Level 3 — Significant inputs to the valuation model are unobservable

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Level 3 Classification

On June 16, 2011, Circle Star acquired all of the membership interests in High Plains Oil, LLC, Nevada limited liability company (“HPO”), effective as of June 1, 2011. A note payable in the amount of $7,500,000 was made by the Company for the purchase of JHE, which was disclosed in the 8-K filed on June 21, 2011. Upon closing of the transaction on June 16 and effective June 1, the note was reduced to $6,500,000 as a result of the payment of the initial installment of $1,000,000 to the seller. In accordance with fair value accounting resulting from an acquisition, the note was discounted, after payment of the initial installment of $1,000,000, using a rate of 28%, resulting in a fair value of $5,517,536. Oil and gas properties acquired were valued at $3,596,473 and the investment in JH Energy Interests at $134,334.

NOTE 6 — ACQUISITIONS

On June 16, 2011, Circle Star acquired all of the membership interests in JHE from HPO, effective as of June 1, 2011, for consideration including 1,000,000 shares of its common stock, a retained profit interest in existing properties valued at $404,101, and the assumption of a promissory note in the aggregate amount of $7,500,000, and 600,000 shares of the Company’s common stock.

As a result of the acquisition, JHE’s assets and liabilities were adjusted to their fair values at the acquisition date. No adjustments were made to JHE’s assets and liabilities other than oil and gas properties and the interest in JHE Energy Interests (JHE Units) units as their carrying value approximated fair value at the date of acquisition. As the consideration paid exceeded the fair value of JHE’s net assets, an impairment charge totaling $3,397,693 was recorded at the acquisition date. The calculation of the impairment charge follows:

Fair value of oil and gas properties	$	3,596,473
Investment in JHE Energy Interests		137,604
Note payable, discounted at 28%		(5,517,536	)
Cash payment at closing		(1,000,000	)
Retained profit interest to HPO (nets with oil and gas properties)		(404,101	)
Fair value of equity shares granted to sellers		(400,000	)
Working capital acquired		189,867
Impairment charge	$	(3,397,693	)

These assets were acquired in accordance with and in an effort to advance the Company’s business plan. The Company incurred transaction costs of $255,000 during the closing of this acquisition which were recorded as expense in the statement of operations.

JHE’s revenues for the three and nine months ended January 31, 2012 are $255,908 and $765,906, respectively and net income for the three and nine months ended January 31, 2012 are $77,926 and $246,269, respectively.

The following unaudited pro forma summarized statements of operations for the nine months ended January 31, 2012, which reflects our acquisition of JHE on June 1, 2011, was derived from the unaudited financial statements of Circle Star as of and for the quarter ended July 31, 2011 and the unaudited financial data of JHE as of and for nine months ended January 31, 2012. The unaudited pro forma financial information for the quarter and nine months ended January 31, 2012 was prepared as if the transaction occurred on May 1, 2010. If the acquisition had been completed on the dates assumed in the pro forma statements of income, the combined company might have performed differently. The unaudited pro forma condensed combined statements of income are presented for illustrative purposes only and do not reflect the impact of possible cost savings and operational efficiencies. You should not rely on the pro forma financial information as an indication of the financial position or results of operations that the combined company would have achieved had the acquisition taken place earlier or the future results that the combined company will achieve.

	Three Months Ended January 31, 2011		Nine Months Ended January 31, 2012		Nine Months Ended January 31, 2011

Total operating revenue	$	446,012	$	765,906	$	729,477
Total operating costs and expenses		848,311		3,326,296		3,254,442
Operating loss		(402,299)		(2,560,390)		(2,524,965)
Interest expense and other		1,594,995		(837,333)		511,664
Net loss attributed to common stockholders	$	1,192,696	$	(3,397,723)	$	(2,013,301)
Loss per common share, basic	$	.03	$	(.11)	$	(.05)

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On December 6, 2011 the Company entered into a letter agreement (the “Apache Letter Agreement”) with Ingebritson Energy LLC, GTP Energy Partners, LLC, Wind Rush Energy, LLC, Gabriel Barerra and Charles T. Brackett (collectively, the “Apache Sellers”) with a stated execution date of December 1, 2011 (the “Apache Execution Date”). Pursuant to the Apache Letter Agreement, the Company purchased from the Apache Sellers certain interests in oil and gas properties within the Redfish 56 Prospect in Glasscock County, Texas. In return, the Apache Sellers received 203,571 shares of common stock of the Company which, at the Execution Date, had a market value of $1.87 per share. These shares were authorized on January 31, 2012 and issued on March 8, 2012. The Company also assumed the responsibility for payment of certain operating expenses and capital expenditures which were valued at $202,321.

NOTE 7 — ASSET RETIREMENT OBLIGATIONS

Accounting standards require companies to record a liability relating to the retirement of tangible long-lived assets. When the liability is initially recorded, there is a corresponding increase in the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, either the obligation is settled at its recorded amount or a gain or loss is incurred and recognized. As of January 31, 2012, management has evaluated its liability associated with its oil and gas properties and has determined it to be insignificant.

NOTE 8 — NOTES PAYABLE

A note payable in the amount of $7,500,000 was made by the Company for the purchase of JHE to the “Edsels”, the former owners of JHE, which was disclosed in the 8-K filed on June 21, 2011. Upon closing of the transaction on June 16 and effective June 1, the note was reduced to $6,500,000 as a result of the payment of the initial installment of $1,000,000. The note was further reduced to $5,000,000 after the payment of the September 1, 2011 installment of $1,500,000. The remaining installment payments due under the note payable are as follows: $2,000,000 on December 31, 2011; $1,500,000 on March 1, 2012; and 1,500,000 on June 1, 2012. The note bears simple interest at 5.0%, which is payable quarterly. The note was discounted, after payment of the initial installment of $1,000,000, using a rate of 28%, resulting in a fair value of $5,517,536. The Company received an extension from the note holder pursuant to the $1,500,000 payment due September 1, 2011 until September 15, 2011. Full payment of the September 1 payment in the amount of $1,500,000 was made prior to September15, 2011.

The Company was unable to timely make the December 2011 Edsel Payment to the Edsels, and in consideration of a payment in the amount of $100,000 by the Company to the Edsels and pursuant to a letter agreement dated December 29, 2011, the Edsels agreed to extend the payment date for the December 2011 Edsel Payment until January 31, 2012, on which date the December 2011 Payment was due and payable. The Company was unable to timely make the December 2011 Edsel Payment to the Edsels on January 31, 2012 and as consideration for the Edsels agreeing to (i) further extend the due date for the December 2011 Payment until February 8, 2012 and (ii) extend the due date for March 2012 Edsel Payment until April 30, 2012 (collectively, the “Modified Payment Terms”), the Company offered to pay, among other items, the sum of $2,000,000 to the Edsels as a principal payment under the Edsel Promissory Note on or before February 8, 2012 pursuant to the terms of a letter agreement dated February 8, 2012. On February 8, 2012, the Company made the December 2011 Payment due to the Edsels under the Note and, consequently, the Company remains current in its payments obligations under the Note. Concurrently therewith, and as additional consideration for the Modified Payment Terms, the Company also agreed to execute the Amendments, which are described in more detail below.

On February 8, 2012, the Company entered into a First Amendment to Assignment and Novation Agreement and a First Amendment to Membership Interest Pledge and Security Agreement (collectively, the “Edsel Amendments”) pursuant to which the Company agreed to delete Section 6, and other similar provisions, from each of the Novation and the Amended Pledge Agreement which provided for, among other items, the vesting, and release from any transfer restrictions, of a corresponding portion of the Company Oil and Gas Properties, as defined in the Novation and Amended Pledge Agreement, once at least fifty percent (50%) of the original principal amount of the Edsel Promissory Note had been paid to the Edsels and thereafter as each further payment of principal was made by the Company to the Edsels under the Edsel Promissory Note. Except as expressly set forth in the Edsel Amendments, all of the terms and provisions of the Novation and Amended Pledge Agreement are unchanged and remain in full force and effect.

The Promissory Note is secured by a pledge of all of the Company’s membership interests in JHE to the James H. Edsel, Nancy Edsel, and James H. Edsel, Jr. (collectively, the “Edsels”) pursuant to the Amended Pledge Agreement. If the Company defaults on any of its obligations under the Promissory Note, the Edsels shall be entitled to exercise any and all remedies available at law to secure payment of the Promissory Note, including, but not limited to, selling the unvested portion of the membership interests.

On September 14, 2011, the Company issued 6% convertible notes (the “Notes”) in the total amount of $1,500,000 (the “Note Issuance”). The Notes are due and payable on September 14, 2014, with interest at the rate of 6% per annum accruing on the unpaid principal amount, compounded annually. The Notes are convertible at the option of the holder into shares of common stock of the Company at a conversion price of $1.50 per share. The Notes are redeemable prior to maturity at the option of the Company and can be prepaid in whole or in part at any time without a premium or penalty, upon 5 business days’ notice; prior to which the holder of the Note may convert the principal and interest into shares of common stock of the Company. The proceeds of the Note Issuance went to pay the balance of the $1,500,000 installment due on September 1, 2011 for the Promissory Note discussed in the previous paragraph. The Notes were offered by the Company in a non-brokered private placement to non-U.S. persons outside of the United States in off-shore transactions. The Notes were not registered under the Securities Act, or the laws of any state, and are “restricted securities” (as defined in Rule 144(a)(3) of the Securities Act). The securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. The Notes were placed pursuant to exclusions from registration requirements by Rule 903 of Regulation S of the Securities Act, such exclusions being available based on information obtained from the investors to the private placement. The notes were discounted by $370,000 to reflect the beneficial conversion that existed on the date of issuance. This discount will be accreted over the term of the convertible notes using the effective yield method.

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NOTE 9 —SHARE BASED COMPENSATION

We recognized share-based compensation expense of $1,209,669 and $3,082,625 for the three and nine months ended January 31, 2012, and we recognized nil for both the three and nine months ended January 31, 2011.

A summary of the Company’s common-stock options as of January 31, 2012 is presented below:

	Shares		Weighted Average Exercise Price
Balance at beginning of period		0	$	-
Granted		450,000		0.50
Balance at end of period		450,000	$	0.50
Exercisable at January 31, 2012		100,000	$	0.50

Total unrecognized compensation cost related to the non-vested common stock options was $329,900 and nil as of January 31, 2012 and 2011, respectively. The cost at January 31, 2012, is expected to be recognized over a weighted-average period of 2.5 years. At January 31, 2012 the aggregate intrinsic value for common stock options was $225,000 and the weighted average remaining contract life was 10 years.

The assumptions used in the fair value method calculation for the nine months ended January 31, 2012 are disclosed in the following table:

	Nine Months Ended January 31, 2012
Weighted average grant date fair value per common stock option granted during the period (2)	$	1.43
Weighted average stock price volatility		70.7	%
Weighted average risk free rate of return		0.74	%
Weighted average expected term	2.00 years

(1) Our estimated future forfeiture rate is zero.
(2) Calculated using the Black-Scholes fair value based method for service and performance based grants.
(3) We have not paid dividends on our common stock.

In addition, the Company has issued restricted stock to certain employees and directors. A summary of the Company’s non-vested restricted shares as of January 31, 2012 is presented below:

	Shares		Grant Date Fair Value
Non-vested at beginning of period		-	$ -
Granted		10,587,000		1.89
Vested		-		-
Forfeited		-		-
Non-vested at end of period		10,587,000	$	1.89

Total unrecognized compensation cost related to the above non-vested, restricted shares amounted to $3,338,280 and nil as of January 31, 2012 and 2011, respectively. The cost at January 31, 2012 is expected to be recognized over a weighted-average period of 2.5 years.

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NOTE 10 – RELATED PARTY TRANSACTIONS

As of January 31, 2012, there is a balance owing to a stockholder of the Company in the amount of $24,521. This amount is unsecured, non-interest bearing, and has no specific terms of repayment.

Pimuro Capital Partners, LLC (“Pimuro”), a consultant who advised HPO with regards to its acquisition of JHE and the Purchase Agreement, charged fees and expenses in the amount of $240,000 relating to such consulting arrangement between HPO and Pimuro under the terms of an Installment Agreement (the “Installment Agreement”) of which $100,000 was due and payable on the closing date and thereafter in monthly installments of $50,000, $50,000 and $40,000 commencing when JHE receives $75,000 in monthly aggregate distribution from JHE Oil and Gas Properties. Pimuro is controlled by G. Jonathan Pina (“Pina”), who was appointed as our Chief Financial Officer on July 11, 2011. As of January 31, 2012, all amounts due and payable to Pimuro have been paid.

On June 16, 2011, the Company closed an acquisition under the terms of a Membership Interest Purchase Agreement, effective as of June 1, 2011 (the “Purchase Agreement”), among HPO, and JHE, pursuant to which the Company acquired all of the membership interests in JHE from HPO (the “Acquisition”). HPO is an entity controlled by S. Jeffrey Johnson (“Johnson”), who was appointed as a director of the Company on June 16, 2011 and Chairman of the Board on July 6, 2011.

NOTE 11 — SHAREHOLDERS’ EQUITY

On June 15, 2011, the Company closed a private placement of units. Under the terms of the private placement, the Company issued 4,800,000 units at a price of $0.25 per unit. Each unit consists of one share of common stock of the Company and one common share purchase warrant, which may be exercised to acquire one share of common stock of the Company at an exercise price of $0.50 through June 15, 2013. As of the nine months ended January 31, 2012, no warrants had been exercised.

On June 16, 2011, the Company closed an acquisition under the terms of a Membership Interest Purchase Agreement, effective as of June 1, 2011 (the “Purchase Agreement”), among HPO, and JHE, pursuant to which the Company acquired all of the membership interests in JHE from HPO (the “Acquisition”). In consideration for the acquisition of JHE, the Company agreed to:

(a) issue 1,000,000 shares of its common stock to HPO (the “Consideration Shares”);

(b) pay the $1,000,000 installment payment due June 1, 2011, under a promissory note in the aggregate amount of $7,500,000 (the “Promissory Note”) issued by HPO to the “Edsels” in connection with the acquisition of JHE by HPO from the Edsels that closed on March 30, 2011 and was effective as of January 2011 (the “High Plans Acquisition”);

(c) execute and deliver a Novation and Assignment Agreement (the “Novation”) pursuant to which the Company will, effective June 1, 2011 (the “Effective Date”): (i) assume all of the obligations and liabilities of HPO under the Promissory Note, and (ii) in consideration for, among other things, consenting to the Acquisition and the forbearance by the Edsels of the first installment payment of $1,000,000 due under the Promissory Note on June 1, 2011 until June 10, 2011 or the closing date, issue an aggregate of 600,000 share of its common stock to the Edsels (the “Edsel Shares”);

(d) undertake to cause JHE to amend its limited liability company agreement to, among other items, provide for the retention by High Plains of a 10% contractual profits interest in JHE (the “Retained Profits Interest”) in the form of a right to 10% of the net revenues, payments, royalties and other distributions received by JHE.

On July 6, 2011, David Brow (“Brow”) the then sole officer of the Company, was granted 100,000 stock options under the Company’s 2011 Stock Option Plan at an exercise price of $0.50 and vesting immediately.

On July 7, 2011, the Company and Felipe A. Pati, a former sole director and officer of the Company, entered into a Contribution Agreement, whereby Mr. Pati contributed 19,550,000 shares of common stock of the Company as a capital contribution to the Company. The Company and Mr. Pati had determined that it was in the best interest of the Company and its shareholders to adjust the outstanding capital of the Company to facilitate the Company’s ability to raise capital and implement the Company’s expanded business strategy.

On July 11, 2011, Pina was granted stock options under the Plan, consisting of options to purchase up to an aggregate of 350,000 shares of the Company’s common stock with 116,666 stock options vesting on July 11, 2012, 116,667 stock options vesting July 11, 2013 and 116,667 stock options vesting July 11, 2014. The options will expire, July 11, 2022, July 11, 2023 and July 11, 2024 respectively.

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On August 17, 2011, the Company closed a private placement of shares (the “Shares”). Under the terms of the private placement, the Company issued 1,440,000 shares of common stock of the Company at a price of $0.25 per share to "Accredited Investors" (as defined in Rule 501(a) of the United States Securities Act of 1933, as amended (the “Securities Act). The Shares were not, and will not be, registered under the Securities Act, or the laws of any state of the United States. Accordingly, the Shares are “restricted securities” (as defined in Rule 144(a)(3) of the Securities Act) and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act.

On October 11, 2011, the Company entered into an executive employment agreement (the “Johnson Employment Agreement”) with Johnson, a director and Chairman of the board of directors (the “Board”) of the Company. Pursuant to the Johnson Employment Agreement, Johnson was appointed to the position of CEO of the Company. The term of the Johnson Employment Agreement is for a two-year period beginning on October 1, 2011 (the “Effective Date”) and ending on the second anniversary of the Effective Date. Under the terms of the Johnson Employment Agreement, Johnson shall be paid a salary of not less than $200,000, annually. Johnson and the Company agreed to an incentive stock compensation arrangement that is anticipated to be linked to the success of the Company’s business and increases shareholder value. Under the terms of the equity compensation, Johnson will be issued shares of common stock of the Company (each, a “Restricted Share”), upon satisfaction of the following performance based conditions:

(a)

Restricted Share Issuance 1: 1,514,500 Restricted Shares are payable and issued on the following schedule so long as Mr. Johnson is employed or the Johnson Employment Agreement is still effective: 1/3 on March 1, 2012, 1/3 on June 1, 2012, 1/3 on September 1, 2012;

(b)

Restricted Share Issuance 2: 1,514,500 Restricted Shares are payable and issued after satisfaction of the following conditions:

(1)

Daily trading volume of the Company’s common stock exceeds 300,000 for 20 of the last 30 days prior to issuance; and

(2)

EBITDA (as defined in the Johnson Employment Agreement ) of the Company exceeds $4,000,000 during any four consecutive quarter periods during the term of the Johnson Employment Agreement ;

(c)

Restricted Share Issuance 3: 3,029,000 Restricted Shares are payable and issued after satisfaction of the following conditions:

(1)

Daily trading volume of the Company’s common stock exceeds 450,000 for 20 of the last 30 days prior to issuance; and

(2)

EBITDA of the Company exceeds $6,000,000 during any four consecutive quarter periods during the term of the Johnson Employment Agreement ;

(d)

Restricted Share Issuance 4: 3,029,000 Restricted Shares are payable and issued after the Company enters into a single Transaction (as defined in the Johnson Employment Agreement) which has a Transaction Value (as defined in the Johnson Employment Agreement) equal to or in excess of $100,000,000.

On December 21, 2011, The Company entered into an amending agreement (the “Pina Amending Agreement”) with Pina to amend the executive employment agreement (the “Pina Employment Agreement”) entered into by the Company and Pina on July 11, 2011 (the “ Pina Effective Date”). Pursuant to the Pina Employment Agreement, Pina would receive 500,000 shares of common stock of the Company (the “Pina Common Shares”) on the Effective Date, 500,000 Pina Common Shares on the 12 month anniversary of the Pina Effective Date, and 500,000 Pina Common Shares on the 24 month anniversary of the Pina Effective Date. The Pina Amending Agreement modifies the vesting of the Pina Common Shares, whereby Pina will receive 1,000,000 Pina Common Shares on the 12 month anniversary of the Pina Effective Date and 500,000 Pina Common Shares on the 24 month anniversary of the Pina Effective Date. Pina and the Company have rescinded and cancelled the original issuance of the 500,000 Pina Common Shares issued on the Pina Effective Date. On December 21, 2011, the market price of the Company’s stock was $2.05 per common share resulting in additional compensation expense to be recognized on a prospective basis of $80,000 through the vesting date of July 31, 2012. Of this amount, $14,709 was recognized in the three months ended January 31, 2011.

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NOTE 12 - INCOME TAXES

We account for income taxes under the liability method. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. As a result of the existing valuation allowance, we estimate our effective tax rate at 0% and therefore have estimated our existing tax liability to be nil as of January 31, 2012.

NOTE 13 — SUBSEQUENT EVENTS

The Company entered into a Membership Interest Purchase Agreement with Colonial Royalties, LLC (“Colonial”) on December 30, 2011 (the “Colonial Purchase Agreement”), whereby Colonial would purchase 100% of the Company’s interests in JHE and the Retained Profits Interest, held by High Plains an entity wholly owned by Johnson, a director and the Chief Executive Officer of the Company (the “Colonial Transaction”), in consideration for $9,350,000. The first payment, $100,000, was paid directly to the Edsels on December 30, 2011. The subsequent payments would be made based on the following schedule: $2,100,000 on January 29, 2012 (the “Second Payment”); $3,200,000 on February 26, 2012 (the “Third Payment”); and $3,950,000 on March 29, 2012 (the “Final Payment” and collectively all payments are known as the “Colonial Acquisition Payments”). The Company’s interest in JHE would not be transferred to Colonial until March 29, 2012 (the “Closing Date”). The Colonial Purchase Agreement has an effective date of January 1, 2012 (the “Colonial Effective Date”).

All cash receipts including all revenues, payments, royalties and distributions received by JHE (the “Cash Receipts”) from the Colonial Effective Date would be held by JHE for the benefit of Colonial to be disbursed to Colonial contingent on timely payment of the Colonial Acquisition Payments. The Cash Receipts (i) for the month of January shall be paid to Colonial on February 1, 2012, contingent upon timely payment of the Second Payment; (ii) for the month of February shall be paid to Colonial on March 1, 2012, contingent upon timely payment of the Third Payment; and (iii) all accounts for the Company shall be transferred to Colonial upon timely payment of the Final Payment.

Pursuant to the Colonial Purchase Agreement, High Plains, a related party to the Company, would receive $935,000 for the Retained Profits Interest, paid on the Closing Date. The Company obtained written consents of the majority of its shareholders to approve the Colonial Transaction.

On February 6, 2012, the Company sent a Notice of Default and Termination (the “Colonial Notice”) to Colonial stating that Colonial was in breach of its payment obligations under the Colonial Purchase Agreement and that the Company was exercising its right to terminate the Colonial Purchase Agreement. Under the terms of the Colonial Purchase Agreement, the delivery of the Colonial Notice by the Company to Colonial was not deemed to be an election of remedies and the Company retains the right to pursue all legal or equitable remedies against Colonial for breach of the Colonial Purchase Agreement. Upon default, the first payment of $100,000 paid to the Edsels was applied to the interest payable on the Seller Note Payable and recorded as a deposit pending final equitable resolution of the default.

On February 8, 2012, the Company issued 10% convertible notes (the “10% Notes”) for cash in the aggregate principal amount of $2,750,000 (the “10% Note Issuance”), subject to the terms of the Inter-Creditor Agreement. The 10% Notes accrue interest at the rate of 10% per annum on the unpaid principal balance and may be prepaid by the Company at any time without the prior written consent of the holders. The 10% Notes are due and payable on February 8, 2013 (the “10% Maturity Date”) or at the election of the applicable holder on the earlier of (i) the closing of a financing transaction by the Company for aggregate proceeds in excess of $5,000,000, which excess amount shall be applied to the principal balance of the applicable holder’s 10% Note (based on the ratio of the principal amount of such holder’s 10% Note relative to the aggregate principal amount of all the 10% Notes); (ii) the sale or partial sale of JHE; (iii) the sale of all or substantially all of the assets of JHE; or (iv) an Event of Default (as defined in the 10% Notes). The 10% Notes are convertible at the option of the holders into shares of common stock of the Company at the 10% Maturity Date or upon the occurrence of one or more of the triggering events set forth in clauses (i), (ii), and (iii) above, at a conversion price of $1.50 per share. The proceeds of the 10% Note Issuance were used to make the December 2011 Edsel Payment. Under the 10% Note and the balance of the proceeds of the 10% Note Issuance will be used for other general corporate purposes.

On February 8, 2012, the Company made the December 2011 Payment due to the Edsels under the Note and, consequently, the Company remains current in its payments obligations under the Note.

Effective February 8, 2012, the Company entered into an Inter-Creditor Agreement (the “Inter-Creditor Agreement”) with the holders of the 10% Notes. The Inter-Creditor Agreement provides for, among other items, (i) the grant to the holders of the 10% Notes of a pledge and security interest in all of the membership interests and assets of the JHE, upon termination of the currently existing pledge and security interest in all of the membership interests and assets of JHE and (ii) the grant on a pro rata basis to the holders of the 10% Notes (based on the ratio of each holder’s investment relative to the aggregate proceeds of the 10% Note Issuance) of a 3.5% overriding royalty interest in certain properties which may be acquired by the Company.

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On February 29, 2012, the Company and Johnson entered into an amendment to the Johnson Employment Agreement whereby the issue and payable dates for Restricted Shares Issuance 1 (1,514,500 restricted shares) were amended to 1/3 on March 1, 2013, 1/3 on June 1, 2013, and 1/3 on September 1, 2013.

On March 5, 2012, David Brow resigned as a director the Company.

On March 5, 2012, pursuant to Article 3, Section 9 of the Bylaws of Company, the Board of Directors of the Company, appointed Morris B. “Sam” Smith, as a director of the Company to fill a vacancy.

The Company entered into a leasehold purchase agreement (the “Wevco Purchase Agreement”) with Wevco Production, Inc. (“Wevco”), whereby Wevco will sell to the Company all of Wevco’s rights, title, and working interest in and to certain oil and gas leases, containing up to 64,575 net acres, more or less, situated in Gove and Trego Counties, Kansas, described more fully in Exhibit A to the Wevco Purchase Agreement. Under the Wevco Purchase Agreement, the Company will pay to Wevco $5,000,000 (the “Wevco Purchase Price”) on or before closing and issue 1,000,000 shares of common stock of the Company to Wevco. Contemporaneously with the signing of the Wevco Purchase Agreement, the Company paid Wevco, $100,000 and the Company is required to pay Wevco an additional $200,000 on or before March 13, 2012 (as amended to March 15, 2012)(collectively the “Wevco Signing Bonus”). The Wevco Signing Bonus is non-refundable and is considered an advance on the Wevco Purchase Price. The Company issued the Wevco Common Shares on March 15, 2012.

On March 14, 2012, the Company issued 10% convertible notes (the “March 10% Notes”) for cash in the aggregate principal amount of $500,000 (the “March 10% Note Issuance”), subject to the terms of the Addendum (as defined below). The March 10% Notes accrue interest at the rate of 10% per annum on the unpaid principal balance and may be prepaid by the Company at any time without the prior written consent of the holders. The March 10% Notes are due and payable on March 14, 2013 (the “March 10% Maturity Date”) or at the election of the holder on the earlier of (i) the closing of a financing transaction by the Company for aggregate proceeds in excess of $5,000,000, which excess amount shall be applied to the principal balance of the holder’s March 10% Note ; (ii) the sale or partial sale of JHE; (iii) the sale of all or substantially all of the assets of JHE; or (iv) an Event of Default (as defined in the March 10% Notes). The March 10% Note is convertible at the option of the holder into shares of common stock of the Company at the March 10% Maturity Date or upon the occurrence of one or more of the triggering events set forth in clauses (i), (ii), and (iii) above, at a conversion price of $1.50 per share. The proceeds of the March 10% Note Issuance were used to pay the Wevco Signing Bonus. The balance of the proceeds of the March 10% Note Issuance will be used for other general corporate purposes.

Effective March 14, 2012, the Company entered into an Addendum to March 2012 Convertible Note Subscription Agreement (the “Addendum”) with the holder of the March 10% Notes. The Addendum provides for, among other items the Company to use its best efforts to (i) the grant to the holder of the March 10% Note of a subordinated security interest in JHE, upon termination of the currently existing pledge and security interest JHE and any creditor with a senior security interest or right to a security interest in JHE existing as of the date of the Addendum, (ii) grant a security interest in the Company’s interest in certain oil and gas properties within the Redfish 56 Prospect in Glasscock County, Texas, and (iii) upon issuance of the Pina Common Shares, under the terms of the Pina Employment Agreement, as may be amended from time to time, Pina will pledge the Pina Shares to secure payment of the March 10% Note.

The Company has evaluated subsequent events through the date of this report.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As used in this quarterly report on Form 10-Q, and unless otherwise indicated, the terms “we,” “us,” “our,” “Circle Star” and the “Company” refer to Circle Star Energy Corp. All dollar amounts in this quarterly report on Form 10-Q are expressed in U.S. dollars unless otherwise indicated.

Forward-Looking Statements

Certain statements in this quarterly report on Form 10-Q constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. We use words like “expects,” “believes,” “intends,” “anticipates,” “plans,” “targets,” “projects” or “estimates” in this quarterly report on Form 10-Q. When used, these words and other, similar words and phrases or statements that an event, action or result “will,” “may,” “could,” or “should” result, occur, be taken or be achieved, identify “forward-looking” statements. Such forward-looking statements are subject to certain risks and uncertainties, both known and unknown, and assumptions, including, without limitation, risks related to:

● risks related to continuation or disposal of our on-line customer support business;

● risks related to the competition from large number of established and well-financed entities that are actively involved in the oil and gas development business;

● risks related to drilling, completion and facilities costs;

● risks related to abandonment and reclamation costs;

● risks related to the performance and characteristics of our oil and gas properties;

● risks related to expected royalty rates, operating and general administrative costs, costs of services and other costs and expenses;

● risks related to our oil and gas production levels;

● risks related to fluctuations in the price of oil and gas, interest and exchange rates;

● risks related to the oil and gas industry, such as risks in developing and producing crude oil and natural gas and market demand;

● risks related to actions taken by governmental authorities, including increases in taxes and changes in government regulations and incentive programs;

● risks related to geological, technical, drilling and processing problems;

● risks and uncertainties involving geology of oil and gas deposits;

● risks related to our ability to locate satisfactory properties for acquisition or participation;

● risks related to shut-ins of connected wells resulting from extreme weather conditions;

● risks related to hazards such as fire, explosion, blowouts, cratering and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury;

● risks related to encountering unexpected formations or pressures, premature decline of reservoirs and the invasion of water into producing formations;

● risks related to the possibility that government policies or laws, including laws and regulations related to the environment, may change or governmental approvals may be delayed or withheld;

● risks related to competition for and/or inability to retain drilling rigs and other services;

● risks related to competition for, among other things, capital, acquisition of reserves, undeveloped land and skilled personnel;

● risks related to our history of operating losses, our limited financial resources and our needs for additional financing;

● risks related to the integration of our new management and implementation of our expanded business strategy in the oil and gas development business;

● other risks related to the thinly traded market for our securities; and

● risks related to holding non-operated interests in properties operated by third-party operators, including our lack of control on the schedule of development, budgeting and production decisions and our reliance on third-party operators.

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The preceding outlines some of the risks and uncertainties that may affect our forward-looking statements. For a full description of such risks and uncertainties, see the heading “Risk Factors” in our annual report on Form 10-K and Form 10-K/A for our fiscal year ended April 30, 2011, filed with the SEC on July 29, 2011 and August 16, 2011, respectively. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.

Our management has included projections and estimates in this quarterly report on Form 10-Q, which are based primarily on management's experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

We qualify all the forward-looking statements contained in this quarterly report on Form 10-Q by the foregoing cautionary statements.

Business Overview

We are an early stage company that was incorporated on May 21, 2007. Up until June 2011, we had been a limited operations entity, primarily focused on organizational matters and developing an online help desk customer support system to assist service companies to improve their customer relationship management. We expected our system to be used by organizations interested in improving their customer relationship management by automating their customer support and by establishing a centralized help desk. The software product was intended to be capable of providing a generic solution across a broad range of industries. We conducted market research, started work on a corporate information-only website, researched third party software development firms and began development on the software product. However, we had limited success in developing clients to purchase our services and we had limited success in raising sufficient capital to develop our technologies and platform. The economic downturn and increased competition in the on-line customer support industry adversely affected our business prospects and our ability to develop competitive services and systems. Through fiscal 2011, we continued to develop our software and began to explore opportunities to diversify our business. We examined complementary technology businesses and resource business and oil and gas business opportunities.

In June 2011, the Company changed its focus and undertook an acquisition of interests in oil and gas producing properties. On June 2, 2011, Brow replaced Felipe Pati, as the sole officer of the Company and was appointed as the President, Treasurer and Secretary. On June 6, 2011, Brow was elected as the sole director of the Company at the annual and special meeting of the shareholders. At the annual and special meeting, the shareholders voted in favor of changing the name of the Company to Circle Star Energy Corp. and amending and restating the bylaws of the Company.

On June 16, 2011 the Company filed a Certificate of Amendment to its articles of incorporation with the Secretary of State of Nevada changing the name of the Company from Digital Valleys Corp. to Circle Star Energy Corp., effective July 1, 2011. Effective July 1, the Company’s ticker symbol on the OTCBB was changed from “DTLV” to “CRCL.”

JHE Acquisition

On June 16, 2011, the Company closed an acquisition under the terms of a Membership Interest Purchase Agreement, effective as of June 1, 2011 (the “Purchase Agreement”), among High Plains Oil, LLC, Nevada limited liability company (“High Plains”), and JHE, pursuant to which the Company acquired all of the membership interests in JHE Holdings, LLC, a Texas limited liability company (“JHE”) from High Plains (the “Acquisition”). High Plains is an entity controlled by S. Jeffrey Johnson (“Johnson”), who was appointed as a director of the Company on June 16, 2011 and Chairman of the Board on July 6, 2011. Johnson was at arms' length to the Company prior to his appointment as a director.

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In consideration for the acquisition of JHE, the Company agreed to:

(a)

issue 1,000,000 shares of its common stock to High Plains (the “Consideration Shares”);

(b)

pay the $1,000,000 installment payment due June 1, 2011, under a promissory note in the aggregate amount of $7,500,000 (the “Edsel Promissory Note”) issued by High Plains to James H. Edsel, Nancy Edsel, and James H. Edsel, Jr. (collectively, the “Edsels”) in connection with the acquisition of JHE by High Plains from the Edsels that closed on March 30, 2011 and was effective as of January 2011 (the “High Plans Acquisition”);

(c)

execute and deliver a Novation and Assignment Agreement (the “Novation”) pursuant to which the Company will, effective June 1, 2011 (the “JHE Effective Date”): (i) assume all of the obligations and liabilities of High Plains under the Edsel Promissory Note, and (ii) in consideration for, among other things, consenting to the Acquisition and the forbearance by the Edsels of the first installment payment of $1,000,000 due under the Edsel Promissory Note on June 1, 2011 until June 10, 2011 or the closing date, issue an aggregate of 600,000 share of its common stock to the Edsels (the “Edsel Shares”);

(d)

undertake to cause JHE to amend its limited liability company agreement to, among other items, provide for the retention by High Plains of a 10% contractual profits interest in JHE (the “Retained Profits Interest”) in the form of a right to 10% of the net revenues, payments, royalties and other distributions received by JHE from the JHE Oil and Gas Properties, as defined below;

(e)

execute and deliver an Amended and Restated Pledge and Security Agreement (the “Amended Pledge Agreement”) with the Edsels pursuant to which the Company will, effective as of the Effective Date: (i) assume all of High Plains’ obligations and liabilities under the initial Pledge and Security Agreement entered into by and between High Plains and the Edsels in connection with the issuance of the Edsel Promissory Note as partial consideration in respect to the High Plains Acquisition and (ii) undertake to cause JHE to assign and transfer a 10% interest in the JHE Oil and Gas Properties to High Plains in exchange for the Retained Profits Interest upon full and complete payment and satisfaction of all obligations due under the Edsel Promissory Note and Amended Pledge Agreement;

(f)

undertake to cause JHE to make a distribution to High Plains, within five (5) business days of June 30, 2011, of cash remitted to JHE through and including June 30, 2011; and

(g)

pay Pimuro, a consultant who advised High Plains with regards to its acquisition of JHE and the Purchase Agreement, the accrued fees and expenses in the amount of $240,000 relating to such consulting arrangement between High Plains and Pimuro under the terms of an Installment Agreement (the “Installment Agreement”), payable of $100,000 on the closing date and thereafter in monthly installments of $50,000, $50,000 and $40,000 commencing when JHE receives $75,000 in monthly aggregate distribution from JHE Oil and Gas Properties (defined below). Pimuro is controlled by G. Jonathan Pina (“Pina”), who was appointed as our Chief Financial Officer on July 11, 2011. Pina was at arms'-length to the Company prior to his appointment.

The acquisition of JHE by the Company closed on June 16, 2011 and was subject to customary closing conditions, including, but not limited to, the receipt of all necessary consents and approvals, the Company and High Plains having complied with all covenants under the Purchase Agreement, and there being no pending litigation, judgment, order or decree that would prohibit the acquisition of JHE by the Company.

The Company owns royalty, non-operated working interests and mineral interests in certain oil and gas properties in Texas. The Oil and Gas Properties include producing wells in the TXL Extension, Crane County, TX (1.00% working interest and 0.75% revenue interest in two wells); Bullard Prospect, Scurry County, TX (1.25% – 2.50% working interest and 0.94% – 2.08% revenue interest in eight wells); Nursery Prospect, Victoria County, TX (2.75% working interest and 2.00% – 2.10% revenue interest in 2 wells); Pearsall Prospect, Dimmit and Zavala Counties, TX (0.24% - 5.00% working interest and 0.17% – 3.75% revenue interest in 23 wells); Madison Woodbine, Grimes and Madison Counties, TX (0.00% - 2.90% working interest and 0.0190% – 2.90% revenue interest in six wells); EnCana Hilltop Bossier Field, Robertson County, TX (0.4146% – 3.7640% working interest, 0.3192% – 2.7265% net revenue interest, and 0.00% – 0.5906% mineral interest in 5 wells) and Giddings Field, Fayette and Lee Counties, TX (0.00% - 3.00% working interest and 0.76% – 2.28% revenue interest in 7 wells).

In addition, the JHE Oil and Gas Properties include mineral interest and non-operated working interest rights in various oil and gas properties. See “Oil and Gas Properties” below.

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County and Well Production Information

Texas County	Production Wells		Net Well Count
Crane		2.00		0.02
Dimmit		10.00		0.06
Fayette		6.00		0.14
Grimes		3.00		0.02
Lee		1.00		0.02
Madison		3.00		0.12
Robertson		5.00		0.04
Scurry		8.00		0.15
Victoria		2.00		0.04
Zavala		13.00		0.04
Total*		53.00		0.65

*Does not include interests in saltwater disposal wells.

Apache Acquisition

On December 6, 2011 the Company entered into a letter agreement (the “Apache Letter Agreement”) with Ingebritson Energy LLC, GTP Energy Partners, LLC, Wind Rush Energy, LLC, Gabriel Barerra and Charles T. Brackett (collectively, the “Apache Sellers”) with a stated execution date of December 1, 2011 (the “Apache Execution Date”). The Letter Agreement is effective November 1, 2011. Pursuant to the Apache Letter Agreement, the Company purchased from the Apache Sellers certain interests in oil and gas properties within the Redfish 56 Prospect in Glasscock County, Texas. In return, the Apache Sellers received 203,571 shares of common stock of the Company and the Company assumed the responsibility for payment of certain operating expenses and capital expenditures.

The foregoing description of the Letter Agreement is qualified in its entirety by reference to the copy of the Apache Letter Agreement which appears as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on December 7, 2011.

Colonial Acquisition

Wevco Acquisition

The foregoing description of the Wevco Purchase Agreement is qualified in its entirety by reference to the copy of the Wevco Purchase Agreement which appears as Exhibit 10.19 to this quarterly report on Form 10-Q.

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Edsel Promissory Note

Pursuant to the Amended Pledge Agreement, the Company, effective as of the JHE Effective Date, pledged 100% of the membership interests in JHE to the Edsels, including all rights and assets relating to such membership interests, as security for the payment and satisfaction of the Company’s obligations under the Edsel Promissory Note.

The JHE Oil and Gas Properties constitute material assets of the Company such that if the Company defaults under the Edsel Promissory Note and the Edsels satisfy the Company’s obligations under the Edsel Promissory Note by selling the unvested portion of the membership interests, the Company may lose all or a portion of the JHE Oil and Gas Properties. In accordance with terms of the Purchase Agreement, as consideration for the acquisition of JHE from High Plains, the Company entered into the Novation pursuant to which the Company agreed to assume, effective as of the JHE Effective Date, all of High Plains’ obligations and liabilities under the Edsel Promissory Note. The Edsel Promissory Note had an initial principal balance of $7,500,000, $1,000,000 of which was paid at closing as consideration for the acquisition of JHE by the Company, and bears interest at a rate of 5% per annum. At closing, the principal balance of the Edsel Promissory Note was $6,500,000 payable on scheduled installments.

On September 2, 2011, the Company paid $400,000 of the $1,500,000 installment due on September 1, 2011 for the Edsel Promissory Note and received an extension from the Edsels to pay the balance of the payment on or before September 15, 2011. The Company paid the balance of the installment payment prior to September 15, 2011.

The Company was unable to timely make the $2,000,000 December 2011 Edsel Payment to the Edsels due on December 31, 2011, and in consideration of a payment in the amount of $100,000 by the Company to the Edsels and pursuant to a letter agreement dated December 29, 2011, the Edsels agreed to extend the payment date for the December 2011 Edsel Payment until January 31, 2012, on which date the December 2011 Payment was due and payable. The Company was unable to timely make the extended payment to the Edsels on January 31, 2012 and as consideration for the Edsels agreeing to (i) further extend the due date for the December 2011 Payment until February 8, 2012 and (ii) extend the due date for March 2012 Edsel Payment until April 30, 2012 (collectively, the “Modified Payment Terms”), the Company offered to pay, among other items, the sum of $2,000,000 to the Edsels as a principal payment under the Edsel Promissory Note on or before February 8, 2012 pursuant to the terms of a letter agreement dated February 8, 2012. Concurrently therewith, and as additional consideration for the Modified Payment Terms, the Company also agreed to execute the Edsel Amendments, which are described in more detail below.

On February 8, 2012, the Company made the $2,000,000 December 2011 Payment due to the Edsels under the Edsel Promissory Note and, consequently, the Company remains current in its payments obligations under the Edsel Promissory Note. The Company still owes the principal amount of $3,000,000 under the Edsel Promissory Note; $1,500,000 of which is due on April 30, 2012; and $1,500,000 of which is due on June 1, 2012.

Effective February 8, 2012, the Company entered into an Inter-Creditor Agreement (the “Inter-Creditor Agreement”) with the holders of the 10% Notes (as defined below – see Financings). The Inter-Creditor Agreement provides for, among other items, (i) the grant to the holders of the 10% Notes of a pledge and security interest in all of the membership interests and assets of the JHE, upon termination of the currently existing pledge and security interest in all of the membership interests and assets of JHE and (ii) the grant on a pro rata basis to the holders of the 10% Notes (based on the ratio of each holder’s investment relative to the aggregate proceeds of the 10% Note Issuance) of a 3.5% overriding royalty interest in certain properties which may be acquired by the Company. (See Financings below for additional information).

Financings

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On August 17, 2011, the Company closed a private placement of shares. Under the terms of the private placement, the Company issued 1,440,000 shares of common stock of the Company at a price of $0.25 per share to "Accredited Investors" (as defined in Rule 501(a) of the United States Securities Act of 1933, as amended (the “Securities Act”).

On September 14, 2011, the Company issued 6% convertible notes (the “6% Notes”) in the total amount of $1,500,000 (the “6% Note Issuance”). The 6% Notes are due and payable on September 14, 2014, with interest at the rate of 6% per annum accruing on the unpaid principal amount, compounded annually. The 6% Notes are convertible at the option of the holder into shares of common stock of the Company at a conversion price of $1.50 per share. The 6% Notes are redeemable prior to maturity at the option of the Company and can be prepaid in whole or in part at any time without a premium or penalty, upon 5 business days’ notice; prior to which the holder of the 6% Note may convert the principal and interest into shares of common stock of the Company. The proceeds of the 6% Note Issuance went to pay the balance of the $1,500,000 installment due on September 1, 2011 for the Edsel Promissory Note (see Edsel Promissory Note above for more additional information).

On February 8, 2012, the Company issued 10% convertible notes (the “10% Notes”) in the aggregate principal amount of $2,750,000 (the “10% Note Issuance”), subject to the terms of the Inter-Creditor Agreement (as defined below). The 10% Notes accrue interest at the rate of 10% per annum on the unpaid principal balance and may be prepaid by the Company at any time without the prior written consent of the holders. The 10% Notes are due and payable on February 8, 2013 (the “10% Maturity Date”) or at the election of the applicable holder on the earlier of (i) the closing of a financing transaction by the Company for aggregate proceeds in excess of $5,000,000, which excess amount shall be applied to the principal balance of the applicable holder’s 10% Note (based on the ratio of the principal amount of such holder’s 10% Note relative to the aggregate principal amount of all the 10% Notes); (ii) the sale or partial sale of JHE; (iii) the sale of all or substantially all of the assets of JHE; or (iv) an Event of Default (as defined in the 10% Notes). The 10% Notes are convertible at the option of the holders into shares of common stock of the Company at the 10% Maturity Date or upon the occurrence of one or more of the triggering events set forth in clauses (i), (ii), and (iii) above, at a conversion price of $1.50 per share. The proceeds of the 10% Note Issuance were used to make the December 2011 Edsel Payment, under the 10% Note and the balance of the proceeds of the 10% Note Issuance will be used for other general corporate purposes. (See Edsel Promissory Note above for additional information)

Effective March 14, 2012, the Company entered into an Addendum to March 2012 Convertible Note Subscription Agreement (the “Addendum”) with the holder of the March 10% Notes. The Addendum provides for, among other items the Company to use its best efforts to (i) the grant to the holder of the March 10% Note of a subordinated security interest in JHE, upon termination of the currently existing pledge and security interest JHE and any creditor with a senior security interest or right to a security interest in JHE existing as of the date of the Addendum, (ii) grant a security interest in the Company’s interest in certain oil and gas properties within the Redfish 56 Prospect in Glasscock County, Texas, and (iii) upon issuance of the Pina Common Shares (as defined below), under the terms of the Pina Employment Agreement (as defined below), as may be amended from time to time, Pina will pledge the Pina Shares (as defined below) to secure payment of the March 10% Note.

The foregoing description of the Addendum is qualified in its entirety by reference to the copy of the Addendum which appears as Exhibit 10.21 to this quarterly report on Form 10-Q.

Officer/Director Compensation and Appointments

On June 16, 2011 after the closing of the JHE acquisition, Johnson was elected as a director of the Company, Johnson was later appointed as Chairman of the Board on July 6, 2011 and as Chief Executive Officer (“CEO”) on October 11, 2011.

On July 6, 2011, the Company’s board of directors adopted the Circle Star Energy Corp. 2011 Stock Option Plan (the “Plan”). The Plan is subject to ratification by shareholders at the Company’s next annual meeting, in order to qualify the issuance of incentive stock options. Pursuant to the Plan, stock options may be granted to any person who is performing or who has been engaged to perform services of special importance to management of the Company in the operation, development and growth of the Company. The maximum number of shares with respect to which stock options may be granted under the Plan may not exceed 3,000,000. Stock options granted under the Plan shall be incentive or non-incentive stock options and shall be evidenced by agreements, which shall be subject to the applicable provisions of the Plan.

On July 6, 2011, David Brow (“Brow”), the sole officer of the Company, was granted 100,000 stock options under the Plan at an exercise price of $0.50 and vesting immediately.

On July 11, 2011, Pina was appointed as the Chief Financial Officer of the Company and took over the Treasurer duties that previously belonged to Brow.

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The Board of the Company increased the size of the Board to consist of three members and pursuant to Article 3, Section 9 of the Bylaws of the Company, Terry W. Dorris was appointed by the Board as a director of the Company, effective August 17, 2011, to fill the vacancy. Dorris subsequently resigned from the Board effective October 12, 2011.

On October 7, 2011, Brow submitted to the Company his resignation as President, effective immediately upon the appointment of his successor. Effective October 11, 2011, the Company accepted Brow’s resignation as President and appointed Johnson as CEO, as described below.

On October 11, 2011, the Company entered into the Johnson Employment Agreement with Johnson, a director and Chairman of the Board of the Company. Pursuant to the Johnson Employment Agreement, Johnson was appointed to the position of CEO of the Company. The term of the Johnson Employment Agreement is for a two-year period beginning on October 1, 2011 (the “Johnson Effective Date”) and ending on the second anniversary of the Johnson Effective Date. Under the terms of the Johnson Employment Agreement, Johnson shall be paid a salary of not less than $200,000, annually. Johnson and the Company agreed to an incentive stock compensation arrangement that is anticipated to be linked to the success of the Company’s business and increases shareholder value. Under the terms of the equity compensation, Johnson will be issued shares of common stock of the Company (each, a “Restricted Share”), upon satisfaction of the following performance based conditions:

(a)

Restricted Share Issuance 1: 1,514,500 Restricted Shares are payable and issued on the following schedule so long as Johnson is employed or the Johnson Employment Agreement is still effective: 1/3 on March 1, 2012, 1/3 on June 1, 2012, 1/3 on September 1, 2012 (as amended on February 29, 2012 to 1/3 on March 1, 2013, 1/3 on June 1, 2013, and 1/3 on September 1, 2013);

(b)

Restricted Share Issuance 2: 1,514,500 Restricted Shares are payable and issued after satisfaction of the following conditions:

(1)

Daily trading volume of the Company’s common stock exceeds 300,000 for 20 of the last 30 days prior to issuance; and

(2)

EBITDA (as defined in the Johnson Employment Agreement) of the Company exceeds $4,000,000 during any four consecutive quarter periods during the term of the Johnson Employment Agreement;

(c)

Restricted Share Issuance 3: 3,029,000 Restricted Shares are payable and issued after satisfaction of the following conditions:

(1)

Daily trading volume of the Company’s common stock exceeds 450,000 for 20 of the last 30 days prior to issuance; and

(2)

EBITDA of the Company exceeds $6,000,000 during any four consecutive quarter periods during the term of the Johnson Employment Agreement;

(d)

Under the terms of the Johnson Employment Agreement, the employment of Johnson may be terminated with or without cause by either Johnson or the Company with 30 days written notice. If the Company terminates the Johnson Employment Agreement, Johnson will be entitled to earn the Restricted Shares for a period of twelve months following such termination. If Johnson terminates the Johnson Employment Agreement, Johnson shall forfeit any unvested Restricted Shares, except the Restricted Shares issuable under Restricted Share Issuance 1.

The foregoing description of the Johnson Employment Agreement is qualified in its entirety by reference to the copy of the Johnson Employment Agreement which appears as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on October 14, 2011.

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On December 16, 2011, Brow resigned as Secretary of the Company effective on the appointment of his successor. The Board appointed Pina as the Secretary of the Company effective December 16, 2011.

The foregoing description of the Pina Amending Agreement is qualified in its entirety by reference to the copy of the Pina Amending Agreement which appears as Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on December 23, 2011.

On January 13, 2012, pursuant to Article 3, Section 9 of the Bylaws of Company, the Board of Directors of the Company, appointed Thomas Merrill Richards, as a director of the Company to fill a vacancy.

On March 5, 2012, Brow resigned as a director the Company.

Business Strategy

On-line Customer Support Business

The Company is currently evaluating its on-line customer support business in order to determine how best to move forward with its implementation or abandonment. We are in the process of determining whether to continue to develop our on-line customer support business, to sell the business (assuming a purchaser can be found) or to abandon the business. Given the competitive nature of the business and our change in overall business strategy, we may be forced to abandon the business.

Oil and Gas Development Business

In June 2011, we acquired JHE, which holds interests on properties operated by others, including royalty, non-operated working interests and mineral interests.

The Company’s business strategy is to continue to expand its reserve base and increase production and cash flow through the continued development of our assets and the acquisition of producing oil and natural gas properties.

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Selected Financial Data

The selected financial information presented below as of and for the periods indicated is derived from our financial statements contained elsewhere in this report and should be read in conjunction with those financial statements.

INCOME STATEMENT DATA	For the Three Months Ended January 31, 2012			For the Three Months Ended January 31, 2011			For the Nine Months Ended January 31, 2012			For the Nine Months Ended January 31, 2011

Revenue	$	255,935		$	-		$	765,906		$	-
Operating Expenses	$	1,908,472		$	9,757		$	8,119,954		$	20,929
Net Loss	$	(2,059,499	)	$	(9,757	)	$	(8,521,258	)	$	(20,929	)
Net Loss per Common Share Basic and Diluted	$	(0.07	)	$	-		$	(0.26	)	$	-
Weighted Average Number of Common Shares Outstanding Basic and Diluted		29,961,739			41,400,000			33,205,326			41,400,000

BALANCE SHEET DATA	At January 31, 2012			At April 30, 2011

Working Capital Deficiency	$	(5,282,351	)	$	(42,800	)
Total Assets	$	3,912,257		$	6,795
Accumulated Deficit	$	(8,691,491	)	$	(97,800	)
Shareholders’ Deficit	$	(2,843,188	)	$	(42,800	)

Our historical results of operations may differ materially from our future results.

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this quarterly report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. See the heading “Forward-Looking Statements” above.

The discussion and analysis of the financial condition and results of operations are based upon the financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but the Company does not believe such differences will materially affect our financial position or results of operations. Critical accounting policies, the policies the Company believes are most important to the presentation of its financial statements and require the most difficult, subjective and complex judgments, are outlined below in “Critical Accounting Policies,” and have not changed significantly.

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Plan of Operation

Oil and Gas Properties

Permian Basin:

The Permian Basin is an oil field located in West Texas and the adjoining area of southeastern New Mexico. The Permian Basin Oil Field covers an area approximately 250 miles wide and 300 miles long. Various zones and terms such as the Avalon Shale, Leonard Shale, Spraberry Formation, Yeso Oil Play, Bone Spring Formation &Wolfcamp Shale are all part of the Permian Basin.

Bullard Prospect (Scurry County, TX) is a producing oil/gas field located in Scurry County, Texas which is located in the Permian Basin in West Texas. The Company owns a 1.25% - 2.50% working interest (0.9375% - 2.0833% net revenue interest) in eight oil/gas wells producing out of the Clear Fork and Glorietta formations at an approximate depth of 3,800 to 3,900 feet. Further, the operator may drill in 5-6 more locations in the Bullard Prospect in the next 12 months. As of January 3, 2011, the operator had identified approximately 6-10 undeveloped locations in the Bullard Prospect. The Company has interests in wells located in the Bullard Prospect operated by Unitex Oil & Gas. The Company holds interests in 3,104.19 gross acres, 2,862.69 of which is undeveloped, and 75.34 net acres, 71.57 of which is undeveloped.

TXL Extension (Crane County, TX) is a producing oil/gas field located in Crane County, Texas, which is located in the Permian Basin in West Texas. The Company has interests in wells located in the TXL Extension operated by CML Exploration, LLC. The Company owns a 1.00% working interest (0.75% net revenue interest) in two wells producing out of the Wolfcamp formation at an approximate depth of 8,000 to 9,000 feet. The Company holds interests in 80.00 gross acres and 0.80 net acres in the TXL Extension.

Eagle Ford Shale

The Eagle Ford Shale is located in South Texas. The formation produces from various depths between 4,000 and 12,000 feet. The Eagle Ford Shale takes its name from the town of Eagle Ford Texas where the shale outcrops at the surface in clay form. The Eagle Ford is a booming shale play.

The Eagle Ford Shale is a geological formation directly beneath the Austin Chalk limestone and it is considered to be the “source rock”, or the original source of hydrocarbons that are contained in the Austin Chalk.

The Company has interests in wells in the Pearsall Prospect which is a producing oil field located around and between Crystal City and Carrizo Springs, Texas, located in south Texas The wells in which the Company has an interest are located in Dimmit and Zavala counties.

Dimmit County, TX

Dimmit County is situated in South Texas where companies are targeting oil, condensate, and gas. Dimmit County produces from both the condensate rich and oil prone areas of the Eagle Ford.

Zavala County, TX

Zavala County is in South Texas and forms part of the Eagle Ford Shale Oil Play. The county lies within the Maverick Basin where oil & gas companies are targeting the Eagle Ford Shale and the Pearsall Shale Gas Play. Drilling in the Eagle Ford targets depths of 4,000 ft to 6,000 ft in the central and southern portions of the county.

Pearsall Prospect

The Pearsall field was originally discovered in the 1930’s and is part of a major oil-producing trend that stretches from near the Texas/Mexico border to the Texas/Louisiana border. The Company’s Eagle Ford interests in the Pearsall Prospect are operated by Chesapeake Energy Corporation (“Chesapeake”). The Company owns interests in various non-producing overriding royalty interest in the Eagle Ford Shale, which is a deeper, productive formation located in the same geographic area below the Austin Chalk formation and is generally considered to be the “source rock” for much of the regional production. Chesapeake has permitted 13 Eagle Ford wells on the acreage in which the Company owns an average overriding royalty interest of 0.16% across 25,000 acres, and 9 wells have been, or are currently being drilled on the aforementioned asset. In addition, the Company owns a 1.00% overriding royalty interest in 3,200 acres operated by Chesapeake. Chesapeake has permitted 13 Eagle Ford wells on the acreage in which the Company owns an average overriding royalty interest of 0.16% across 25,000 acres, and 9 wells have been, or are currently being drilled on the aforementioned asset. In addition, the Company owns a 1.0% overriding royalty interest in 3,200 acres operated by Chesapeake.

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Approximately 50% of the horizontal drill wells in the world have been drilled in the Austin Chalk. The Austin Chalk is a prolific reservoir that has been developed with vertical and horizontal drilling techniques. The Company’s Austin Chalk wells in the Pearsall Prospect are operated by CML Exploration, LLC. The Company owns a 0.24% - 5.00% working interest (0.17% - 3.75% net revenue interest) in 20 oil wells producing out of the Austin Chalk and Buda formations at an approximate depth of 6,000 to 7,100 feet. The Company holds interests in gross acres of 36,687.53 and net acres of 90.2365 in the Pearsall Prospect. Oil and natural gas production from this area is 40 degrees-gravity oil and 1,200 - 1,600 BTU natural gas. The Company also owns interests in various non-producing overriding royalty interests in the Eagle Ford Shale, which is a deeper, productive formation located in the same geographic area (see Eagle Ford Pearsall Prospect).

Nursery Prospect

Nursery Prospect (Victoria County, TX) is a producing gas field located in Victoria County, Texas. The Nursery Prospect is situated in an area that has exhibited excellent gas and very good associated condensate production. The Company owns a 2.75% working interest (2.00% - 2.10% net revenue interest) in two gas wells producing out of the Frio and Miocene formations at an approximate depth of 4,400 to 6,000 feet. The Company’s wells located in the Nursery Prospect are operated by CML Exploration, LLC. The Company holds interests in 8,000 gross acres and 22,000 net acres in the Nursery Prospect.

Madisonville Woodbine Prospect

Madisonville Woodbine Prospect (Grimes and Madison Counties, TX) is a producing oil field located south of Madisonville, Texas. The Company owns a 0.00% - 2.90% working interest (0.019% - 2.90% net revenue interest) in six oil wells producing out of the Woodbine formation at an approximate depth of 7,800 to 9,000 feet. The Company acquired these interests via an acquisition which enjoins mineral and working interests in the Madisonville Woodbine Prospect through perpetual mineral deeds. The Company's wells located in the Madisonville Woodbine Prospect are currently operated by CML Exploration and Woodbine Acquisition Corp. The Company holds interests in 3,466.23 gross acres and 43.9655 net acres in the Madisonville Woodbine Prospect. The Company owns approximately a 5.00% net revenue interest in the Oltmann Unit #1. Oil and natural gas production from this area is 40 degrees - gravity oil and 1,200 - 1,400 BTU natural gas. The Company also owns an interest in WAC's Camp #1 well which is undergoing completion and in several undeveloped horizontal Woodbine locations.

EnCana Hilltop Bossier Field

EnCana Hilltop Bossier Field (Robertson County, TX) is a producing gas field located west of Centerville Texas, in east Texas. The Company owns a 3.76% mineral interest, 0.31% net revenue interest and 0.42% working interest in five gas wells producing out of the Bossier formation at an approximate depth of 11,000 to 12,500 feet. The Company owns this interest by virtue of a perpetual mineral interest and royalty interests in the five wells. Deep Bossier wells intersect shale and sandstone formations that are between 2,000 and 3,000 feet thick. The Company obtained its perpetual mineral interest from one of the original mineral owners. The Company’s wells in the EnCana Hilltop Bossier Field are operated by EnCana Oil & Gas (USA), Inc. The Company holds interests in 1,628.42 gross acres and 9.88 net acres in the EnCana Hilltop Bossier Field.

Giddings Field

Giddings Field (Fayette and Lee Counties, TX) is a producing oil field across several counties in South Central Texas. The Giddings field was rapidly exploited in the 1970’s and eventually expanded to include a long, narrow trend which extends from the Texas-Mexico border up through northeast Texas into Louisiana. The primary producing reservoir is the Austin Chalk which produced over 1 Billion BOE through vertical development and then underwent massive horizontal development beginning in the early 1990’s, with secondary production from the Taylor and deeper Buda and Georgetown formations. The Company owns a 0.00% - 3.00% working interest (0.76% - 2.28% net revenue interest) in seven oil wells producing out of the Austin Chalk formation at an approximate depth of 7,800 to 9,000 feet. The Company’s wells in Giddings field are operated by Leexus Oil LLC. The Company holds interests in 1,766.13 gross acres and 54.25 net acres in Giddings field.

Glass Prospect

Glass Prospect (Glasscock County, TX) is project area encompasses 1,280 gross acres and 640 net mineral acres located in the oil-rich Permian basin region and is operated by Apache Corporation (“Apache”). The operator has already drilled 4 Spraberry wells and is evaluating the potential for additional development. Covering 2,500 square miles and six Texas counties, the Spraberry Formation is one of the largest in the nation for total proved reserves. The formation produces oil from a single enormous sedimentary unit located between the depths of 5,100 and 8,300 feet. In 2007, the U.S. Department of Energy ranked the Spraberry Trend third in the United States by total proved reserves and seventh in total production. Estimated reserves for the entire Spraberry-Dean unit exceed 10 billion barrels. To-date the formation has produced an estimated one billion barrels of oil. While development on the Glass Prospect leases has focused on the Spraberry formation to-date, the project is prospective for both Fusselmen and Cline Shale opportunities. Apache is actively drilling horizontal Cline shale wells in the same field as the Glass prospect, and a recent Cline well drilled by Apache produced 8,800 bbl of oil equivalent in the first 30 days on-line.

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Delivery Commitments

The Company is not obligated to provide a fixed and determinable quantity of oil or gas in the future under existing contracts or agreements.

Competition

The oil and gas industry is intensely competitive, particularly with respect to the acquisition of prospective oil and natural gas properties and oil and natural gas reserves. Our ability to effectively compete is dependent on our geological, geophysical and engineering expertise, and our financial resources. We must compete against a substantial number of major and independent oil and natural gas companies that have larger technical staffs and greater financial and operational resources than we do. Many of these companies not only engage in the acquisition, development and production of oil and natural gas reserves, but also have refining operations, market refined products and generate electricity. We also compete with other oil and natural gas companies to secure drilling rigs and other equipment necessary for drilling and completion of wells. Consequently, drilling equipment may be in short supply from time to time. Currently, access to additional drilling equipment in certain regions is difficult.

Commodity Price Environment

Generally, the demand and the price of natural gas increases during the colder winter months and decreases during the warmer summer months. Pipelines, utilities, local distribution companies and industrial users utilize natural gas storage facilities and purchase some of their anticipated winter requirements during the summer, which can lessen seasonal demand fluctuations. Crude oil and the demand for heating oil are also impacted by seasonal factors, with generally higher prices in the winter. Seasonal anomalies, such as mild winters, sometimes lessen these fluctuations.

Our results of operations and financial condition are significantly affected by oil and natural gas commodity prices, which can fluctuate dramatically. Commodity prices are beyond our control and are difficult to predict. We do not currently hedge any of our production.

The prices received for domestic production of oil and natural gas have been volatile and have resulted in increased demand for the equipment and services that we need to drill, complete and operate wells. Shortages have developed, and we have seen an escalation in drilling rig rates, field service costs, material prices and all costs associated with drilling, completing and operating wells. If oil and natural gas prices remain high relative to historical levels, we anticipate that the recent trends toward increasing costs and equipment shortages will continue.

Results of Operations

Three-month period ended January 31, 2012 compared to three-month period ended January 31, 2011

We earned $255,935 in revenues for the three months ended January 31, 2012 compared to nil in the three months ended January 31, 2011. We incurred operating expenses in the amount of $1,908,472 for the three months ended January 31, 2012, compared to $9,757 for the three months ended January 31, 2011. Operating expenses for the three month period ended January 31, 2012 included: (a) general and administrative costs of $1,734,886 ($9,757 for the same period in 2011), (b) lease operating expenses of $32,154 (nil for the same period in 2011), (c) production taxes of $10,878 (nil for the same period in 2011), and (d) depreciation, depletion, and amortization of $130,554 (nil for the same period in 2011). The increase of $1,898,715 in operating expenses for the three months ended January 31, 2012 compared to January 31, 2011 is a result of stock based compensation and the changes in operation of the Company resulting from the acquisition of JHE. Stock based compensation totaled $1,209,669 for the three months ended January 31, 2012 and nil for the three months ended January 31, 2011.

We incurred a net loss in the amount of $2,059,499 for the three months ended January 31, 2012, compared to $9,757 for the three months ended January 31, 2011. Our increased loss was primarily attributable to stock based compensation and operating expenses of the newly acquired subsidiary JHE.

Nine-month period ended January 31, 2012 compared to nine-month period ended January 31, 2011

We earned $765,906 in revenues for the nine months ended January 31, 2012 compared to nil for the nine months ended January 31, 2011. We incurred operating expenses in the amount of $8,119,954 for the nine months ended January 31, 2012, compared to $20,929 for the nine months ended January 31, 2011. Operating expenses for the nine month period ended January 31, 2012 included: (a) general and administrative costs of $4,211,767 ($20,929 for the same period in 2011), (b) lease operating expenses of $69,944 (nil for the same period in 2011), (c) production taxes of $39,830 (nil for the same period in 2011), and (d) depreciation, depletion, and amortization of $400,718 (nil for the same period in 2011). The increase of $8,099,025 in operating expenses for the nine months ended January 31, 2012 compared to January 31, 2011 is a result of stock based compensation and of the changes in operation of the Company resulting from the acquisition of JHE. Stock based compensation totaled $3,082,625 for the nine months ended January 31, 2012 and nil for the nine months ended January 31, 2011.

We incurred a net loss in the amount of $8,521,258 for the nine months ended January 31, 2012, compared to $20,929 for the nine months ended January 31, 2011. Our increased loss was primarily attributable to stock based compensation and operating expenses of the newly acquired subsidiary JHE.

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Liquidity and Capital Resources

As of January 31, 2012, the Company had current assets of $296,126 consisting of $96,775 cash, $188,247 trade accounts receivable, and $11,104 prepaid expenses, and current liabilities of $5,578,477. The current liabilities consist of the discounted note payable to seller of $4,883,874, accounts payable and accrued liabilities of $499,532, amounts due to related party of $24,521, interest payable of $46,687, and a deposit of $100,000. As of the Company’s year ended April 30, 2011, the Company had current assets of $6,795 and current liabilities of $49,595. The increase in current liabilities between these two periods is primarily the result of the incurrence of a seller note payable related to the acquisition of JHE.

As of January 31, 2012, the Company had a working capital deficit of $5,282,351, compared to a deficit of $42,800 as at April 30, 2011. We estimate that cash requirements of approximately $3,600,000 will be required for development and administration costs, and to fund working capital during the next twelve months. There can be no assurance that we will be successful in raising the required capital or that actual cash requirements will not exceed our estimates. Failure to raise needed financing could result in our having to discontinue our mining oil and gas development business.

As at January 31, 2012, we had a cumulative deficit of $8,691,491 compared to $97,800 as at April 30, 2011. We expect to incur further losses during the remainder of our fiscal year ending April 30, 2012.

During the period covered by this quarterly report, the Company was unable to timely make the $2,000,000 December 2011 Edsel Payment to the Edsels due on December 31, 2011, and in consideration of a payment in the amount of $100,000 by the Company to the Edsels and pursuant to a letter agreement dated December 29, 2011, the Edsels agreed to extend the payment date for the December 2011 Edsel Payment until January 31, 2012, on which date the December 2011 Payment was due and payable. The Company was unable to timely make the extended payment to the Edsels on January 31, 2012 and as consideration for the Edsels agreeing to (i) further extend the due date for the December 2011 Payment until February 8, 2012 and (ii) extend the due date for March 2012 Edsel Payment until April 30, 2012 (collectively, the “Modified Payment Terms”), the Company offered to pay, among other items, the sum of $2,000,000 to the Edsels as a principal payment under the Edsel Promissory Note on or before February 8, 2012 pursuant to the terms of a letter agreement dated February 8, 2012. Concurrently therewith, and as additional consideration for the Modified Payment Terms, the Company also agreed to execute the Edsel Amendments (described in more detail above in the section entitled Edsel Promissory Note.)

On February 8, 2012, the Company made the $2,000,000 December 2011 Payment due to the Edsels under the Edsel Promissory Note and, consequently, the Company remains current in its payment obligations under the Edsel Promissory Note. The Company still owes the principal amount of $3,000,000 under the Edsel Promissory Note; $1,500,000 of which is due on April 30, 2012; and $1,500,000 of which is due on June 1, 2012.

The Edsel Promissory Note is secured by a pledge of all of the Company’s membership interests in JHE to the Edsels pursuant to the Amended Pledge Agreement and the First Amendment to Membership Interest Pledge and Security Agreement (described in more detail above in the section entitled Edsel Promissory Note). If the Company defaults on any of its obligations under the Edsel Promissory Note, the Edsels shall be entitled to exercise any and all remedies available at law to secure payment of the Edsel Promissory Note, including, but not limited to, selling the unvested portion of the membership interests.

The Company assumed High Plains’ obligations to pay Pimuro $240,000 under the terms of the Installment Agreement, of which $100,000 was paid on closing of the Acquisition and monthly installments of $50,000, $50,000 and $40,000 are payable commencing on the last day of the month that JHE receives aggregate revenue from the JHE Oil and Gas Properties during such month. As of the date of this filing, these amounts have been paid.

On June 16, 2011, we raised $1,200,000 in a private placement of units. Each unit consists of one share of common stock of the Company and one common share purchase warrant, which may be exercised to acquire one share of common stock of the Company at an exercise price of $0.50 through June 15, 2013. We used the proceeds from the private placement to pay $1,000,000 to the Edsels, $100,000 to Pimuro and $15,000 to reimburse the Edsels for legal expenses. We estimate that we incurred $100,000 in transaction expenses in connection with the Acquisition and the private placement.

On September 2, 2011, the Company paid $400,000 of the $1,500,000 installment due on September 1, 2011 for the Promissory Note and received an extension from the Edsels to pay the balance of the payment on or before September 15, 2011.

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On February 8, 2012, the Company issued the 10% Notes in the aggregate principal amount of $2,750,000 (the “10% Note Issuance”), subject to the terms of the Inter-Creditor Agreement. The 10% Notes accrue interest at the rate of 10% per annum on the unpaid principal balance and may be prepaid by the Company at any time without the prior written consent of the holders. The 10% Notes are due and payable on February 8, 2013 (the “10% Maturity Date”) or at the election of the applicable holder on the earlier of (i) the closing of a financing transaction by the Company for aggregate proceeds in excess of $5,000,000, which excess amount shall be applied to the principal balance of the applicable holder’s 10% Note (based on the ratio of the principal amount of such holder’s 10% Note relative to the aggregate principal amount of all the 10% Notes); (ii) the sale or partial sale of JHE; (iii) the sale of all or substantially all of the assets of JHE; or (iv) an Event of Default (as defined in the 10% Notes). The 10% Notes are convertible at the option of the holders into shares of common stock of the Company at the 10% Maturity Date or upon the occurrence of one or more of the triggering events set forth in clauses (i), (ii), and (iii) above, at a conversion price of $1.50 per share. The proceeds of the 10% Note Issuance were used to make the December 2011 Edsel Payment, under the 10% Note and the balance of the proceeds of the 10% Note Issuance will be used for other general corporate purposes.

On March 14, 2012, the March 10% Notes for cash in the aggregate principal amount of $500,000 (the “March 10% Note Issuance”), subject to the terms of the Addendum. The March 10% Notes accrue interest at the rate of 10% per annum on the unpaid principal balance and may be prepaid by the Company at any time without the prior written consent of the holders. The March 10% Notes are due and payable on March 14, 2013 (the “March 10% Maturity Date”) or at the election of the holder on the earlier of (i) the closing of a financing transaction by the Company for aggregate proceeds in excess of $5,000,000, which excess amount shall be applied to the principal balance of the holder’s March 10% Note ; (ii) the sale or partial sale of JHE; (iii) the sale of all or substantially all of the assets of JHE; or (iv) an Event of Default (as defined in the March 10% Notes). The March 10% Note is convertible at the option of the holder into shares of common stock of the Company at the March 10% Maturity Date or upon the occurrence of one or more of the triggering events set forth in clauses (i), (ii), and (iii) above, at a conversion price of $1.50 per share. The proceeds of the March 10% Note Issuance were used to pay the Wevco Signing Bonus. The balance of the proceeds of the March 10% Note Issuance will be used for other general corporate purposes.

The Company does not currently have sufficient cash to fund its working capital requirements or to make the next installment payment under the Edsel Promissory Note of $1,500,000 on April 30, 2012 or the final payment of $1,500,000 due on June 1, 2012. Consequently, in order to avoid defaulting on its payment obligations under the Edsel Promissory Note and to fund its working capital requirements, the Company will need to obtain additional financing, through the issuance of equity or debt. There can be no assurance that the Company will be able to raise sufficient financing to satisfy its obligations under the Edsel; Promissory Note.

Given that we have not achieved profitable operations to date, our cash requirements are subject to numerous contingencies and risks beyond our control, including operational and development risks, competition from well-funded competitors, and our ability to manage growth. We can offer no assurance that the Company will generate cash flow sufficient to achieve profitable operations or that our expenses will not exceed our projections.

We estimate that we will require approximately $3,600,000 over the next twelve months to fund our capital requirements. We do not currently have sufficient capital to fund these commitments. Therefore, we need to raise approximately $3,600,000 in debt or equity financing in the next twelve months. There can be no assurance that such additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. Unprecedented disruptions in the credit and financial markets in the past eighteen months have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for the Company to obtain, or increase its cost of obtaining, capital and financing for its operations. If we are unable to obtain additional or alternative financing on a timely basis and are unable to generate sufficient revenues and cash flows, we will be unable to meet our capital requirements and will be unable to continue as a going concern.

We anticipate generating losses in the near term, and therefore, may be unable to continue operations in the future. To secure additional capital, we will have to issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no agreements, arrangements, or understandings with any person to obtain funds through bank loans, lines of credit, or any other sources.

The following contractual obligations chart is based on obligations as of March 15, 2012. Contractual obligations of less than 1 year are obligations payable between February 8, 2012 through January 31, 2013, a portion of which has been paid prior to March 16, 2012. Contractual obligations of 1-3 years are obligations payable between February 1, 2012 and January 31, 2014.

Contractual Obligations	Less than 1 year		1-3 years

Long Term Debt Obligations

Promissory Note to James H. Edsel, Nancy Edsel, and James Edsel, Jr. (i)	$	3,000,000

6% Convertible Notes Payable (ii)			$	1,500,000

10% Convertible Notes Payable due February 8, 2013 (iii)			$	2,750,000

10% Convertible Notes Payable due March 14, 2013 (iv)			$	500,000

Purchase Obligations

Salary payments to G. Jonathan Pina (v)	$	180,000	$	80,322

Consulting Agreement with Big Sky Management (vi)	$	62,500

Services and Support Agreement with Consolidated Asset Management Services (Texas), LLC (vii)	$	96,000

Salary Payments to S. Jeffrey Johnson (viii)	$	200,000	$	133,333

Professional Services Agreement with ChangeWave Inc. (ix)	$	20,000

Total	$	3,558,500	$	4,963,655

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(i) The Promissory Note is payable in the following installments: $1,500,000 on April 30, 2012, and $1,500,000 on June 1, 2012.

(ii) The 6% Convertible Notes are due and payable on September 14, 2014 and accrue interest at a rate of 6% per annum and payable at maturity.

(iii) The 10% Convertible Notes are due and payable on February 8, 2013 and pay interest at a rate of 10% per annum and payable monthly.

(iv) The 10% Convertible Notes are due and payable on March 14, 2013 and pay interest at a rate of 10% per annum and payable monthly.

(v) Monthly installments of $15,000 for a two-year term, beginning July 11, 2011.

(vi) Monthly installments of $12,500 for a one-year term, beginning July 1, 2011.With a thirty-day notice, either party may terminate the agreement.

(vii) Monthly installments of $11,000 for the first two months, $13,500 for months three to six, and $16,000 for months seven to twelve, beginning August 1, 2011.

(viii) Annual salary in the amount of 200,000 starting on October 1, 2011 with no set payment intervals for a two-year term.

(ix) $20,000 due on March 20, 2012.

Going Concern Consideration

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13(a)-15(f) and 15(d)-15(f) under the Exchange Act) during the quarter ended January 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We know of no material, active, or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation there such claim or action involves damages for more than 10% of our current assets. There are no proceedings in which any of our company’s directors, officers, or affiliates, or any registered or beneficial shareholders, is an adverse party or has a material interest adverse to our company’s interest.

On June 16, 2011, Circle Star acquired all of the outstanding equity interest in JHE. JHE was party to a litigation related to a mineral interest in the well known as Landers #1 (“Landers #1”) that was initiated in November 2008 in the District Court 82nd Judicial District, Robertson County, Texas.

The litigation involved a multi-party trespass to try title suit to determine the ownership of Landers #1. Ross L. Martella III originally sought a temporary restraining order, but the lawsuit evolved into a trespass to try title action under Chapter 22 of the Texas Property Code. A Final Judgment was rendered in the suit in November, 2010 and it became final and non-appealable in December, 2010. Subsequently, two additional litigation matters involving Landers #1 were initiated. As of June 10, 2011, one of the suits was dismissed and Orbis Energy, Ltd. (“Orbis”) has agreed to indemnify JHE in connection with the remaining litigation related to Landers #1.

The parties consider the lawsuits to be a nuisance and Circle Star does not believe the Landers #1 litigation to be material due to Orbis’ agreement to indemnify, hold harmless and defend at its sole cost and expenses, Circle Star and its respective successors and assigns from any and all claims and/or costs associated with these lawsuits or any other claim which might be made against the interests that are subject to such litigation.

Item 1A. Risk Factors.

Not applicable.

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

Subsequent to the period covered by this quarterly report, the Company offered and sold the following securities pursuant to exemptions from the registration requirements under the Securities Act, which transactions were previously disclosed in the previous Quarterly Report on Form 10-Q or Current Reports on Form 8-K.

On December 6, 2011 the Company entered into the Apache Letter Agreement with Apache Seller. Pursuant to the Apache Letter Agreement, the Company purchased from the Apache Sellers certain interests in oil and gas properties within the Redfish 56 Prospect in Glasscock County, Texas. In return, the Apache Sellers were issued, on March 8, 2012, 203,572 shares of common stock of the Company (the “Apache Acquisition Shares”) and the Company assumed the responsibility for payment of certain operating expenses and capital expenditures, effective December 1, 2011.

The Apache Acquisition Shares have not and will not be registered under Securities Act, or the laws of any state of the United States. Accordingly, the Apache Acquisition Shares are “restricted securities” (as defined in Rule 144(a)(3) of the Securities Act) and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The Apache Acquisition Shares will be placed pursuant to exemptions from the registration requirements of the Securities Act provided by Section 4(2) thereof.

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The Wevco Common Shares will not be registered under the Securities Act, or the laws of any state of the United States. Accordingly, the Wevco Common Shares are “restricted securities” (as defined in Rule 144(a)(3) of the Securities Act) and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The Wevco Common Shares will be issued pursuant to exemptions from the registration requirements of the Securities Act provided by Section 4(2) thereof.

The 10% Notes and the March 10% Note were offered by the Company in a non-brokered private placement to non-U.S. persons outside of the United States in off-shore transactions. The 10% Notes and the March 10% Note were not registered under the Securities Act, or the laws of any state of the United States, and are “restricted securities” (as defined in Rule 144(a)(3) of the Securities Act). The 10% Notes and the March 10% Note may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The 10% Notes and the March 10% Note were placed pursuant to exclusions from the registration requirements of the Securities Act pursuant to Rule 903 thereunder, such exclusions being available based on information obtained from the private placement investors.

Item 3. Defaults Upon Senior Securities

None.

Item 4. [Removed and Reserved.]

Not applicable.

Item 5. Other Information.

Nominating Committee

There have not been any material changes to the procedures by which security holders may recommend nominees to the Company’s Board.

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Item 6. Exhibits.

Exhibit	Description
3.1	Articles of Incorporation (included as Exhibit 3.1 to the Form S-1 filed August 6, 2008, and incorporated by reference); and Certificate of Amendment (included as Exhibit 3.1 to the Form 8-K filed on July 1, 2011)
3.2	Amended and Restated Bylaws (included as Exhibit 10.7 to the 8-K filed June 21, 2011, and incorporated by reference)
10.1	Membership Interest Purchase Agreement, dated effective June 10, 2011 (included as Exhibit 10.1 to the Form 8-K filed on June 21, 2011)
10.2	Amended and Restated Pledge and Security Agreement, dated effective June 10, 2011 (included as Exhibit 10.2 to the Form 8-K filed on June 21, 2011)
10.3	Novation and Assignment, dated effective June 10, 2011 (included as Exhibit 10.3 to the Form 8-K filed on June 21, 2011)
10.4	Promissory Note, dated effective January 1, 2011 (included as Exhibit 10.4 to the Form 8-K filed on June 21, 2011)
10.5	Installment Agreement (included as Exhibit 10.5 to the Form 8-K filed on June 21, 2011)
10.6	Form of Subscription Agreement (included as Exhibit 10.6 to the Form 8-K filed on June 21, 2011)
10.7	Contribution Agreement entered into between Felipe Pati and the Company (included as Exhibit 10.1 to the Form 8-K filed on July 12, 2011)
10.8	Circle Star Energy Corp. 2011 Stock Option Plan (included as Exhibit 10.2 to the Form 8-K filed on July 12, 2011)
10.9	G. Jonathan Pina Employment Agreement (included as Exhibit 10.1 to the Form 8-K filed on July 13, 2011)
10.10	Form of Series A 6% Convertible Note (included as Exhibit 10.1 to the Form 8-K filed on September 19, 2011)
10.11	S. Jeffrey Johnson Employment Agreement (included as Exhibit 10.1 to the Form 8-K filed on October 14, 2011)
10.12	Letter Agreement (included as Exhibit 10.1 to the Form 8-K filed on December 7, 2011)
10.13	Amending Agreement to Pina Employment Agreement (included as Exhibit 10.1 to the Form 8-K filed on December 23, 2011)
10.14	Membership Interest Purchase Agreement with Colonial Royalties LLC, dated December 30, 2011 (included as Exhibit 10.1 to the Form 8-K filed on January 5, 2012)
10.15	Form of 10% Convertible Note (February 2012)
10.16	Inter-Creditor Agreement
10.17	First Amendment to Assignment and Novation Agreement
10.18	First Amendment to Amended and Restated Membership Interest Pledge and Security Agreement
10.19	Leasehold Purchase Agreement dated March 8, 2012
10.20	Form of 10% Convertible Note (March 2012)
10.21	Addendum to March 2012 Convertible Note Subscription Agreement
31.1	Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act
31.2	Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document *
101.SCH	XBRL Taxonomy Extension Schema Document *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase *
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB	XBRL Taxonomy Extension Label Linkbase Document *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document *

* Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CIRCLE STAR ENERGY CORP.

Dated: March 16, 2012	By:	/s/ S. Jeffrey Johnson
		S. Jeffrey Johnson, Chief Executive Officer
		(Principal Executive Officer)

Dated: March 16, 2012	By:	/s/ G. Jonathan Pina
		G. Jonathan Pina, Chief Financial Officer
		(Principal Financial Officer)

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