Circle Star Energy 10-Q/A 2014 Q3 Quarterly report (amended)

UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

Amendment No. 1

FORM 10-Q /A

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2014
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	98-0537383
(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

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of common shares outstanding as of March 14, 2014 the initial date of this filing was 70,614,796   and as of the filing date, the outstanding is 72,424,711.

  EXPLANATORY NOTE

On August 4, 2014 the management of Circle Star Energy, Corp. (the “Company”) and its Board of Directors (the “Board”) concluded that the previously issued consolidated financial statements contained in the Company’s Quarterly Reports on Form 10-Q (the “Form 10-Q”) for the quarter ended January 31, 2014 should no longer be relied upon because of errors related to the presentation of certain information included in the consolidated financial statements and footnotes to the consolidated financial statements. The Company has determined that it was necessary to correct the accounting for certain transactions as presented within the consolidated statement of operations and statement of cash flows along with their corresponding impact on the Company’s balance sheet.

The initial accounting for the fair value of certain over-riding royalty interests and net revenue interests in certain crude oil and natural gas properties (‘Interests’) sold during the fiscal quarter ended January 31, 2014 to an un-related third party resulted in the gain being over-stated in the Form 10Q filed on March 14, 2014. The methodology which was initially utilized to arrive at the fair value applied to the Interests sold was inappropriately applied at the time the transaction was initially recorded. Related to the re-allocation of the fair value of the assets sold; the calculation of depletion on a field by field basis was re-performed. The issues were discovered in connection with the audit of our April 30, 2014 financial statements. The gain on the sale of assets initially reported as $1,728,235 was re-calculated utilizing the appropriate fair value to arrive at a net gain of $1,232,279. Depletion expense of $134,685 as reported through January 31, 2014 was re-calculated to be $496,659 for the nine months then ended. The net impact of these adjustments resulted in net income of $708,485 or $0.01 per share and $231,187 or $0.00 per share for the three months and nine months ended January 31, 2014, respectively as compared to a previously reported $1,566,415 or $0.03 per share and $1,089,117 or $0.02 per share for the three and nine months ended January 31, 2014 respectively.

2

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
SIGNATURES		27

3

PART I.               FINANCIAL INFORMATION

Item 1.                 Financial Statements.

CIRCLE STAR ENERGY CORP.

CONSOLIDATED BALANCE SHEETS

	January 31, 2014			April 30, 2013
	(unaudited)
	restated (NOTE 14)
ASSETS
CURRENT ASSETS
Cash	$	772,489		$	125,109
Trade accounts receivable		153,578			128,117
Prepaid expenses and other assets		26,330			42,840
Total Current Assets		952,397			296,066
Oil and Gas Properties at cost, - using the successful efforts method
Unproved properties		815,589			815,589
Proved properties		2, 449,225			3,110,292
Less: accumulated depletion, depreciation and amortization		(1, 406,514	)		(912,634	)
Oil and Gas properties-net		1,858,300			3,013,247
Investment in partnership		167,215			167,215
Total Assets	$	2,977,912		$	3,476,528
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	84,057		$	678,292
Accrued liabilities		222,182			334,464
Salaries and taxes payable		128,712			197,046
Interest payable		227,890			436,890
Convertible notes payable, net of unamortized discount		3,663,253			2,752,800
Derivative liabilities associated with convertible securities		29,292			63,671
Total Current Liabilities		4,355,386			4,463,163
Convertible notes payable, net of unamortized discount		-			1,330,712
Total Liabilities		4,355,386			5,793,875
STOCKHOLDERS' (DEFICIT)
Common stock, 100,000,000, par value $0.001 shares authorized, 53,856,175 and 44,173,404 common shares issued and outstanding at January 31, 2014 and April 30, 2013, respectively.		53,856			44,174
Additional paid in capital		20,398,660			19,699,656
Accumulated deficit		( 21,829,990	)		(22,061,177	)
Total Stockholders' (Deficit)		( 1,377,474	)		(2,317,347	)
Total Liabilities and Stockholders' (Deficit)	$	2,977,912		$	3,476,528

The accompanying notes are an integral part of these unaudited interim financial statements

4

 CIRCLE STAR ENERGY CORP.

 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended January 31, 2014			Three Months Ended January 31, 2013
	restated (NOTE 14)
Revenues
Oil sales	$	224,796		$	250,898
Gas sales		25,057			17,031
Total Revenues		249,853			267,929
Operating Expenses
Lease operating		23,531			23,059
Production taxes		13,569			18,420
Exploration costs		-			-
Depreciation, depletion, and amortization		385,988			115,647
Impairment of oil and gas properties		-			-
General and administrative		279,653			1,229,127
Gain on sale of oil and gas properties		(1,232,279	)		-
Total Operating Expenses		(529,538	)		1,386,253
Gain ( Loss ) from Operations		779,391			(1,118,324	)
Other Income (Expense)
Interest expense		(155,625	)		(429,326	)
Derivative liability expense		-			-
Change in fair value of  convertible securities liability		(706	)		12,095
Loss in connection with conversion of notes payable		-			(23,500	)
Gain in connection with settlement of accounts payable		115,353			-
Loss on sale of assets		-			-
Distributions in connection with net profits interest		(39,193	)		(9,827	)
Net Income (Loss) before equity in earnings of unconsolidated affiliates		699,220			(1,568,882	)
Equity in earnings of unconsolidated affiliates		9,265			-
Net Income (Loss)	$	708,485		$	(1,568,882	)
Earnings (Loss) Per Common Share:
Basic	$	0. 01		$	(0.04	)
Diluted	$	0. 01		$	-
Weighted Average Shares Outstanding
Basic		51,649,653			42,017,614
Diluted		56,856,320			-

The accompanying notes are an integral part of these unaudited interim financial statements

5

CIRCLE STAR ENERGY CORP.

 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Nine months ended January 31, 2014			Nine months ended January 31, 2013
	restated (NOTE 14)
Revenues
Oil sales	$	923,725		$	594,296
Gas sales		69,304			35,691
Total Revenues		993,029			629,987
Operating Expenses
Lease operating		98,365			58,844
Production taxes		45,427			36,522
Exploration costs		-			80,579
Depreciation, depletion, and amortization		496,659			331,873
Impairment of oil and gas properties		-			3,566,497
General and administrative		1,142,298			3,989,606
Gain on sale of oil and gas properties		(1,232,279	)		-
Total Operating Expenses		550,470			8,063,921
Gain ( Loss ) from Operations		442,559			(7,433,934	)
Other Income (Expense)
Interest expense		(490,023	)		(1,394,223	)
Derivative liability expense		(22,135	)		-
Change in fair value of  convertible securities liability		67,840			(27,050	)
Loss in connection with conversion of notes payable		-			(429,834	)
Gain in connection with settlement of accounts payable		293,296			-
Loss on sale of assets		-			(89,847	)
Distributions in connection with net profits interest		(84,330	)		89
Net Income (Loss) before equity in earnings of unconsolidated affiliates		207,207			(9,374,799	)
Equity in earnings of unconsolidated affiliates		23,980			-
Net Income (Loss)	$	231,187		$	(9,374,799	)
Earnings (Loss) Per Common Share:
Basic	$	0. 00		$	(0.23	)
Diluted	$	0. 00		$	-
Weighted Average Shares Outstanding
Basic		49,861,342			39,952,832
Diluted		55,068,009			-

The accompanying notes are an integral part of these unaudited interim financial statements

6

CIRCLE STAR ENERGY CORP.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Nine months ended January 31, 2014			Nine months ended January 31, 2013
	restated (NOTE 14)
Cash flows from operating activities
Net Income (loss)	$	231,187		$	(9,374,799	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation, depletion and amortization		496,659			331,873
Amortization of discount on notes payable		213,696			1,083,570
Share-based compensation		393,002			2,562,111
Impairment of oil and gas properties		-			3,566,497
Exploration costs		-			80,579
Derivative liability expense		22,135			-
Change in fair value derivative liability		(67,840	)		27,050
Equity in earnings of unconsolidated affiliate		-			(12,535	)
(Gain) Loss on conversion of debt and settlement of accounts payable		(293,296	)		429,834
(Gain) Loss on sale of oil and gas properties		(1, 232,279	)		89,847
Changes in operating assets and liabilities:
Trade accounts receivable		(23,210	)		16,542
Prepaid expenses and other assets		14,259			(13,728	)
Accounts payable		(221,259	)		414,394
Accrued liabilities		40,289			269,740
Bank overdrafts		-			(409,544	)
Advances from working interest partners		-			130,643
Interest payable		(209,000	)		277,034
Net cash (used in) operating activities		(635,657	)		(530,892	)
Cash flows from investing activities
Acquisitions of oil and gas properties, net		(6,877	)		(219,438	)
Net proceeds from sale of oil and gas properties		1,897,444			-
Capital expenditures in connection with working interest partners		(142,530)			-
Distributions from equity method investees		-			12,535
Net cash provided by (used in) investing activities		1,748,037			(206,903	)
Cash flows from financing activities
Proceeds from the issuance of common stock		-			1,950,000
Payments on note issued to seller		-			(1,250,000	)
Proceeds from convertible notes		50,000			125,000
Repayments of convertible notes payable		(515,000	)		-
Net cash provided by (used in) financing activities		(465,000	)		825,000
Net increase in cash		647,380			87,205
Cash
Beginning of year		125,109			60,626
End of period	$	772,489		$	147,831
Supplemental Cash Flow Information:
Cash paid for interest	$	485, 103		$	33,453
Cash paid for income taxes	$	-		$	-
Supplemental Non-Cash Investing and Financing Information:
Settlement of seller note through conveyance of oil and gas properties	$	-		$	250,000
Common stock issued for acquisition of Blue Ridge leases	$	-		$	2,402,741
Common stock issued in connection with debt conversion and in settlement of accrued liabilities	$	288,421		$	1,145,617

The accompanying notes are an integral part of these unaudited interim financial statements

7

CIRCLE STAR ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.           BASIS OF PRESENTATION AND USE OF ESTIMATES

The interim consolidated financial statements of Circle Star Energy Corporation ("we," "us," "our," "Circle Star" or the "Company") are unaudited and contain all adjustments (consisting primarily of normal recurring adjustments) necessary for a fair statement of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for a full year or for previously reported periods due in part, but not limited to, the volatility in crude oil and natural gas commodity prices, global economic and financial market conditions, interest rates, estimates of reserves, drilling risks, geological risks, transportation restrictions, the timing of acquisitions, product demand, market competition, interruption in production and our ability to obtain additional capital. You should read these consolidated interim financial statements in conjunction with the audited consolidated financial statements and notes thereto included in Circle Star's Annual Report on Form 10-K for the year ended April 30, 2013, filed with the Securities and Exchange Commission on August 13, 2013.

2.           GOING CONCERN

At January 31, 2014, we had cash and cash equivalents of $772,489 and a working capital deficit of $3,402,989.  For the nine months ended January 31, 2014, we had net income of $ 231,187, operating income of $442,559 and cash used in operations of ($635,657).

Given that we have not achieved income from operations to date, and have maturing debt obligations 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. Accordingly, there is substantial doubt as to our ability to continue as a going concern for a reasonable period of time.

There can be no assurance that 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 over the past two years have had a significant material adverse impact on access to capital and credit for many companies. Considering our financial condition, we may be forced to issue debt or equity at less favorable terms than would otherwise be available. 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 from operations 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 financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. 

3.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Equity Method Investment

The Company has a 10% investment in JHE Energy Interests (“JHEI”) which is accounted for under the equity method of accounting. JHEI is engaged in the exploration, development, and production of oil and gas assets in the state of Texas. The Company’s investment in JHEI was $167,215 and $167,215 as of January 31, 2014 and April 30, 2013, respectively. The Company has elected to use the equity method, as we may have the ability to exercise significant influence on the investee. During the nine months ended January 31, 2014, we received earnings distributions of $23,980 related to the investment in JHEI.

Transfer of Net Profits Interest

During the nine months ended January 31, 2014 we paid a total of $8,330 to High Plains Oil and an unrelated party, related to their 10% retained net profits interest in our wholly-owned subsidiary, JHE Holdings, LLC (“JHE”).  This net profits interest had been owned by High Plains Oil, LLC (“High Plains”), an entity controlled by S. Jeffrey Johnson our Chief Executive Officer. On May 9, 2013, High Plains transferred its ownership of the net profits interest to an unrelated third party.

Advances from Working Interest Partners

In January 2013, the Company entered into two Participation agreements, whereby the Company became the operator of two wells in Trego County, Kansas.  Advances from working interest partners are included in accrued liabilities on our consolidated balance sheet in the amount of $46,209 as of January 31, 2014, and consisted of cash calls received from the other working interest owner, net of costs incurred on the respective wells. 

8

CIRCLE STAR ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Recently Issued Accounting Pronouncements

In July 2013, the FASB issued, ASU No. 2013-11 "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" (“ASU 2013-11”).  ASU 2013-11 addresses the diversity in practice that exists for the balance sheet presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. ASU No. 2013-11 is effective for the Company’s fiscal quarter ending July 31, 2014. ASU 2013-11 impacts balance sheet presentation only. The Company is currently evaluating the impact of the new rule but believes the balance sheet impact will not be material.

4.           FAIR VALUE MEASUREMENTS

The Company has adopted new guidance under ASC Topic 820, Fair Value Measurements and Disclosures.

ASC Topic 820 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data and requires disclosures for assets and liabilities measured at fair value based on their level in the hierarchy. Further new authoritative accounting guidance (ASU No.2009-05) under ASC Topic 820, provides clarification that in circumstances in which a quoted price in an active market for the identical liabilities is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update.

The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

·   Level 1 – Quoted prices in active markets for identical assets of liabilities

·   Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

·   Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives. The effects of interactions between embedded derivatives are calculated and accounted for in arriving at the overall fair value of the financial instruments. In addition, the fair values of freestanding derivative instruments such as warrant and option derivatives are valued using the Black-Scholes model.

The Company uses Level 3 inputs for its valuation methodology for the derivative liabilities and embedded conversion option liabilities as their fair values were determined by using the Black-Scholes option pricing model based on various assumptions. The Company’s derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value of derivatives.

9

CIRCLE STAR ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table sets forth the liabilities as January 31, 2014, which are recorded on the balance sheet at fair value on a recurring basis by level within the fair value hierarchy. As required, these are classified based on the lowest level of input that is significant to the fair value measurement:

			Fair Value Measurements at Reporting Date Using
Description	January 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Derivative liabilities associated with convertible promissory notes	$	29,292		-		-	$	29,292

The following table sets forth a summary of changes in fair value of our derivative liabilities for the period ended January 31, 2014.

	January 31, 2014
Beginning balance May 1, 2013	$	63,671
Embedded conversion option liability recorded in connection with the issuance of convertible promissory notes		83,185
Changes in derivative liabilities recorded in connection with the conversion of convertible promissory notes		(49,724	)
Change in fair value of embedded beneficial conversion feature of convertible promissory notes included in earnings		(67,840	)
Ending balance January 31, 2014	$	29,292

5.           INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period.

Diluted net income per common share is computed in the same manner, but also considers the effect of common stock shares underlying the following:

	January 31, 2014
Common stock awards (a)		566,667
Convertible notes payable (b)		4,390,000
Common stock warrants		250,000
Total		5,206,667

(a)   Common stock awards represent unvested portion of common shares issuable to employees upon completion of the requisite vesting period.

(b)   During the nine months ended January 31, 2014, $50,000 in cash was received from the issuance of convertible notes payable (Note 7).  These notes contain an embedded conversion feature whereby the notes may be converted into shares of the Company’s common stock. The dilutive impact of these securities fluctuates based on the terms of the conversion feature. The dilutive impact as of January 31, 2014 has been included herein. The dilutive impact of a potential conversion of these notes in subsequent periods may, vary significantly depending on the market value of our common shares at the time of conversion.

10

CIRCLE STAR ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6.           OIL AND GAS PROPERTIES

The Company holds the following oil and gas interests:

	January 31, 2014			April 30, 2013
Unproved Oil and Gas Properties	$	815,589		$	815,589
Total Unproved Oil and Gas Properties		815,589			815,589
Proved Oil and Gas Properties		2, 449,225			3,110,292
Total Proved Oil and Gas Properties		2, 449,225			3,110,292
Accumulated depletion, depreciation and amortization		(1, 406,514	)		(912,634	)
Net Oil and Gas Properties	$	1,858,300		$	3,013,247

On January 24, 2014, the Company completed the assignment of certain royalty and over-riding royalty interests related to 14 wells located in Madison, Grimes, Dimmit and Fayette counties in Texas to unrelated third parties. Net capitalized costs associated with the interests sold amounted to $ 665,165 . Net cash consideration received in connection with the conveyance amounted to $1,897,444. In connection with the sale we have recorded a gain of $1, 232,279 .

7.           NOTES PAYABLE

As of January 31, 2014 and April 30, 2013, notes payable consisted of the following:

	January 31, 2014			April 30, 2013
Current Portion
(a) Convertible notes payable 10% – February 8, 2013	$	2,235,000		$	2,750,000
(b) Convertible notes payable 10% – August 15, 2014		32,925			67,713
(c) Convertible notes payable 6% – September 14, 2014		1,500,000			-
Less discount on convertible notes payable		(104,672	)		(64,913	)
Total current portion	$	3,663,253		$	2,752,800
Long Term Portion
(c) Convertible notes payable 6% – September 14, 2014	$	-		$	1,500,000
Less discount on convertible notes payable		-			(169,288	)
Total long term portion	$	-		$	1,330,712
Total Notes Payable	$	3,663,253		$	4,083,512

(a)   The 10% convertible notes became due on February 8, 2013 in the principal amount of $2,750,000. In January 2014 the Company paid a total of $1,000,000 cash, each of the two noteholders receiving $500,000.  Of the total amount paid $515,000 was allocated to principal on the notes $257,500 for each note and $485,000 was allocated to interest $242,500 for each note.  On February 28, 2014, the Company entered into new note agreements with the two noteholders. The amended and restated note agreements, each in the amount of $1,155,000, accrue interest at 12% per annum and mature on December 31, 2014. The new notes are collateralized by a security interest in the oil and gas properties held by JHE. The Company has maintained the right to continue selling interests in assets held by JHE provided that 70% of the proceeds from any sale by JHE be applied to the outstanding principal and accrued interest related to the amended and restated notes. In connection with the new note agreements we have agreed to issue 5,000,000 shares of our common stock to the noteholders. The Company at the election of the Chief Executive Officer has retained the right to vote these shares and we have retained the right to re-purchase any or all of these shares at a price of $0.15 per share for six months from the date of grant. In addition we have issued to the noteholders 2,500,000 warrants to purchase our common shares at $0.05 per share beginning on February 15, 2015. The Company has retained the right to call the warrants any time within the first six months from the date of issuance at $0.10 provided that we re-pay a minimum of $500,000 in principal on each note.

(b)   On August 15, 2012, the Company entered into a convertible note agreement which allows the Company to borrow up to $555,000. The note matures on August 15, 2014. The terms of the note contain a 10% or $55,000 original issuance discount, to be pro-rated based on actual cash drawn in connection with the instrument. The note is convertible into common shares at the lesser of $0.55 or at a share value of 75% of the lowest closing share price for the 25 days preceding a conversion.

11

CIRCLE STAR ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

During the nine months ended January 31, 2014, we received net cash proceeds of $50,000 related to borrowings under the terms of the initial note agreement. As of January 31, 2014, we had an outstanding balance of $32,925 under the terms of the note and recorded a discount in the amount of $28,803 to be amortized over the term of the note. The note bore no interest for the first 90 days and at 10% thereafter. The terms of the note indicate that if any principal were not repaid within 90 days of the initial funding, the 10% interest charge on all outstanding principal was to accrue immediately. Therefore we have accrued $5,000 as a component of the principal balance as of January 31, 2014. In addition we have recorded $5,000 in original issuance discount and $1,050 in fees as components of the principal balance.

In connection with this conversion feature, we have recorded a derivative liability totaling $83,185 for the $50,000 draw related to the Level III fair value measurement of the conversion feature on the day one issuance of the debt. The value of the associated conversion liability will be re-valued at the end of each fiscal period with changes recorded as charges to our profit and loss. As of January 31, 2014, we have recorded a liability of $29,292 related to the embedded conversion feature and recorded gains of $67,840 during the nine months ended January 31, 2014, related to the change in its fair value. We used the Black-Scholes model in establishing the date of issuance fair value and end of reporting period fair value of the conversion liability. Key assumptions included in the fair value measurement of this liability included: volatility ranging from 199.51% on the date of issuance, to 280.44% as of the end of the reporting period; risk free interest rates ranging from 0.13% on the date of issuance, to 0.10% at the end of the reporting period; and an assumed dividend rate of 0%.

In May, June and July 2013, the Company received conversion notices from the holders of the $555,000 convertible note. The conversion notices indicated the conversion of $82,838 in principal, accrued interest and original issuance discount into 2,296,749 common shares at conversion prices of $0.053, $0.053, $0.023 and $0.023 per share respectively (Note 8).

In December 2013 and January 2014, the Company received conversion notices from the holders of the $555,000 convertible note. The conversion notices indicated the conversion of $28,125 in principal, accrued interest and original issuance discount into 2,700,000 shares of common stock at conversion prices of $0.01875 and $0.075 per share respectively (Note 8).

Subsequent to January 31, 2014, an additional $23,880 in principal, accrued interest and original issuance discount was converted into 4,000,000 shares of our common stock at prices ranging from $0.006 to $0.005925 per share.

(c)   On September 14, 2011, the Company issued 6% convertible notes in the total amount of $1,500,000. The notes are due and payable on September 14, 2014 and bear interest at the rate of 6% per annum. The notes are convertible at the option of the holder into common shares 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 repaid in whole or in part at any time without a premium or penalty. Upon issuance, the notes were discounted by $370,000 to reflect the beneficial conversion value that existed on that date. This discount is being amortized over the term of the note payable utilizing the effective interest method. As of January 31, 2014, the remaining unamortized discount related to the notes was $76,027. Interest is payable with the principal on September 14, 2014.

12

CIRCLE STAR ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

8.           SHAREHOLDERS’ EQUITY

Common Shares

As of January 31, 2014 and April 30, 2013, 100,000,000 shares of our $0.001 par value common stock were authorized, 53,856,175 and 44,173,404 were issued and outstanding, respectively.

·   On May 7, 2013 we issued 500,000 shares of common stock at $0.0525 per share, the contractual conversion price, in connection with the conversion of $26,250 in principal related to our August 14, 2014, 10% convertible notes payable. (Note 7)

·   On May 23, 2013 we issued 496,429 shares of common stock at $0.0525 per share, the contractual conversion price, in connection with the conversion of $26,062 in principal, original issuance discount and accrued interest on our August 14, 2014, 10% convertible notes payable. (Note 7)

·   On June 19, 2013 we issued 650,000 shares of common stock at $0.0235 per share, the contractual conversion price, in connection with the conversion of $15,259 in principal related to our August 14, 2014, 10% convertible notes. (Note 6)

·   On July 3, 2013 we issued 650,320 shares of common stock at $0.0235 per share, the contractual conversion price, in connection with the conversion of $15,266 in principal, original issuance discount and accrued interest related to our August 14, 2014, 10% convertible notes payable. (Note 7)

·   On June, 27, 2013 we issued 757,249 shares of common stock to Jeffrey Johnson (“Johnson”) our Chief Executive Officer and President, at $0.08 per share. 504,833 of these shares were issued in connection with the completion of requisite vesting requirements, 252,416 shares were issued as share based compensation related to an allowance for the income tax effect of this vesting and a previous vesting of 504,833 shares. In connection with the issuance of these additional shares we have recorded share based compensation expense in the amount of $10,196.

·   On June 27, 2013 we issued 33,333 shares of common stock to an employee of the Company. The issuance of these shares represents the completion of the requisite vesting period, with all expense being recognized during the vesting period.  The shares were initially granted at $2.60 per share.

·   On June 27, 2013 we issued 1,591,675 shares of common stock at $0.05 per share, the market value of the shares on the date of grant, to Johnson, in connection with the forgiveness of $63,667 in accrued salaries owed Mr. Johnson. In connection with this issuance of shares we have recorded additional share based compensation expense of $15,917, related to an allowance for the income tax effect of the issuance.

·   On June 27, 2013 we issued 1,568,750 shares of common stock at $0.05 per share, the market value of the shares on the date of grant, to an employee of the Company in connection with the forgiveness of $62,750 in accrued salaries. In connection with this issuance of shares we have recorded share based compensation expense of $15,688, related to an allowance for the income tax effect of the issuance.

·   On July 12, 2013 we issued 103,973 shares of common stock to a former director of the Company. The issuance of these shares represents the completion of the requisite vesting period, with all expense being recognized during the vesting period.  The shares were initially granted at $0.60 per share.

·  On August 30, 2013 we issued 504,834 shares of common stock at $0.04 per share, the market value of the shares on the date of grant, to Johnson. The shares were issued in connection with the completion of the requisite vesting period, with all expense being recognized during the vesting period. An additional 126,208 shares of common stock were issued at $0.04 per share on that same date related to an allowance for the income tax effect of the issuance of the vested shares. In connection with the issuance of the additional shares for the income tax effect we have recorded additional share based compensation expense of $5,048.

·  On December 20, 2013 we issued 700,000 shares of common stock at $0.01875 per share, the contractual conversion price, in connection with the conversion of $13,125 in principal, original issuance discount and accrued interest related to our August 14, 2014, 10% convertible notes payable. (Note 7)

·  On January 23, 2014 we issued 2,000,000 shares of common stock at $0.0075 per share, the contractual conversion price, in connection with the conversion of $15,000 in principal, original issuance discount and accrued interest related to our August 14, 2014, 10% convertible notes payable. (Note 7)

13

CIRCLE STAR ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

· Subsequent to January 31, 2014 we issued 4,000,000 shares of common stock at prices ranging from $0.006 to $0.005925 the contractual conversion prices related to the conversion of $23,880 in principal, original issuance discount and accrued interest related to our August 14, 2014, 10% convertible notes payable. (Note 7)

· On March 4, 2014 we issued a total of 5,000,000 common shares, 2,500,000 to each of the holders of our February 8, 2013, 10% convertible noteholders at $0.0145 in connection with the amendment and restatement of the underlying note agreements. (Note 7)

· On March 6, 2014, the Board of Directors of the Company resolved to issue 7,758,621 common shares at $0.0145 per share, which was the closing price of our shares on that date, in connection with the issuance bonuses to our Chief Executive Officer, and an employee of the Company (4,310,345 shares and 344,828 shares, respectively). In addition, we issued 3,103,448 shares to an employee of the Company in connection with the satisfaction of accrued salaries payable.

Stock Warrants

As of January 31, 2014, there were 250,000 warrants to purchase the Company’s common shares outstanding. The warrants are exercisable at a weighted average exercise price of $2.75 and have a remaining contractual life of 1.28 years.

9.           SHARE BASED COMPENSATION

Stock Options

A summary of the Company’s common-stock options activity through January 31, 2014, is presented below:

	Shares			Weighted Average Exercise Price
Balance at April 30, 2013		350,000		$	0.50
Forfeitures		(350,000	)		0.50
Balance at end of period		-		$	-
Exercisable at January 31, 2014		-		$	-

During the nine months ended January 31, 2014, 350,000 of our stock options were forfeited by our former Chief Financial Officer.

We recognized share-based compensation expense including all option and common share awards expense of $393,002 and $2,562,111 for the nine months ended January 31, 2014 and 2013, respectively.

10.           INCOME TAXES

The effective income tax rates for the nine months ended January 31, 2014 and 2013 were nil. Total income tax expense for the nine months ended January 31, 2014 and 2013, differed from amounts computed by applying the U.S. federal statutory tax rates to pre-tax income due primarily to changes in the valuation allowance recorded against deferred tax assets.

11.         RELATED PARTY TRANSACTIONS

During the nine months ended January 31, 2014, the Company made cash payments of $8,330 to High Plains related to its retained net profits interest. As of January 31, 2014, we have recorded a liability in the amount of $nil related to High Plain’s retained net profits interest. High Plains is an entity controlled by S. Jeffrey Johnson our Chief Executive Officer. On May 9, 2013, High Plains transferred its ownership of the net profits interest to an unrelated third party. (Note 3)

12.         LITIGATION

Convertible Notes

On October 28, 2013, the holders of our 10% convertible notes due February 8, 2013 in the principal amount of $2,750,000 filed a legal action against the Company in the District Court for Clark County, Nevada, in an attempt to collect the outstanding balance related to these notes. On February 28, 2014, the Company entered into a settlement agreement and new note agreements with the holders. The amended and restated note agreements, each in the amount of $1,155,000, accrue interest at 12% per annum and mature on December 31, 2014.

Jonathan G. Pina

On January 27, 2014 Jonathan Pina, our former Chief Financial Officer, filed a legal action against the Company in the District Court of Harris County Texas, in an attempt to collect vacation pay and for alleged failure to pay severance and benefits for resignation with good reason. The Company intends to defend this legal action vigorously.

14

CIRCLE STAR ENERGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

13.         SUBSEQUENT EVENTS

On February 28, 2014, the Company entered into new note agreements with the holders of its 10%, convertible notes payable. The amended and restated note agreements each in the amount of $1,155,000, accrue interest at 12% per annum and mature on December 31, 2014. The new notes are collateralized by a security interest in the oil and gas properties held by JHE. The Company has maintained the right to continue selling interests in assets held by JHE provided that 70% of the proceeds from any sale by JHE be applied to the outstanding principal and accrued interest related to the amended and restated notes. In connection with the new note agreements we have agreed to issue 5,000,000 shares of our common stock to the noteholders. The Company at the election of the Chief Executive Officer has retained the right to vote these shares and we have retained the right to re-purchase any or all of these shares at a price of $0.15 per share for six months from the date of grant. In addition we have issued to the noteholders 2,500,000 warrants to purchase our common shares at $0.05 per share beginning on February 15, 2015. The Company has retained the right to call the warrants any time within the first six months from the date of issuance at $0.10 provided that we re-pay a minimum of $500,000 in principal on each note.

On various dates subsequent to January 31, 2014 through March 14, 2014, we issued 4,000,000 shares of common stock at prices ranging from $0.006 to $0.005925 the contractual conversion prices related to the conversion of $23,880 in principal, original issuance discount and accrued interest related to our August 14, 2014, 10% convertible notes payable. (Note 7)

On March 4, 2014 we issued a total of 5,000,000 common shares, 2,500,000 to each of the holders of our February 8, 2013, 10% convertible noteholders at $0.0145 in connection with the amendment and restatement of the underlying note agreements. (Note 7)

On March 6, 2014, the Board of Directors of the Company resolved to issue 7,758,621 common shares at $0.0145 per share, which was the closing price of our shares on that date, in connection with the issuance of bonuses to our Chief Executive Officer, and an employee of the Company (4,310,345 shares and 344,828 shares, respectively). In addition, we issued 3,103,448 shares to an employee of the Company in connection with the satisfaction of accrued salaries payable.

14.        RESTATEMENT

The initial accounting for the fair value of certain over-riding royalty interests and net revenue interests in certain crude oil and natural gas properties (‘Interests’) sold during the fiscal quarter ended January 31, 2014 to an un-related third party resulted in the gain initially recognized being over-stated. The methodology initially utilized to arrive at the fair value applied to the Interests sold was inappropriately applied at the time the transaction was initially recorded. Related to the re-allocation of the fair value of the assets sold; the calculation of depletion on a field by field basis was re-performed. The issues were discovered in connection with the audit of our April 30, 2014 consolidated financial statements. The gain on the sale of assets initially reported as $1,728,235 was re-calculated utilizing the appropriate fair value to arrive at a net gain of $1,232,279. Depletion expense of $134,685 as reported through January 31, 2014 was re-calculated to be $496,659 for the nine months then ended. The net impact of these adjustments resulted in net income of $708,485 or $0.01 per share and $231,187 or $0.00 per share for the three months and nine months ended January 31, 2014, respectively as compared to a previously reported $1,566,415 or $0.03 per share and $1,089,117 or $0.02 per share for the three and nine months ended January 31, 2014, respectively.

15

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

The following discussion and analysis should be read in conjunction with accompanying financial statements and related notes included elsewhere in this report. It contains forward looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, market prices for oil and  natural gas, economic and competitive conditions, regulatory changes, estimates of proved reserves, geological, geophysical and engineering risks and uncertainties,  potential failure to achieve production from development drilling projects, capital expenditures and other uncertainties, as well as those factors discussed below and elsewhere in this report, all of which are difficult to predict and which expressly qualify all subsequent oral and written forward-looking statements attributable to us or persons acting on our behalf. In light of these risks, uncertainties and assumptions, the forward looking events discussed may not occur. We do not have any intention or obligation to update forward-looking statements included in this report after the date of this report, except as required by law. The preceding outlines some of the risks and uncertainties that may affect our forward looking statements.

As used in this quarterly report on Form 10Q, 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 10Q are expressed in U.S. dollars, unless otherwise indicated.

Overview

Since the Company’s incorporation on May 21, 2007 through June 2011, we had limited operations primarily focused on organizational matters and developing an online help desk customer support system to assist service companies to improve their customer relationship management. In fiscal 2011, we began to explore opportunities to diversify our business. Our focus has been the acquisition of royalty, working interests and mineral interests in certain oil and gas properties in Texas and Kansas. 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, 2011, the Company’s ticker symbol on the OTCBB was changed from “DTLV” to “CRCL.”

Business Strategy

Our primary objective is to increase our net asset value, and cash flow through acquisitions, exploration, development, and exploitation of oil and gas properties.

The four key components of our growth strategy are:

● Identification and acquisition of strategic assets.

● Utilization of strategic partners.

● Cost effective implementation of operations.

● Increase cash flows from existing properties.

16

Results of Operations

The financial information with respect to the three and nine months ended January 31, 2014 and 2013, as discussed below is unaudited. In the opinion of management, such information contains all adjustments (consisting primarily of normal recurring accruals) necessary for a fair presentation of the results for such periods.  The results of operations for interim periods are not necessarily indicative of the results of operations for the full fiscal years. The table below presents the results of operations for the three and nine months ended January 31, 2014 and 2013.

	Three Months Ended						Nine months ended
	January 31, 2014			January 31, 2013			January 31, 2014			January 31, 2013
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Consolidated Statement of Operations:
Revenues	$	249,853		$	267,929		$	993,029		$	629,987
Lease operating, production and other		37,100			41,479			143,792			95,366
General and administrative expenses		279,653			1,229,127			1,142,298			3,989,606
Depreciation, depletion and amortization		385,988			115,647			496,659			331,873
Gain on sale of oil and gas properties		(1,232,279	)		-			(1,232,279	)		-
Impairment of oil and gas properties		-			-			-			3,566,497
Exploration costs		-			-			-			80,579
Gain ( Loss ) from operations		779,391			(1,118,324	)		442,559			(7,433,934	)
Net income (loss)	$	708,485		$	(1,568,882	)	$	231,187		$	(9,374,799	)

The following table sets forth summary information regarding oil gas production, average sales prices and average production costs for the three and nine months ended January 31, 2014. We determined the BOE using the ratio of six Mcf of natural gas to one BOE. The ratios of six Mcf of natural gas to one BOE does not assume price equivalency and, given price differentials, the price for a BOE for natural gas may differ significantly from the price for a barrel of oil.

	Three Months Ended				Nine months ended
	January 31, 2014		January 31, 2013		January 31, 2014		January 31, 2013
Revenue
Oil	$	224,796	$	250,898	$	923,725	$	594,296
Gas		25,057		17,031		69,304		35,691
Total oil and gas sales	$	249,853	$	267,929	$	993,029	$	629,987
Sales Volume
Oil (Bbls)		2,239		2,537		8,704		6,247
Gas (Mcf)		4,438		3,117		11,874		7,661
Total (BOE)		2,979		3,057		10,683		7,524
Total (BOE/d)		32		33		39		27
Average Sales Price
Oil (Per Bbls)	$	100.40	$	98.90	$	99.71	$	95.13
Gas (Per Mcf) (1)		5.65		5.46		5.84		4.66
Total (Per BOE)	$	83.87	$	87.64	$	81.24	$	83.73
Average Per BOE
Lease operating expense	$	7.90	$	7.54	$	9.21	$	7.82
Production taxes	$	4.56	$	6.03	$	4.25	$	4.85
Depletion expense	$	129.57	$	37.83	$	46.49	$	44.11

(1) Includes NGL’s realized prices per Mcf would be significantly less with the exclusion of NGL’s

17

Revenue and Operating Trends

For the nine months ended January 31, 2014, we did not generate sufficient revenues to cover our operating expenses (when excluding the impact of the gain on sale of oil and gas properties).

Industry Overview for the three and nine months ended January 31, 2014

Oil prices have continued to be relatively strong during the last quarter of calendar 2013 and into calendar 2014. Gas prices continue to be relatively weak and continue to fluctuate based on demand. Concerns surrounding the global financial crisis and fluctuations in demand led to gas prices falling to a ten year low and oil prices dropping significantly in the spring of 2012.

Company Overview for the three and nine months ended January 31, 2014

We generated net income of $ 708,485 for the three months ended January 31, 2014 and our net income for the nine months ended January 31, 2014 was $ 231,187 . Included in net income for the three and nine months ended January 31, 2014 are gains of $1, 232,279 recorded in connection with our conveyance of certain royalty and over-riding royalty interests in oil and gas properties with an effective date of December 1, 2013. From our inception through January 31, 2014, we have received revenues from our oil and natural gas activities, while historically we have incurred substantial acquisition and impairment costs and overhead expenses which have resulted in an accumulated deficit through January 31, 2014 of $ 21,829,990 . The conveyance of certain royalty interests and over-riding royalty interests in oil and gas properties constitute the conveyance of a significant portion of our revenue stream which may result in increase in our accumulated deficit in future fiscal periods.

Comparison of Results of Operations for the three months ended January 31, 2014 and 2013

Oil and gas sales. Oil and gas sales decreased $18,076, or (7%), for the three months ended January 31, 2014, to $249,853 from $267,929 for the three months ended January 31, 2013. The $18,076 decrease in oil and gas sales was primarily attributable to a decrease in production volumes in oil and lower realized prices per BOE, partially offset by increases in production volumes in gas. Production volumes decreased, primarily due to normal fluctuations in production volumes by certain wells during the fiscal quarter ended January 31, 2014 coupled with our conveyance of certain royalty interests.

Oil and gas production.  Production for the three months ended January 31, 2014 totaled 2,979 BOE (32 BOE/d), compared to 3,057 BOE (33 BOE/d) in the prior year period, a decrease of (3%).  The decrease in production in the 2014 fiscal period is the result primarily of normal fluctuations in production volumes by certain wells coupled with our conveyance of certain royalty interests.  

Lease operating expenses. Our lease operating expenses (“LOE”) increased $472, or 2% to $23,531 for the three months ended January 31, 2014, from $23,059 for the three months ended January 31, 2013. The $7.90 per BOE/LOE in the 2014 fiscal period as compared to $7.54 per BOE/LOE in the 2013 fiscal period was primarily attributable to a decrease in oil volumes produced as a percentage of our overall sales.

Severance and production taxes. Our severance and production taxes decreased $4,851, or (26%) to $13,569 for the three months ended January 31, 2014, from $18,420 for the three months ended January 31, 2013. The decrease in severance and production taxes was due primarily to the decrease in oil sales volumes coupled with one time charges incurred in the prior period.

General and administrative. Our general and administrative expenses (“G&A”) decreased $949,474 or (77%), to $279,653 for the three months ended January 31, 2014, from $1,229,127 for the three months ended January 31, 2013.  The decrease in G&A was primarily due to significantly lower share-based compensation, reduced legal expense and accounting fees coupled with decreased payroll expense.  

Depreciation, depletion, and amortization. Our depreciation, depletion and amortization expense (“DD&A”) increased $270,341 or 234%, to $ 385,988 for the three months ended January 31, 2014, from $115,647 for the three months ended January 31, 2013. The increase in DD&A expense over the prior year period was primarily attributable to the addition of two wells, for which we have included commensurate increase in underlying reserves, coupled with upward revisions/adjustments to the depletion base recorded in connection with our sale certain interests in our crude oil and natural gas properties resulting in an increase in previously reported depletion as described elsewhere herein.

Gain (loss) in connection with settlement of accrued liabilities.  Gains recorded during the three months ended January 31, 2014 amounted to $115,353, compared to a loss of $23,500 recorded during the three months ended January 31, 2013.  These gains and losses resulted from the settlement of accounts payable and accrued liabilities.

Gain in connection with sale of oil and gas properties.  Gains recorded during the three months ended January 31, 2014 amounted to $1, 232,279 , compared to no gain or loss recorded during the three months ended January 31, 2013.  These gains resulted from the conveyance of certain royalty and override interests in oil and gas properties as described further herein.

Interest expense, net.  Our interest expense, net, decreased $273,701, or (64%), to $155,625 for the three months ended January 31, 2014, from $429,326 for the three months ended January 31, 2013. This decrease is primarily attributable to reduced amortization of deferred financing charges as the costs associated with our largest convertible notes have been fully accreted.

18

Comparison of Results of Operations for the nine months ended January 31, 2014 and 2013

Oil and gas sales. Oil and gas sales increased $363,042, or 58%, for the nine months ended January 31, 2014, to $993,029 from $629,987 for the nine months ended January 31, 2013. The $363,042 increase in oil and gas sales was primarily attributable to an increase in both oil and gas production volumes, offset by decreases in the average price per BOE.  Production volumes increased primarily due to the addition of two wells offset slightly by our conveyance of certain royalty interests.  

Oil and gas production.  Production for the nine months ended January 31, 2014 totaled 10,683 BOE (39 BOE/d), compared to 7,524 BOE (27 BOE/d) in the prior year period, an increase of 42%.  The increase in production in the 2014 fiscal period is the result primarily of the addition of two wells.  

Lease operating expenses. Our LOE increased $39,521, or 67% to $98,365 for the nine months ended January 31, 2014, from $58,844 for the nine months ended January 31, 2013. The $9.21 per BOE/LOE in the 2014 fiscal period as compared to $7.82 per BOE/LOE in the 2013 fiscal period was primarily attributable to an increase in oil volumes produced as a percentage of our overall sales coupled with non-recurring one time charges.

Severance and production taxes. Our severance and production taxes increased $8,905, or 24% to $45,427 for the nine months ended January 31, 2014, from $36,522 for the nine months ended January 31, 2013. The increase in severance and production taxes was due primarily to the increase in overall sales volumes.

General and administrative. Our G&A decreased $2,847,308 or (71%), to $1,142,298 for the nine months ended January 31, 2014, from $3,989,606 for the nine months ended January 31, 2013.  The decrease in G&A was primarily due to lower share-based compensation and reduced legal expense and accounting fees coupled with reduced payroll expense.   

Depreciation, depletion, and amortization. Our DD&A increased $164,786 or 50%, to $ 496,659 for the nine months ended January 31, 2014, from $331,873 for the nine months ended January 31, 2013. The increase in DD&A expense over the prior year period was primarily attributable to the addition of two wells, for which we have included commensurate increases in underlying reserves, The increase in DD&A expense over the prior year period was primarily attributable to the addition of two wells, for which we have included commensurate increase in underlying reserves, coupled with upward revisions/adjustments to the depletion base recorded in connection with our sale certain interests in our crude oil and natural gas properties resulting in an increase in previously reported depletion as described elsewhere herein.

Gain (loss) in connection with settlement of accrued liabilities and debt.  Gains recorded during the nine months ended January 31, 2014 amounted to $293,296, compared to losses of $429,834 recorded in the nine months ended January 31, 2013.  These current period gains resulted from the adjustment in accrued salary amounts owed to our former CFO and from the settlement of accounts payable.  The prior period losses resulted from the conversion of accounts payable, accrued liabilities and debt.

Gain in connection with sale of oil and gas properties.  Gains recorded during the nine months ended January 31, 2014 amounted to $1, 232,279 , compared to no gain or loss recorded during the nine months ended January 31, 2013.  These gains resulted from the conveyance of certain royalty and override interests in oil and gas properties as described further herein.

Interest expense, net.  Our interest expense, net, decreased $904,200, or (65%, to $490,023 for the nine months ended January 31, 2014, from $1,394,223 for the nine months ended January 31, 2013. This decrease is primarily attributable to reduced amortization of deferred financing charges as the costs associated with our largest convertible notes have matured, coupled with the conversion of convertible notes and associated deferred financing charges during the comparable prior period.

Liquidity and Capital Resources

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.

We had a working capital deficit of $3,402,989 at January 31, 2014 versus $4,167,097 at April 30, 2013.  Our working capital deficit decreased during nine months ended January 31, 2014, due primarily to repayments on convertible notes, settlement of accounts payable and accrued liabilities, and decreases in losses incurred in connection with operations, partially offset by the change in $1,500,000 in notes payable from long-term to short-term. Our gain from operations amounted to $ 442,559 for the nine months ended January 31, 2014.

19

Our cash balance at January 31, 2014 was $772,489 of which $8,134 relates to advances from our working interest partners, as compared to $125,109 at April 30, 2013. The change in our cash balance is summarized as follows:

Cash balance at April 30, 2013	$	125,109
Sources of cash:
Cash provided by investing activities	1,748,037
Total sources of cash including cash on hand	1,873,146
Uses of cash:
Cash used in operations	(635,657		)
Cash used in financing activities	(465,000		)
Total uses of cash	(1,100,657		)
Cash balance at January 31, 2014	$	772,489

Net cash provided from investing activities of $1,748,037 for the nine months ended January 31, 2014 was attributable primarily to the net proceeds received from the conveyance of certain of our interests in oil and gas properties of $1,897,444.  Partially offsetting the proceeds from conveyance were investments in oil and gas properties of $6,877 and distributions in operations of our oil and gas joint venture of $142,530.

Net cash used in operating activities of $635,657 for the nine months ended January 31, 2014 was attributable to our net loss adjusted for non-cash charges as presented in the consolidated statements of cash flows and changes in working capital as discussed above.

We have historically financed our business activities principally through issuances of common shares, promissory notes, convertible notes and common share purchase warrants issued in private placements. These financings are summarized as follows:

	Nine months ended
	January 31, 2014			January 31, 2013
Proceeds from sale of common shares	$	-		$	1,950,000
Proceeds from convertible notes payable		50,000			125,000
Repayments on convertible notes payable		(1,000,000	)		-
Payments on note issued to seller		-			(1,250,000	)
Net cash provided by financing activities	$	(950,000	)	$	825,000

The net proceeds of our equity and debt financings have been primarily used to satisfy working capital requirements and invest in oil and natural gas properties as well as to fund the operations of the Company.  These investments totaled $6,877 and $219,438 for the nine months ended January 31, 2014 and 2013, respectively.

Additional disclosure related to the Company’s liquidity and capital resources can be found in the section “Financing Activities” below.

Our current cash and cash equivalents and anticipated cash flow from operations may not be sufficient to meet our working capital, capital expenditures, growth strategy requirements, and debt service requirements for the foreseeable future.  See “Outlook for 2013/2014 Capital”. If we are unable to generate revenues necessary to finance our operations over the long-term, we must seek additional capital through the sale of our equity or additional borrowings and or the sale of our assets.

As discussed in the “Outlook for 2013/2014 Capital”, although difficult to quantify, we are anticipating capital expenditures. We will need to obtain adequate sources of cash to fund our anticipated capital expenditures through the end of the fiscal year ended 2014.

Recent Developments

Financing Activities

·   On May 7, 2013 we issued 500,000 shares of common stock at $0.0525 per share, the contractual conversion price, in connection with the conversion of $26,250 in principal related to our August 14, 2014, 10% convertible notes payable.

·   On May 23, 2013 we issued 496,429 shares of common stock at $0.0525 per share, the contractual conversion price, in connection with the conversion of $26,062 in principal, original issuance discount and accrued interest on our August 14, 2014, 10% convertible notes payable.

20

·   On June 19, 2013 we issued 650,000 shares of common stock at $0.0235 per share, the contractual conversion price, in connection with the conversion of $15,259 in principal related to our August 14, 2014, 10% convertible notes.

·   On July 3, 2013 we issued 650,320 shares of common stock at $0.0235 per share, the contractual conversion price, in connection with the conversion of $15,266 in principal, original issuance discount and accrued interest related to our August 14, 2014, 10% convertible notes payable.

·   On June, 27, 2013 we issued 757,249 shares of common stock to Jeffrey Johnson (“Johnson”) our Chief Executive Officer and President at $0.08 per share. 504,833 of these shares were issued in connection with the completion of requisite vesting requirements, 252,416 shares were issued as share based compensation related to an allowance for the income tax effect of this vesting and a previous vesting of 504,833 shares.

·   On June 27, 2013 we issued 33,333 shares of common stock to an employee of the Company. The issuance of these shares represents the completion of the requisite vesting period, with all expense being recognized during the vesting period.  The shares were initially granted at $2.60 per share.

·   On June 27, 2013 we issued 1,591,675 shares of common stock at $0.05 per share to Johnson, in connection with the forgiveness of $63,667 in accrued salaries owed Mr. Johnson.

·   On June 27, 2013 we issued 1,568,750 shares of common stock at $0.05 per share to an employee of the Company in connection with the forgiveness of $62,750 in accrued salaries.

·   On July 12, 2013 we issued 103,973 shares of common stock to a former director of the Company. The issuance of these shares represented the completion of the requisite vesting period, with all expense being recognized during the vesting period.  The shares were initially granted at $0.60 per share.

· On August 30, 2013 we issued 504,834 shares of common stock at $0.04 per share to Johnson. The shares were issued in connection with the completion of the requisite vesting period. An additional 126,208 shares of common stock were issued to Johnson at $0.04 per share on that same date related to an allowance for the income tax effect of the issuance of the vested shares.

·   On December 20, 2013 we issued 700,000 shares of common stock at $0.01875 per share, the contractual conversion price, in connection with the conversion of $13,125 in principal, original issuance discount and accrued interest related to our August 14, 2014, 10% convertible notes payable.

·   On January 23, 2014 we issued 2,000,000 shares of common stock at $0.0075 per share, the contractual conversion price, in connection with the conversion of $15,000 in principal, original issuance discount and accrued interest related to our August 14, 2014, 10% convertible notes payable.

·  Subsequent to January 31, 2014 we issued 4,000,000 shares of common stock at prices ranging from $0.006 to $0.005925 the contractual conversion prices related to the conversion of $23,880 in principal, original issuance discount related to our August 14, 2014, 10% convertible notes payable.

·   On March 4, 2014 we issued a total of 5,000,000 common shares, 2,500,000 to each of the holders of our February 8, 2013, 10% convertible noteholders at $0.0145 in connection with the amendment and restatement of the underlying note agreements.

·  Subsequent to January 31, 2014, the Board of Directors of the Company resolved to issue 7,758,621 common shares at $0.0145 per share, which was the closing price on the date of issuance of our shares, in connection with the issuance of  bonuses to our Chief Executive Officer, and an employee of the Company (4,310,345 shares and 344,828 shares, respectively). In addition we issued 3,103,448 shares to an employee of the Company in connection with the satisfaction of accrued salaries payable.

Oil and Gas Properties

Texas

The Company owns a variety of non-operated working interests and overriding royalty interests in approximately 73 producing wells in Texas.  The interests range from less than 1% up to approximately 5% in each well.   The wells are located in the following areas:  Permian Basin, Eagle Ford Shale, Pearsall Field, Giddings Field & the Woodbine Field.  The wells are operated by Apache (Permian), Chesapeake (Eagle Ford Shale), CML (Giddings, Pearsall & Permian), Leexus (Giddings) and Woodbine Acquisitions (Woodbine).  As of January 31, 2014, the Company had approximately 430 net leased acres in Texas.

21

Kansas

The Company operates 2 wells in Kansas.  The Company owns a 25% working interest (approximately 20% net revenue interest) before payout and a 43.75% working interest (approximately 35% net revenue interest) after payout in both wells which are located in Trego County.  As of January 31, 2014, the Company had approximately 9,838 net leased acres in Kansas.  Approximately 1,480 are located in Trego County and approximately 8,358 are located in Sheridan County.  There are multiple potential pay zones of interest with the primary zones of interest being the Arbuckle, Marmaton & Lansing-Kansas City ranging from approximately 3,200 feet to approximately 4,300 feet in depth.

Contemplated Activities

We are continually evaluating other drilling and acquisition opportunities for possible participation. The absence of news and/or press releases should not be interpreted as a lack of development or activity.  Generally, at any one time, we are engaged in various stages of evaluation in connection with one or more drilling or acquisition opportunities. Unless required by applicable law, our policy is generally not to disclose the specifics of any such opportunity until such time as that transaction is finalized, and we have entered into a definitive agreement regarding the same and then, only when such transaction is material to our business. Similarly, we do not speculate on the outcome of such ventures until the drilling, production or other results are available and have been verified by us.

We may alter or vary all or part of these contemplated activities based upon changes in circumstances, including, but not limited to, unforeseen opportunities, inability to negotiate favorable acquisitions, farmouts, joint ventures, or divestitures, commodity prices, lack of cash flow, lack of funding, and/or other events which we are not able to anticipate.

Litigation

Convertible Notes

On October 28, 2013, the holders of our 10% convertible notes due February 8, 2013 in the principal amount of $2,750,000 filed a legal action against the Company in the District Court for Clark County, Nevada, in an attempt to collect the outstanding balance related to these notes. On February 28, 2014, we entered into a settlement agreement and new note agreements with the holders. The amended and restated note agreements, each in the amount of $1,155,000, accrue interest at 12% per annum and mature on December 31, 2014.

Jonathan G. Pina

On January 27, 2014 Jonathan Pina, our former Chief Financial Officer, filed a legal action against the Company in the District Court of Harris County Texas, in an attempt to collect vacation pay and for alleged failure to pay severance and benefits for resignation with good reason. The Company intends to defend this legal action vigorously.

Contractual Obligations

We have assumed various contractual obligations and commitments in the normal course of our operations and financing activities.  We have described these obligations and commitments in our "Management's Discussion and Analysis of Financial Condition and Results of Operations" section in our Annual Report on Form 10-K for the year ended April 30, 2013.  There were no material changes to our contractual obligations since April 30, 2013, except items described in "Recent Developments".

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.

Financial Instruments

As of January 31, 2014 and 2013, the Company had cash, accounts receivable, accounts payable, notes payable and accrued liabilities, which are each carried at approximate fair market value due to the short maturity date of those instruments.  Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

22

Outlook for 2013/2014 Capital

We caution that we cannot reasonably estimate what our expenditures for the coming fiscal year will be; however, we will attempt to participate in all activities which will allow us to maintain our current level of participation and ownership interests. We are continually evaluating drilling and acquisition opportunities to continue to grow our asset base with the goal to potentially increase our cash flows.

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.

Critical Accounting Policies

Our consolidated financial statements have been prepared by management in accordance with U.S. GAAP.  Please refer  to the corresponding section in Part II, Item 7 and the notes to the consolidated financial statements of our Annual Report on Form 10-K for the year ended April 30, 2013 for the description of critical accounting policies and estimates.

Risks and Uncertainties

There are a number of risks that are inherent in the energy industry, particularly in the segments in which the Company operates.  Accordingly, there are risks involved in an ownership of the Company’s securities.

Item 3.                 Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4.                 Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management’s Report On Internal Controls Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

-   Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

-   Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

-   Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

23

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Disclosure Controls and Procedures

At the end of the period covered by this quarterly report on Form 10-Q for the three months ended January 31, 2014, an evaluation was carried out by the Company’s sole officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act).  Based on that evaluation, the sole officer concluded that as of the end of the period covered by this report on Form 10-Q, the Company’s disclosure controls and procedures were adequately designed and effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to the Company’s sole officer, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

Management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") (1994 Version) and SEC guidance on conducting such assessments.  Based on that evaluation, they concluded that, during the period covered by this report; such internal controls and procedures were not effective based on the COSO criteria.  This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our ability to prepare accurate financial statements, which are considered to be material weaknesses.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and (2) inadequate segregation of duties consistent with control objectives.  The aforementioned material weaknesses were identified by our sole officer in connection with the audit of our financial statements as of April 30, 2013.

Management believes that the material weaknesses set forth above had an effect on our financial results and led to the restatement reported in this amended report.  Management believes that the lack of formal controls over period end financial disclosure and reporting processes could result in a material misstatement in our financial statements in future periods. See, “Management’s Remediation Initiatives.”

Management’s Remediation Initiatives

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we are in the process of formulating a plan to remediate our material weaknesses in internal controls, however due to liquidity considerations immediate remediation of identified control weaknesses may not be feasible. 

Changes in Internal Controls over Financial Reporting

Except as noted above, there was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

24

PART II.             OTHER INFORMATION

Item 1.                 Legal Proceedings.

Other than as listed below, 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 where 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.

Convertible Notes

On October 28, 2013, the holders of our 10% convertible notes due February 8, 2013 in the principal amount of $2,750,000 filed a legal action against the Company in the District Court for Clark County, Nevada, in an attempt to collect the outstanding balance related to these notes. On February 28, 2014, we entered into a settlement agreement and new note agreements with the holders. The amended and restated note agreements each in the amount of $1,155,000, accrue interest at 12% per annum and mature on December 31, 2014.

Pina Litigation

On January 27, 2014 Jonathan Pina, our former Chief Financial Officer, filed a legal action against the Company in the District Court of Harris County Texas, in an attempt to collect vacation pay and for alleged failure to pay severance and benefits for resignation with good reason. The Company intends to defend this legal action vigorously.

Item 1A.              Risk Factors.

Not applicable.

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

· In December 2013 and January 2014, we issued 700,000 shares and 2,000,000 shares of common stock at $0.01875 and $0.0075 per share, respectively, in connection with the conversion of convertible notes.

No underwriters were used in the above stock transaction. We relied upon the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as the investor was deemed to be sophisticated with respect to the investment in the securities due to his financial condition and involvement in our business. A restrictive legend was placed on the certificates evidencing the securities issued.

Item 3.                 Defaults Upon Senior Securities.

None.

Item 4.                 Mine Safety Disclosures.

Not applicable.

Item 5.                 Other Information.

Not applicable.

25

Item 6.                 Exhibits.

Exhibit	Description
2.1	Membership Interest Purchase Agreement, dated effective June 10, 2011 (included as Exhibit 10.1 to the Form 8-K filed on June 21, 2011)
3.1	Articles of Incorporation (included as Exhibit 3.1 to the Form S-1 filed August 6, 2008); 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 Form 8-K filed June 21, 2011)
4.1	Warrant issued to Mediapark A.G.(included as Exhibit 4.1 to the Form 8-K filed March 4, 2014)
4.2	Warrant issued to Soloman AG (included as Exhibit 4.2 to the Form 8-K filed March 4, 2014)
10.1	Circle Star Energy Corp. 2011 Stock Option Plan (included as Exhibit 10.2 to the Form 8-K filed on July 12, 2011)
10.2	Form of 6% Series A Convertible Note (included as Exhibit 10.1 to the Form 8-K filed on September 19, 2011)
10.3	Executive Employment Agreement entered into between the Company and S. Jeffrey Johnson (included as Exhibit 10.1 to the Form 8-K filed on October 14, 2011)
10.4	Amending Agreement among the Company and S. Jeffrey Johnson entered into on February 29, 2012 (included as Exhibit 10.1 to the Form 8-K filed on March 6, 2012)
10.5	Settlement Agreement dated February 28, 2014 by and between Mediapark A.G., Soloman AG, and Circle Star Energy Corp. (included as Exhibit 99.1 to the Form 8-K filed March 4, 2014)
31.1	Certification of the Principal Executive, Financial and Accounting Officer and Director pursuant to Rule 13a-14(a) of the Exchange Act
32.1	Certification of Principal Executive, Financial and Accounting Officer and Director pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Report of LaRoche Petroleum Consultants dated August 7, 2013 (included as Exhibit 99.1 to the Company’s Annual Report on Form 10-K filed on August 13, 2013)
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 *

*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

26

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: August 19, 2014	By:	/s/ S. Jeffrey Johnson
		S. Jeffrey Johnson, Chief Executive Officer
		(Principal Executive, Financial and Accounting Officer and Director)

27