Item 1.

Consolidated Financial Statements and Notes to Financial Statements

1

Consolidated Balance Sheets

F-1

Consolidated Statements of Operations

F-2

Consolidated Statements of Cash Flows

F-3

Notes to the Consolidated Financial Statements

F-4

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

2

Item 3

Controls and Procedures

16

Part II.  Other Information

Item 1.

Legal Proceedings

18

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

18

Item 3.

Defaults Upon Senior Securities

18

Item 4.

Submission of Matters to a Vote of Security Holders

18

Item 5.

Other Information

18

Item 6.

Exhibits

19

Signatures

20

PART I

FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements and Notes to Financial Statements

General

The accompanying reviewed consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Company's annual report on Form 10-KSB for the year ended June 30, 2007. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the six months ended December 31, 2007 are not necessarily indicative of the results that can be expected for the year ending June 30, 2008.

1

Uranium Star Corp.

(An Exploration Stage Company)

(Unaudited)

December 31, 2007

Index

Consolidated Interim Balance Sheets

F 1

Statements of Interim Statement of Operations

F 2

Statements of Interim Statements of Cash Flows

F 3

Notes to the Interim Consolidated Financial Statements

F 4

Uranium Star Corp.

(An Exploration Stage Company)

Consolidated Interim Balance Sheets

(Expressed in US dollars)

(Unaudited)

	December 31,	June 30,
	2007	2007
	$	$
ASSETS
Current Assets
Cash and term deposit	6,150,403	12,308,793
Marketable securities	88,000	-
Taxes recoverable	2,282,538	910,579
Total current assets	8,520,941	13,219,372
Property and Equipment (Note 3)	69,281	77,925
Total Assets	8,590,222	13,297,297
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	157,855	520,483
Deferred tax liabilities	1,439,134	1,479,933
Total Liabilities	1,596,989	2,000,416
Commitments and Going Concern (Notes 1 and 8)
Stockholders’ Equity
Common stock, 175,000,000 shares authorized, $0.001 par value, 71,636,357 shares issued and outstanding (June 30, 2007 – 66,849,969 shares)	71,636	66,849
Additional paid-in capital	38,303,969	35,243,212
Accumulated Other Comprehensive Loss	14,000	-
Donated capital	20,750	20,750
Deficit accumulated during the exploration stage	(31,417,122)	(24,033,930)
Total stockholders’ equity	6,993,233	11,296,881
Total Liabilities and Stockholders’ Equity	8,590,222	13,297,297

The accompanying notes are an integral part of these consolidated financial statements

F-1

Uranium Star Corp.

(An Exploration Stage Company)

Consolidated Interim Statements of Operations

(Expressed in US dollars)

(Unaudited)

	Accumulated From March 1, 2004 (Date of Inception) To December 31,	For the 3 months Ended December 31		For the 6 months Ended December 31
	2007	2007	2006	2007	2006
	$	$	$	$	$
Revenue	-	-	-	-	-
Expenses
Advertising	8,720	-	-	-	-
Amortization	15,850	4,323	167	8,646	334
Donated services and expenses	18,750	-	-	-	-
Foreign currency transaction (gain) loss	(678,787)	(20,125)	72,443	(205,912)	76,661
General and administrative	1,352,670	153,639	1,622,439	439,524	961,244
Impairment loss on mineral properties	7,488,508	485,560	-	1,250,560	553,846
Mineral exploration	6,793,882	345,803	243,394	3,412,955	911,918
Professional fees	1.032,519	157,676	173,430	266,931	262,702
Stock based compensation (Note 7)	14,487,459	891,813	619,855	2,629,983	1,951,955
Loss from operations	30,673,210	2,018,689	2,731,728	7,802,687	4,718,660
Other income
Interest income	(521,382)	(73,354)	-	(214,157)	-
Other income	(173,840)	(34,000)	-	(164,540)	-
Total loss before provision for income taxes	29,977,988	1,945,335	2,731,728	7,423,990	4,718,660
Income tax expense (recovery)	1,439,134	(40,799)	-	(40,799)	-
Net loss	31,417,122	1,945,335	2,731,728	7,383,191	4,718,660
Unrealized loss from investments in     marketable securities	(14,000)	(18,000)	-	(14,000)	-
Comprehensive loss	31,403,122	1,927,335	2,731,728	7,369,191	4,718,660
Net Loss Per Share – Basic and Diluted	-	(0.03)	(0.08)	(0.11)	(0.15)
Weighted Average Shares Outstanding	-	67,581,168	34,293,321	67,213,571	30,955,682

The accompanying notes are an integral part of these consolidated financial statements

F - 2

Uranium Star Corp.

(An Exploration Stage Company)

Consolidated Interim Statements of Cash Flows

(Expressed in US dollars)

(Unaudited)

	Accumulated From March 1, 2004 (Date of Inception) To December 31,		For the 6 months Ended December 31
	2007		2007	2006
	$		$	$
Operating Activities
Net loss	(31,417,122)	(7,383,191)		(4,718,660)
Adjustments to reconcile net loss to net cash used in operating activities
Amortization	15,849	8,646		334
Non-cash proceeds received	(74,000)	(74,000)		-
Donated services and expenses	20,750	-		-
Deferred tax expense (recovery)	1,439,134	(40,799)		-
Impairment loss on mineral properties	7,488,508	1,250,560		553,846
Stock-based compensation	14,487,459	2,629,983		2,734,955
Change in operating assets and liabilities
Prepaid expenses	-	-		7,060
Accounts payable and accrued liabilities	157,857	(362,628)		(13,045)
Taxes recoverable	(2,282,540)	(1,371,961)		(35,890)
Due to related parties	-	-		(12,609)
Exploration advances	-	-		(51,438)
Net Cash Used in Operating Activities	(10,164,105)	(5,343,390)		(1,535,447)
Investing Activities
Due to related parties	-	-		-
Mineral property acquisition costs	(899,845)	(815,000)		(5,385)
Purchase of equipment	(85,129)	-		-
Net Cash Used in Investing Activities	(984,974)	(815,000)		(5,385)
Financing Activities
Proceeds from issuance of common stock - net	17,299,482	-		12,777,742
Net Cash Provided By Financing Activities	17,299,482	-		12,777,742
Increase (Decrease) in Cash and Cash Equivalents	6,150,403	(6,158.390)		11,236,910
Cash and Cash Equivalents – Beginning of Year	-	12,308,793		555,817
Cash  and Cash Equivalents – End of Year	6,150,403	6,150,403		11,792,727
Non-cash Investing and Financing Activities
Issuance of common stock for mineral properties	3,838,850	375,000		548,461
Issuance of common stock for services	4,523,125	595,000		783,000
Supplemental Disclosure
Interest Paid	-	-		-
Income taxes paid	-	-		-

The accompanying notes are an integral part of these consolidated financial statements

 

 

F-3

 

 

Uranium Star Corp.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2007

(Unaudited)

1.  

  Exploration Stage Company

The Company was incorporated in the State of Nevada on March 1, 2004. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standard ("SFAS") No.7 "Accounting and Reporting by Development Stage Enterprises".  On December 11, 2007 the Company incorporated a subsidiary, Uranium Star (Mauritius) Ltd., in the Country of Mauritius. The Company's principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, confirmation of the Company's interests in the underlying properties, and the attainment of profitable operations. As at December 31, 2007, the Company has never generated any revenue and has accumulated losses of $31,417,122 since inception. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.    

Summary of Significant Accounting Policies

a)   

Principals of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of Uranium Star Corp. and its wholly owned subsidiary, Uranium Star (Mauritius) Ltd.  All inter-company accounts and transactions have been eliminated on consolidation.  These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars.  The Company's fiscal year end is June 30.

b)

Use of Estimates

The preparation of consolidated financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

c)

Basic and Diluted Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. Basic and diluted loss per share is computed using the weighted average number of common shares outstanding.  Diluted EPS and the weighted average number of common shares exclude all dilutive potential shares since their effect is anti dilutive. Shares underlying these securities totaled approximately 48,249,250 as of December 31, 2007.

d)

Comprehensive Income (Loss)

 SFAS 130, "Reporting Comprehensive Income", establishes standards for the reporting and display of comprehensive income, its components and accumulated balances.  As at December 31, 2007, the Company's only component of comprehensive income is unrealized gains on marketable securities.

 e)

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

F - 4

Uranium Star Corp.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2007

(Unaudited)

2.

Summary of Significant Accounting Policies (continued)

f)

Marketable Securities

The Company classifies and accounts for debt and equity securities in accordance with Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities.   The Company has classified all of its marketable securities as available for sale, thus securities are recorded at fair market value and any associated unrealized gain or loss, net of tax, is included as a separate component of shareholders’ equity, “Accumulated other comprehensive income.”

g)

Property and Equipment

Property and equipment is stated at cost, less accumulated amortization, and consists of computer hardware and exploration equipment. Amortization of computer hardware is computed using the straight line method over three years and exploration equipment is amortized over 5 years on a straight line basis.

h)

Mineral Property Costs

The Company has been in the exploration stage since its inception on March 1, 2004, and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred using the guidance in EITF 04 02, "Whether Mineral Rights Are Tangible or Intangible Assets". The Company assesses the carrying costs for impairment under SFAS 144, "Accounting for Impairment or Disposal of Long Lived Assets" at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units of production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

i)

Long Lived Assets

In accordance with the Financial Accounting Standards Board ("FASB") SFAS No. 144, "Accounting for the Impairment or Disposal of Long Lived Assets", the carrying value of intangible assets and other long lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

j)

Financial Instruments

The fair value of financial instruments, which include cash and cash equivalents, marketable securities and accounts payable were estimated to approximate their carrying values due to the immediate or short term maturity of these financial instruments. The Company's operations are in Canada which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company's operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

k)

Interim Consolidated Financial Statements

These interim unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

l)

Foreign Currency Translation

The Company's functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 "Foreign Currency Translation", using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

F - 5

Uranium Star Corp.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2007

(Unaudited)

2. Summary of Significant Accounting Policies (continued)

m)

Stock based Compensation

Prior to July 1, 2005, the Company accounted for stock based awards under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" using the intrinsic value method of accounting, under which compensation expense was only recognized if the exercise price of the Company's employee stock options was less than the market price of the underlying common stock on the date of grant. Effective July 1, 2005, the Company adopted the fair value recognition provisions of SFAS No. 123R "Share Based Payments", using the modified retrospective transition method. The Company had not issued any stock options or share based payments prior to July 1, 2005. Accordingly, there was no effect on the Company's reported loss from operations, cash flows or loss per share as a result of adopting SFAS No 123R.

n)

Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not.  The Company has adopted SFAS No. 109 "Accounting for Income Taxes" as of its inception.  Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward.  Potential benefit of net operating losses have not been recognized in these consolidated financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

In July 2006, the Financial Accounting Standards Board issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes   an interpretation of FASB Statement No. 109, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. This interpretation is effective for fiscal years beginning after December 15, 2006. The Company adopted the provisions of FIN 48 on July 1, 2007.  The Company recognized no material adjustment in the liability for unrecognized income tax benefits as a result of the adoption, and at the adoption date of July 1, 2007 there were no unrecognized tax benefits that would affect the effective tax rate if recognized. At December 31, 2007 the Company had no unrecognized tax benefits. Management does not believe unrecognized tax benefits will significantly change within twelve months of the reporting date.  Interest and penalties are related to income tax matters are recognized in income tax expense. As of July 1, 2007 there are no accrued interest related to uncertain tax positions.

p)

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". The objective of SFAS 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements.  SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits companies to measure financial instruments and certain other items at fair value. The objective of this statement is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is expected to expand the use of fair value measurement for accounting for financial instruments. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.

F - 6

Uranium Star Corp.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2007

(Unaudited)

3.

Property and Equipment

		Accumulated	December 31,	June 30,
			2007	2007
	Cost	Amortization	Net carrying value
	$	$	$	$
Computer Equipment	2,001	1,446	555	888
Exploration equipment	83,128	14,402	68,726	77,037
	85,129	15,848	69,281	77,925

4.

Related Party Balances/Transactions

a)

 The Company incurs $3,000 per month in fees from a company related by common management for office administration and rent expense, on a month to month basis. Total rent expense for the six months ended December 31, 2007 was $18,000 (December 31, 2006 - $18,000).

b)

For the six months ended December 31, 2007, the Company incurred a total of $207,524 (December 31, 2006   $77,715) in consulting fees to directors, officers and a relative of a director.

c)

For the six months ended December 31, 2007, the Company issued 2,975,000 common shares to directors, officers and a relative of a director for their services at a fair value of $595,000.

d)

For the six months ended December 31, 2007, the Company granted 3,425,000 stock options to directors, officers and a relative of a director.

Related party transactions are in the normal course of business and are measured at the exchange value as agreed to between the related parties.

5.

Mineral Properties

a)

The Company entered into an agreement dated May 14, 2004 with the former President of the Company to acquire a 100% interest in seven mineral claims located in the Cariboo Mining Division, British Columbia, Canada, in consideration for the issuance of 7,500,000 shares of common stock.  The claims are registered in the name of the former President, who has executed several trust agreements whereby the former President agreed to hold the claims in trust on behalf of the Company.  On December 10, 2007, the Company divested the claims for cash consideration of $1,000.

b)

The Company entered into an agreement dated August 1, 2005 to acquire a 100% interest in two mineral claims located in the Cariboo Mining Division, British Columbia, Canada, in consideration for $4,000 (paid) and the issuance of 300,000 shares of common stock (issued) with a fair value of $30,300. On December 10, 2007, the Company divested of the property for gross proceeds of $1,000.

c)

The Company entered into a letter of intent dated March 10, 2006, for an option to acquire a 100% interest in 20 mineral claims located in Finland. The letter of intent is to be replaced by a formal agreement.  The Company paid $50,000 and upon the exercise of the option on August 25, 2006 issued 500,000 shares of common stock pursuant to the Finnish mineral property agreement.  The cost of the mineral property was initially capitalized. The Company recognized a cumulative impairment loss of $460,000 in fiscal 2007. The Company, after evaluation of its exploration commitments on hand, decided not to proceed with exploration activities in Finland and accordingly abandoned its reservation claims.

d)

The Company entered into a binding letter of intent dated May 2, 2006, for an option to acquire a 75% interest in 200 claims located in northern Quebec, Canada.  The vendor has the right and option to sell an additional 25% undivided interest in the property.  This agreement is subject to a royalty agreement dated May 27, 1992, as amended November 3, 1993.  The vendor had acquired a 100% interest in the property, subject to a 1% NSR on certain claims, and a 0.5% NSR on other claims.  The vendor has the right to buy back half of the 1% NSR for $200,000 and half of the 0.5% NSR for $100,000.  In order to exercise its option, the Company must issue 2,000,000 shares of common stock  and 2,000,000 warrants, exercisable at $1.00 per share on or before June 1, 2009; and incur aggregate exploration expenditures in the amount of $2,000,000 on the property on or before August 31, 2008 (the "Earn In" period).  The Company has issued the 2,000,000 shares of common stock and warrants relating to the agreement, and incurred aggregate exploration expenditures of $6,545,164 as at December 31, 2007.

F - 7

Uranium Star Corp.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2007

(Unaudited)

5.

Mineral Properties (continued)

During the Earn In period, the vendor will have the additional option to sell its remaining 25% for 1,000,000 common shares and 1,000,000 warrants of the Company.   On February 28, 2007, the vendor exercised the option to sell the remaining 25% interest in the property, as such the Company issued 1,000,000 shares of common stock valued at $1,219,000 and 1,000,000 warrants valued at $752,985.

On August 15, 2006, the Company acquired an additional nineteen mineral claims contiguous to the property in consideration for a payment of $5,385 (CAD$6,000) as an acquisition fee, 150,000 common shares valued at $103,500 and 75,000 warrants valued at $34,961.  These shares and warrants were issued on October 4, 2006.  During the year ended June 30, 2007, the Company recognized an impairment loss of $143,846, as it had not yet been determined whether there were proven or probable reserves on the property.   As at December 31, 2007, the cumulative impairment loss is $143,846.

e)

On August 9, 2006, the Company acquired 69 mineral claims located within the Workman Creek Uranium District of central Arizona, and paid $52,244 in property and staking costs.  On September 4, 2007, the Company entered into an agreement to sell the 69 claims within the Workman Creek Uranium District of Central Arizona to Hawk Uranium Inc., a public company listed on the TSX Venture Exchange. The Company received 200,000 common shares of Hawk Uranium Inc. which is the sale price as contemplated in the sale agreement.

f)

On August 22, 2007, the Company entered into a joint venture agreement with Madagascar Minerals and Resources sarl ("Madagascar"), a company incorporated under the laws of Madagascar. The joint venture is established with the Company owning a 75% undivided interest and Madagascar the remaining 25% interest. The consideration paid to Madagascar to acquire the 75% stake in the joint venture consists of a signing fee of $15,000, a payment of $750,000, and the issuance of 1,250,000 common shares and 500,000 share purchase warrants of the Company all within 30 days of the properties vesting in the joint venture.  Each share purchase warrant is exercisable at $1.00 per share for a period of 2 years from the date of issuance. On December 10, 2007, the Company issued 1,250,000 common shares valued at $375,000 based on the prevailing quoted market price of $0.30 per share and 500,000 share purchase warrants valued at $60,560 using the Black-Scholes pricing formula.  Accordingly the Company recognized an impairment loss of $1,200,560, as it has not yet been determined whether there are proven or probable reserves on the property.

The properties vesting in the joint venture are comprised of mineral permits consisting of 36 "squares” with each square representing approximately 6.25 sq. kilometers. The properties are located in the District of Toliara and are referenced as TN 12,306, P(R); TN 12,814, P(R); TN 12,887 P(R); TN 12,888 P(R); TN 13,020 P(R); TN 13,021 P(R) as issued by the Bureau de Cadastre Minier de Madagascar ("BCMM") pursuant to the Mining Code 1999 (as amended) and its implementing decrees.

The joint venture will operate under the name "Three Horses joint venture".  The Company will be responsible for all costs in connection with the joint venture until completion of a bankable feasibility report is prepared establishing that such ore body is of sufficient size and grade to justify development of a mine.  Madagascar will assist in obtaining all necessary approvals relating to exploration permits, permission and exploitation rights from local and governmental agencies and institutions with regulatory and statutory authority at the expense of the Company.  The Company will act as the operator of the joint venture with exclusive rights to direct and manage all exploration and other activities.

Following completion of the feasibility report, each party to the joint venture will make their contributions pari passu.  In the event that one or other of the parties is unable to make their contribution to funding, their shareholdings will be diluted accordingly.  In the event a shareholder's shareholding is diluted below 10% the remaining shareholding will be exchanged for a 2% net smelter return ("NSR").  The NSR may be acquired by the remaining shareholder at a price of $1,000,000 in cash or shares of the Company for the first 1% and at a price of $1,500,000 in cash or shares of the Company for the second 1%.

In the event either party to the joint venture or its associates acquires any squares within a perimeter of 10 kilometers, such squares acquired become part of the existing property and such property will be held by the joint venture.  Madagascar will have the right of first refusal on any dropped squares.

F - 8

Uranium Star Corp.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2007

(Unaudited)

5.

Mineral Properties (continued)

The Company can terminate the joint venture agreement on giving 60 days written notice. This notice shall be given to Madagascar who has a first right of refusal over the properties. Upon termination of the agreement, neither the Company (including any of its direct or indirect subsidiaries) nor Madagascar shall have any further obligations or liabilities to each other under this agreement.

g)

On September 25, 2007, the Company entered into an earn in option with Temex Resources Corp, ("Temex") a public Company listed on the TSX Venture Exchange. The Company will earn an undivided 50% interest in the "Merico Ethel" and "Yarrow" Property (collectively the "properties").  The "Merico Ethel Property” is comprised of 29 mining claims, 87 units and 3,480 acres in James, Truax and Tudhope Townships, as shown on claim sheets G -0225, G- 0251 and G- 3724 in the Larder Lake Mining Division, in the Province of Ontario and the "Yarrow" property is comprised of 3 mining claims, 27 units and 1,080 acres as shown on claim sheet G- 0260 in the Larder Lake Mining Division, in the Province of Ontario. The earn in option is exercisable on or before June 30, 2008 (the "earn in date"). To exercise the option and earn an undivided 50% interest in the properties, the Company is required to pay  Cdn$50,000 (paid) on the execution of the agreement and incur not less than  Cdn$950,000 in exploration and development expenditures on or before the earn in date. As at December 31, 2007, the Company has incurred aggregate exploration expenditures of $833,795. Temex shall manage the initial exploration under the supervision of a technical committee and upon satisfying the above, a joint venture will be created to manage the properties.

These properties are subject to net smelter royalties ("NSR").  On the Merico  Ethyl Property  there is an aggregate 2% NSR royalty to Jkate Explorations Inc. on payable metals produced from the property. Temex has a pre emptive right to purchase up to 1% of the NSR for $1,000,000.  On the Yarrow Property there is an aggregate 2% NSR royalty to Raven Resources Inc. on payable metals produced from the property. Temex has a pre emptive right to purchase up to 1% of the NSR for $1,000,000.

6.

Common Stock

a)

On August 5, 2005, the Company issued 300,000 split adjusted shares of common stock with a fair value of $30,300 for the acquisition of mineral claims as referred to in Note 5(b).

b)

On September 1, 2005, the Company completed a private placement offering consisting of 2,265,000 split adjusted units of the Company at a purchase price of $0.20 per unit for proceeds of $450,500 after issue costs of $2,500. Each unit consisted of one common share of the Company and one share purchase warrant. Each warrant may be exercised on or before September 1, 2007 at a price of $0.27 per share.

c)

On September 26, 2005, the Company completed a forward stock split on the basis of three new shares of common stock in exchange for every one old share of common stock outstanding. All per share amounts have been retroactively restated to reflect the forward stock split.

d)

On March 23, 2006, the Company issued 255,000 shares upon the exercise of stock options at $0.45 per share for cash proceeds of $114,750.

e)

Between May 17 and June 2, 2006, the Company entered into various share subscription agreements for 255,000 share units at a price of $1.00 per unit for proceeds of $255,000.  Each unit consists of one share of common stock and one share purchase warrant. Each warrant will be exercisable at a price of $1.25 per share for a period of 2 years from the date of issuance.  On August 21, 2006, the Company cancelled 25,000 common shares and refunded $25,000 to a shareholder pursuant to the private placement.  The terms of the share subscription agreements for 230,000 shares valued at $1.00 each were subsequently amended to agree with the same terms and conditions as part of the larger private placement offering with respect to share units as referred to in Note 6(m).  On January 16, 2007, the Company issued 460,000 common shares and 460,000 share purchase warrants. Each share purchase warrant is exercisable at $0.50 per share for a period of 2 years from the date of issuance.

F - 9

Uranium Star Corp.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

December 31, 2007

(Unaudited)

6. Common Stock (continued)

f)

On April 26, 2006, the Company issued 5,550,000 shares of common stock to directors, officers and consultants as compensation for services rendered at a fair value of $3,330,000.  The shares were valued at an estimated fair market value of $0.60 per share after applying a 50% discount to the quoted market price due to the long term restrictive nature of the shares issued.  Related parties to the Company received 3,575,000 shares.  The directors, officers and consultants also received 3,650,000 warrants, exercisable at $1.00 per share on or before April 26, 2009.  These warrants have been recorded at a value of $1,919,072 and classified as stock based compensation on the statement of operations.  Related parties to the Company received 2,400,000 of these warrants.

g)

On June 2, 2006, pursuant to the mineral property agreement described in Note 5(d), the Company issued 2,000,000 shares and 2,000,000 warrants to the Vendor of the property.  The shares were valued at an estimated fair market value of $0.85 per share after applying a 50% discount to the quoted market price due to the long term restrictive nature of the shares issued.  The warrants are exercisable at $1.00 per share on or before June 1, 2009 and have been recorded at fair value, using the Black Scholes option pricing model, of $1,925,117 and initially classified as mineral property acquisition costs.  

h)

On August 25, 2006, the Company issued 500,000 shares of comm