SUN RIVER ENERGY, INC - FORM 10-Q

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EX-32.1 - SUN RIVER ENERGY, INC	v197052_ex32-1.htm
EX-31.1 - SUN RIVER ENERGY, INC	v197052_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2010

¨ 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: 000-27485

SUN RIVER ENERGY, INC.

(Exact name of registrant as specified in its charter)

Colorado	84-1491159
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

5950 Berkshire Lane, Suite 1650, Dallas, Texas 75225

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (214) 739-9191

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 ¨ 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).

¨ Yes ¨ 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.

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company) 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).

¨ Yes x No

There were 23,646,727 shares issued and outstanding of the registrant's Common Stock as of September 8, 2010.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION	1

Item 1. Financial Statements.	1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15

Item 3. Quantitative and Qualitative Disclosures About Market Risk.	20

Item 4. Controls and Procedures.	20

PART II—OTHER INFORMATION	22

Item 1. Legal Proceedings.	22

Item 1A. Risk Factors.	22

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	22

Item 3. Defaults Upon Senior Securities.	23

Item 4. (Removed and Reserved).	23

Item 5. Other Information.	23

Item 6. Exhibits.	23

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

BALANCE SHEETS

	July 31,			April 30,
	2010			2010
	(Unaudited)			(Audited)

Assets
Current Assets:
Cash and cash equivalents	$	39,817		$	39,817
Total Current Assets		39,817			39,817

Fixed Assets, net of depreciation $1,740 and $1,200, respectively		-			-

Other assets:
Leases		220,000			220,000
Mineral rights		100,000			100,000
Wells in process and advances		678,781			678,781
Total Other Assets		998,781			998,781

Total Assets	$	1,038,598		$	1,038,598

Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable	$	473,601		$	876,055
Accrued interest payable		200,733			213,893
Accrued litigation expense		550,000			550,000
Stock to delivered for debt		(470,435	)		(470,435	)
Drilling bonds payable		37,507			37,508
Notes payable		1,832,338			1,166,787
Total Current Liabilities		2,623,744			2,373,808

Stockholders' Deficit

Common stock, $0.0001 par value; 100,000,000 shares authorized 20,367,222 and 19,373,995 issued at July 31, 2010 and April 30, 2010, respectively		2,037			1,937
Additional paid-in capital		5,931,462			5,171,705
APIC unexercised warrants		2,266,560			2,228,460
Deficit accumulated during the development stage		(9,785,205	)		(8,737,313	)
Total Stockholders' Deficit		(1,585,146	)		(1,335,211	)

Total Liabilities and Stockholders' Deficit	$	1,038,598		$	1,038,598

See the notes to these financial statements.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						October 22, 2002
	July 31,						(inception) to
	2010			2009			July 31, 2010

Revenue:	$	-		$	-		$	-

Operational expenses:
Consulting expenses		640,696			426,597			4,628,749
Officer and Director fees					-			459,695
Depreciation		-			-			1,200
Lease expenses		40,533			-			730,054
Litigation expense		135,873			-			685,873
General and administrative expenses		188,329			164,658			1,140,767

Total operational expenses		1,005,431			591,255			7,646,338

Net loss from operations		(1,005,431	)		(591,255	)		(7,646,338	)

Other Income (Expenses)
Interest income		-			-			3,032
Interest expense		(26,481	)		(30,676	)		(1,102,975	)
Debt relief		-			-			505,418
Loss on claim release		-			-			(1,298,603	)
Realized loss on sale of assets		-			-			(245,739	)
Unrealized gain (loss) on investments		-			-			-

		(26,481	)		(30,676	)		(2,138,867	)

Net loss	$	(1,031,912	)	$	(621,931	)	$	(9,785,205	)

Per share information

Net loss per common share
Basic	$	(0.05	)	$	(0.04	)
Fully diluted	$	(0.05	)	$	(0.04	)

Weighted average number of common stock outstanding		18,640,916			16,707,858

See the notes to these financial statements.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Statement of Stockholders' Equity (Deficit)

From October 22, 2002 (Inception) through July 31, 2010

(Unaudited)

										Deficit
	COMMON STOCK				Additonal			APIC		Accum. During			Total
					Paid-in			Unexercised		Development			Stockholders'
	# of Shares		Amount		Capital			Warrants		Stage			Deficit

Balance - October 22, 2002		-	$	-	$	-		$	-	$	-		$	-
Stock issued for cash		1,000		1		49			-		-			50
Net Loss for Period		-		-		-			-		(50	)		(50	)

Balance - December 31, 2002		1,000		1		49			-		(50	)		-

Net Loss for Year		-		-		-			-		-			-

Balance - December 31, 2003		1,000		1		49			-		(50	)		-

Net Loss for Year		-		-		-			-		-			-

Balance - December 31, 2004		1,000		1		49			-		(50	)		-

Issuance of shares for Merger		9,033,333		903		436,763			-		-			437,666
Merger accounting		484,500		48		(20,923	)		-		-			(20,875	)
Value of subsidiary in excess of related party's basis		-		-		(866,667	)		-		-			(866,667	)
Net Loss for Year		-		-		-			-		(350,050	)		(350,050	)
Balance - April 30, 2006		9,518,833		952		(450,778	)		-		(350,100	)		(799,926	)

Issuance of Stock for Cash		795,000		80		397,420			-		-			397,500
at $0.50 per share plus warrant at $0.75
Issuance of Stock for Debt		242,935		24		149,976			-		-			150,000
at $0.62 per share
Issuance of Stock for Marketable Securities		800,000		80		399,920			-		-			400,000
at $0.50 per share
Issuance of Stock for Services		309,000		31		154,469			-		-			154,500
at $0.50 per share
Issuance of Stock for Lease acquisition		880,000		88		439,912			-		-			440,000
Issuance of Stock for Cash		2,200,000		220		1,099,780			-		-			1,100,000
Net Loss for Year									-		(661,339	)		(661,339	)
Balance - April 30, 2007		14,745,768		1,475		2,190,699			-		(1,011,439	)		1,180,735

Issuance of Stock for Services		310,000		31		468,969			-		-			469,000
at $1.51 per share
Issuance of Stock for Interest		20,000		2		50,998			-		-			51,000
at $2.55 per share
Options issued		-		-		43,340			-		-			43,340
Net Loss for Year		-		-		-			-		(2,537,051	)		(2,537,051	)
Balance - April 30, 2008		15,075,768		1,508		2,754,006			-		(3,548,490	)		(792,976	)

Issuance of Stock for Services
at average price of $0.47		485,000		48		228,202			-		-			228,250
Issuance of Stock for Interest
at average price of $0.28		100,000		10		27,990			-		-			28,000
Issuance of Stock in exchange for
debt at an average price of $0.25		500,000		50		124,950			-		-			125,000
Exchange stock for cashless warrants		156,655		16		(16	)		-		-			-
Warrants issued for services		-		-		-			36,060		-			36,060
Warrants issued to directors		-		-		-			1,960,000		-			1,960,000
Net loss for year		-		-		-			-		(2,827,376	)		(2,827,376	)
Balance - April 30, 2009		16,317,423		1,632		3,135,132			1,996,060		(6,375,866	)		(1,243,042	)

Issuance of stock for conversion
of promissory notes		2,290,036		229		572,280			-		-			572,509
Issuance of stock for debt payment		287,545		29		572,250			-		-			572,279
Issuance of stock for services		324,500		32		644,058			-		-			644,090
Issuance of stock for services - officers		125,000		12		247,988			-		-			248,000
Issuance of stock for cashless														-
warrant exercise		29,491		3		(3	)		-		-			-
Issuance of warrants for services		-		-		-			248,380		-			248,380
Net loss for period		-		-		-			-		(2,377,427	)		(2,377,427	)
Balance - April 30, 2010		19,373,995		1,937		5,171,705			2,244,440		(8,753,293	)		(1,335,211	)

Issuance of stock for conversion
of promissory notes		608,227		62		151,996								152,058
Issuance of stock for services		285,000		29		435,272								435,300
Issuance of stock for services - officers		100,000		10		172,490								172,500
Issuance of stock for cashless
warrant exercise														-
Issuance of warrants for services									22,120					22,120
Net loss for period											(1,031,912	)		(1,031,912	)
Balance - July 31, 2010		20,367,222	$	2,037	$	5,931,462		$	2,266,560	$	(9,785,205	)	$	(1,585,145	)

See the notes to these financial statements.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

STATEMENT OF CASH FLOWS

(Unaudited)

							October 22, 2002
	For the Three Months Ended						(Inception) to
	July 31,						July 31,
	2010			2009			2010

Cash Flows from Operating Activities:
Net Loss	$	(1,031,912	)	$	(621,931	)	$	(9,769,048	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		-			-			1,200
Unrealized gain on marketale securities		-			-			40,765
Equity issued for services and interest		-			394,770			3,995,620
Amortization of consulting stock		-			-			115,000
Litigation expense		-			-			550,000
Gain on debt		-			-			(75,773	)
Changes in current assets and liabilities:
Increase in accounts payable and accrued liabilities		(415,615	)		197,947			1,210,878

Net Cash (Used In) Operating Activities		(1,447,527	)		(29,214	)		(3,931,358	)

Cash Flows from Investing Activities:
Increase in fixed assets		-			-			(1,200	)
Increase in other assets		-			-			(611,311	)
Sale of marketable securities		-			-			52,600
Acquisition - net of cash acquired		-			-			(813,001	)
Net Cash used in investing activities		-			-			(1,372,912	)

Cash Flows from Financing Activities:
Common stock issued for cash		-			-			1,444,750
Comon stock issued for debt/assets		781,977			-			1,896,977
Proceeds (Payments) from advances		-			51,467			43,062
Proceeds (Payments) from notes payable		665,550			(20,000	)		1,996,330
Merger accounting		-			-			(20,875	)

Net Cash Provided by Financing Activities		1,447,527			31,467			5,360,244

Net increase (decrease) in Cash		-			2,253			55,974

Cash and Cash Equivalents - Beginning of Period		39,817			38,851			-

Cash and Cash Equivalents - End of Period	$	39,817		$	41,104		$	55,974

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest expense	$	-		$	-		$	-
Cash paid for income taxes	$	-		$	-		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Issuance of common stock for payment of debt	$	-		$	206,009		$	847,279
Issuance of common stock for payment of promissory notes	$	152,057		$	-		$	999,566
Issuance of common stock for marketable securities	$	-		$	-		$	400,000
Issuance of common stock for other assets	$	-		$	-		$	440,000
Issuance of equity for services	$	629,920		$	394,770		$	1,904,760

See the notes to these financial statements.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2010

(Unaudited)

Note 1 – Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization

Sun River Energy, Inc. (the “Company”) was incorporated on October 22, 2002, under the laws of the State of Colorado.

Sun River is an oil and gas exploration, development and production company engaged in locating and developing petroleum resources primarily in the Raton Basin in Colfax County, N.M. The Company’s past activities have targeted the Mississippian and Pennsylvanian formations on the Company’s property in Colfax County, N.M. As of July 31, 2010, Sun River held oil and gas mineral interests in 158,960 gross acres (132,417 net acres) located in New Mexico. There are no producing wells and three shut-in wells located on these properties.

See Subsequent Material Events set forth in Note 7 below, which identifies significant material changes to the ownership and management of the Company.

Basis of Presentation

Development Stage Company

The Company has not earned any significant revenues from its limited principal operations. Accordingly, the Company’s activities have been accounted for as those of a “Development Stage Enterprise”. Among the disclosures required are that the Company’s financial statements be identified as those of a development stage company, and that the statements of operation, stockholders’ equity (deficit) and cash flows disclose activity since the date of the Company’s inception.

Interim Presentation

In the opinion of the management of the company, the accompanying unaudited financial statements include all material adjustments, including all normal and recurring adjustments, considered necessary to present fairly the financial position and operating results of the Company for the periods presented. The financial statements and notes are presented as permitted by Form 10-Q, and do not contain certain information included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2010. It is the Company’s opinion that when the interim financial statements are read in conjunction with the April 30, 2010 Annual Report on Form 10-K and its Current Reports on Form 8-K the disclosures are adequate to make the information presented not misleading. Interim results are not indicative of results for a full year or any future period.

Significant Accounting Policies

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less and money market instruments to be cash equivalents.

Revenue Recognition

The Company recognizes revenue when it is earned and expenses are recognized when they occur.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2010

(Unaudited)

Value of Financial Instruments

The carrying amount of cash, accounts payable and notes payable is considered to be representative of its fair value because of the short-term nature of this financial instrument.

Stock-Based Compensation

Under the fair value recognition provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expenses on a straight-line basis over the requisite service period, which is the vesting period.

Prior to May 1, 2009, the Company entered into a Consulting Agreement with a third party for services. Payment for such services includes a monthly payment of 20,000 shares of the Company’s common stock and a warrant exercisable for 20,000 shares of the Company’s common stock (see below). During the three months ended July 31, 2010, the Company issued 60,000 shares of the Company’s common stock to such consultant. The Company recognized an expense of $88,800 (a range of $1.40 to $1.64 per share, based on closing market prices on the date of issuance). During the quarter ended July 31, 2010, warrants exercisable for 60,000 shares were issued by the Company. During the quarter ended July 31, 2010, the warrants exercisable for 60,000 shares had exercise prices ranging from $1.45 to $1.65 per share. The total fair value of the options at the date of grant was $22,120 and was recorded as consulting expense. The warrants have a term of two years from the date of issuance. The warrants were valued using the Black-Scholes model.

Other Comprehensive Income

The Company has no material components of other comprehensive income (loss), and accordingly, net loss is equal to comprehensive loss in all periods.

Loss Per Share

The Company provides a dual presentation of basic and diluted earnings or loss per share (EPS) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Income Taxes

Deferred income tax assets and liabilities are computed annually for differences between the financial statements and tax basis of assets and liabilities that will result in taxable of deductive amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income (loss). Valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2010

(Unaudited)

Recently Issued Accounting Pronouncements

In July 2010, the Financial Accounting Standards Board (“FASB”) issued Proposed Accounting Standard Update (Topic 450) – Disclosure of Certain Loss Contingencies. This amendment would lower the current disclosure threshold and broaden the current disclosure requirements to provide adequate and timely information to assist users in assessing the likelihood, potential magnitude, and potential timing (if known) of future cash outflows associated with loss contingencies. For public entities, the new guidance would be effective for fiscal years ending after December 15, 2010, and interim and annual periods in subsequent fiscal years. The Company is currently evaluating the impact of the future adoption of the Update.

There were various other accounting standards and interpretations issued in 2009 and 2010, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows.

Note 2 – Going Concern and Management’s Plan of Operations

Going Concern

The Company’s financial statements for the three months ended July 31, 2010 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $1,031,912 for the three months ended July 31, 2010 and an accumulated deficit during the development stage of $9,785,028. At July 31, 2010, the Company’s total current liabilities exceed total current assets by $2,583,749.

The Company is in the development stage and has not earned any revenue from operations. The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital or locate a merger candidate and ultimately, achieve profitable operations. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. Management is seeking new capital to support the ongoing operations of the Company.

Note 3 – Leases and Mineral Rights

Mineral Rights - New Mexico

The Mineral rights in New Mexico are valued at $100,000 on the financial statements based on the predecessor’s cost basis.

Note 4 – Notes Payable

Outstanding Notes Payable

On July 27, 2010, the Company issued to Cicerone Corporate Development, LLC, an affiliate of the Company, a Commercial Promissory Note for $629,105 in connection with their outstanding accounts payable balance. The Promissory Note is unsecured, due on demand, bears a 4% per annum interest rate and provides for a conversion into shares of the Company's common stock at $1.45 per share. At July 31, 2010, the note has a balance of $629,105 and accrued interest of $275.77. On August 3, 2010, the note was converted to common stock in the amount of 433,867 restricted common shares of the Company at the rate of $1.45 per share.

On April 20, 2010, the Company issued a 4% unsecured corporate promissory note for $148,861. The note is due on demand. At July 31, 2010, the note has an outstanding balance of $148,861 and accrued interest of $1,664. In August 2010, the principal and accrued interest were both converted into 108,497 shares of the Company’s restricted common stock at $1.38 per share.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2010

(Unaudited)

In April 2010, the Company issued a 4% unsecured corporate promissory note to a vender for outstanding amounts totaling $300,759. The note is due on demand. At July 31, 2010, the note has a principal balance of $300,750 and accrued interest of $3,361. In August 2010, the principal and accrued interest where both converted into 202,792 shares of the Company’s restricted common stock at $1.50 per share.

In April 2010, the Company issued a 4% unsecured corporate promissory note to an individual for outstanding advances of $44,112. The note is due on demand. At July 31, 2010, the note has a principal balance of $44,112 and accrued interest of $493. In August 2010, the principal and accrued interest where both converted into 29,744 shares of the Company’s restricted common stock at $1.50 per share.

In April 2010, the Company issued a 4% unsecured corporate promissory note in exchange for a prior promissory note for outstanding accrued interest on promissory notes that’s principal had been converted into shares of the Company’s restricted common stock during the years ended April 30, 2010 and 2009. The promissory note had a principal balance of $37,412. The note is due on demand. At July 31, 2010, the note has a principal balance of $37,412 and accrued interest of $377. In August 2010, the principal and accrued interest where both converted into 25,226 shares of the Company’s restricted common stock at $1.50 per share.

In April 2010, the Company issued a 4% unsecured corporate promissory note in to an individual for outstanding advances of $80,978. The note is due on demand. At July 31, 2010, the note has a principal balance of $80,978 and accrued interest of $7,958. In August 2010, the principal and accrued interest where both converted into 54,601 shares of the Company’s restricted common stock at $1.50 per share.

In March 2009, the Company issued a 4% unsecured corporate promissory note to a vendor for outstanding amounts owed totaling $88,230. The note is due on demand and requires a monthly payment of $10,000. At July 31, 2010, the note has a principal balance of $68,230 and accrued interest of $905. In September 2010, the Company paid $5,000 in cash and converted the remaining principal and accrued interest into 40,908 shares of the Company’s restricted stock at $1.56 per share.

In February 2008, the Company issued an 18% unsecured corporate promissory note to a vendor for outstanding amounts owed totaling $373,540. The note is due on demand. At October 31, 2009, the note had a principal balance of $373,540 and accrued interest of $96,895. On October 31, 2009, the Board of Directors approved the issuance of 241,249 shares of the Company’s restricted common stock as payment of the principal and accrued interest. While such stock has been issued, the holder of the promissory note has not accepted the shares as settlement and so the Company has continued to accrue interest on the promissory note. At July 31, 2010, there was accrued interest of $147,185.

In October 2007, the Company issued a 7.5% unsecured corporate promissory note for $211,855. The note is due on demand. During the year ended April 30, 2010, $69,154 in principal of the promissory note was converted into 324,036 shares of the Company’s common stock ($0.25 per share). At July 31, 2010, the note has an outstanding balance of $142,701 and accrued interest of $26,207. In August 2010, the principal and accrued interest where both converted into 675,870 shares of the Company’s restricted common stock at $ 0.25 per share.

In April 2006, in exchange for $150,000, the Company issued a 6% secured corporate promissory note. The note is secured by certain leases held by the Company. At July 31, 2010, the note has an outstanding principal balance of $6,637 and accrued interest of $1,295.

On April 10, 2006, the Company issued a 6% secured corporate promissory note for $600,000, to a shareholder of the Company, Mr. Robert A. Doak, Jr. The promissory note had an original due date of March 31, 2007 and it has been assigned to unrelated parties, the due date extended several times and now been divided into several notes. The new unsecured promissory notes have an annual interest rate of 7.5% and are due on demand. During the year ended April 30, 2010, principal and accrued interest of $340,263 was converted into 1,303,092 shares of the Company’s common stock. During the three months ended July 31, 2010 principal and accrued interest of $156,211 was converted into 608,227 shares of the Company’s common stock for payment in full.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2010

(Unaudited)

Note 5 – Stockholders’ Deficit

Preferred Stock

At a Special Meeting of the Shareholders of the Company on June 23, 2008, the shareholders voted to authorize the creation of 25,000,000 shares of Preferred Stock with a par value of $0.0001, to be issued in such classes or series and with such rights, designations, privileges and preferences as to be determined by the Company’s Board of Directors at the time of the issuance of any preferred shares. No shares have been issued at this time, nor have any classes been established.

Common Stock

Prior to May 1, 2009, the Company entered into a Consulting Agreement with a third party, who has since become an affiliate of the Company, for services. Payment for such services includes a monthly payment of 20,000 shares of the Company’s common stock and a warrant exercisable for 20,000 shares of the Company’s common stock (see Warrants below). During the three months ended July 31, 2010, the Company issued 60,000 shares of the Company’s common stock to such consultant. The Company recognized an expense of $22,120 (a range of $1.45 to $1.65 per share, based on closing market prices on the date of issuance.)

During the three months ended July 31, 2010, the Company issued 285,000 shares of its restricted common stock to individuals in return for their services on the Company’s advisory board. The Company recognized an expense of $435,300 (at prices ranging from $1.54 to $1.65 per share based on closing market prices at the date of issuance.)

During the three months ended July 31, 2010, the Company issued 100,000 shares of its restricted common stock to Mr. Sullivan, Mr. Kelloff and Mr. Leaver for their services as officers of the Company (50,000, 30,000 and 20,000 shares, respectively). The Company recognized an expense of $172,500 ($1.65 per share based on closing market prices at the date of issuance.)

During the three months ended July 31, 2010, the Company issued 608,227 shares of its common stock to holders of promissory notes as payment of principal of $152,057 and accrued interest of $4,214 ($0.25 per share). (See Note 4)

Warrants

During the year ended April 30, 2009, the Company entered into a Consulting Services Agreement with a third party for services. Payment for such services includes a monthly payment of 20,000 shares of the Company’s common stock and a warrant exercisable for 20,000 shares of the Company’s common stock. During the three months ended July 31, 2010, the Company issued 60,000 shares of the Company’s common stock to such consultant. During the three months ended July 31, 2010, warrants exercisable for 60,000 shares were issued by the Company. The warrants have a term of two years from the date of issuance, exercises prices based on closing market price on the last day of the month of issuance and provide for a cashless exercise.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2010

(Unaudited)

During the three months ended July 31, 2010, the warrants exercisable for 60,000 shares had exercise prices ranging from $1.45 to $1.65 per share. The total fair value of the warrants at the date of grant was $22,120 and was recorded as consulting expense. The Company used the following assumptions to determine the fair value of warrant grants during the three months ended July 31, 2010:


	2010

Expected life		1 year
Volatility		62% - 151%
Risk-free interest rate		4.5% - 4.75%
Dividend yield		0

The expected term of the warrants represents the period of time that the stock options granted are expected to be outstanding based on historical exercise trends. The expected volatility is based on the historical price volatility of the Company’s common stock. The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related warrants.

The dividend yield represents our anticipated cash dividend over the expected life of the warrants.

A summary of warrant activity for the three months ended July 31, 2010 is presented below:


					Weighted
	Shares		Weighted		Average	Aggregate
	Under		Average		Remaining	Intrinsic
	Warrant		Exercise Price		Contractual Life	Value

Outstanding at May 1, 2010		1,660,000	$	2.00	1.54 years	$	-

Granted		60,000		-	1.55 years		-
Exercised					-		-
Expired
Outstanding at July 31, 2010		1,720,000	$	.92	1.40 years	$	-

Note 6 – Litigation

LPC Investments, LLC Litigation

On December 12, 2008, LPC Investments, LLC (LPC Investments) filed a lawsuit, in the Jefferson County District Court, against the Company. The lawsuit alleges a breach of contract against the Company in connection with the payment of an unsecured, 8.75% promissory note and conversion of 2,200,000 shares of the Company’s common stock into a preferred note. LPC Investments sought not only payment of the unsecured, 8.75% promissory note and accrued interest but also attorney fees. A payment of $75,645 has been made on the promissory note.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2010

(Unaudited)

On August 18, 2009, the Court granted the Motion to Dismiss filed by LPC in July 2009. The case has been dismissed without prejudice and all claims against the Company have been dropped, however LPC has not withdrawn its conversion notice and demand. Therefore, the Company has recorded a $550,000 litigation liability in connection with the conversion notice and demand.

On September 24, 2009, LPC Investments filed suit in the District Court of Jefferson County, Colorado against the Company. Among other things, the suit asks the Court to issue a declaratory judgment in requesting that 2.2 million shares previously purchased by LPC Investments (the Disputed Shares) are indeed owned by LPC Investments, and to direct the Company to co-operate with LPC Investment's outstanding legend removal requests submitted to the Company's transfer agent by LPC Investments. LPC Investments is also seeking payment of attorney fees and costs. In that same litigation, on October 2, 2009, the Company filed Counterclaims and Third Party Claims in the District Court of Jefferson County, Colorado against LPC Investments and Kevin Paul. The claims and the relief sought by the Company are substantially similar to the claims and relief previously sought in the Douglas County litigation.

On June 23, 2010, the Company entered into a confidential settlement agreement regarding its litigation with LPC and Kevin Paul which require the purchase of 1,900,139 shares of common stock held by LPC and Paul over a specific period of time. As July 23, 2010, 526,788 shares of stock have been purchased by third party investors consistent with the terms of the settlement agreement.

Spencer Edwards Litigation

On March 10, 2010, the Company filed an Original Petition and Application for Temporary Injunction and Permanent Injunctive Relief in the County Court of Dallas County, Texas. The case is styled: Sun River Energy, Inc., JH Brech, and Richard L. Toupal v. Spencer Edwards, Inc. Cause No. cc-10—1676-E, in the County Court at Law # 5, Dallas County, Texas.

The suit alleges among other things Spencer Edwards, Inc. has repeatedly violated Rule 144 of the U.S. Securities Act of 1933 in the selling of common shares of the Company on the open market which was a basis of the underlying litigation against Kevin Paul in Case No. 2009CV4859 the District Court of Jefferson County, Division 8, Colorado. This case is in the discovery phase. The Company is seeking actual damages and costs and attorney’s fees.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2010

(Unaudited)

Note 7 – Subsequent Events

Acquisition Activity

On August 3, 2010, the Company acquired all of the outstanding capital stock of PC Operating Texas Inc. (“PC Operating”), a Texas corporation, pursuant to the terms of a Share Purchase Agreement among the Company, Donal R. Schmidt Jr. and Thimothy Wafford. In connection with the acquisition of PC Operating, the Company issued a total of 250,000 shares of its restricted common stock, to each of Messrs. Schmidt and Wafford, the shareholders of PC Operating.

Subsequently, the Company changed the name of PC Operating to Sun River Operating, Inc. Sun River Operating, Inc. is a full service oil and gas operating company located in Dallas Texas. It owns office equipment, software, furniture and personal property that allow it to conduct operations in multiple geographic areas. In addition, it employees a staff of two attorneys, a CPA, two accountants, a land technical, a geologist and two petroleum engineers.

On August 3, 2010, the Company also acquired leasehold and well bore interests from FTP Oil & Gas LP (“FTP”), pursuant to the terms of a Purchase and Sale Agreement between the Company and FTP. In consideration for the acquisition, the Company issued an aggregate of 1,388,000 restricted shares of its common stock to FTP owned by Messrs. Schmidt and Wafford and a convertible note in the principal amount of $1,000,000.00 was issued to FTP. The convertible note has a term of one year, bears interest at the rate of 8.0% per annum, and is convertible into shares of the Company's Common Stock at a conversion rate of $1.50 per share.

The acquisition of assets from FTP include approximately 2,148 gross acres (1,610 net acres) in Tom Green County, Texas, which consists of four prospects developed by industry partner Fairchild Petroleum of Midland, Texas. In addition, the Company acquired a 39% working interest of 29.25% net revenue interest in two wells on the acreage as described below. Additionally, FTP assigned to the Company its rights, title and interest in certain in certain participation agreements and a surface use agreement.

Effective August 1, 2010, Mr. Schmidt was employed by the Company as the Chief Executive Officer and President. In addition, he was appointed as a director of the Company where he serves as the Chairman of the Board of Directors consistent with the bylaws of the Company. At the same time, Mr. Wafford was employed as the Chief Operating Officer of the Company and Mr. Robert Fields was appointed to the Board of Directors.

Issuance and Conversion of Promissory Notes

On August 3, 2010, the Cicerone Corporate Development , LLC Note Payable for $629,105 was converted to restricted common stock in the amount of 433,867 shares at $1.45 per share.

As set forth in Note 4 above, on August 6, 2010, the Company converted an aggregate of $1,416,341 of outstanding promissory notes into 1,530,597 shares of the Company’s common stock. The promissory notes were converted at rates of $0.25 per share to $1.50 per share depending upon the terms of the individual promissory notes.

On September 3, 2010, the Company paid $5,000 in cash and converted the remaining balance of $63,229.66 of an outstanding promissory note into 40,908 shares of the Company’s common stock. The promissory note was converted at a rate of $1.56 per share.

SUN RIVER ENERGY, INC.

(A Development Stage Company)

Notes To The Financial Statements

July 31, 2010

(Unaudited)

Stock Issuance

In July 2010, the Company issued 325,000 shares of its restricted common stock to its officers and directors for services.

The Company has evaluated it activities subsequent to the three months ended July 31, 2010 through September 7, 2010 and found no other reportable subsequent events, then those disclosed above.

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

CAUTIONARY AND FORWARD LOOKING STATEMENTS

In addition to statements of historical fact, this Quarterly Report on Form 10-Q for the quarter ended July 31, 2010 contains forward-looking statements. The presentation of future aspects of Sun River Energy, Inc. ("Sun River," the "Company" or "issuer") found in these statements is subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," or "could" or the negative variations thereof or comparable terminology are intended to identify forward-looking statements.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause the Company's actual results to be materially different from any future results expressed or implied by the Company in those statements. Important facts that could prevent the Company from achieving any stated goals include, but are not limited to, the following:

Some of these risks might include, but are not limited to, the following:

(a) volatility or decline of the Company's stock price;

(b) potential fluctuation in quarterly results;

(d) inadequate capital to continue or expand its business, inability to raise additional capital or financing to implement business plans;

(e) failure to commercialize its technology or to make sales;

(f) rapid and significant changes in markets;

(g) litigation with or legal claims and allegations by outside parties; and

(h) insufficient revenues to cover operating costs.

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the factors described in other documents the Company files, from time to time, with the SEC, including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed by the Company.

Overview and Plan of Operations

Sun River is an oil and gas exploration, development and production company engaged in locating and developing petroleum resources primarily in the Raton Basin in Colfax County, N.M. The Company’s principal business strategy has been to use technologies new to a specific area to generate and develop high-potential exploitation resources in this area. Accordingly, its principal business model has been the acquisition of oil and gas mineral interests, either directly or indirectly, and the exploitation and development of those properties. The Company’s past activities have targeted the Mississippian and Pennsylvanian formations on the Company’s property in Colfax County, N.M. As of April 30, 2010, Sun River held oil and gas mineral interests in 158,960 gross acres (128,357 net acres) located in New Mexico. There are no producing wells and three shut-in wells located on these properties.

In August 2010, the Company acquired certain wells bore rights and oil and gas mineral leases in Tom Green County, Texas, as described further below and a full service oil & gas operating company located in Dallas, Texas, which owned office equipment, software, furniture and personal property.

The Company’s anticipated future development includes, but is not limited to, further development of its New Mexico mineral interests, continued operations on its recently acquired Tom Green County, Texas acreage which includes the Stansberry # 1 well and of the Lora # 1 well. The first well the Stansberry # 1 was drilled to a total depth of 5,507 feet. It is completed in the Harkey Sand at between the 4,780 foot and the 4,784 intervals. The well has a 1,650 psi shut in tubing pressure and is awaiting a pipeline connection in conjunction with a gas marketing agreement. The second well the Lora # 1 was drilled to a total depth of 4,807 feet. The well remains shut in awaiting a completion attempt in the 3,200 foot sands. This sand is prolific in this area of the Permian Basin in the nearby Christoval North Field.

Additionally, the Company intends to identify and acquire additional mineral interest and production in geological and geographical areas in which management has technical and administrative experience.

To date, the Company has no revenues. The Company will need substantial additional capital to support its proposed future operations. The Company has no committed source for any funds as of the date hereof. There can be not assurances that any funds will be available when needed. In the event funds cannot be raised when needed, the Company may not be able to carry out its business plan, may never achieve sales or royalty income, and could fail in business as a result of these uncertainties.

The independent registered public accounting firm's report on the Company's financial statements as of April 30, 2010, and for each of the years in the two-year period then ended, includes a "going concern" explanatory paragraph, that describes substantial doubt about the Company's ability to continue as a going concern.

Results of Operations

Three Months Ended July 31, 2010 compared to the Three Months Ended July 31, 2009.

Revenue. During the three months ended July 31, 2010 and 2009, the Company did not recognize any revenues from its operating activities.

Operational Expenses. During the three months ended July 31, 2010, operating expenses, which are comprised of consulting expenses, lease expenses, litigation expense and general and administrative expenses, were $1,005,431 compared to $591,255 during the three months ended July 31, 2009, which represents an increase of $414,176, or 70.1%. Consulting expenses increased by $214,099, or 50.2% to $640,696 for the three months ended July 31, 2010 from $426,597 for the comparable period in 2009. Consulting expenses increased primarily as a result of fees due under consulting agreements, including a consulting agreement with Cicerone Corporate Development, LLC, which were entered into between the periods of July 2009 and October 2009. Lease expenses increased to $40,533 for the three months ended July 31, 2010 from $0 in the comparable period in 2009. Lease expenses increased as a result of the payment of past due rent in the amount of $4,158 and the payment of $36,375 of land research costs related to the Company’s property in Colfax County, New Mexico. Litigation expense for the three months ended July 31, 2010 was $135,873 as compared to $0 for the three months ended July 31, 2009. The litigation expense in 2010 was a result of litigation with a shareholder which has now been settled along with ongoing litigation against a brokerage firm for wrongfully trading in unregistered shares. General and administrative expenses increased by $23,671 to $188,329 for the three months ended July 31, 2010 from $164,658 for the comparable period in 2009. General and administrative expenses increased primarily as a result of increase in insurance, dues and subscriptions, office expenses, investor relation and other miscellaneous expenses.

Interest Expense. The Company recognized interest expense of $26,481 during the three months ended July 31, 2010 compared to $30,676 for the same period in 2009. The decrease of $4,195 in interest expense resulted from a decrease in notes payable.

Net Loss. During the three months ended July 31, 2010, the Company recognized a net loss of $1,031,912, compared to a net loss of $621,931 for the comparable three months in 2009. The increase of $409,981 was due to the $414,176 increase in operating expenses less the $4,195 decrease in interest expense discussed above.

Liquidity and Capital Resources

As of July 31, 2010, the Company had cash and cash equivalents of $39,817 and a working capital deficit of $ 2,583,927. To date, the Company has not generated any revenues from operations. The Company has been dependent upon loans from third parties and the issuance of securities to finance the payment of operating expenses. The Company will continue to rely on loans and issuances of securities to generate cash until such time as its operations generate revenue.

The Company has no material commitments for capital expenditures within the next year, however if operations are commenced, substantial capital will be needed to pay for participation, investigation, exploration, acquisition and working capital. There can be no assurances the Company will obtain financing for these operations.

Operating Activities. Net cash used in operating activities was $1,447,527 for the three months ended July 31, 2010 as compared to net cash used in operating activities of $29,214 during the comparable period in 2009. This increase of $1,418,313 in cash used in operating activities for the three months ended July 31, 2010 is primarily a result of the $1,031,912 in net loss and the decrease in accounts payable and accrued liabilities of $415,615 which resulted from the issuance of notes payable in payment of amounts due to third parties for goods and services provided to the Company. Net cash used in operating activities for the three months ended July 31, 2009 is a result of $621,931 in net loss primarily offset by an increase in equity used for services and interest of $394,770 and an increase in accounts payable and accrued liabilities of $197,947.

Investing Activities. The net cash used in/provided by investing activities was $0 for the three months ended July 31, 2010 and 2009.

Financing Activities. Net cash provided by financing activities for the three months ended July 31, 2010 was $1,447,527 as compared to net cash provided by financing activities of $31,467 in the comparable period in 2009. During the three months ended July 31, 2010, we received $665,550 in proceeds from the issuance of notes and $781,977 from the issuance of common stock for debt. During the three months ended July 31, 2009, we used $20,000 to repay outstanding notes, which was offset by the receipt of $51,467 in proceeds from advances primarily from Michael A. Littman.

Conversion of Debt

On August 6, 2010, the Company converted an aggregate of $1,416,341 of outstanding promissory notes into 1,530,597 shares of the Company’s common stock. The promissory notes were converted at rates of $0.25 per share to $1.50 per share depending upon the terms of the individual promissory notes. On September 3, 2010, the Company paid $5,000 in cash and converted the remaining balance of $63,229.66 of an outstanding promissory note into 40,908 shares of the Company’s common stock. The promissory note was converted at a rate of $1.56 per share. The Company anticipates converting all or a majority of the remaining debt to equity under the terms of the respective promissory notes. There can be no assurances however, that the Company will be successful in converting its remaining outstanding debts into common stock.

Critical Accounting Policies and Estimates

The preparation of the Company’s consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The following is a summary of the significant accounting policies and related estimates that affect the Company’s financial disclosures.

Oil and Gas Properties and Reserves

We follow the full cost method of accounting whereby all costs related to the acquisition and development of oil and gas properties are capitalized into a single cost center referred to as a full cost pool. Depletion of exploration and development costs and depreciation of production equipment is computed using the units-of-production method based upon estimated proved oil and gas reserves. Under the full cost method of accounting, capitalized oil and gas property costs less accumulated depletion and net of deferred income taxes may not exceed an amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil and gas reserves less the future cash outflows associated with the asset retirement obligations that have been accrued on the balance sheet plus the cost, or estimated fair value if lower, of unproved properties. Should capitalized costs exceed this ceiling, an impairment would be recognized.

Estimating accumulations of gas and oil is complex and is not exact because of the numerous uncertainties inherent in the process. The process relies on interpretations of available geological, geophysical, engineering and production data. The extent, quality and reliability of this technical data can vary. The process also requires certain economic assumptions, some of which are mandated by the Securities and Exchange Commission (“SEC”), such as gas and oil prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The accuracy of a reserve estimate is a function of the quality and quantity of available data; the interpretation of that data; the accuracy of various mandated economic assumptions; and the judgment of the persons preparing the estimate.

The most accurate method of determining proved reserve estimates is based upon a decline analysis method, which consists of extrapolating future reservoir pressure and production from historical pressure decline and production data. The accuracy of the decline analysis method generally increases with the length of the production history. Since most of our wells have been producing less than seven years, their production history is relatively short, so other (generally less accurate) methods such as volumetric analysis and analogy to the production history of wells of other operators in the same reservoir were used in conjunction with the decline analysis method to determine the estimates of our proved reserves including developed producing, developed non-producing and undeveloped. As our wells are produced over time and more data is available, the estimated proved reserves will be redetermined on an annual basis and may be adjusted based on that data.

Actual future production, gas and oil prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable gas and oil reserves most likely will vary from any estimates.

Impairment of Long-lived Assets

The cost of our unproved properties is withheld from the depletion base as described above, until it is determined whether or not proved reserves can be assigned to the properties. These properties are reviewed periodically for possible impairment. Our management reviews all unproved property each quarter. If a determination is made that acreage will be expiring or that we do not plan to develop some of the acreage that is no longer considered to be prospective, we record an impairment of the acreage and reclassify the costs to the full cost pool. We estimate the value of these acres for the purpose of recording the related impairment. The impairments that we have recorded were estimated by calculating a per acre value from the total unproved costs incurred for the applicable acreage divided by the total net acres owned by us. This per acre estimate is then applied to the acres that we do not plan to develop in order to calculate the impairment. A change in the estimated value of the acreage could have a material impact on the total impairment recorded by us, calculation of depletion expense and the ceiling test analysis.

Stock-Based Compensation

We account for stock option grants and restricted stock awards by recognizing compensation cost for stock-based awards based on the estimated fair value of the award. Compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense over the service period, which generally represents the vesting period. We use the Black-Scholes option valuation model to calculate the fair value of option awards. This model requires us to estimate a risk free interest rate and the volatility of our common stock price. The use of a different estimate for any one of these components could have a material impact on the amount of calculated compensation expense.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 105, “Generally Accepted Accounting Principles” (formerly Statement of Financial Accounting Standards (“SFAS”) No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”). ASC 105 establishes the FASB ASC as the single source of authoritative nongovernmental U.S. GAAP. The standard is effective for interim and annual periods ending after September 15, 2009. We adopted the provisions of the standard on September 15, 2009, which did not have a material impact on our financial statements.

In July 2010, the FASB issued Proposed Accounting Standard Update (Topic 450) – Disclosure of Certain Loss Contingencies. This amendment would lower the current disclosure threshold and broaden the current disclosure requirements to provide adequate and timely information to assist users in assessing the likelihood, potential magnitude, and potential timing (if known) of future cash outflows associated with loss contingencies. For public entities, the new guidance would be effective for fiscal years ending after December 15, 2010, and interim and annual periods in subsequent fiscal years. The Company is currently evaluating the impact of the future adoption of the Update.

Off Balance Sheet Arrangements

From time-to-time, we enter into off-balance sheet arrangements and transactions that can give rise to off-balance sheet obligations. As of July 31, 2010, the off-balance sheet arrangements and transactions that we had entered into included undrawn letters of credit, operating lease agreements and gas transportation commitments. The Company does not believe that these arrangements are reasonably likely to materially affect its liquidity or availability of, or requirements for, capital resources currently or in the future.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company’s operations do not employ financial instruments or derivatives which are market sensitive. Short term funds are held in non-interest bearing accounts and funds held for longer periods are placed in interest bearing accounts. Large amounts of funds, if available, will be distributed among multiple financial institutions to reduce risk of loss. The Company's cash holdings do not generate interest income.

Reduced Commodity Prices May Result in Ceiling Test Write-Downs and Other Impairments

We may be required to write down the carrying value of our gas and oil properties as a result of low gas and oil prices or if there are substantial downward adjustments to the estimated proved reserves, increases in the estimates of development costs or deterioration in the exploration results.

Investments in unproved properties are also assessed periodically to ascertain whether impairment has occurred. Our evaluation of impairment of unproved properties incorporates our expectations of developing unproved properties given current and forward-looking economic conditions and commodity prices.

Reduced Commodity Prices May Impact Our Ability to Produce Economically

Significant or extended price declines may adversely affect the amount of oil and natural gas that we can produce economically. A reduction in production could result in a shortfall in our expected cash flows and require us to reduce our capital spending or borrow funds to cover any such shortfall. Any of these factors could negatively impact our ability to replace our production and our future rate of growth.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls. The Company’s Chief Executive and Principal Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the Company’s fiscal quarter of 2010 pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, as appropriate to allow timely decisions regarding required disclosure. Based on his evaluation, the Chief Executive and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of July 31, 2010 as a result of certain material weakness in the Company’s internal control over financial reporting described in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2010.

In connection with the closing of certain acquisitions in August 2010, the Company’s new management team has implemented new procedures relating to the disbursement of cash for the payment of accounts payable, the approval of asset acquisitions and the execution of contracts. The Company’s management team also continues to evaluate the Company’s disclosure controls and procedures and will implement standard accounting procedures and control necessary to ensure the effectiveness of its disclosure controls and procedures.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Holme, Roberts & Owen

The Company has made demand on its former legal counsel, Holme, Roberts & Owen (“HRO”), and asserted that HRO committed malpractice with respect to HRO’s representation of the Company against LPC and Paul in the case set forth herein. On August 26, 2010, the Company entered into a Settlement Agreement with HRO, pursuant to which HRO agreed to waive all outstanding legal fees in the amount of $79,552.81, plus interest and costs and pay the Company $150,000 by September 15, 2010.

Item 1A. Risk Factors.

Not Applicable.

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

The Company has made the following unregistered sales of its securities from May 1, 2010 through July 31, 2010.

DATE OF SALE	TITLE OF SECURITIES	NO. OF SHARES		CONSIDERATION	CLASS OF PURCHASER

5/6/10	Common Stock		175,000	Promissory Note Conversion	Business Associate
5/31/10	Warrant		20,000	Consulting Fees	Business Associate
6/7/10	Common Stock		100,000	Promissory Note Conversion	Business Associate
6/17/10	Common Stock		40,000	Consulting Fee	Business Associate
6/29/10	Common Stock		133,334	Promissory Note Conversion	Business Associate
6/30/10	Warrant		20,000	Consulting Fees	Business Associate
7/20/10	Common Stock		199,893	Promissory Note Conversion	Business Associate
7/23/10	Common Stock		200,000	Compensation for Services Y/E 4/30/2010	Directors
7/23/10	Common Stock		125,000	Consulting Fee	Officers
7/31/10	Warrant		20,000	Consulting Fees	Business Associate

Exemption from Registration Claimed

All of the shares described above were issued by us in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 4(2). All of the individuals and/or entities listed above that purchased the unregistered securities were all known to us and our management, through pre-existing business relationships, as long standing business associates, friends, and employees. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to our management in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to us. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.		Description
31.1		Certifications of Chief Executive Officer and Principal Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002
32.1		Certifications of Chief Executive Officer and Principal Financial Officer pursuant to Section 906 of Sarbanes Oxley Act of 2002

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, hereunto duly authorized.

	SUN RIVER ENERGY, INC.

Date: September 20, 2010	By:	/s/ Donal R. Schmidt, Jr.
		Name: Donal R. Schmidt, Jr.
		Title: President and CEO

Attached files

SUN RIVER ENERGY, INC Reports

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