U.S. SECURITIES AND EXCHANGE COMMISSION



WASHINGTON, D.C. 20549



FORM 10-QSB



(Mark one)



/ X / Annual report under section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended July 31, 2005



or



/ / Transition report under section 13 or 15(d) of the Securities Exchange Act of 1934



SONORAN ENERGY, INC.

(Name of Small Business Issuer in its Charter)



WASHINGTON                                                                                                                                  13-4093341

(State of incorporation)                                                                                                               (IRS Employer Identification No.)



3100 W. Ray Road, Ste 130, Chandler, AZ  85226

(Address of Principal Executive Offices) (Zip Code)



1 Berkeley Street, London, England, W1J 8DJ

(Previous Address of Principal Executive Offices) (Zip Code)



480-963-8800

(Issuer's Telephone Number)





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.



YES   X                                    NO



The number of shares outstanding of the Company's no par common stock as of July 31, 2005 was 37,269,920.



Traditional Small Business Disclosure Format:



YES                                       NO    X



Page 1

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CONTENTS



PART I.  FINANCIAL INFORMATION



Item 1.   Financial Statements



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

and Results of Operations



Item 3.   Controls and Procedures



PART II. OTHER INFORMATION



Item 1.  Legal Proceedings



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



Item 6.   Exhibits

Page 2

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PART I - FINANCIAL INFORMATION





ITEM 1. FINANCIAL STATEMENTS.





SONORAN ENERGY, INC.



CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



(Unaudited)



For the Periods Ended July 31, 2005 and 2004



TABLE OF CONTENTS



PAGE



|Condensed Consolidated Balance Sheet                                 | F-1
|-------------------------------------------------------------------- | ---
|                                                                     |    
|Condensed Consolidated Statements of Operations                      | F-2
|                                                                     |    
|Condensed Consolidated Statement of Changes in Shareholders' Deficit | F-3
|                                                                     |    
|Condensed Consolidated Statements of Cash Flows                      | F-4
|                                                                     |    
|Notes to Unaudited Condensed Consolidated Financial Statements       | F-5





---



SONORAN
ENERGY, INC.



Consolidated
Balance Sheet





July
31, 2005







|Assets                                                        |                  
|------------------------------------------------------------- | -----------------
|                                                              |                  
|Current assets:                                               |                  
|Cash                                                          | $        695,511 
|Certificate of
  deposit                                      | 100,000          
|Accounts
  receivable                                         | 334,865          
|Prepaid Expense                                               | 125,182          
|Total current assets                                          | 1,255,558        
|                                                              |                  
|Oil and gas
  properties - full cost method                   |                  
|Proved, less
  accumulated depletion of $99,574               | 1,930,716        
|Unproved, less
  impairment charge of $71,078                 | 2,195,718        
|Equipment, less accumulated depreciation
  of $39,124         | 69,153           
|Total capital assets                                          | 4,195,587        
|                                                              |                  
|Other assets:                                                 |                  
|Deferred finance
  charge (Note C)                            | 460,689          
|Excess purchase
  price on asset (Note H)                     | 604,585          
|Total other assets                                            | 1,065,274        
|                                                              |                  
|                                                              | $ 
  6,516,419   
|                                                              |                  
|Liabilities
  and Shareholders' Deficit                       |                  
|                                                              |                  
|Current liabilities:                                          |                  
|Bank line of
  credit                                         | $      
  50,000 
|Accounts payable                                              | 1,533,968        
|Accounts payable
  - ad valorem tax                           | 139,923          
|Indebtedness to
  related parties (Note B)                    | 139,305          
|Accrued expenses                                              | 1,905,591        
|Customer
  deposits                                           | 3,912            
|Employee taxes
  payable                                      | 13,729           
|Loan payable
  (Note D)                                       | 320,998          
|Deferred rent                                                 | 31,490           
|Deferred gains
  on oil and gas property sales                | 484,046          
|Total current liabilities                                     | 4,623,062        
|                                                              |                  
|Long-term liabilities                                         |                  
|Convertible
  debentures (Note E)                             | 2,105,000        
|Convertible note
  discount (Note C)                          | (53,158)         
|Asset retirement
  obligation (Note F)                        | 375,874          
|                                                              | 2,487,716        
|                                                              |                  
|Contingencies                                                 | -                
|                                                              |                  
|Shareholders' deficit (Note G):                               |                  
|Series
  "A" convertible preferred stock, no par value;       |                  
|25,000,000 shares authorized, 0 shares issued and outstanding | -                
|Common stock, no
  par value; 250,000,000 shares authorized   |                  
|37,269,920 shares issued and outstanding                      | 28,212,392       
|Paid-in Capital
  for stock options                           | 1,430,887        
|Accumulated
  deficit                                         | (30,177,638)     
|Total shareholders' deficit                                   | (534,359)        
|                                                              | $    
  6,516,419
|                                                              |                  



See accompanying notes to consolidated financial statements.







F-1








SONORAN
ENERGY, INC.







Consolidated
Statements of Operations







|                                                    | For the
  Three Months Ended July 31,
|--------------------------------------------------- | -------------------------------------
|                                                    | 2005                                 
|Revenue                                             |                                      
|Oil and gas
  sales                                 | $       316,937                      
|Other                                               | 108,895                              
|Total revenue                                       | 425,832                              
|                                                    |                                      
|Expenses:                                           |                                      
|Oil and gas
  production costs                      | 245,676                              
|Workover expense                                    | -                                    
|Ad valorem and
  other taxes                        | 42,292                               
|Accretion
  expense                                 | 21,195                               
|Depletion,
  depreciation and amortization          | 49,851                               
|Stock-based
  compensation:                         |                                      
|Officer compensation                                | -                                    
|Consulting                                          | 165,000                              
|Directors                                           | -                                    
|General and
  administrative                        | 933,725                              
|Total expenses                                      | 1,457,739                            
|                                                    |                                      
|Interest income                                     | 191                                  
|Interest expense                                    | (82,531)                             
|                                                    |                                      
|Loss from continuing operations before income taxes | (1,114,247)                          
|                                                    |                                      
|Income tax provision                                | -                                    
|                                                    |                                      
|Net loss                                            | $ 
  (1,114,247)                     
|                                                    |                                      
|Net loss per common share:                          |                                      
|Basic and
  diluted                                 | $          
  (0.03)                 
|Weighted average common shares
  outstanding:       |                                      
|Basic and
  diluted                                 | 33,684,282                           
|                                                    |                                      







See
accompanying notes to consolidated financial statements.







F-2








SONORAN
ENERGY, INC.







Consolidated
Statement of Changes in Shareholders' Equity







|                                                             | Series "A" Convertible Preferred Stock |  | Common
  Stock |  | Outstanding
  Common Stock Options/Warrants |  | Retained
  Deficit |  | Total        
|------------------------------------------------------------ | -------------------------------------- |  | -------------- |  | ------------------------------------------- |  | ------------------ |  | -------------
|                                                             | Shares                                 |  | Amount         |  | Shares                                      |  | Amount             |  |              
|                                                             |                                        |  |                |  |                                             |  |                    |  |              
|Balance at April 30, 2004                                    | 1,000,000                              |  | $1,950,000     |  | 24,531,620                                  |  | $20,377,389        |  | $   
  23,425
|                                                             |                                        |  |                |  |                                             |  |                    |  |              
|Common stock sales                                           | -                                      |  | -              |  | 2,771,971                                   |  | 1,328,208          |  | -            
|Exercised common stock warrants                              | -                                      |  | -              |  | 150,512                                     |  | 38,012             |  | -            
|Common stock issued to officers for
  compensation           | -                                      |  | -              |  | 2,400,000                                   |  | 1,392,000          |  | -            
|Common stock issued to directors for
  services              | -                                      |  | -              |  | 350,000                                     |  | 203,000            |  | -            
|Common stock issued in exchange for
  consulting services    | -                                      |  | -              |  | 587,280                                     |  | 354,000            |  | 1,407,462    
|Common stock issued to employees for
  compensation          | -                                      |  | -              |  | 100,000                                     |  | 58,000             |  | -            
|Common stock issued in exchange for legal
  services         | -                                      |  | -              |  | 50,000                                      |  | 25,500             |  | -            
|Common stock issued in exchange for oil
  and gas properties | -                                      |  | -              |  | 300,000                                     |  | 210,000            |  | -            
|Common stock issued for payment of debt                      | -                                      |  | -              |  | 131,006                                     |  | 28,821             |  | -            
|Net loss, year ended April 30, 2005                          | -                                      |  | -              |  | -                                           |  | -                  |  | -            
|                                                             |                                        |  |                |  |                                             |  |                    |  |              
|Balance at April 30, 2005                                    | 1,000,000                              |  | $1,950,000     |  | 31,372,389                                  |  | $24,014,930        |  | $1,430,887   
|                                                             |                                        |  |                |  |                                             |  |                    |  |              
|Common stock sales                                           | -                                      |  | -              |  | 2,060,039                                   |  | 1,189,412          |  | -            
|Exercised common stock warrants                              | -                                      |  | -              |  | 50                                          |  | 50                 |  | -            
|Common stock issued for conversion of
  preferred shares     | (1,000,000)                            |  | (1,950,000)    |  | 2,000,000                                   |  | 1,950,000          |  | -            
|Common stock issued to officers for
  compensation           | -                                      |  | -              |  | -                                           |  | -                  |  | -            
|Common stock issued to directors for
  services              | -                                      |  | -              |  | 320,000                                     |  | 128,000            |  | -            
|Common stock issued in exchange for
  consulting services    | -                                      |  | -              |  | 250,000                                     |  | 165,000            |  | -            
|Common stock issued to employees for
  compensation          | -                                      |  | -              |  | -                                           |  | -                  |  | -            
|Common stock issued in exchange for legal
  services         | -                                      |  | -              |  | -                                           |  | -                  |  | -            
|Common stock issued in exchange for assets
  purchase        | -                                      |  | -              |  | 1,000,000                                   |  | 650,000            |  | -            
|Common stock issued for payment of debt                      | -                                      |  | -              |  | 267,442                                     |  | 115,000            |  | -            
|Net loss, three months ended July 31, 2005                   | -                                      |  | -              |  | -                                           |  | -                  |  | -            
|Balance at July 31, 2005                                     | -                                      |  | -              |  | 37,269,920                                  |  | $28,212,392        |  | $1,430,887   
|                                                             |                                        |  |                |  |                                             |  |                    |  |              



See accompanying notes to consolidated financial statements.







F-3








SONORAN
ENERGY, INC.







Consolidated
Statements of Cash Flows







|                                                                      | For the
  Three Months Ended July 31,
|--------------------------------------------------------------------- | -------------------------------------
|                                                                      | 2005                                 
|                                                                      |                                      
|Net cash (used
  in) operating activities                             | $ 
  (423,764)                       
|                                                                      |                                      
|Cash flows from investing
  activities:                               |                                      
|Office equipment
  purchases                                          | (7,500)                              
|Payments for oil
  and gas working interests                          | -                                    
|Payment for
  certificate of deposit                                  | (50,000)                             
|                                                                      |                                      
|Net cash used in investing activities                                 | (57,500)                             
|                                                                      |                                      
|Cash flows from financing activities:                                 |                                      
|Proceeds from
  notes payable                                         | -                                    
|Repayment of
  loans and advances                                     | (75,000)                             
|Proceeds from
  exercised options and warrants                        | 50                                   
|Proceeds from
  the sale of common stock                              | 1,189,412                            
|                                                                      |                                      
|Net cash provided by financing activities                             | 1,114,462                            
|                                                                      |                                      
|Net change in cash                                                    | 633,198                              
|                                                                      |                                      
|Cash, beginning of year                                               | 62,313                               
|                                                                      |                                      
|Cash, end of year                                                     | $      695,511                       
|                                                                      |                                      
|Supplemental disclosure of cash flow
  information:                   |                                      
|Cash paid for
  income taxes                                          | $                 
  -               
|Cash paid for
  interest                                              | $                 
  -               
|                                                                      |                                      
|Non-cash investing and financing
  activities:                        |                                      
|Common stock
  issued for payment of debt and current liabilities     | $      
  115,000                    
|Scottsdale Oil
  Field Services acquired in exchange for common stock | $      
  650,000                    
|                                                                      |                                      



See accompanying notes to consolidated financial statements.











F-4



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SONORAN ENERGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

July 31, 2005



NOTE A:    General Information



The accompanying un-audited condensed consolidated financial statements of Sonoran Energy, Inc. as of and for the three months ended July 31, 2005 and July 31, 2004 have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.



In the opinion of management, all adjustments considered necessary for a fair presentation of the results of the interim period have been included. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire fiscal year. These statements should be read in conjunction with the consolidated

financial statements and notes thereto for the year ended April 30, 2005 included in the Company's report in Form 10-KSB as filed with the Securities and Exchange Commission.



The Company uses the full cost method of accounting to account for our oil and gas operations. Accordingly, we capitalize the cost to acquire, explore for and develop oil and gas

properties. Under the theory of full cost accounting, all successful and unsuccessful costs associated with acquisition, exploration and development activities are considered to be part of the cost of any oil and gas found and produced and should therefore be amortized over a unit of production method.



Note B:    Indebtedness to Related parties



The Company was advanced $100,000 on August 4, 2004 by a relation of our Vice President of North American operations. The term of the note is one year and carries interest of 12% per annum.



The Company repaid $75,000 of this note during the quarter.



Note C:   Other Assets



Deferred finance charges



The Company incurred commitment fees and finder fees for the Cornell Capital convertible debentures totaling $689,000. The commitment fee payable to Cornell Capital of $425,000 in the form of a non-interest bearing convertible note (see Note E) has been discounted at 5% to reflect an imputed interest over the term of the note resulting in a net commitments fee of $365,936 at the time of the agreement.



The discount of $59,064 is shown on the Balance Sheet as Convertible note discount. The term of the debenture is three years and the Company has chosen to amortize the commitment and finder fees over the life of the debenture resulting in a charge to interest expense this quarter of $51,187.67. The Company also charged interest expense with $5,906.40 this quarter for amortization of the discount.



Note D:    Loan Payable



During July 2004 the Company issued a promissory note for $165,000 to Glencoe Capital Inc for the purposes of placing the advance payment on the Texas property. The note bears an interest rate of 12% per annum commencing on August 16th, 2004. Of this $15,000 was held by the lender to cover its fees for services. The term of the note was initially August 16, 2004, but the term was extended by verbal agreement between both parties. In addition, Zenith Financial, as guarantor, pledged 330,000 shares of the Company's stock it held as collateral for the loan.  In November 2004, Glencoe Capital, Inc. chose to foreclose on the collateral and sell the pledged shares and by April 15, 2005 had sold all of the pledged shares.  The Company recorded a liability to Zenith of $218,121 for the replacement of the sold collateral.  The obligation to Zenith at July 31, 2005 includes 80,000 additional shares of the Company's common stock as a fee payable to Zenith.



F-5

---





Note E:    Convertible Debentures



On October 18, 2004, the Company entered into a Standby Equity Distribution Agreement with Cornell Capital Partners, L.P. wherein we may, at our discretion, periodically sell to Cornell Capital Partners shares of our common stock for a total purchase price of up to $15,000,000. For each share of common stock purchased under the Standby Equity Distribution Agreement, Cornell Capital Partners will pay 100% of the lowest volume weighted average price of the common stock as quoted on Bloomberg LP during the five consecutive trading days immediately following the notice date.



The Company agreed to pay Cornell Capital Partners, L.P. 5% of
the proceeds that we receive under the Standby Equity Distribution Agreement. In
addition, upon execution of the Standby Equity Distribution Agreement, we paid
Cornell Capital Partners a commitment fee in the amount of $425,000, which was
paid by the issuance of a convertible debenture in the principal amount of
$425,000. The convertible debenture has a term of three years, has no stated
interest is convertible into our common stock at a price per share of 100% of
the lowest closing bid price for the three trading days immediately preceding the conversion date. Cornell Capital Partners may not convert the debenture for a number of shares of common stock in excess of that number of shares of common stock which, upon giving effect to such conversion, would cause the aggregate number of shares of common stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares of our common stock following such conversion.  The convertible debenture was discounted at 5% over three years resulting in a discount of $59,064.  This discount is amortized as interest expense over the three year term of the debenture.



We also received proceeds from an $800,000 convertible debenture, funded at the initial closing for which Cornell earns a fee of 10% with an additional 6% paid to QuestStar Capital Partners. Terms of conversion are identical to those of the commitment fee debenture.  QuestStar Capital will also receive a commission of 2% on each drawdown under the Standby Equity Distribution Agreement.



We also received proceeds from an $880,000 convertible debenture, funded on November 1, 2004 for which Cornell earns a fee of 10% with an additional 6% paid to QuestStar Capital Partners. Terms of conversion are identical to those of the commitment fee debenture. The Company will amortize the commitment fee plus the fees paid to Cornell and QuestStar over the term of the debenture. The Company recorded interest expense of $53,912 for this quarter for fees.



We agreed to prepare and file a registration statement under the Securities Act of 1933, as amended, that included the shares of common stock issuable pursuant to the Standby Equity Distribution Agreement, the shares of common stock issuable pursuant to the $425,000 principal amount convertible debenture and the shares of common stock issuable to Newbridge

Securities Corporation. This registration statement was filed, and then withdrawn, at the request of the Securities and Exchange Commission, pending





F-6

---





renegotiation of the contractual terms with Cornell.  A subsequent re-filing of this statement is anticipated in September, 2005. We cannot sell shares of common stock to Cornell Capital Partners, LP under the Standby Equity Distribution Agreement until such registration statement is declared effective by the Securities and Exchange Commission. The agreement with Corporate Capital Partners was amended on August 17, 2005 - see Note I.





Convertible Debentures and Loans Payable at July 31, 2005 are comprised of the following:



|                                                                                                                                | 2005      |  | 2004   
|------------------------------------------------------------------------------------------------------------------------------- | --------- |  | -------
|                                                                                                                                |           |  |        
|Convertible debentures bearing interest at 5% repayable October 17, 2007                                                        | 1,680,000 |  | -      
|                                                                                                                                |           |  |        
|Convertible debenture for commitment fee, non-interest bearing, discounted at an imputed rate of 5%, repayable October 17, 2007 | 425,000   |  | -      
|                                                                                                                                |           |  |        
|Total convertible debentures                                                                                                    | 2,105,000 |  | -      
|                                                                                                                                |           |  |        
|Loan payable to Camden Holdings, on demand and non-interest bearing                                                             | 87,824    |  | 92,424 
|                                                                                                                                |           |  |        
|Note Payable to Glencoe Capital bearing interest of 12%, repayable August 14th                                                  | -         |  | 165,000
|Loan payable bearing interest of 10.81%, repayable in monthly installments of $609.45 for 36 months                             | 18,053    |  | -      
|Loan payable to Zenith Financial, on demand and non-interest bearing                                                            | 218,121   |  | -      
|                                                                                                                                | 323,998   |  | 257,424
|                                                                                                                                |           |  |        
|Loan from related party, due August 5, 2005 bearing interest at 12% (see Note 2)                                                | 25,000    |  | -      
|                                                                                                                                |           |  |        
|Totals                                                                                                                          | 2,453,998 |  | 257,424
|                                                                                                                                |           |  |        

Principal payments due in years ended April 30:



|2006  | $     335,060
|----- | -------------
|2007  | 6,030        
|2008  | 2,111,716    
|2009  | 1,192        
|      |              
|Total | $   2,453,998
|      |              





F-7

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Note F: Asset Retirement Obligation





In June 2001, FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations.  SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset.  Subsequently, the asset retirement cost is allocated to expense using a systematic and rational method.  The provisions of SFAS No. 143 were effective for fiscal years beginning after June 15, 2002.





The following table is a reconciliation of the Company's liability for asset retirement obligations:



|Balance April 30, 2005             | $ | 354,679
|---------------------------------- | - | -------
|Impact of adoption of SFAS No. 143 |   | --     
|Addition to Liability              |   | --     
|Liability Settled                  |   | --     
|Accretion Expense                  |   | 21,195 
|Balance April 30, 2005             | $ | 375,874





Note G:    Share issues during the quarter



The Company issued the following restricted shares during the quarter:



-    1,000,000 shares of common stock at $0.65 per share for $650,000 as for purchase of. Scottsdale Oil Field Services Ltd.

-    1,253,587 shares of common stock at $0.55 per share for a private placements totaling $689,411

-       806,452 shares of common stock at $0.62 per share for a private placements totaling $500,000

-    2,000,000 shares of common stock at $0.98 per share for $1,950,000 for conversion of 1,000,000 preferred shares

-       250,000 shares of common stock at $0.66 per share for consulting fees of $165,000.

-       320,000 shares of common stock at $0.40 per share for a 5 year lease of office space in Jordan for $128,000. 267,442 shares of common stock at $0.43 per share for debt repayment of $115,000.

-                50 shares of common stock at $1.00 per share for warrants exercised of $50.



Common Stock Options



A summary of the status of the Company's stock option awards as of April 30, 2005, and the changes during the three months ended July 31, 2005 are presented below:



|                            |                             | Options Issued to Non-Employees | Weighted Average Exercise Price | Weighted Average Fair Value | Exercisable | Weighted Average Exercise Price - Exercisable
|--------------------------- | --------------------------- | ------------------------------- | ------------------------------- | --------------------------- | ----------- | ---------------------------------------------
|                            | Options Issued to Employees
|Outstanding, April 30, 2005 | 9,700,000                   | 4,300,000                       | $       0.53                    | $       0.29                | 14,000,000  | 0.53                                         
|                            |                             |                                 |                                 |                             |             |                                              
|Options granted             | -                           | -                               | -                               | -                           | -           | -                                            
|Options exercised           | -                           | -                               | -                               | -                           | -           | -                                            
|Options cancelled           | 150,000                     | -                               | 0.20                            | -                           | 150,000     | 0.20                                         
|Outstanding, July 31, 2005  | 9,550,000                   | 4,300,000                       | $          0.53                 | $        0.29               | 13,850,000  | $          0.53                              
|                            |                             |                                 |                                 |                             |             |                                              



The fair value for the options granted during the year ended April 30, 2005 was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:





Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.24%

Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00%

Volatility factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138.60%

Weighted average expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 years



The Black-Scholes options valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options. However, the Company has presented the pro forma net loss and pro forma basic and diluted loss per common share using the assumptions noted above.





F-8

---

Note H:    Scottsdale Oil Field Services Acquisition



The Company acquired Scottsdale Oil Field Services Ltd. on June 1, 2005 for 1,000,000 shares of restricted common stock valued at the market price on that day of $0.65 per share.



The "excess purchase on asset" shown on the Balance Sheet as at July 31, 2005 reflects the difference between the equity in Scottsdale and the price paid.



An allocation of the purchase price had not been completed as of this report date

and the final valuation may result in allocating some of the intangible assets to amortizable assets.

The purchase price was allocated as follows:



|Cash                  | $       2,844
|--------------------- | -------------
|Accounts receivable   | 311,038      
|Prepaid expense       | 334          
|PP & E                | 2,226        
|Bank line of credit   | (52,300)     
|Accounts payable      | (186,341)    
|Accrued expense       | (28,474)     
|Customer deposit      | (3,912)      
|Excess purchase price | 604,585      
|Purchase price        | $    650,000 





Note I:    Proposed Merger



Baron Oil



On May 7, 2004, the Company signed a Merger Agreement to acquire Baron Oil AS ("Baron"), a Norwegian oil and gas company. Baron, which has a presence across the Middle East and through its office in Amman, Jordan, is positioned to attract oil and gas contracts in the

region. The Company

Auditors are presently doing a pre-acquisition audit and completion is expected by October 15, 2005.



Note J:    Subsequent Event



On Aug 17 the Company signed an agreement with Cornell Capital Partners, LP that replaces the existing agreement in terms of cost and repayment.



Under the new agreement the Company will pay the $425,000 commitment fee with the issuance of 1,000,000 shares of restricted common stock.



The balance of $1,680,000 plus accrued interest owing plus a fee for the change results in a total debt of $$2,021,172 bearing interest at 5% annually, repayable at $150,000 per month plus interest over 13 months starting November 1, 2005 with a final payment of $71,461 in the 14th month.



The lender has the right to convert all or a portion of the outstanding amount to common stock at a price of $0.54 per share subject to the actual shares received cannot exceed 4.99% of the then outstanding shares.





F-9

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ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words "believes", "anticipates", "plans", "expects" and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Sonoran Energy, Inc. (the "Company", "Sonoran", and sometimes "we", "us", "our" and derivatives of such words) undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. These forward-looking statements should be read in conjunction with the Company's disclosures included in their Form 10-KSB for the fiscal year ended April 30, 2005.



General



During the quarter The Company has successfully completed the pre-acquisition audit of Scottsdale Oil Field Services and the Company's auditors are currently undergoing the completion of the Baron Oil pre-acquisition audit with a view to complete the legal requirements of this acquisition during October 2005.



Comments on The Company's operations during the quarter are as follows:



East Texas fields:

- JRC/Lisa Layne:  Production from the East Texas fields was occasionally disrupted due to high injection pressures in the water disposal wells and various leaks in the water disposal lines.  The Sonoran Energy technical team identified the problems as being directly attributable to the old and poorly designed water handling and injection system.



To remedy and overcome the technical problems, Sonoran Energy redesigned and modified, during the months of May and June, the water handling system Overall production. This resulted in a stoppage of the production of oil from this field during the modification work period. In addition to the modifications work conducted on the field, a hole in the tubing of the Wells land and Cattle disposal well was repaired in conjunction with washing the perforations in both disposal wells to reduce injection pressures. During July, production increased as the wells were not subject to the same level of technical problems as previously experienced.



- Ann McKnight Unit:  This unit continues to successfully produce without experiencing any incidents.



Louisiana: Sonoran Energy held meetings in Louisiana to discuss and agree upon the development plan for moving forward with the production of the existing wells.  As part of this process, Sonoran Energy prepared the necessary paperwork to assume operator-ship of the wells and is undergoing the final process to assume the operatorship of the wells shortly.



The completion of the Baron Oil acquisition brings to Sonoran Energy the KWB field on which Sonoran Energy management commenced the exercise of some technical and administrative control over its operations by relocating the well files from the field to an office in Midland for safekeeping.  We successfully established the necessary liaison network with the field personnel to allow us to monitor operations in the field during the pending completion of the pre-acquisition audit.



Management continues to review opportunities for the acquisition of additional quality assets that will allow us to increase our presence in the United States.





Page 3

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Analysis of Operations



Results of Operations for the Three Months ended July 31, 2005 compared to the Three Months ended July 31, 2004:



REVENUES



Revenues were $425,832 for the three months ended July 31, 2005 and $31,282 for the three months ended July 31, 2004.



This quarter's revenue reflects sales from the East Texas properties of $290,763 and consulting revenue from Scottsdale Oil of $105,487. The July 31, 2204 revenue was from the Louisiana operation which was the only property the Company owned during that quarter.



As the Company does not expect the consulting revenue from third parties to continue as the staff from Scottsdale will be completely occupied in the operations of Sonoran Energy, segmented information is not considered meaningful nor informative.



OIL AND GAS PRODUCTION COSTS



Oil and gas production costs were $245,676 for the three months ending July 31, 2005 and $135,707 for the three months ending July 31, 2004.  The increase also reflects one full quarter operation of the East Texas operation which the Company did not own in the first quarter of 2004. Increased oil prices and improved operations resulted in a gross margin of 22% for this quarter compared to a loss for the same period last year.  Management continues to review the operating costs to determine areas in which to improve performance and to lower costs.



DEPLETION, DEPRECIATION AND AMORTIZATION



Depletion, depreciation and amortization was $49,851 for the three months ended July 31, 2005 compared to $274 for the three months ended July 31, 2004. The current three months reflects the depreciation on equipment plus depletion expense of $43,199 on the East Texas fields. Last year the Company did not record any depletion expense on its unproved properties and had not yet acquired the East Texas property.



STOCK-BASED COMPENSATION



Stock based compensation for Consultants was $165,000 for the three months ended July 31, 2005 compared to $100,000 for the three months ended July 31, 2004. The Company was able to use stock to pay more of the consulting expense concerned with oil and gas projects as well as sourcing financing.



GENERAL AND ADMINISTRATIVE EXPENSES



General and administrative expenses increased by $431,000 dollars for the three months ended July 31, 2005, when compared with the same period for 2004. The Company now employs several experienced oil and gas personal, and has offices in Arizona, London and Amman. The increase is also attributable to the increased travel expense due to the Company's efforts to penetrate the global market place.



Liquidity and Capital Resources



The Company believes that it will be able to source sufficient funds through a combination of new debt and equity over the next twelve months. Sonoran Energy funding process has been successful over the last few months where the Company has managed to raise $ 1.6 million since April 1, 2005. An aggressive funding process is still currently underway with potential positive results expected. Sonoran Energy management now believes that it has sufficient cash to develop the first stage of its Louisiana oil field, which will generate positive operational cash flow, added to its cash flow from the East Texas properties, to cover the Company's operational costs and general overheads. Moreover, the Company's management believes that it will have available the necessary funds to undergo the second stage of the development work on the Louisiana properties, which will again generate higher cash flow amounts sufficient to settle the Company's monthly convertible debt. In addition to the private equity that has been sourced over the last few months, Sonoran Energy has finalized the restructuring of the Cornell Capital Partners agreement in relation to the US$ 15 million standby equity distribution, which the Company's management will utilize efficiently and diligently for further developing and implementing its business plan.



The Company is not a party to off-balance sheet arrangements and does not engage in trading activities involving non-exchange traded contracts. In addition, the Company has no financial guarantees, or lease agreements or other arrangements that could trigger a requirement for an early payment or that could change the value of the Company's assets. Management continues to examine various alternatives for increasing capital resources including, among other things, participation with industry and/or private partners to form Joint Ventures for the development of both existing and future assets.



Foreign Currency Exposure



Sonoran is not exposed to fluctuations in foreign currencies relative to the U.S. dollar at this time but, as Sonoran expands its operations, it may begin to collect revenues in currencies other than the U.S. dollar. Sonoran does not currently engage in any hedging activities.



Item 3.    Controls and Procedures.



The Company's Chief Executive Officer and Chief Financial Officer have concluded, based on an evaluation conducted within 90 days prior to the filing date of this quarterly report on Form 10-QSB, that the Company's disclosure controls and procedures have functioned effectively so as to provide those officers the information necessary whether:



(i) this quarterly report on Form 10-QSB contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report on Form 10-QSB, and



(ii) the financial statements, and other financial information included in this quarterly report on Form 10-QSB, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report on Form 10-QSB.



There have been no significant changes in the Company's internal controls or in other factors since the date of the Chief Executive Officer's and Chief Financial Officer's evaluation that could significantly affect these internal controls, including any corrective actions with regards to significant deficiencies and material weaknesses.



Page 4

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PART II - OTHER INFORMATION

Item 1.    Legal Proceedings



Nothing to report.



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



During the quarter the Company issued restricted common stock as follows:



-    1,000,000 shares of common stock at $0.65 per share for $650,000 as for purchase of. Scottsdale Oil Field Services Ltd. These shares were issued under the Rule 4(2) exemption.

-    1,253,587 shares of common stock at $0.55 per share for a private placements totaling $689,411. These shares were issued to non-U.S. residents under the auspices of Regulation S.

806,452 shares of common stock at $0.62 per share for a private placements totaling $500,000. These shares were issued to non-U.S. residents under the auspices of Regulation S.

-    2,000,000 shares of common stock at $0.98 per share for $1,950,000 for conversion of 1,000,000 preferred shares. These shares were issued under the Rule 4(2) exemption.

-       250,000 shares of common stock at $0.66 per share for consulting fees of $165,000. These shares were issued under the Rule 4(2) exemption.

-       320,000 shares of common stock at $0.40 per share for a 5 year lease of office space in Jordan for $128,000. These shares were issued to non-U.S. residents under the auspices of Regulation S.

-        267,442 shares of common stock at $0.43 per share for debt repayment of $115,000. These shares were issued under the Rule 4(2) exemption.

-                 50 shares of common stock at $1.00 per share for warrants exercised of $50. These shares were issued under the Rule 4(2) exemption.



Item 6.    Exhibits



a)    Exhibits:



31.1 - Rule 13a-14a/15d-14(a) Certification by Chief Executive Officer

31.2 - Rule 13a-14a/15d-14(a) Certification by Chief Financial Officer

32.1 - Section 1350 Certification by Chief Executive Officer

32.2 - Section 1350 Certification by Chief Financial Officer



b)    Reports on Form 8-K:



The Company issued the following report on Form 8-K during the quarter:





Item 7.01. Regulation FD Disclosure





On Sunday, May 22, 2005, the following article (translated into English) was published by Al-Gahad newspaper in Amman, Jordan:



Amman - Dr. Maher Hijazin, Director General of the NRA, announced that the Authority will sign a PSA with the American Sonoran Energy in the coming two weeks.  And he added that Sonoran will deliver a technical study that was applied for Azraq area in addition to developing Hamza Field by using advanced technology to achieve accurate and extensive results.



Mr. Hijazin added that Sonoran considered the Azraq is a promising and important exploration area based on the information submitted from NRA.



The NRA and Sonoran Energy had signed MOU for 5 months with an investment of $400,000 to study the geological nature, exploratory activity and visibility for the area.



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.



Dated: September 12, 2005

SONORAN ENERGY, INC.

/s/ Peter Rosenthal

Peter Rosenthal,

Chief Executive Officer





Page 4

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Signatures



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



SONORAN ENERGY, INC



September 12, 2005



By: Peter Rosenthal

Peter Rosenthal

Director/President/CEO



KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints Peter Rosenthal and Rasheed Rafidi, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities to sign any and all amendments to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each said attorneys-in-fact and agents or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.



In accordance with the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of registrant in the capacities and on the dates indicated.





|Signature                                 | Title                  | Date              
|----------------------------------------- | ---------------------- | ------------------
|/s/ Peter Rosenthal
Peter Rosenthal       | President/CEO/Director | September 12, 2005
|/s/ Christopher Pitman
Christopher Pitman | Director               | September 12, 2005
|/s/ Mehdi Varzi
Mehdi Varzi               | Director               | September 12, 2005
|/s/ Charles Waterman
Charles Waterman     | Director               | September 12, 2005
|/s/ Rasheed Rafidi
Rasheed Rafidi         | Director/CFO           | September 12, 2005
|/s/ Ala Nuseibeh
Ala Nuseibeh             | Director/VP            | September 12, 2005
|/s/Khaldoun Awamleh
Khaldoun Awamleh      | Director               | September 12, 2005





Page 6

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Exhibit 31.1





|Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended,  provides the following certification.
     I, Peter Rosenthal, President of Sonoran Energy, Inc. ("Company"), certify that:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.                                                                                                                                                                                                                          
|2.                                                                                                                                                                                                                          



|3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. | The other certifying directors and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))  and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for Sonoran and have:
a.  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to Sonoran Energy, Inc., including its consolidated subsidiaries, is made known to us by other within those entities, particularly during the period in which this report is being prepared;
b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles.
c.  Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report on such evaluation; and
d.  Disclosed in this report any change in Sonoran Energy, Inc.'s internal control over financial reporting that occurred during Sonoran's third fiscal quarter that has materially affected, or is reasonably likely to materially affect, Sonoran's internal control over financial reporting; and
|5. | The other certifying directors and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of our board of directors (or persons performing the equivalent functions):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



|a. | All significant deficiencies and material weaknesses  in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial data; and
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting; and                                                                                     
|  
|   |                                                                                                                                                                                                                                                                 

|Date: September 12, 2005 | /s/ Peter Rosenthal        
|------------------------ | ---------------------------
|                         | Peter Rosenthal,  President
|                         |                            



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Exhibit 31.2





|Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended,  provides the following certification.
     I, Rasheed Rafidi, Chief Financial Officer of Sonoran Energy, Inc. ("Company"), certify that:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.                                                                                                                                                                                                                                       
|2.                                                                                                                                                                                                                                       
|3.                                                                                                                                                                                                                                       
|4.                                                                                                                                                                                                                                       
|5.                                                                                                                                                                                                                                       

|a. | All significant deficiencies and material weaknesses  in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial data; and
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting; and
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |                                                                                                                                                                            



|Date: September 12, 2005 | /s/ Rasheed Rafidi  
|------------------------ | --------------------
|                         | Rasheed Rafidi,  CFO



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Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. Section 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Sonoran Energy, Inc. on Form 10-QSB for the quarter ending July 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peter Rosenthal, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



/s/ Peter Rosenthal

Peter Rosenthal

President



September 12, 2005

---



Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. Section 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Sonoran Energy, Inc. on Form 10-QSB for the quarter ending July 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Rasheed Rafidi, CFO of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



/s/ Rasheed Rafidi

Rasheed Rafidi

Chief Financial Officer



September 12, 2005