UNITEDSTATES
 
SECURITIESAND EXCHANGE COMMISSION

 

 WASHINGTON, D.C. 20549
 

 FORM 10-QSB
 

(Mark One)
 

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

               **Forthe quarterly period ended October 31, 2004**

                                  
  OR

 
 (  )      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: 000-28915
 

 
**Sonoran Energy, Inc.**

(Exact name of registrant as specified in its charter)
 

** Washington, United States**

(State or other jurisdiction                                                of incorporation or organization)
  

**13-4093341**

(I.R.S. Employer ID Number)
 
**1 Berkly Street, London, England, W1J 8DJ**

(Address of principal executive offices)   (Zip code)
 

**44 (0) 20 7016 8801**

    * (Issuer'stelephone number)*
 
**N/A**
*(Former Name, Former Address and Former Fiscal Year if Changed Since LastReport)*

      
 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.
 

                         YES                                               NO        X       

                    
The number of shares outstanding of the Company's no par common stock as ofOctober 31, 2004 was 26,169,045.
 
Traditional Small Business Disclosure Format:  
 
                         YES                                                 NO        X       
 
Page 1

 
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 2.   Unregistered Sales of Equity Securities and Use of Proceeds
 

Item 6.   Exhibits
Page 2

 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

SONORAN ENERGY, INC.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Periods Ended October  31, 2004 and 2003

TABLE OF CONTENTS
                                                                                                     

                                                                                                                                                                  **PAGE**
Condensed Consolidated Balance SheetF-1  Condensed Consolidated Statements of    OperationsF-2  Condensed Consolidated Statement of Changes    in Shareholders' DeficitF-3  Condensed Consolidated Statements of Cash    FlowsF-4  Notes to Unaudited Condensed Consolidated Financial    StatementsF-5    
                                                               
Page 3

SONORAN ENERGY, INC.

Condensed Consolidated Balance Sheet

(Unaudited)

October31, 2004

 

**ASSETS**

**As Restated**

**(See Note C)**
          Current assets:              Cash$114,164                         Total current assets114,164            Oil and gas properties - full cost method                Unproved 1,950,000          Deposit on	Purchase Sale Agreement (Note B)850,000         	Equipment, less accumulated depreciation of $1,1147,280   $  2,921,444  
**LIABILITIES AND SHAREHOLDERS'      DEFICIT**
           Current liabilities:           Accounts      payable$    611,952         	Indebtedness to related party (Note C)450,640          Accrued      expenses623,768          Notes      payable (Note D)165,000         	Convertible debentures (Note E)1,225,000          Loans	payable84,824      	Deferred gains on oil and gas properties484,046                         Total current liabilities3,645,230            Shareholders' deficit:           Preferred      stock, no par value; 25,000,000 shares authorized,                     1,000,000- shares issued and outstanding1,950,000          Common      stock, no par value; 75,000,000 shares authorized,               	26,169,045 shares issued and outstanding21,251,365          Outstanding      common stock options - 1,500,00029,675          Retained	Deficit(23,954,826)                         Total shareholders' deficit(723,786)   $  2,921,444  
Seeaccompanying notes to the condensed, consolidated financialstatements.

 

PageF-1

SONORAN ENERGY, INC.

 

Condensed Consolidated Statements of Operations

(Unaudited)

 

 **For      the Six Months Ended**
**October 31** **For      the Three Months Ended**
**October 31** **2004** **2003** **2004** **2003**        Revenue                 Oil and gas sales$                              	53,431 $                                	214,528 $                                   	22,149 $                                 	108,936          Other- 3,000 - 1,500                            Total revenue53,431 217,528 22,149 110,436        Expenses                 Oil and gas production costs200,355 125,475 64,648 53,301          Depletion, deprecation, and amortization566 67,503 292 34,423          Stock-based compensation                      Consulting125,500 36,010 25,500 8,910          Investor      Relations- 6,750 - 6,750          Debt issue      costs- 18,700 - 16,200          General and administrative1,613,655 172,932 1,122,351 92,877    	Loan commitment fee425,000 - 425,000 -          Liability settlement loss- 24,899 - 25,425                            Total expenses2,365,076 452,269 1,637,791 237,866                    Loss from operations(2,311,645) (234,741) (1,615,642) (127,450)Interest income- 274 - 123Interestexpense(9,261) (143,639) (9,261) (70,689)                                Loss	before      income taxes(2,320,906) (378,106) (1,624,903) (198,016)        Income tax      provision- - - -                            Net loss$                       	(2,320,906) $                              	(378,106) $                           	(1,624,903)   $                               (198,016)          Net loss per common      share:                 Basic and diluted$                                 (0.09) $                                     (0.04) $                                     (0.06) $                                          (0.02)Basic and diluted      weighted average common shares                 outstanding25,238,609 10,121,243 25,601,701 10,250,544        
Seeaccompanying notes to the condensed, consolidated financialstatements.

 

PageF-2

SONORAN ENERGY, INC.

 

Condensed Consolidated Statement of Changes in Shareholders'Deficit

(Unaudited)

For theSix Months Ended October 31, 2004

 

 **Series A Convertible Preferred Stock** **Common Stock**   **Retained Deficit** **Total** **Shares** **Amount** **Shares** **Amount** 
**Outstanding**

**Common**

**Stock**

**Options**
                Balance at April 30, 2004	1,000,000 $   	1,950,000 	24,531,620 $         	20,377,389 $            23,425 $           (21,633,920) $    716,894              Common stock      sales- - 	1,174,633 	566,714 - - 566,714Common stock      issued in exchange for                  consulting services- - 112,280 119,250 6,250 - 125,500Exercised common stock warrants- - 150,512 38,012 - - 38,012
Common stock      issued in exchange for

     property
- - 200,000 150,000 - - 150,000Net      loss- - - - - 	(2,320,906) (2,320,906)              Balance as at October 31,      20041,000,000 $     	1,950,000 26,169,045 $         	21,251,365 $            23,425 $          	(23,954,826)  $(723,786)              
 

Seeaccompanying notes to the condensed, consolidated financialstatements.

 

PageF-3

SONORAN ENERGY, INC.

 

CondensedConsolidated Statements of Cash Flows

(Unaudited)

 

 
**For the Six Months Ended**

**October 31,**
 **2004** **2003**    Net cash (Used In) Operating      Activities$                	(849,969) $                      (97,948)    Cash flows from investing    activities:        Payments for oil and	gas working interests- (26,130)     Payments for office	equipment(3,326) -     Deposit on Purchase	Sale Agreement (Note B)(700,000) -          Net cash      used in investing activities(703,326) (26,130)    Cash flows from financing    activities:        Proceeds from      advances- 200,000     Proceeds from	related party advance (Note C)100,000 -     Proceeds from	issuance of promissory note (Note D)165,000 -    Proceeds from issuance of	convertible debenture (Note E)800,000 -     Repayment of      loans/advances(7,576) (50,000)     Proceeds from the	exercise of warrants38,012       Proceeds from the      issuance of common stock566,714 -          Net cash      provided by financing activities1,662,150 150,000                        Net change in cash70,855 25,922    Cash, beginning of period43,309 32,619    Cash, end of period$      	114,164 $                58,541    Supplemental disclosure of cash flow      information:        Cash paid for income      taxes$                        - $                        -     Cash paid for      interest$                  	- $              42,000    Non-cash investing and financing      activities:   
     Common stock issued for payment of      advances and accrued

               liabilities
$            101,390 $            101,390     Common stock issued      for properties$       150,000 $                        -    
 

Seeaccompanying notes to the condensed, consolidated financialstatements.

 

PageF-4

 

**SONORAN ENERGY, INC.**

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**October 31, 2004**

 

NOTE A:    General Information

 

The accompanying un-audited condensed consolidated financial statements of Sonoran Energy, Inc. as of and for the six months ended October 31, 2004 and  October 31, 2003 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, 2004 included in the Company's report in Form 10-KSB as filed with the Securities and Exchange Commission.

 

NOTE B:    Deposit on Purchase Sale Agreement

 

The Company has paid a non-refundable deposit of $150,000 in July 7 2004 as well as an additional deposit of $550,000 on October 18, 2004 on a $1.5 mil Purchase Agreement for three oil fields located in Texas.  The original closing date of the purchase was scheduled on July 30, 2004. However, upon mutual consent, both parties agreed to an extension to the closing date to reflect October 31, 2004.  The purchase price is based upon the Seller's working interest in and to the Properties but will be adjusted to reflect the seller's actual working interest and associated net revenue interest, and proper allocation of revenues, credits and expenses as of the effective date which was agreed to be November 1, 2004.

 

On October 14, 2004 the Company issued 200,000 shares valued at .75 for $150,000 to the owners of the property as compensation for the late closing of the agreement.

 

The acquisition was officially completed on November 8, 2004 for a total acquisition fee of $1,600,000 and the issuance of 300,000 restricted shares of Sonoran Energy's common stock to the owners of the field.

 

Note C:    Indebtness 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.

 

Note D:    Note 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 has been extended by verbal agreement between both parties.

 

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.

 

We have 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, accrues interest at 5% and 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.

 

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 Questar Capital Partners.  Terms of conversion are identical to those of the commitment fee debenture.  Questar Capital will also receive a commission of 2% on each drawdown under the Standby Equity Distribution Agreement.

 

We have agreed to prepare and file a registration statement under the Securities Act of 1933, as amended, that includes 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.  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.

 

Note F:    Share issues during the quarter

 

               -   200,000 shares of common stock at $.75 per share for $150,000 as compensation for the delay in closing of an asset purchase

               -   125,000 shares of common stock at $.40 per share for a private placement totaling $50,000.

               -   300,171 shares of common stock at $.35 per share for a private placement totaling $105,060.

               -  173,331 shares of common stock at $.55 per share for a private placement totaling $95,332.

               -   12 shares of common stock at $1.00 per share as a result of dividend warrants being exercised.

               -   35,000 shares of common stock at $.55 per share for 19,250 to a consultant for services.

 

***Common Stock Options***

 

On September 22, 2004, the Company granted a consultant options to purchase 125,000 shares of the Company's common stock.  The options' exercise price is $1.25 and the options expire on September 22, 2005.  The Company determined the fair value of the options in accordance with SFAS 123 and recorded stock-based compensation expense of $6,250 in the accompanying financial statements.

 

A summary of the status of the Company's stock option awards as of October 31, 2004, and the changes during the six months ended October 31, 2004 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,    20041,200,000175,000$         0.57$       0.111,375,000$         0.57       Options granted-125,0001.250.05125,0001.25Options exercised------Options cancelled------Outstanding, April 30,    20041,200,000300,000$          0.63$        0.111,500,000$          0.63       
 

The fair value for the options granted during the year ended April 30, 2004 was estimated at the date of grant using the Black-Scholes option-pricing model with

the following assumptions:

 

 

                                           Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . .     1.53%

                                           Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . .     0.00%
                                           Volatility factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . .  147.19%
                                           Weighted average expected life . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . .   1 year

 

 

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.

 

Note G:    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.   Baron specializes in the utilization of the latest proven technology and operational processes in the development, drilling and operating of onshore oil and gas fields.  Under the terms of the agreement, the Company would acquire 100% of the issued and outstanding shares of Baron in exchange for approximately 19 million shares of the Sonoran Energy's common stock. The Company has further agreed to provide an additional commitment of $20 million for the purposes of developing Baron's KWB field in the USA.

 

The agreement had not closed as of the date of this report.

 

***Scottsdale Oil Field Services***

 

On August 18, 2004, the Company signed a Stock Purchase Agreement to acquire Scottsdale Oil Field Services, Limited ("SOFS"), an Arizona corporation.  SOFS' management and team of oil and gas operational staff and consultants have many years of experience in North America, the UK, Africa, South America, Pakistan, Australia, and Asia.  SOFS specializes in providing engineering, reservoir, drilling (including deep water) financial, commercial, materials management, systems and procedures, environmental and operational services to the oil and gas industry through the placement of the company's highly qualified personnel.

 

Under the terms of the agreement, the Company will acquire all of the issued and outstanding shares of SOFS in exchange for 1,000,000 shares of Sonoran Energy's restricted common stock.  The Company further agreed to enter into employment contracts with the two existing officers and one direct employee covering an initial period of two years.  The acquisition has not been consummated as of the date of this report.

 

Page F-5

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

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and Section 27A of the Securities Act of 1933, as amended. For this purpose, 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, 2004.

 

**General**

 

The Company has, since July 2004, set out as its strategic focus to explore lucrative opportunities in the Middle East, North Africa, and the Caspian region while keeping a solid profitable base back in the USA. As part of its efforts, the Company prepared a first draft business plan and actively pursued financial backing to see the successful implementation of the plan.  The Company also realized the need for additional qualified people to join the management team and recruited a Vice President for the Middle East, North Africa and Caspian operation and a Vice President for Exploration and New Ventures.

 

On the operating front, we continued to have minimal production from the Louisiana properties pending the implementation of a capital development plan to increase the oil production from the properties in the near future. The company also continued with its forward process required for the acquisition completion of Scottsdale Oil Field Services and Baron Oil AS. In addition the Company increased their deposit on an oil and gas operation in three fields in Texas with closing dated November 1, 2004.

 

Page 4  

 
**Analysis of Operations**

 

Results of Operations for the Six Months ended October 31, 2004 compared to the Six Months ended October 31, 2003:

 

REVENUES

 

Revenues were $53,431 for the six months ended October 31, 2004 and $217,528 for the six months ended October 31, 2003.  As mentioned above, we had minimal production from the Louisiana field in the first six months of this year versus the operation of the working interests acquired in 2003 which were sold in January 2004.

 

OIL AND GAS PRODUCTION COSTS

 

Oil and gas production costs were $200,355 for the six months ending October 31, 2004 and $125,475 for the six months ending October 31, 2003.  The operating expense was higher due to the costs of maintaining the 15,000 acre parcel which comprises the Louisiana property.  Management is currently reviewing the operating costs in detail to determine areas in which to improve performance and to lower costs.

 

DEPLETION, DEPRECIATION AND AMORTIZATION

 

Depletion, depreciation and amortization was $566 for the six months ended October 31, 2004 compared to $67,503 for the six months ended October 31, 2003. The current six months reflects the depreciation on equipment only whereas last year's figure includes the depletion on the oil and gas properties held at that time but subsequently sold. The Company did not record any depletion expense on its unproved properties this year to date.

 

STOCK-BASED COMPENSATION 

 

The Company issued 77,280 restricted shares for $100,000, valued at the average market price for the 5 days prior to the agreement date, to a US consulting firm for the preparation of information for investors which can also be used for presentations to financial institutions.  The Company also issued 35,000 restricted shares for $19,250, valued at the market price on September 22, 2004, to a Consultant to assist in developing business in the middle east as part of a six month contract with total compensation of 125,000 restricted common shares.

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

General and administrative expenses increased by $1.38 million dollars for the six months ended October 31, 2004, when compared with the same period for 2003.  The Company now employs several experienced oil and gas personal, have 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 three to six months. These funds will be targeted at developing the Company's planned future acquisitions. The Company believes that the current assets and anticipated future acquisitions will be sufficient to fund the anticipated liquidity and capital resource needs of the Company for the fiscal year ending April 30, 2005.  At the present time, Management feels that there are opportunities to enhance existing wells and discussions have been held regarding efforts to tap into possible reserves on the oil properties.

 

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 and specific rework of existing properties to enhance production and expansion of its sales of crude oil and natural gas.

 

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 from customers 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 5

 

 

**PART II - OTHER INFORMATION**

 

**Item 2.     UnregisteredSales of Equity Securities and Use of Proceeds**

                               

 During the quarter the Company issued common stock as follows:
	 

               -    200,000 shares of common stock at $.75 per share for $150,000 as compensation for the delay in closing of an asset purchase

               -    598,502 shares of common stock at $.42 per share for a private placement totaling $250,392.

               -    12 shares of common stock at $1.00 per share as a result of dividend warrants being exercised.

               -    35,000 shares of common stock  at $.55 per share for 19,250 to a consultant for services.

	 
                                  

**Item 6.    Exhibits**

 

a)    Exhibits:
           

        31.1 - Rule 13a-14a/15d-14(a) Certification by ChiefExecutive Officer
        31.2 - Rule13a-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 onForm 8-K:
 
  The Company filed the following 8-K on October 22, 2004:

        

                On October 18, 2004, we entered into a Standby Equity Distribution Agreement with Cornell Capital Partners, L.P.  Pursuant to the Standby Equity Distribution Agreement, 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.

 

        
Page6
**Signatures**

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

 

                                            
**SONORAN ENERGY, INC**

 

December 6, 2004
 
By:    Peter Rosenthal

Peter Rosenthal

Director/President/CEO
 
KNOW ALL PERSONS BY THESE PRESENTS, thateach person whose signature appears below hereby severally constitutes andappoints Peter Rosenthal and Rasheed Rafidi, and each of them, his true andlawful attorney-in-fact and agent, with full power of substitution andresubstitution for him and in his name, place and stead, in any and allcapacities 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 theCommission, 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 thingrequisite or necessary fully to all intents and purposes as he might or could doin person, hereby ratifying and confirming all that each said attorneys-in-factand agents or any of them or their or his substitute or substitutes, maylawfully do or cause to be done by virtue hereof. 

 

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

 
**Signature**
**Title**
**Date**
/s/		Peter Rosenthal

Peter		Rosenthal
President/CEO/Director
December 6, 2004
/s/		Christopher Pitman

		Christopher Pitman
Director
December 6, 2004
/s/		Mehdi Varzi

Mehdi		Varzi
Director
December 6, 2004
/s/		Charles Waterman

Charles		Waterman
Director
December 6, 2004
/s/		Rasheed Rafidi

Rasheed Rafidi
Director/CFO
December 6, 2004
/s/		Russ Costin

Russ		Costin
Director/Controller
December 6, 2004
 
 

 

 

Page 7

 

**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. 
I have reviewed this	quarterly report on Form 10-QSB of Sonoran Energy, Inc.;
2.      
Based on my knowledge,    this quarterly report does not contain any untrue statement of a material    fact or omit 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;
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 fourth 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: December 6, 2004/s/ Peter Rosenthal          Peter Rosenthal,  President  
**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. I have reviewed this	quarterly report on Form 10-QSB of Sonoran Energy, Inc.;2.      Based on my knowledge,    this quarterly report does not contain any untrue statement of a material    fact or omit 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;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 fourth 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: December 6, 2004/s/ Rasheed Rafidi      	Rasheed Rafidi,  CFO
**Exhibit 32.1**

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

    In connection with the Quarterly Report of SonoranEnergy, Inc. on Form 10-QSB for the quarter ending October 31, 2004, as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), I,Peter Rosenthal, President of the Company, certify, pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-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 theSecurities Exchange Act of 1934; and (2) the information contained in the Reportfairly presents, in all material respects, the financial condition and result ofoperations of the Company. 

/s/ Peter Rosenthal

Peter Rosenthal

President

December 6, 2004
**Exhibit 32.2**

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

    In connection with the Quarterly Report ofSonoran Energy, Inc. on Form 10-QSB for the quarter ending October 31, 2004, asfiled with the Securities and Exchange Commission on the date hereof (the"Report"), I, Rasheed Rafidi, CFO of the Company, certify, pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-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 theSecurities Exchange Act of 1934; and (2) the information contained in the Reportfairly presents, in all material respects, the financial condition and result ofoperations of the Company. 

/s/ Rasheed Rafidi

Rasheed Rafidi

Chief FinancialOfficer

December 6, 2004**