U.S. SECURITIES AND EXCHANGE COMMISSION

























WASHINGTON, D.C. 20549



















































FORM 10-KSB







































(Mark one)











































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























For the Year Ended April 30, 2003























or











































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















































SONORANENERGY, INC.



























(Name of Small Business Issuer in its Charter)















































WASHINGTON                                                                                                                                                  
13-4093341



























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

















































11300 W. Olympic Boulevard, Ste. 800, Los Angeles, CA, 90064





















(Address of Principal Executive Offices)         (Zip Code)















































866-599-7676



























(Issuer's Telephone Number)

















































Securities registered under Section 12(g) of the Act:























COMMON STOCK, NO PAR VALUE PER SHARE

























(Title of Class)

---





















































































Check whether issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange during the past 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 / /











































State issuer's revenues for its most recent fiscal year:
$80,507.











































The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference
to the price at which the common equity was sold, or the average bid and ask price of such common equity, as of June 30,
2003 was $2,740,333.











































APPLICABLE ONLY TO CORPORATE REGISTRANTS











































The number of shares outstanding of the issuer's Common Stock, no par value, as of June 30, 2003, was 9,134,444.











































Transitional Small Business Disclosure Format (check one):





















YES / /   NO /X/

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SONORAN ENERGY, INC.





















































2003 FORM 10-KSB ANNUAL REPORT



















































Table of Contents













































































PART I

















































Item 1. Description of Business











































Item 2. Description of Property











































Item 3. Legal Proceedings











































Item 4. Submission of Matters to a Vote of
Security Holders













































PART II

















































Item 5. Market for Common Equity and
Related Stockholder Matters











































Item 6. Management's Discussion and
Analysis of Financial Condition and Results of Operations











































Item 7. Financial Statements











































Item 8. Changes In and Disagreements with
Accountants on Accounting and Financial Disclosure













































PART III

















































Item  9.    Directors, Executive Officers, Promoters and Control Persons; Compliance With Section





















16(a) of the Exchange Act











































Item 10. Executive Compensation











































Item 11. Security Ownership of Certain
Beneficial Owners and Management











































Item 12.    Certain Relationships and Related Transactions













































PART IV

















































Item 13. Exhibits and Reports on Form 8-K











































Item 14. Controls and Procedures

---

















































CAUTIONARY STATEMENT FOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER FEDERAL SECURITIES LAWS GENERAL.











































Sonoran Energy, Inc is including the following discussion to inform existing and potential security holders
generally of some of the risks and uncertainties that can affect the Company and to take advantage of the "safe
harbor" protection for forward-looking statements afforded under federal securities laws.  Statements made in
this Annual Report on Form 10-KSB may be forward-looking statements.  In addition, from time to time, the
Company may otherwise make forward-looking statements to inform existing and potential security holders
about the Company.  These statements may include projections and estimates concerning the timing and
success of specific projects and the Company's future (1) income, (2) oil and gas production, (3) oil and gas
reserves and reserve replacement and (4) capital spending.  Forward-looking statements are generally
accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "plan," "goal"
or other words that convey the uncertainty of future events or outcomes.  In addition, except for the historical
information contained in this report, the matters discussed in this report are forward-looking statements.  These
statements by their nature are subject to certain risks, uncertainties and assumptions and will be influenced by
various factors.  Should any of the assumptions underlying a forward- looking statement prove incorrect, actual
results could vary materially.

---















































PART I

























































ITEM 1 - DESCRIPTION OF BUSINESS



















































GENERAL BUSINESS DESCRIPTION

































Overview



















































Sonoran Energy, Inc. (the "Company", "Sonoran" and sometimes "we," "us," "our" and derivatives of such
words), formerly named Showstar Online.com Inc., was incorporated on July 14, 1995 in the State of Colorado
as Cerotex Holdings, Inc.  The stockholders of the Company approved a change in corporate domicile to
Washington State, which became effective on September 15, 2000. Prior to June 2002 the company had
developed software and an art site on the Internet. The project had to be discontinued due to lack of funding. On
June 3, 2002 the Company changed its name to Sonoran Energy, Inc. and began the full transition to becoming
a junior oil and gas producer.



































General























In the months prior to June 30, 2003, Sonoran Energy, Inc., during 2002, had been searching for a merger
partner, buyer or a combination thereof to ensure the Company's continued operations. In April 2002,
management was presented with an opportunity to acquire a minority working interest in two California oil and
gas properties. Further reviews and meetings resulted in the Company management deciding to enter the oil and
gas industry and in May 2002 closed on one of the properties.

















Following the corporate name change and repositioning, Sonoran Energy began an aggressive program to build
itself into a promising junior oil and gas producer, purchasing additional oil and gas properties in July and
December 2002 and then again in April 2003.





















The Company, through its association with knowledgeable industry consultants, is positioned to be able to
identify, acquire and develop working interest percentages in smaller, underdeveloped oil and gas projects that
do not meet the requirements of the larger California producers and developers.

























Sonoran acquires interests in land and producing properties through acquisition and lease on which it drills
and/or operates oil or gas wells in efforts to discover and/or to produce oil and gas.  Crude oil and natural gas
produced from these properties are sold to various refineries and pipeline companies.  The majority of all oil
and gas properties that Sonoran owns and operates are in joint ventures with others in the industry.  Sonoran's
interests in these properties will vary depending on the availability of said interests and their locations.  All of
the Company's current operations and major revenue producing properties are in California.





























































DESCRIPTION OF BUSINESS - OIL AND GAS OPERATIONS

















































EXPLORATION AND DEVELOPMENT











































Sonoran operates in a highly competitive industry wherein many companies, from large multinational
companies to small independent producers, are competing for a finite amount of oil and gas resources.  The
Company seeks out properties to explore for oil and gas by drilling and also seeks out producing oil and gas
properties that can be purchased and operated.  Management believes that under the right economic conditions,
several of the producing properties that the Company owns could have further developmental potential. Certain
oil properties currently owned and operated by the Company may be receptive to enhanced oil recovery
procedures when economic conditions improve.











































OIL AND GAS PRODUCTION OPERATIONS











































Sonoran has a working interest in 6 oil and gas leases (properties) located within various counties in the State of
California.  All of these properties are capable of producing oil or natural gas, although not all of these
properties are considered profitable under certain economic conditions. During fiscal 2003, the Company
owned working interests, in 6 leases within California, with total gross oil production of approximately 2,800
barrels of oil and 1,567 Mcf of gas for the short time that the company owned the properties.  Production
operations, conducted by third party operators, consist of the daily pumping of oil from a well(s) into tanks,
maintaining the production facilities both at the well and tank settings, preparing and shipping the crude oil to
buyers.  Daily operations differ from one property to another, depending on the number of wells, the depth of
the wells, the gravity of the oil produced and the location of the property.  All of Sonoran's oil production is
classified as primary recovery production at this time; although certain properties may be conducive to
secondary recovery operations in the future, depending on the prevailing price of oil.  Gas production and sales
are similarly done through third parties.











































Primary recovery of oil and gas is by means of natural flow(s) or artificial lift of oil and gas from a single well
bore.  Natural gas and petroleum fluids enter the well bore by means of reservoir pressure or gravity; fluids and
gases are moved to the surface by natural pressure or by means of artificial lift.











































The Company contracts, through Joint Operating Agreements, for field level personnel (i.e., pumpers, rig
crews, roustabouts and equipment operators) that perform basic daily activities associated with producing oil
and gas. Daily operations include inspections of surface facilities and equipment, gauging, reporting and
shipping oil, and routine maintenance and repair activities on wells, production facilities and equipment.











































The Company participates in new wells or redrills existing wells on properties owned by the Company in an
attempt to increase oil and gas production.  The Company utilizes the services of outside drilling contractors for
drilling new wells and redrilling existing wells.  Maintenance and repairs of existing wells to maintain or
increase oil and gas production are also carried out by contractors.  Economic factors associated with the price
of oil and gas and the productive output of wells determine the number of active wells the Company
participates in.











































MARKETING OF CRUDE OIL AND NATURAL GAS











































The Company sold all its crude oil to Pacific Marketing and Transportation LLC in 2003.  While revenue from
this customer is significant it is management's opinion that the oil and gas it produces could be sold to other
crude oil purchasers, refineries or pipeline companies. Natural gas is sold to companies in the area of
operations.  The Company sells its oil pursuant to short-term contracts at market prices.  Accordingly, the
amount of oil the Company sells is dependent upon market demand.  Market demand for Sonoran's production
is subject to various influences and can never be assured, especially in an era of changing prices.  The base
values for crude oil the Company sells is set by major oil companies in response to area and market strengths
and international influences.  Types and qualities of crude oil vary substantially in base values posted by crude
oil buyers in various areas of the country. Sonoran's crude oil sales are not seasonal, but uniform throughout the
year.  Gas sales are also done through short term month to month contracts with various buyers at market
prices.











































RISKS, COMPETITION AND INDUSTRY CONDITIONS











































The profitability of the Company's operations depends primarily on the production of oil and gas in
commercially profitable quantities.  Oil and gas properties often fail to provide a return sufficient to repay the
substantial sums of money required for their acquisition, exploration and development. The acquisition,
exploration and development of oil and gas properties is a highly competitive business.  Many entities with
which the Company competes have significantly greater financial and staff resources.  Such competitive
disadvantages could materially and adversely affect the Company's ability to acquire new properties or develop
existing properties.











































The oil and gas industry, in general, has been adversely affected by several factors beyond the Company's
control, including unstable oil and gas prices, uncertainty regarding the effect of pricing agreements and
production quotas and allocations established by the Organization of Petroleum Exporting Countries, political
instability in the Middle East and the status of ever-changing federal and state legislation and regulation. Given
the uncertainty of international and domestic political actions and their impact on the energy markets, it is
difficult, if not impossible, to predict the price or market situation for any oil or gas which is currently owned or
which could be developed by the Company.  Depressed oil and gas prices or significant curtailment in the
Company's oil and gas production from its better properties would have a material adverse effect on the
Company's operations.































































REGULATIONS











































The Company's business is affected by numerous governmental laws and regulations, including energy,
environmental, conservation, tax and other laws and regulations relating to the petroleum industry.  Changes in
any of these laws and regulations could have a material and adverse effect on the Company's business and
financial stability.  In view of the many uncertainties with respect to current laws and regulations, including
their applicability to the Company, the Company cannot predict the overall effect of such laws and regulations
on future operations.































































TAXATION











































The operations of the Company, as is the case in the petroleum industry generally, are significantly affected by
federal tax laws. Federal, as well as state, tax laws have many provisions applicable to corporations which
could affect the future tax liability of the Company.































































ENVIRONMENTAL











































The Company's activities are subject to existing federal and state laws and regulations governing environmental
quality and pollution control.  These laws may require the acquisition of permits relating to certain ongoing
operations, for drilling, emissions, waste water disposal and other air and water quality controls.  In view of the
uncertainty and unpredictability of environmental statutes and regulations, the Company cannot ensure that
such laws and regulations will not materially and adversely affect the business of the Company.  The Company
does not anticipate any material effect on its capital expenditures or earnings as the result of governmental
regulations, enacted or proposed, concerning environmental protection or the discharge of material into the
environment.  The Company is actively pursuing an ongoing policy of upgrading and restoring older properties
to comply with current and proposed environmental regulations.











































COMMITMENTS AND CONTINGENCIES











































The Company is liable for future dismantlement and abandonment costs associated with its oil and gas
properties.  These costs include future site restoration, post closure and other environmental exit costs.  The
costs of future dismantlement and abandonment have not been determined.  Management believes that these
costs will not have a material adverse effect upon its financial position or results of operations.































































OTHER











































The Company employed 2 contract people as of April 30, 2003, who were office and administrative personnel.
The Company has Joint Operating Agreements with third parties covering the production crews on all
properties. The Company contracts for additional labor services when needed.  The Company is not a party to
any union or labor contracts.











































All of the Company's revenues during 2003 were derived from domestic sources.











































The Company does not have any patents or trademarks, and it does not believe that its business or operations
are dependent upon owning any patents or trademarks.



































































ITEM 2 - DESCRIPTION OF PROPERTY

















































(a)  DESCRIPTION OF PROPERTY











































The principal assets of the Company consist of proven and unproven oil and gas properties along with oil and
gas production related equipment acquired as part of the leases.  The Company's oil and gas properties currently
are located exclusively in the state of California in the following locations:











































SAN ANTONIO PROJECT, acquired in May 2002, located in the Salinas Basin, Monterrey California. A
3.375 % working interest in future wells of this project.









FRANKLIN PROJECT, acquired in July 2002, located in the Sacramento Valley, California. Sonoran
acquired a 2% working interest in this gas play with potential of 400 Bcf of gas.  Sonoran secured any and all
rights held by previous owner to participate in future wells drilled on the Franklin Prospect Contract Area.









KEYSTONE OIL COMPANY'S DEER CREEK PROPERTY, acquired in December 2002, is a
"Community" Lease consisting of approximately 93 acres at Deer Creek Field, Tulare County, California. Sonoran has a 60% working interest in the property but will receive 80% of the net revenue until it has
recouped 150% of its acquisition costs. This project with 12 producing wells and two water injection wells, is a
straight production acquisition for approximately 35 barrels oil per day.













EMJAYCO'S GLIDE #33 PROPERTY,acquired in December 2002, is a lease consisting of 160 acres in Mt.
Poso Field, Kern County, California. Sonoran has a 60% working interest in the property but will receive 80%
of the net revenue until it has recouped 150% of its acquisition costs. The project, which has twelve wells and
one water injector well, is producing an average of 30 barrels per day.







DEER CREEK OIL FIELD – MERZONIAN LEASE
acquired in April 2003, is a lease consisting of
approximately 20 acres, 6 producing wells and one injection well in Tulare County adjacent to the Keystone
leases. Sonoran has a 50% working interest with the other 50% belonging to our operating partner. The wells
are producing an average of 25 barrels per day.







SACREMENTO BASIN GAS PROPERTIES acquired in April 2003, consists of four operations which
Sonoran has acquired a working interest in each lease:



-    Deverton Creek Gas Field located in Solano County, consisting of seven producing wells operated by
Aspen Exploration Corp. and producing 1000 Mcf /day as of January 1, 2003.  Sonoran acquired a 1.125%
Working Interest in the producing wells along with working interests varying from 0.019% to 0.056 % in
wells that have proven undeveloped reserves.











-    Malton-Black Butte Gas Field located in Tehama County, consisting of six producing wells, a water
injection well operated by Aspen Exploration Corp. with one shut-in well and producing 1000 Mcf /day as
of January 1, 2003.  Sonoran acquired a 10% Working Interest in the producing wells along with working
interests varying from 2.65% to 5.0 % in wells that have proved undeveloped reserves.











-    Maine Prairie Gas Field located in Solano County, consisting of four producing wells operated by Castle
Minerals Ltd. and producing 1914 MMBTU /day as of January 1, 2003. Sonoran acquired a 1.41%
Working Interest in three of the wells and a 0.705% working interest in the fourth well.











-    Lambie Ranch located in Salano County, consisting of one well that is presently being reworked and
operated by Gotland Oil Co. Sonoran has acquired a 1.0% Working Interest in this well.



































































(b)  OIL AND GAS PROPERTIES











































The Company's estimated future net recoverable oil and gas reserves from proved developed properties were
assembled by independent petroleum engineers using general accepted industry standards and are as follows:























|               | Crude Oil (BBLS) | Natural Gas (MCF)
|-------------- | ---------------- | -----------------
|               |                  |                  
|April 30, 2003 | 220,592          | 70,279           
|               |                  |                  



















































The Company's estimated future net recoverable oil and gas reserves, noted above, have not been filed with any
other Federal authority or agency.











































The Company received a third party report on the gas properties, as part of the due diligence on the purchase,
showing proved undeveloped reserves of 126,632 Mcf. In addition, during the year the Company received third
party reports identifying additional crude oil reserves (PUD) of 890,000 bbls on existing oil properties. Using
year-end oil prices and estimated lease operating expenses, the estimated value of future net revenues, before
income tax, to be derived from proved oil and gas reserves, discounted at 10%, was $6,564,444 at April 30,
2003.











































Sonoran's net share of oil and gas
production after royalty and other working interests for the past five years
ending April 30, were as follows:























|                  | 2003  | 2002
|----------------- | ----- | ----
|                  |       |     
|Crude oil (Bbls)  | 2,797 | 0   
|                  |       |     
|Natural gas (MCF) | 1,567 | 0   

























Sonoran's average sales prices per barrel or per MCF of crude oil and natural gas, respectively, and production
costs per equivalent barrel (gas production is converted to equivalent barrels at the rate of 6 MCF per barrel,
representing the estimated relative energy content of gas to oil) for the past five years ending April 30, were as
follows:

























|                 | 2003     |  | 2002 
|---------------- | -------- |  | -----
|Sales price:     |          |  |      
|Crude oil        | $ 24.87  |  | $ n/a
|                 |          |  |      
|Natural gas      | $   4.99 |  | $ n/a
|                 |          |  |      
|Production costs | $   9.74 |  | $ n/a
|                 |          |  |      













































The average selling price of Sonoran's crude oil at April 30, 2003, was approximately $21.33 per barrel and the
average selling price of Sonoran's gas at April 30, 2003, was approximately $4.99 per MCF.



























































































ITEM 3 - LEGAL PROCEEDINGS



















































The Company has been named as a defendant in a lawsuit filed against Savingsplus Internet Inc. by a director
of Savingsplus for failure to repay a $35,000 loan to the director's company (Korker
Diversified Holdings). Sonoran has retained counsel and
filed a reply to the suit as of April 30, 2001. There was no contact with the other party until April 2002 when
the Company was informed the other party wished to proceed and in July 2002 told that they had increased their
claim by about $190,000. Subsequent submissions by Korker have reduced the claim and Sonoran has held an
examination for discovery of Korker's officers. In April/May 2003 Korker attempted to schedule a Summary
Trial of the matter but adjourned after receipt of Sonoran's affidavits.  Counsel for Korker has made numerous
requests from information which should be apparent from the materials already prepared.  Sonoran has invited
Korker's counsel to conduct an examination for discovery but to this date this has not occurred. No new date
has been set for the Summary Trial although all necessary materials have been prepared The Company is
optimistic that the lawsuit will be successfully defended and is still considering a counter suit.



































































ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

















































No matters were submitted to a vote of security holders during the fourth quarter of 2003.

---











































PART II





















































ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

















































(a)  PRICE RANGE OF COMMON SHARES











































The common stock of Sonoran is traded on the OTC Bulletin Board under the symbol "SNRN".  The following
are high and low sales prices for each quarter of 2003 and 2002, and reflect inter-dealer prices without retail
markup, markdown or commission.























|QUARTER ENDING    | HIGH BID | LOW BID
|----------------- | -------- | -------
|July 31, 2001     | $0.02    | $0.01  
|October 31, 2001  | $0.01    | $0.01  
|January 31, 2002  | $0.01    | $0.01  
|April 30, 2002    | $0.01    | $0.01  
|July 31, 2002 (1) | $0.15    | $0.10  
|October 31, 2002  | $0.24    | $0.10  
|January 31, 2003  | $0.18    | $0.10  
|April 20, 2003    | $0.34    | $0.11  























(1)    The Company completed a 25 old for 1 new restructure of equity on June 3, 2002.













































At April 30, 2003, the Company had 219 shareholders of record, and an unknown number of additional holders
whose stock is held in "street name".











































The Company has paid no dividends on its common shares for the past five years.  In July 2003, the Company
announced an 8% Unit dividend and warrant (one warrant for every 10 shares held) payable August 22, 2003 to
shareholders of record on July 25, 2003.











































Future dividends on the common shares, if any, will be dependent upon the Company's earnings, financial
conditions and other relevant factors as determined by the Board of Directors.







































































ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS OF
OPERATIONS

























GENERAL











The past 12 months have been one of dramatic change for Sonoran Energy, Inc. as it made the transition to a
junior oil and gas producer.  In April 2002, the Company began exploring opportunities within the oil and gas
industry, and made the decision to shift its business focus to the energy sector in May 2002, and acquired a
small working interest in an oil property lease in the Salinas Basin near Monterrey, California.  The Company
then completed the transition in June 2002 when it changed its name and began operating as Sonoran Energy,
Inc.











Sonoran Energy's initial acquisition introduced the Company to its operating partner Longbow LLC, who
together with Archer Exploration, began providing the Company with industry expertise and introductions to
new oil and gas opportunities.  That strategic alliance was solidified in the following months and led to the
Company formulating an ambitious property acquisition program.  As a result, the Company acquired a major
working interest in two significant oil and gas properties in the Bakersfield, California area in December 2002.
One of these oil-producing properties started generating revenues for the Company in December 2002.  The
second property required some reactivation work and has since been returned to production, and commenced
generating revenues in May 2003. In April 2003, the Company acquired two additional working interests
consisting of an oil lease adjacent to an existing lease and four natural gas leases both generating revenue upon
closure.











In May 2003, a third party geologic review identified an additional 250,000 barrels of proved undeveloped
(PUD) reserves on the Company's combined 113-acre leasehold in the Deer Creek Oil Field.  In June 2003, a
third party geologic review identified an additional 640,000 barrels of proved undeveloped (PUD) reserves on
Sonoran's Emjayco Glide #33 Property holdings













Management intends to continue with its acquisition program and plans to develop into a significant junior oil
and gas producer.





























LIQUIDITY AND CAPITAL RESOURCES





















































The Company had cash and cash equivalents of $32,719 at April 30, 2003 for an increase of $25,009 when
compared to April 30, 2002.  Net capital spending of $987,420 used cash in 2003.  This was offset by proceeds
from the issuance of notes payable of $1,075,000 and private placements of $142,487.  The components of the
changes in cash for 2003 are more fully described in the Statements of Cash Flows included in Item 7 of this
Form 10-KSB.  Adequate funds were available to carry out all cash calls the Company chose to participate in.



















































The Company believes that its existing current assets and the amount of cash it anticipates it will generate from
current operations will be sufficient to fund the anticipated liquidity and capital resource needs of the Company
for the fiscal year ended April 30, 2004.  The Company expects to increase its capital expenditures during the
current fiscal year to enhance or increase its current oil and gas production capacities and does not anticipate
having any trouble in securing sufficient funds to complete projects





















































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, debt 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 in California.















































































ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS























































































Results of Operations for the Fiscal Year Ended April 30, 2003 compared to the Fiscal Year Ended April 30,
2002:



















































REVENUES



















































Revenue was $80,507 in April 30, 2003 and $122,134 in April 30, 2002. As the Company changed its business
plan early in fiscal 2003 to enter the oil and gas industry a explanation of the change in revenue would be
meaningless.  The revenue for April 30, 2003 is not indicative of the anticipated revenue for 2004 due to the
limited time the Company received revenue from it's properties - i.e., Gas properties acquired in April 2003 and
one of the oil properties began operation in May 2003.

















































OPERATING EXPENSES



















































Operating expense was $48,759 in April 30,
2003 and $0 in April 30, 2002. As the Company changed its business plan early in
fiscal 2003 to enter the oil and gas industry, an explanation of the change in
operating expenses
would be meaningless.











































































GENERAL AND ADMINISTRATIVE EXPENSES



















































General and administrative expenses decreased by approximately 46% for the year ended April 30, 2003, when
compared with the same period for 2002.  Stock based compensation increased during 2003 as the Company
was able to pay for the listed services with stock rather than cash.











































































PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION



















































The provision for depletion, depreciation and amortization was $4,228 for the year ended April 30, 2003
reflecting the cost associated with the first years operation from the oil and gas leases which were not part of
the Company in 2002.



















































OTHER INCOME (EXPENSE)



















































The liability settlement gains arise from the Company being able to settle longer term debt from expense
incurred prior to its entry into the oil and gas industry.



















































RECENT ACCOUNTING DEVELOPMENTS













































In December 2002, the Financial Accounting Standards Board issued SFAS No. 148,
"Accounting for Stock-Based Compensation-Transition and Disclosure", which amended SFAS No. 123 to provide alternative
methods of transition for a voluntary change to the fair value based method of accounting for stock-based
employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require prominent
disclosure in both annual and interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results. For the Company, the provisions
of SFAS No. 148 were in effect for its year ended April 30, 2003. The Company will continue to use APB No.
25 to account for stock based compensation, while providing the disclosures required by SFAS No. 123 as
amended by SFAS No. 148.







---











































ITEM 7- FINANCIAL STATEMENTS



SONORAN ENERGY, INC.

Index to Consolidated Financial Statements



|                                                                                                       | Page
|------------------------------------------------------------------------------------------------------ | ----
|Independent Auditors' Report                                                                           | F-2 
|                                                                                                       |     
|Consolidated Balance Sheet at April 30, 2003                                                           | F-3 
|                                                                                                       |     
|Consolidated Statements of Operations for the
    years ended April 30, 2003 and 2002                  | F-4 
|                                                                                                       |     
|Consolidated Statement of Changes in
    Shareholders' Deficit from May 1, 2001 through April 30, 2003 | F-5 
|                                                                                                       |     
|Consolidated Statements of Cash Flows for the
    years ended April 30, 2003 and 2002                  | F-7 
|                                                                                                       |     
|Notes to Consolidated Financial Statements                                                             | F-9 
|                                                                                                       |     

F-1

---



To the Board of Directors and Shareholders





Sonoran Energy, Inc.









INDEPENDENT AUDITORS' REPORT









We have audited the accompanying consolidated balance sheet of Sonoran Energy, Inc. and its
subsidiaries as of April 30, 2003 and the related consolidated statements of operations, changes in
shareholders' deficit, and cash flows for the years ended April 30, 2003 and 2002.  These consolidated
financial statements are the responsibility of the Company's management.  Our responsibility is to
express an opinion on these consolidated financial statements based on our audits.







We conducted our audits in accordance with auditing standards generally accepted in the United States
of America.  Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatements.  An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.







In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Sonoran Energy, Inc. and its subsidiaries as of April 30, 2003 and the
results of their operations and their cash flows for the years ended April 30, 2003 and 2002 in
conformity with accounting principles generally accepted in the United States of America.







The accompanying financial statements have been prepared assuming that the Company will continue as
a going concern.  As discussed in Note 1 to the financial statements, the Company has a working capital
deficit at April 30, 2003 and has incurred significant losses since inception, which raise substantial
doubt about its ability to continue as a going concern.  Management's plans in regard to these matters
are also described in Note 1.  The financial statements do not include any adjustments that might result
from the outcome of these uncertainties.







Cordovano and Harvey, P.C.





Denver, Colorado





July 31, 2003



F-2

---

SONORAN ENERGY, INC.

Consolidated Balance Sheet

April 30, 2003



|Assets                                                         |                  
|-------------------------------------------------------------- | -----------------
|Current assets:                                                |                  
|Cash                                                           | $     
    32,719
|Accounts receivable                                            | 14,592           
|Loan receivable (Note 3)                                       | 2,525            
|Accrued interest receivable (Note 3)                           | 327              
|Prepaid expenses                                               | 82,500           
|Total current assets                                           | 132,663          
|                                                               |                  
|Restricted cash - Idle
    well bond (Note 1)                  | 75,303           
|Oil and gas properties
    - full cost method (Notes 1 and 8): |                  
|Proved                                                         | 747,209          
|Unproved                                                       | 514,908          
|Total oil and gas properties                                   | 1,262,117        
|Accumulated depletion                                          | (4,228)          
|Net oil and gas properties                                     | 1,257,889        
|                                                               |                  
|Assets available for
    sale (Note 6)                         | 309,743          
|                                                               | $  1,775,598     
|                                                               |                  
|Liabilities and Shareholders' Deficit                          |                  
|Current liabilities:                                           |                  
|Accounts payable                                               | $   
    562,964 
|Accrued expenses                                               | 241,337          
|Loans payable (Note 6)                                         | 845,000          
|Notes payable (Note 7)                                         | 75,000           
|Accrued interest payable (Notes 6 and 7)                       | 231,790          
|Indebtedness to related parties (Note 2)                       | 15,042           
|Total current liabilities                                      | 1,971,133        
|                                                               |                  
|Long-term debt (Note
    7):                                   |                  
|Notes payable                                                  | 1,000,000        
|Total liabilities                                              | 2,971,133        
|                                                               |                  
|Contingencies (Note 8)                                         | -                
|                                                               |                  
|Shareholders' deficit
    (Note 4):                            |                  
|Preferred stock, no par value; 25,000,000 shares authorized,   |                  
|no shares issued and outstanding                               | -                
|Common stock, no par value; 75,000,000 shares authorized,      |                  
|8,854,444 shares issued and outstanding                        | 14,589,663       
|Additional paid-in capital                                     | 380,000          
|Outstanding common stock warrants - 150,000                    | 7,200            
|Cumulative translation adjustments                             | 22,687           
|Accumulated deficit                                            | (16,195,085)     
|                                                               | (1,195,535)      
|                                                               |                  
|Total shareholders' deficit                                    | $    1,775,598   
|                                                               |                  

See accompanying notes to consolidated financial statements.



F-3

---

SONORAN ENERGY, INC.

Consolidated Statements of Operations



|                                                    | For the Years Ended April 30,
|--------------------------------------------------- | -----------------------------
|                                                    | 2003                         
|Revenue                                             |                              
|Oil and gas sales                                   | $     
    78,007            
|Other                                               | 2,500                        
|Total revenue                                       | 80,507                       
|                                                    |                              
|Operating expenses:                                 |                              
|Oil and gas production costs                        | 48,759                       
|Depletion                                           | 4,228                        
|Depreciation and amortization                       | -                            
|Stock-based compensation (Note 3):                  |                              
|Officer compensation                                | 30,000                       
|Legal                                               | 106,000                      
|Debt issue costs                                    | 85,000                       
|Stock warrants                                      | 7,200                        
|Consulting                                          | 111,025                      
|General and administrative                          | 235,945                      
|Impairment of web site and domain name (Note 1)     | -                            
|Liability settlement gains                          | (231,390)                    
|Total costs and expenses                            | (396,767)                    
|                                                    |                              
|Interest income                                     | 630                          
|Interest expense                                    | (145,376)                    
|                                                    |                              
|Loss from continuing operations before income taxes | (461,006)                    
|                                                    |                              
|Income tax provision
    (Note 5)                   | -                            
|                                                    |                              
|Net loss                                            | $    (461,006)               
|                                                    |                              
|Net loss per common
    share:                      |                              
|Basic and diluted                                   | $         
    (0.08)        
|Weighted average common
    shares outstanding:     |                              
|Basic and diluted                                   | 5,524,542                    
|                                                    |                              



*
Restated for 1:25 reverse common stock split (see Note 4)



See accompanying notes to consolidated
financial statements.



F-4

---

SONORAN ENERGY, INC.

Consolidated Statement of Changes in Shareholders' Deficit



|                                                                                  | Common Stock | Additional Paid-In Capital | Outstanding Common Stock Options/Warrants | Deferred Stock Compensation | Deficit Accumulated During Development Stage | Cumulative Trasnlation Adjustment | Total        
|--------------------------------------------------------------------------------- | ------------ | -------------------------- | ----------------------------------------- | --------------------------- | -------------------------------------------- | --------------------------------- | -------------
|                                                                                  | Shares       | Amount                     | Other Comprehensive Income (Loss)        
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Balance at
    April 30, 2001                                                     | 50,847,030   | $  13,356,971              | $    74,000                               | $  191,000                  | $  (81,663)                                  | $ (14,264,246)                    | $    (42,280)
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock cancelled                                                        | (575,000)    | (115,000)                  | 115,000                                   | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    Stock issued to an officer under terms of employment contract (Note 2) | 400,000      | 4,000                      | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock issued to officers as payment for liabilities (Note 2)           | 4,645,800    | 46,458                     | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Deferred
    stock compensation                                                   | -            | -                          | -                                         | -                           | 81,663                                       | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Expired
    warrants and options                                                  | -            | -                          | 191,000                                   | (191,000)                   | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Comprehensive loss:                                                               |              |                            |                                           |                             |                                              |                                   |              
|Net loss, year ended                                                              |              |                            |                                           |                             |                                              |                                   |              
|April 30, 2002                                                                    | -            | -                          | -                                         | -                           | -                                            | (1,469,833)                       | -            
|Cumulative Translation                                                            |              |                            |                                           |                             |                                              |                                   |              
|Adjustment                                                                        | -            | -                          | -                                         | -                           | -                                            | -                                 | 94,086       
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Comprehensive loss                                                                | -            | -                          | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Balance at
    April 30, 2002                                                     | 55,317,830   | 13,292,429                 | 380,000                                   | -                           | -                                            | (15,734,079)                      | 51,806       
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|1 for 25
    reverse common stock split                                           | (53,105,074) | -                          | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock sales (Note 4)                                                   | 569,950      | 142,487                    | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock issued to an officer as payment for salaries (Note 2)            | 200,000      | 30,000                     | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock issued in exchange for consulting services (Note 4)              | 2,038,500    | 299,525                    | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock issued in exchange for debt issue costs (Note 4)                 | 500,000      | 85,000                     | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock issued to officers as payment for liabilities (Note 2)           | 1,184,200    | 296,055                    | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock issued in exchange for debt payments (Note 4)                    | 399,038      | 94,167                     | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock issued in exchange for oil and gas properties (Note 4)           | 1,750,000    | 350,000                    | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Common
    stock warrants issued to non-employees (Note 4)                        | -            | -                          | -                                         | 7,200                       | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Comprehensive loss:                                                               |              |                            |                                           |                             |                                              |                                   |              
|Net loss, year ended                                                              |              |                            |                                           |                             |                                              |                                   |              
|April 30, 2003                                                                    | -            | -                          | -                                         | -                           | -                                            | (461,006)                         | -            
|Cumulative translation                                                            |              |                            |                                           |                             |                                              |                                   |              
|adjustment                                                                        | -            | -                          | -                                         | -                           | -                                            | -                                 | (29,119)     
|Comprehensive loss                                                                | -            | -                          | -                                         | -                           | -                                            | -                                 | -            
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              
|Balance at
    April 30, 2003                                                     | 8,854,444    | $  14,589,663              | $  380,000                                | $    7,200                  | $              
    -                        | $ (16,195,085)                    | $      22,687
|                                                                                  |              |                            |                                           |                             |                                              |                                   |              

See accompanying notes to consolidated financial statements.



F-6

---

SONORAN ENERGY, INC.

Consolidated Statements of Cash Flows



|                                                                            | For the Years Ended April 30,
|--------------------------------------------------------------------------- | -----------------------------
|                                                                            | 2003                         
|Cash flows from
    operating activities:                                   |                              
|Net loss                                                                    | $   
    (461,006)           
|Adjustments to reconcile net loss to net cash used in operating activities: |                              
|Depletion, depreciation and amortization                                    | 4,228                        
|Liability settlement gains                                                  | (231,390)                    
|Impairment of web site and domain name                                      | -                            
|Stock compensation expense                                                  | 329,525                      
|Stock issued for debt issue costs                                           | 85,000                       
|Common stock warrants granted                                               | 7,200                        
|Changes in operating assets and liabilities:                                |                              
|Receivables and prepaid expenses                                            | (97,419)                     
|Accounts payable and accrued expenses                                       | 190,448                      
|                                                                            |                              
|Net cash used in operating activities                                       | (173,414)                    
|                                                                            |                              
|Cash flows from
    investing activities:                                   |                              
|Issuance of note receivable                                                 | (2,525)                      
|Payment of Idle well bond                                                   | (75,000)                     
|Purchases of oil and gas properties                                         | (912,420)                    
|                                                                            |                              
|Net cash used in investing activities                                       | (989,945)                    
|                                                                            |                              
|Cash flows from
    financing activities:                                   |                              
|Proceeds from advances                                                      | -                            
|Proceeds from notes payable                                                 | 1,075,000                    
|Proceeds from the sale of common stock                                      | 142,487                      
|                                                                            |                              
|Net cash provided by financing activities                                   | 1,217,487                    
|                                                                            |                              
|Cumulative translation
    adjustment                                       | (29,119)                     
|                                                                            |                              
|Net change in cash                                                          | 25,009                       
|                                                                            |                              
|Cash, beginning of year                                                     | 7,710                        
|                                                                            |                              
|Cash, end of year                                                           | $      32,719                
|                                                                            |                              
|Supplemental disclosure
    of cash flow information:                       |                              
|Cash paid for income taxes                                                  | $              
    -        
|Cash paid for interest                                                      | $     47,889                 
|                                                                            |                              
|Non-cash investing and
    financing activities:                            |                              
|Common stock issued for payment of debt, advances, and other liabilities    | $   390,222                  
|Common stock issued for acquisition of oil and gas properties               | $   350,000                  
|                                                                            |                              

See accompanying notes to consolidated financial statements.

F-8

---

SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements









Note 1:    Nature of Organization and Summary of Significant Accounting Policies









Nature of Organization

















Sonoran Energy, Inc. (the "Company") was incorporated under the laws of Colorado as Cerotex
Holdings, Inc. on July 14, 1995.  The Company's shareholders approved a change of corporate domicile
to Washington State, which became effective on September 15, 2000.  Prior to June 2002, the Company
developed software and an art site on the Internet.  The Internet project was terminated in April 2002,
due to lack of funding, after generating approximately $1.8 million in liabilities that were unpaid as of
June 30, 2003.  On June 3, 2002, the Company changed its name to Sonoran Energy, Inc. and entered
the oil and gas industry.  The Company's primary objective is to identify, acquire and develop oil and
gas projects located in California.























The Company acquires interests in producing properties through leases on which it drills and/or operates
oil or gas wells in efforts to discover and/or to produce oil and gas.  The majority of all oil and gas
properties that the Company owns and operates are in joint venture with others in the industry.  The
Company's interests in the properties vary depending on the availability of the interests and their
locations.























The Company has a working interest in six oil and gas properties located within the State of California.





Basis of Presentation









The accompanying consolidated financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and liabilities in the normal course of business.  As shown
in the accompanying consolidated financial statements, the Company has incurred significant losses
since inception.  The Company lacks liquidity and has a working capital deficit at April 30, 2003.  These
factors, among others, indicate that the Company may be unable to continue as a going concern.





The consolidated financial statements do not include any adjustments relating to the recoverability and
classification of liabilities that might be necessary should the Company be unable to continue as a going
concern.  The Company's continuation as a going concern is dependent upon its ability to secure
profitable interests in oil and gas projects.  Further, the Company is dependent upon management's
ability to produce sufficient cash flow that is required to meet obligations as they come due.  Lastly, the
Company is dependent upon successful completion of additional financing and, ultimately, to attain
profitability.  Historically, the Company has been successful in meeting ongoing cash requirements
sufficient to remain in operations; however there can be no assurances that the Company will continue
to be successful in obtaining the funds necessary to meet the anticipated cash requirements.  The
Company plans to continue to finance its operations and satisfy cash requirements with a combination of
debt financing, stock sales and in the longer term, revenues from operations.





Basis of Consolidation









The consolidated financial statements include the accounts of Sonoran Energy, Inc. and its wholly
owned subsidiaries Showstar Entertainment Corporation, a Nevada company that has done business as
Showstar Productions, Inc.; Showstar Online Canada, Inc., a Canadian registered company; and ALS
Sportswear.  All significant intercompany balances and transactions have been eliminated in
consolidation.  The Company's subsidiaries have been dormant since the Company entered the oil and
gas industry.



F-9

---













SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements













Use of Estimates









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

























Cash Equivalents













For the purposes of the statement of cash flows, the Company considers all highly liquid debt
instruments purchased with an original maturity of three months or less to be cash equivalents.  The
Company had no cash equivalents at April 30, 2003.















Restricted Cash







The Company was required to post a $75,000 Idle Well Bond with the government prior to beginning
operations on the oil well leases.  The funds are held by a financial institution in an investment
certificate, which bears interest at a variable rate.





Oil and Gas Producing Activity







The Company follows the full cost method of accounting for its oil and gas activity. Accordingly, all
costs associated with the acquisition, exploration and development of oil and gas properties are
capitalized within the appropriate cost center.  Any internal costs that are capitalized are limited to those
costs that can be directly identified with acquisition, exploration, and development activities undertaken
by the Company for its own account, and do not include any costs related to production, general
corporate overhead, or similar activities.







All capitalized costs within a cost center are depleted on the units-of-production method based on
estimated proved reserves attributable to the oil and gas properties owned by the Company.





For each cost center, capitalized costs less accumulated depletion and related deferred income taxes,
may not exceed the cost center ceiling.  Any excess is charged to expense during the period in which the
excess occurs.  The cost center ceiling is equal to the sum of:





(a) The present value of estimated future net revenues from proved oil and gas reserves, less
estimated future expenditures to be incurred in developing the proved reserves computed
using a 10 percent discount factor; (b) the cost of properties not being amortized; (c) the
lower of cost or fair market value of unproven properties included in the costs being
amortized; and (d) income tax effects related to the differences between the book and tax
basis of the properties.













If a significant portion of the Company's oil and gas interests are sold, a gain or loss would be
recognized; otherwise, proceeds from sales are applied as a reduction of oil and gas properties. The
Company did not sell any of its oil and gas properties during the year ended April 30, 2003.



F-10

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements









Assets Available For Sale







Assets available for sale are stated at cost less accumulated depreciation.  Propriety of the assets is
subject to certain negotiations discussed in Note 6.





Web Site and Software























The Company recognizes web site development costs in accordance with Statement of Position ("SOP")
98-1.  As such, the Company expenses all costs incurred that relate to the planning and post
implementation phases of development.  Costs incurred during the development phase are capitalized
and recognized over the product's estimated useful life if the product is expected to have a useful life
beyond one year.  The cost of developing the Company's Internet portal (web site) was expensed until
the Company determined that the portal would result in future economic benefit and management was
committed to funding the project.  Thereafter, all direct external implementation and development costs
were capitalized and amortized using the straight-line method over the remaining estimated useful lives,
not exceeding three years.  Costs associated with repair or maintenance of the existing site or the
development of web site content are expensed when incurred in the accompanying consolidated
statements of operations.





The Company recorded depreciation expense of $-0- and $183,547 related to the capitalized Internet
portal and webmail costs during the years ended April 30, 2003 and 2002, respectively.







In addition, the Company has adopted
Emerging Issues Task Force Issue No. 00-2 ("EITF 00-2"). EITF
00-2 requires the implementation of SOP 98-1 when software is used by a vendor in providing a service
to a customer but the customer does not acquire the software or the right to use it.





Impairment – Web site and domain name











In the fourth quarter of the year ended April 30, 2002, the Company completed a balance sheet review
that identified assets whose carrying amounts were not recoverable.  As a result of this review, the
Company recorded an asset impairment charge of $782,955 for the write-off of unamortized web site
software costs and the domain name.













Impairments on Long-Lived Assets















The Company evaluates the carrying value
of its long-lived assets under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". SFAS No. 144 requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted future cash flows
estimated to be generated by those assets are less than the assets' carrying amount.   If such assets are
impaired, the impairment to be recognized is measured by the amount by which the carrying amount of
the assets exceeds the fair value of the assets.  Assets to be disposed of are reported at the lower of the
carrying value or fair value, less costs to sell.



F-11

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements

Net loss per share







The Company accounts for loss per share in accordance with SFAS No. 128. Under SFAS No. 128, net
loss per basic share excludes dilution and is determined by dividing loss available to common
shareholders by the weighted average number of common shares outstanding during the period.  Net
loss per diluted share reflects the potential dilution that could occur if securities and other contracts to
issue common stock were exercised or converted into common stock.  Due to the Company's losses, any
inclusion of other securities to issue common stock would have an anti-dilutive effect on loss per diluted
share.  Therefore, basic and diluted loss per share amounts are equal.





Income Taxes











Income taxes are provided for the tax effects of transactions reported in the financial statements and
consist of taxes currently due plus deferred taxes related primarily to differences between the recorded
book basis and tax basis of assets and liabilities for financial and income tax reporting.  The deferred tax
assets and liabilities represent the future tax return consequences of those differences, which will either
be taxable or deductible when the assets and liabilities are recovered or settled.  Deferred taxes are also
recognized for operating losses that are available to offset future taxable income and tax credits that are
available to offset future income taxes.



























Stock-Based Compensation









The Company accounts for stock-based employee compensation arrangements in accordance with
Accounting Principles Board ("APB") Opinion 25 and complies with the disclosure provisions of SFAS
No. 123.  Under APB No. 25, compensation expense is based on the difference, if any, on the date of
grant, between the fair value of the Company's stock and the exercise price.  The Company accounts for
stock issued to non-employees in accordance with the provisions of SFAS No. 123.  SFAS 123 requires
the fair value based method of accounting for stock issued to non-employees in exchange for services.





Companies that elect to use the method provided in APB 25 are required to disclose pro forma net
income and pro forma earnings per share information that would have resulted from the use of the fair
value based method.  The Company has elected to continue to determine the value of stock-based
compensation arrangements under the provisions of APB 25.





Fair Value of Financial Instruments









The Company's financial instruments, including cash, receivables, current liabilities, and short-term
debt, are carried at cost, which approximates their fair value because of the short-term maturity of these
instruments.



F-12

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements









Foreign Currency Translation







Assets and liabilities of non-U.S. subsidiaries are translated to U.S. dollars at end-of-period exchange
rates.  The effects of this translation for non-U.S. subsidiaries are reported in other comprehensive
income (loss).  Remeasurement of assets and liabilities of non-U.S. subsidiaries that use a currency
other than the U.S. dollar as their functional currency are included in income as transaction gains and
losses.  Income statement elements of all non-U.S. subsidiaries are translated to U.S. dollars at average-period exchange rates and are recognized as part of revenues, costs and expenses.  The functional
currency of the Company's foreign subsidiary is the local currency, the Canadian dollar.















Recent Accounting Pronouncement







In December 2002, the Financial Accounting Standards Board issued SFAS No. 148,
"Accounting for
Stock-Based Compensation-Transition and Disclosure", which amended SFAS No. 123 to provide
alternative methods of transition for a voluntary change to the fair value based method of accounting for
stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to
require prominent disclosure in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method used on reported
results. For the Company, the provisions of SFAS No. 148 were in effect for its year ended April 30,
2003. The Company will continue to use APB No. 25 to account for stock based compensation, while
providing the disclosures required by SFAS No. 123 as amended by SFAS No. 148.















Reclassifications







Certain prior year amounts may have been reclassified to conform to the current year presentation. Such
reclassifications had no effect on the prior year net income.















Note 2:    Related Party Transactions









During the year ended April 30, 2003, the Company issued 426,200 shares of its common stock to an
officer as payment for $106,550 of accrued compensation.  The market price of the common stock was
$.25 on the date of issuance.





During the year ended April 30, 2003, the Company issued 200,000 shares of its common stock to an
officer as payment for $30,000 of salaries.  The market price of the common stock was $.15 on the date
of issuance.







As of April 30, 2001, the Company owed an officer $189,640 for loans, accrued interest and advances
made to the Company in prior years.  During the year ended April 30, 2002, the Company repaid $8,360
of principal and $9,098 of accrued interest with the issuance of 1,745,800 shares of the Company's
common stock.  The market price of the stock was $.01 per share on the date of the issuance.  Interest
expense on the loans and advances totaled $39,592 for the year ended April 30, 2002, which increased
the balance owed the officer to $211,774 as of April 30, 2002.  During the year ended April 30, 2003,
the Company issued the officer 758,000 shares of its common stock to pay off all of the officer's loans
and accrued interest valued at $189,504.  The number of shares issued was based on the market price of
the stock on the date of issuance, $.25.  The Company also repaid the officer 47,228 against the officer's
advances.  Following the stock issuance and payments, the Company owes the officer for $15,042 in
non-interest bearing advances as of April 30, 2003.  The $15,042 is included in the accompanying
consolidated financial statements as "indebtedness to related parties".



F-13

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements

During the year ended April 30, 2002, the Company issued 400,000 shares of its common stock to an
officer under the terms of an employment agreement.  The market price of the stock was $.01 per share
on the date of the issuance.  As a result, the Company recognized a stock-based compensation expense
for the market value of the stock, $4,000.





During the year ended April 30, 2002, the Company issued a total of 2,900,000 shares of its common
stock to one officer as payment for $29,000 of accrued wages.  The market price of the stock was $.01
per share on the date of the issuance.













Note 3:    Loan Receivable









During the year ended April 30, 2003, the Company advanced an unrelated third party $2,525 as part of
a loan agreement.  The loan carries a 15 percent interest rate and matured on July 1, 2002.  The loan was
unpaid as of April 30, 2003.  Accrued interest on the loan totaled $327 at April 30, 2003.















Note 4:    Shareholders' Deficit































Preferred Stock













The Company is authorized to issue 25 million shares of no par value preferred stock, which may be
issued in series with such designations, preferences, stated values, rights, qualifications or limitations as
determined by the Board of Directors.

























Common Stock















On May 29, 2002, the Company's Board of Directors approved a 1 for 25 reverse stock split.  Following
the reverse stock split the Company had 2,212,756 common shares issued and outstanding.













During the year ended April 30, 2003, the Company sold, through its officers and directors, 569,950
shares of its common stock for $142,487.















During the year ended April 30, 2003, the Company issued 1,750,000 shares of its common stock in
exchange for working interests in oil and gas properties valued at $350,000.  The value of the stock
issued was recorded at the quoted market price on the date of issuance.  The working interests were
acquired in the developments known as the Franklin Prospect ($225,000) and the San Antonio Anvil Bar
($125,000).















During the year ended April 30, 2003, the Company issued 399,038 shares of its common stock as
payment for liabilities valued at $94,167.  The value of the stock issued was recorded at the quoted
market price on the date of issuance.



F-14

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements













Stock-Based Compensation



















During the year ended April 30, 2003, the Company issued 2,038,500 shares of its common stock to
outside service providers, in exchange for legal, financial consulting, investor relations and other
consulting services. The value of the stock issued was recorded at the quoted market price on the date of
issuance and totaled $299,525.  The services are included in the accompanying financial statements as
"stock-based compensation", net of $82,500 prepaid for the fiscal year ended April 30, 2004.





During the year ended April 30, 2003, the Company issued 500,000 shares of its common stock as
payment for debt issue costs. The value of the stock issued was recorded at the quoted market price on
the date of issuance and totaled $85,000.  The costs are included in the accompanying financial
statements under "stock-based compensation".















Common Stock Options and Warrants







A summary of the status of the Company's stock option and stock warrant awards as of April 30, 2002,
and the changes during the period from May 1, 2000 through April 30, 2002 are presented below:



|                                   | Incentive Stock Option Plan | Options and Warrants Issued to Non-Employees | Weighted Average Exercise Price | Weighted Average Fair Value | Exercisable   | Weighted Average Exercise Price - Exercisable
|---------------------------------- | --------------------------- | -------------------------------------------- | ------------------------------- | --------------------------- | ------------- | ---------------------------------------------
|                                   | Incentive Stock Options     | Executive Employment Options                
|Outstanding, April 30,
    2001    | -                           | 400,000                                      | 700,000                         | $   
    1.29               | $   
    0.57 | 700,000                                      
|                                   |                             |                                              |                                 |                             |               |                                              
|Options and warrants
    issued    | -                           | -                                            | -                               | -                           | -             | -                                            
|Options and warrants
    exercised | -                           | (200,000)                                    | -                               | 0.02                        | -             | -                                            
|Options and warrants
    cancelled | -                           | (200,000)                                    | (700,000)                       | -                           | -             | (700,000)                                    
|Outstanding, April 30,
    2002    | -                           | -                                            | -                               | -                           | -             | -                                            
|                                   |                             |                                              |                                 |                             |               |                                              
|Options and warrants
    issued    | -                           | -                                            | 150,000                         | 0.25                        | 0.05          | 150,000                                      
|Options and warrants
    exercised | -                           | -                                            | -                               | -                           | -             | -                                            
|Options and warrants
    cancelled | -                           | -                                            | -                               | -                           | -             | -                                            
|Outstanding, April 30,
    2003    | -                           | -                                            | 150,000                         | $         -                 | $          -  | 150,000                                      
|                                   |                             |                                              |                                 |                             |               |                                              







During October 2002, the Company granted an unrelated third party warrants to purchase 150,000
shares of the Company's common stock.  The warrants carry an exercise price of $.25 per share and
expire two years from the grant date.  The Company determined the fair value of the warrants at $.05
per share in accordance with SFAS 123.  The transaction was valued at $7,200 and is included in the
accompanying consolidated financial statements as "stock-based compensation".  The fair value for
these warrants was estimated at the date of grant using the Black-Scholes option-pricing model with the
following assumptions:



F-15

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements



Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. . . . . . . . . . . . . . . . .     2.00%









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

Volatility factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. . . . . . . . . . . . . . . . . . .  100.00%

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.







During 1999, the Company granted an officer options to purchase 1,000,000 shares of the Company's
common stock exercisable at $.50 per share.  In January 2001, the board of directors voted to amend the
exercise price from $.50 to $.02 per share.  The options vested evenly through November 2001.  In
accordance with the re-valuing of the options, the Company recorded compensation expense at the time
the options were exercised.  All options were exercised or cancelled as of April 30, 2002.











Note 5:    Income Taxes









A reconciliation of the U.S. statutory federal income tax rate to the effective tax rate is as follows:









































|                                                   | Years Ended
    April 30,
|-------------------------------------------------- | -------------------------
|                                                   | 2003                     
|U.S.
    Federal statutory graduated rate          | 34.00%                   
|State
    income tax rate, net of federal benefit  | 5.83%                    
|Net
    operating loss for which no tax benefit is |                          
|currently available                                | -39.83%                  
|                                                   | 0.00%                    
|                                                   |                          















The valuation allowance offsets the net deferred tax asset for which there is no assurance of recovery.
The change in the valuation allowance for the years ended April 30, 2003 and 2002 totaled $180,982
and $554,925, respectively.  The current tax benefit also changed by $180,982 and $554,925 for the
years ended April 30, 2003 and 2002, respectively.  The net operating loss carryforward expires through
the year 2023.







The valuation allowance will be evaluated at the end of each year, considering positive and negative
evidence about whether the deferred tax asset will be realized.  At that time, the allowance will either be
increased or reduced; reduction could result in the complete elimination of the allowance if positive
evidence indicates that the value of the deferred tax assets is no longer impaired and the allowance is no
longer required.





Should the Company undergo an ownership change as defined in Section 382 of the Internal Revenue
Code, the Company's tax net operating loss carryforwards generated prior to the ownership change will
be subject to an annual limitation, which could reduce or defer the utilization of these losses.



F-16

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements

















Note 6:    Advances and Loans Payable





























Loans from Merger Candidate













The Company received loans from First Nevisian ("FN"), the parent of a potential merger candidate,
totaling $25,000 and $818,000 during the years ended April 30, 2002 and 2001, respectively.  The
Company also moved its operations into the FN offices during the year ended April 30, 2001.  The loans
were due on demand in the event that the proposed merger was not consummated.











Effective July 31, 2001, the proposed merger agreement was terminated.  Following the termination, the
Company moved its operations from the FN offices, but left all of its property and equipment.  As of
April 30, 2003, the Company owed FN the $843,000 in loans and $212,394 in related accrued interest.
In addition, FN held property and equipment owned by the Company with a book value of
approximately $309,743.  The two parties are negotiating a settlement agreement whereby FN would
reduce the balance of principal and interest owed on the loans in exchange for the Company's property
and equipment held by FN.  The net realizable value of the property and equipment held by FN is
included in the accompanying consolidated financial statements as "assets available for sale".













Other Loans













During the year ended April 30, 2003, the Company received $2,000 from an unrelated third party for
working capital.  The loan carries a 16 percent interest rate and is payable on demand.  As of April 30,
2003, the loan had not been repaid and the Company accrued $53 in related accrued interest payable.











During the years ended April 30, 2003 and 2002, the Company received $11,700 and $29,300,
respectively, from unrelated third parties for working capital.  During the year ended April 30, 2003, the
Company issued 150,438 shares of its common stock as payment for the loans and $1,758 of accrued
interest.





During the year ended April 30, 2001, the Company received $50,000 from an unrelated third party for
working capital.  During the year ended April 30, 2003, the Company issued 248,600 shares of its
common stock as payment for the loans and $12,149 of accrued interest.



F-17

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements











Note 7:    Notes Payable



























Following is a schedule of the Company's notes payable as of April 30, 2003:







|Note payable dated
    October 28, 2002, interest rate at 18 percent, maturity date of October 24,
    2004                                                                                                                              |                   
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------
|secured by first
    mortgage on oil and gas properties, convertible (1) to the Company's common                                                                                                                                         |                   
|stock at the option of
    the holder                                                                                                                                                                                                    | $     
    600,000
|                                                                                                                                                                                                                                         |                   
|Note payable dated
    April 1, 2003, interest rate at 15 percent, maturity date of March 31, 2005                                                                                                                                       |                   
|secured by first
    mortgage on oil and gas properties, convertible (1) to the Company's common                                                                                                                                         |                   
|stock at the option of
    the holder                                                                                                                                                                                                    | 375,000           
|                                                                                                                                                                                                                                         |                   
|Note payable dated
    April 30, 2003, interest rate at 15 percent, maturity date of March 31, 2005                                                                                                                                      |                   
|secured by first
    mortgage on oil and gas properties, convertible (1) to the Company's common                                                                                                                                         |                   
|stock at the option of
    the holder                                                                                                                                                                                                    | 25,000            
|Total notes payable,
    long-term                                                                                                                                                                                                       | $  1,000,000      
|                                                                                                                                                                                                                                         |                   
|Note payable dated May
    23, 2002, interest rate at 8 percent, default interest rate of 16 percent,
    maturity date of September 30, 2002, unsecured, convertible (2) to the
    Company's common stock at the option of the holder  | $       25,000    
|                                                                                                                                                                                                                                         |                   
|Note payable dated July
    13, 2002, interest rate at 8 percent, default interest rate of 16 percent,
    maturity date of September 30, 2002, unsecured, convertible (2) to the
    Company's common stock at the option of the holder | 50,000            
|Total notes payable,
    short-term                                                                                                                                                                                                      | $       75,000    
|                                                                                                                                                                                                                                         |                   































(1)    Note holder is entitled, at its option, to convert any or all of the principal amounts of the note
into shares of the Company's common stock at the greater of a price equal to 80 percent of
the average daily trading prices over the thirty days immediately preceding the date of
conversion, or $.50 per share.













(2)    Note holder is entitled, at its option, to convert any or all of the indebtedness related to the
note into shares of the Company's common stock at the greater of a price equal to 80 percent
of the average daily trading prices over the five days immediately preceding the date of
conversion, or $.25 per share.













Accrued interest payable and interest expense on the promissory notes totaled $10,290 and $58,179,
respectively, as of and for the year ended April 30, 2003.



F-18

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements







Maturities on the Company's notes payable are as follows:



|April 30, |                   
|--------- | ------------------
|2004      | $      
    75,000
|2005      | 1,000,000         
|          | $  1,075,000      
|          |                   













Note 8:    Concentrations and Contingencies

























Concentrations

















During the year ended April 30, 2003, the Company sold all of its crude oil to Pacific Marketing and
Transportation LLC.  While revenue from this customer is significant, it is management's belief that the
oil and gas the Company produces could be sold to other crude oil purchasers, refineries or pipeline
companies.  The Company sells its oil pursuant to short-term contracts at market prices.  Market
demand for the Company's production is subject to various influences that can never be assured.  The
base values for the Company's crude oil sales is set by major oil companies in response to area and
market strengths and international influences.























Contingencies



















The Company has been named as a defendant in a lawsuit filed by a director of Savingsplus
Internet, Inc. for failure to repay a $35,000 loan to the director's company ("Korker"). Sonoran has retained
counsel and filed a reply to the suit as of April 30, 2001. In July 2002, the Company was informed that
Korker had increased their claim by approximately $190,000. Subsequent submissions by Korker have
reduced the claim and Sonoran has held an examination for discovery of Korker's officers. In April and
May 2003 Korker attempted to schedule a Summary Trial of the matter but adjourned after receipt of
Sonoran's affidavits.  The Company is optimistic that the lawsuit will be successfully defended and is
considering a countersuit.























Note 9:    Unaudited Oil and Gas Reserve Information









At April 30, 2003 (the Company had no reserves at April 30, 2002), the estimated oil and gas reserves
presented herein were derived from reports prepared by independent engineering firms.  The Company
cautions that there are many inherent uncertainties in estimating proved reserve quantities and in
projecting future production rates and the timing of development expenditures. Accordingly, these
estimates are likely to change as future information becomes available, and these changes could be
material.





The properties included in the oil and gas reserve estimates presented below contributed all of the
Company's oil and gas production during the year ended April 30, 2003.





Proved oil and gas reserves are the estimated quantities of crude oil and natural gas, which geological
and engineering data demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions.





Proved developed reserves are reserves expected to be recovered through existing wells with existing
equipment and operating methods.



F-19

---





SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements









Analysis of Changes in Proved Reserves







Estimated quantities of proved reserves (all of which are located within the United States), as well as the
changes in proved reserves during the year ended April 30, 2003, are presented in the following tables
(there was no oil and gas activity during the year ended April 30, 2002):











|                                            | Crude Oil (Bls) |  | Natural Gas (Mcf)
|------------------------------------------- | --------------- |  | -----------------
|Proved reserves at April 30, 2002           | -               |  | -                
|Purchase of reserves                        | 667,471         |  | 198,478          
|Production                                  | (2,797)         |  | (1,567)          
|                                            | 664,674         |  | 196,911          
|Proved reserves at April 30, 2003           |                 |  |                  
|                                            |                 |  |                  
|                                            | Crude Oil (Bls) |  | Nautral Gas (Mcf)
|                                            |                 |  |                  
|Proved developed reserves at April 30, 2003 | 220,592         |  | 70,279           
|                                            |                 |  |                  





















Costs incurred in oil and gas property acquisition, exploration and development activities are
summarized as follows:



























|                  | Year Ended
    April 30, 2003
|----------------- | -----------------------------
|                  |                              
|Acquisitions:     |                              
|Proved            | $     
    747,209           
|Unproved          | 446,787                      
|Development costs | 68,121                       
|Exploration costs | -                            
|                  |                              
|Total             | $  1,262,117                 
|                  |                              





















F-20

---

SONORAN ENERGY, INC.

Notes to Consolidated Financial
Statements



The table below sets forth a standardized measure of the estimated discounted future net cash flows
attributable to the Company's proved oil and gas reserves. Estimated future cash inflows were computed
by applying year-end prices of oil and gas (with consideration of price changes only to the extent
provided by contractual arrangements) to the estimated future production of proved oil and gas reserves
at April 31, 2003 discounted at 10 percent. The future production and development costs represent the
estimated future expenditures to be incurred in developing and producing the proved reserves, assuming
continuation of existing economic conditions.













|                                                                      | Year Ended
    April 30, 2003
|--------------------------------------------------------------------- | -----------------------------
|                                                                      |                              
|Future cash inflows                                                   | $  15,160,030                
|Future cash outflows:                                                 |                              
|Production costs                                                      | (4,829,626)                  
|Development costs                                                     | (1,302,559)                  
|Future net cash flows before income taxes                             | 9,027,845                    
|                                                                      |                              
|Future income taxes                                                   | -                            
|Future net cash flows                                                 | 9,027,845                    
|Adjustment to discount future annual net cash
    flows at 10 percent | (2,463,401)                  
|                                                                      |                              
|Standardized measure of discounted future net
    cash flows          | $    6,564,444               
|                                                                      |                              

The following table summarizes the principal factors comprising the changes in the standardized
measure of estimated discounted net cash flows for the year ended April 30, 2003.

















|                                              | Year Ended
    April 30, 2003
|--------------------------------------------- | -----------------------------
|                                              |                              
|Standardized measure, beginning of period     | $                     
    - 
|Sales of oil and gas, net of production costs | (29,248)                     
|Purchase of reserves                          | 6,593,692                    
|                                              |                              
|Standardized measure, end of period           | $       6,564,444            
|                                              |                              

F-21

---



























































ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE

























































None

---















































































PART III

























































































ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT





























































The Company hereby incorporates by reference the information to be contained under the section entitled
"Directors and Executive Officers" or a similarly entitled section from its definitive Proxy Statement to be filed
with the Securities and Exchange Commission in connection with its 2003 Annual Meeting of Shareholders.















































































ITEM 10 - EXECUTIVE COMPENSATION

























































The Company hereby incorporates by reference the information to be contained under the section entitled
"Compensation of Directors and Executive Officers" or a similarly entitled section from its definitive Proxy
Statement to be filed with the Securities and Exchange Commission in connection with its 2003 Annual
Meeting of Shareholders.















































































ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

























































The Company hereby incorporates by reference the information to be contained under the section entitled
"Voting Securities and Principal Holders Thereof" or a similarly entitled section from its definitive Proxy
Statement to be filed with the Securities and Exchange Commission in connection with its 2003 Annual
Meeting of Shareholders.





















































ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



















































During the year ended April 30, 2003, the Company issued 200,000 shares of its common stock to an officer as
payment for $30,000 of salaries.  The market price of the common stock was $.15 on the date of issuance.



















During the year ended April 30, 2003, the Company issued the officer 758,000 shares of its common stock to
pay off all of the officer's loans and accrued interest valued at $189,504.  The number of shares issued was
based on the market price of the stock on the date of issuance, $.25.  The Company also repaid the officer
$47,228 against the officer's advances.  Following the stock issuance and payments, the Company owes the
officer for $15,042 in non-interest bearing advances as of April 30, 2003.  The $15,042 is included in the
accompanying consolidated financial statements as "indebtedness to related parties".

---



















































PART IV



























































ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

























































































(a)  1.  FINANCIAL STATEMENTS



























































These documents are listed and included in Part II, Item 7 of this

























report:



















































Report of Independent Public Accountants

























Balance Sheets at April 30, 2003

























Statements of Operations for the periods ended April 30, 2003 and 2002.

























Statements of Shareholders' Equity for the periods ended April 30, 2003 and 2002.

























Statements of Cash Flows for the periods ended April 30, 2003 and 2002.

























Notes to Financial Statements.















































































(a)  3.  EXHIBITS

























































99.1
- Certifications by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Sections 906
and 302 of the

























Sarbanes-Oxley Act of 2002.



















































99.2
- Certifications by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906and
302 of the

























Sarbanes-Oxley Act of 2002.















































































(b) REPORTS ON FORM 8-K

























































The Company filed the following two Form 8-K during the 4th quarter:

























April 3rd, 2003 - Item 2.   Acquisition or Disposition of Assets.











































On April 1, 2003, Sonoran Energy, Inc. (the "Company") acquired a working interest in three natural
gas producing properties in California's Sacramento Basin from Archer Exploration, Inc. The Company
has acquired varying percentages in the three properties that are producing 3,700 Mcf per day.

























The first property is located in the Malton-Black Butte Gas Field, Tehama County and the Company's
interest consists of a 10% working interest in six wells and a water injection well producing a combines
1,000 Mcf per day.  The estimated economic life of production of this field is 20 years from the present.

























The second property, located in the Denverton Creek Gas Field, Solano County, consists of a 1.25%
working interest in seven wells operated by Aspen Exploration. As of January 1, 2003, the wells were
producing 1,000 Mcf per day.

























The third property, located in the Maine Prairie Gas Field, Solano County, consists of a 1.41% working
interest in four wells producing 1,700 Mcf per day as of January 1, 2003.

























To finance the purchase, the Company secured a $150,000 loan from Ironwood LLC covering all of the
costs of acquisition. The loan is for a two-year term and gives the lender the right to convert any
outstanding balance after two-years into common stock of the Company at a floor price of 50 cents per
share. The $150,000 loan is secured by a deed of trust on the Properties.





















































April 22nd, 2003 - Item 2.   Acquisition or Disposition of Assets.











































On April 16, 2003, Sonoran Energy, Inc. (the "Company") completed its 50% acquisition of the
National Development Company - Merzonian Lease with operating partner, Longbow, LLC, acquiring
the remaining 50% interest. The acquisition of the lease (Section 22, T22S R27E MDB&M), located in
the Deer Creek Oil Field, 42 miles north of Bakersfield, California, is a straight production
acquisition. The lease consists of six producing wells and one injection well producing approximately
25 barrels of oil per day.  The new lease is an offset property to the 93-acre Deer Creek Field Keystone
leases acquired by the Company in December of 2002.

























The Deer Creek Field is located in an area predominately explored and operated by small independent
oil and gas companies, and lies in the western dipping homocline along the western flank of the Sierra
Nevada.  Production on the Merzonian Lease is long lived and on a relatively flat line curve.

























Crude oil sales from the Merzonian Lease over the past six months have averaged 763 barrels of oil per
month, for a daily average of 25.2 barrels of oil per day. Based on a price of $20 per barrel, the
undiscounted Net Present Value of the property is estimated at $613,000. Payout for the acquisition is
approximately three years.

























To finance the purchase, the Company secured a $148,334 loan from Ironwood LLC covering all of the
costs of acquisition. The loan is for a two-year term and gives the lender the right to convert any
outstanding balance after two-years into common stock of the Company at a floor price of 50 cents per
share. The $148,334 loan is secured by a deed of trust on the Properties.



























































ITEM 14.  CONTROLS AND PROCEDURES

























































We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in
our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and forms. Our chief executive
officer and chief financial officer have evaluated our disclosure controls and procedures within 90 days prior to
the filing of this annual report of Form 10-KSB and have determined that such disclosure controls and
procedures are effective.



















































There have been no significant changes in our internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their evaluation including any corrective actions with regard to
significant deficiencies and material weaknesses.



















































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













































































August 13, 2003



By:    John Punzo































John Punzo























Director/President/CEO



By: Russ Costin

Russ Costin

Chief Financial Officer

---



























Exhibit 99.1



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 Annual Report of
Sonoran Energy, Inc.
on Form 10-KSB for the year ending April 30, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
John Punzo, Chief Executive Officer, President and Director 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/ John Punzo

John Punzo

Chief Executive
Officer/President/Director

August 13, 2003



CERTIFICATION PURSUANT TO 18 U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATIONS



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

|a.     | All significant
    deficiencies in the design or operation of internal controls which could
    adversely affect the Company's ability to record, process, summarize and
    report financial data and have identified for the Company's auditors any
    material weaknesses in internal controls, and                                                  
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      
|b.     | Any fraud, whether or
    not material, that involves management or other employees who have a
    significant role in the Company's internal controls; and                                                                                                                                                                                               
|      
|**6.** | I have indicated in this
    annual report whether or not there were
    significant changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of my most
    recent evaluation, including any corrective actions with regard to
    significant deficiencies and material weaknesses.
|       |                                                                                                                                                                                                                                                                                                                                                           

|Date: August 13,
    2003 | /s/ John Punzo                     
|------------------------- | -----------------------------------
|                          | John Punzo, CEO/ President/Director
|                          |                                    



























---

Exhibit 99.2

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 Annual Report of
Sonoran Energy, Inc.
on Form 10-KSB for the year ending April 30, 2003, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
Russ Costin, Chief Financial Officer 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/ Russ Costin

Russ Costin

Chief Financial
Officer

August 13, 2003



CERTIFICATION PURSUANT TO 18 U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATIONS



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

|a.     | All significant
    deficiencies in the design or operation of internal controls which could
    adversely affect the Company's ability to record, process, summarize and
    report financial data and have identified for the Company's auditors any
    material weaknesses in internal controls, and                                                  
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      
|b.     | Any fraud, whether or
    not material, that involves management or other employees who have a
    significant role in the Company's internal controls; and                                                                                                                                                                                               
|      
|**6.** | I have indicated in this
    annual report whether or not there were
    significant changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of my most
    recent evaluation, including any corrective actions with regard to
    significant deficiencies and material weaknesses.
|       |                                                                                                                                                                                                                                                                                                                                                           

|Date: August 13,
    2003 | /s/ Russ Costin 
|------------------------- | ----------------
|                          | Russ Costin, CFO
|                          |