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, 2005



or



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



SONORAN ENERGY, INC.

(Name of Small Business Issuer in its Charter)





WASHINGTON                                                                                                                                  13-4093341

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





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

(Address of Principal Executive Offices) (Zip Code)





1 Berkeley Street, London, England, W1J 8DJ

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



480-963-8800

(Issuer's Telephone Number)



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



COMMON STOCK, NO PAR VALUE PER SHARE

(Title of Class)



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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: $563,772.



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, 2005 was $23,529,292



APPLICABLE ONLY TO CORPORATE REGISTRANTS



The number of shares outstanding of the issuer's Common Stock, no par value, as of June 30, 2005, was 31,372,389.



Transitional Small Business Disclosure Format (check one):

YES / / NO /X/



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SONORAN ENERGY, INC.

2005 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 Shareholder 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

Item 8A.  Controls and Procedures

Item 8B. Other Information



Part III



Item 9.  Executive Officers, Promoters and Control Persons; Compliance with Section 16(b) of the Exchange Act

Item 10.  Executive Compensation

Item 11.  Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

Item 12.  Certain Relationships and Related Transactions

Item 13.  Exhibits and Reports on Form 8-K

Item 14.  Principal Accountant Fees and Services



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Cautionary Statement



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. 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 an International independent oil and gas exploration and production company, developing and producing crude oil and natural gas. Sonoran's portfolio during the reporting period was comprised of assets located in Louisiana and East Texas. Our operational focus is on property enhancement through developmental and redevelopment drilling, operating cost reduction, low-to-moderate risk exploration, asset redeployment and acquisitions of properties in the right circumstances. Our policy is to apply energy, commitment and the right technology to the assets we operate, and through our partner relationships, we have access to state-of-the-art technology.



General



During the period from May 2001 to April 2002, Sonoran Energy, Inc. 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, the Company 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. During the fiscal year ending 2004 The Company sold certain small properties within the US and acquired 100% working interests in 6 producing fields located in Rapides, Livingstone, Vernon and Beauregard Parishes in Louisiana.



During the fiscal year ending
2005 and specifically from April 1, 2005
the Company underwent major changes in introducing qualified members to the Company's
Board of Directors as well as highly qualified oil and gas
Management Team. Sonoran was transformed from a small US-focused oil and gas entity into an independent oil and gas company with both International and Domestic interests through its aggressive international
expansion program , which includes pursuing opportunities in the Middle East, North Africa and the Caspian regions . Sonoran successfully closed on November 5, 2005, on 12 wells acquired from Rippy Oil
 Company in East Texas for US$ 1,600,000 and
300,000 in Sonoran
common restricted shares.



Sonoran inten ds to
acquire
 interest rights
 in land and producing properties through undergoing
acquisition or joint ventures process
with other oil and gas companies. Sonoran 's
 expected production of
c rude oil and natural gas
from these properties will be sold to various purchasers and pipeline companies. Sonoran's
interests in these properties will vary depending on the working interest and
net revenue interest availability through the acquisition or joint venture.



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DESCRIPTION OF BUSINESS - OIL AND GAS OPERATIONS



EXPLORATION AND DEVELOPMENT



Sonoran operates in
the
highly competitive industry wherein
large multinational companies
and
small independent producers, are aggressively
competing for a finite amount of oil and gas resources. The Company seeks out properties
for
explor ation of
 oil and gas through seismic studies and wells
drilling but
also making tangible efforts for seeking and acquiring producing oil and gas properties. 
Management intends to
continue its
review of
its existing properties for possible additional reserves as well as
 new well s
 possibilities and upgrades to production facilities.



OIL AND GAS PRODUCTION OPERATIONS



The Company has various working interests in twelve (12) production wells, three (3) associated salt water disposal wells and one water injection well located in two counties in Texas. Performance has been lees than anticipated due to unforeseen mechanical problems but most of the issues had been corrected by year end.



Sonoran also has various working interests in 10 producing wells covering 6 producing fields within various counties in the State of Louisiana. Limited production from these wells has been obtained during this fiscal year. These wells can however all be brought into profitable production with a relatively small investment and we are actively seeking finance partners to start this exciting project.



During fiscal 2004, the Company owned working interests in 6 leases within California which were sold in January 2004.



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, and 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 accomplished 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.



Sonoran currently contracts for operational support (contract operator) with recognized operating companies within the area of operation. The contract operator will enter into additional contracts 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. In the event operations are controlled by a Joint Venture agreement, the operator nominated within the Joint Venture agreement will contract necessary field personnel.



To increase oil and gas production, Sonoran participates in new wells or re-drills existing wells on properties in which Sonoran has acquired interests through acquisition or joint ventures as described above. Sonoran 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 commerciality of the wells and consequently determine the number of active wells the Company participates in.



MARKETING OF CRUDE OIL AND NATURAL GAS



Crude oil from the Louisiana properties is sold to Texon LP under the terms of a contract between BPR Energy and Texon LP effective from February 1, 2004 through to August 31, 2004, and month to month thereafter. 
 For the year ending April 30, 2005 the average value realized for oil was $ 45.11
per barrel.



Crude oil from the East Texas properties is sold to Eastex Crude Company and Plains Marketing, LP based on agreements
effective at the time of the purchase of the working interests in November 2004.

For the year ending April 30, 2005 the average value realized for oil was $ 47.64
per barrel.



Natural gas sold from the Louisiana properties is sold under the terms of the Gas Sales contract between BPR Energy Inc. and Duke Energy Field Services, LP. entered into in January 1, 2001 and covering a period of five (5) years. The value obtained for any gas sold is referenced as 90% of a defined "Index Price" less any applicable treating and compression fees. For the year ending April 30, 2005 the average value realized for the gas was $ 6.47
per million cubic feet.



We will continue to sell our current production under the terms of the above reference contracts. However, we will also continue to monitor and review these contracts to ensure that the best value for our production is being achieved.



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. 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



In the United States, legislation affecting the oil and gas industry has been pervasive and is under constant review for amendment or expansion. Pursuant to such legislation, numerous federal, state and local departments and agencies have issued extensive rules and regulations binding on the oil and gas industry and its individual members, some of which carry substantial penalties for failure to comply. These laws and regulations have a significant impact on oil and gas drilling, gas processing plants and production activities, increase the cost of doing business and, consequently, affect profitability. Inasmuch as new legislation affecting the oil and gas industry is commonplace and existing laws and regulations are frequently amended or reinterpreted, Sonoran is unable to predict the future cost or impact of complying with these laws and regulations. Sonoran considers the cost of environmental protection a necessary and manageable part of its business. Sonoran has been able to plan for and comply with new environmental initiatives without materially altering its operating strategies.



Exploration and Production. Sonoran's operations are subject to various types of regulation at the federal, state and local levels. These regulations include requiring permits for the drilling wells; maintaining prevention plans; submitting notification and receiving permits relation to the presence, sue and release of certain materials incidental to oil and gas operations; and regulating the location of wells, the method of drilling and casing wells, the use, transportation, storage and disposal of fluids and materials used in connection with drilling and production activities, surface plugging and abandoning of wells and the transporting of production. Sonoran's operations are also subject to various conservation matters, including the number of wells which may be drilled in a unit, and the unitization or pooling of oil and gas properties. In this regard, some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases, which may make it more difficult to develop oil and gas properties. In addition state conservation laws establish maximum rates of production oil and gas wells, generally limit the venting or flaring of gas, and impose certain requirements regarding the ratable purchase of production. The effect of these regulations is to limit the amounts of oil and gas Sonoran can produce from its wells and to limit the number of wells or the locations at which Sonoran can drill.



Environmental.Our exploration, development, and production of oil and gas, including our operation of saltwater injection and disposal wells, are subject to various federal, state and local environmental laws and regulations. Such laws and regulations can increase the costs of planning, designing, installing and operating oil and gas wells. Our domestic activities are subject to a variety of environmental laws and regulations, including but not limited to, the Oil Pollution Act of 1990 ("OPA"), the Clean Water Act ("CWA"), the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the Resource Conservation and Recovery Act ("RCRA"), the Clean Air Act ("CAA"), and the Safe Drinking Water Act ("SDWA"), as well as state regulations promulgated under comparable state statutes. We are also subject to regulations governing the handling, transportation, storage, and disposal of naturally occurring radioactive materials that are found in our oil and gas operations. Civil and criminal fines and penalties may be imposed for non-compliance with these environmental laws and regulations. Additionally, these laws and regulations require the acquisition of permits or other governmental authorizations before undertaking certain activities, limit or prohibit other activities because of protected areas or species, and impose substantial liabilities for cleanup of pollution.



Under the OPA, a release of oil into water or other areas designated by the statute could result in the company being held responsible for the costs of remediating such a release, certain OPA specified damages, and natural resource damages. The extent of that liability could be extensive, as set forth in the statute, depending on the nature of the release. A release of oil in harmful quantities or other materials into water or other specified areas could also result in the company being held responsible under the CWA for the costs of remediation, and civil and criminal fines and penalties.



CERCLA and comparable state statutes, also known as "Superfund" laws, can impose joint and several and retroactive liability, without regard to fault or the legality of the original conduct, on certain classes of persons for the release of a "hazardous substance" into the environment. In practice, cleanup costs are usually allocated among various responsible parties. Potentially liable parties include site owners or operators, past owners or operators under certain conditions, and entities that arrange for the disposal or treatment of, or transport hazardous substances found at the site. Although CERCLA, as amended, currently exempts petroleum, including but not limited to, crude oil, gas and natural gas liquids from the definition of hazardous substance, our operations may involve the use or handling of other materials that may be classified as hazardous substances under CERCLA. Furthermore, there can be no assurance that the exemption will be preserved in future amendments of the act, if any.



RCRA and comparable state and local requirements impose standards for the management, including treatment, storage, and disposal of both hazardous and non-hazardous solid wastes. We generate hazardous and non-hazardous solid waste in connection with its routine operations. From time to time, proposals have been made that would reclassify certain oil and gas wastes, including wastes generated during drilling, production and pipeline operations, as "hazardous wastes" under RCRA which would make such solid wastes subject to much more stringent handling, transportation, storage, disposal, and clean-up requirements. This development could have a significant impact on our operating costs. While state laws vary on this issue, state initiatives to further regulate oil and gas wastes could have a similar impact.

Because oil and gas exploration and production, and possibly other activities, have been conducted at some of our properties by previous owners and operators, materials from these operations remain on some of the properties and in some instances require remediation. In addition, in certain instances we have agreed to indemnify sellers of producing properties from which we have acquired reserves against certain liabilities for environmental claims associated with such properties. While we do not believe that costs to be incurred by us for compliance and remediating previously or currently owned or operated properties will be material, there can be no guarantee that such costs will not result in material expenditures.



Additionally, in the course of our routine oil and gas operations, surface spills and leaks, including casing leaks, of oil or other materials occur, and we incur costs for waste handling and environmental compliance. Moreover, we are able to control directly the operations of only those wells for which we act as the operator. Management believes that the company is in substantial compliance with applicable environmental laws and regulations.



We do not anticipate being required in the near future to expend amounts that are material in relation to our total capital expenditures program by reason of environmental laws and regulations, but inasmuch as such laws and regulations are frequently changed, we are unable to predict the ultimate cost of compliance. There can be no assurance that more stringent laws and regulations protecting the environment will not be adopted or that we will not otherwise incur material expenses in connection with environmental laws and regulations in the future.



Occupational Health and Safety.Sonoran is also subject to laws and regulations concerning occupational safety and health. Due to the continued changes in these laws and regulations, and the judicial construction of many of them, Sonoran is unable to predict with any reasonable degree of certainty its future costs of complying with these laws and regulations. Sonoran considers the cost of safety and health compliance a necessary and manageable part of its business. Sonoran has been able to plan for and comply with new initiatives without materially altering its operating strategies.



Sonoran is subject to certain laws and regulations relating to environmental remediation activities associated with past operations, such as the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and similar state statutes. In response to liabilities associated with these activities, accruals have been established when reasonable estimates are possible. Such accruals primarily include estimated costs associated with remediation. Sonoran has used discounting to present value in determining its accrued liabilities for environmental remediation or well closure, but no material claims for possible recovery from third party insurers or other parties related to environmental costs have been recognized in Sonoran's financial statements. Sonoran adjusts the accruals when new remediation responsibilities are discovered and probable costs become estimable, or when current remediation estimates must be adjusted to reflect new information.



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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



Sonoran is liable for future restoration 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 restoration and well abandonment have not been determined in detail. State regulations require operators to post bonds that assure that well sites will be properly plugged and abandoned. Each state in which Sonoran operates requires a security bond varying in value from state to state and depending on the number of wells that Sonoran operates. Management views this as a necessary requirement for operations within each state and does not believe that these costs will have a material adverse effect on its financial position as a result of this requirement.



OTHER



The Company employed 8 contract people as of 30 April, 2005. Sonoran currently contracts for operational support (contract operator) with recognized operating companies within the area of operation. The contract operator will enter into additional contracts 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. In the event operations are controlled by a Joint Venture agreement, the operator nominated within the Joint Venture agreement will contract necessary field personnel.



All of the Company's revenues during 2005 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.



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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.



BVR Prospect



During January, 2004, Sonoran acquired interests in ten (10) production wells completed in the Austin chalk located in Beauregard, Vernon, Rapides and Livingston Parishes in Louisiana from BPR Energy Inc. In addition to these ten (10) wells, Sonoran also acquired interests in four (4) associated salt water disposal wells. Of the ten (10) production wells, only three (3) were producing at the time of the acquisition, with production only being undertaken to maintain and hold the lease position.



Eight (8) of the production wells have a 100% working interest ("WI") and 73% Net Revenue Interest ("NRI") with a reversionary interest of 87% WI and 63.5% NRI after recovery of any capital investment necessary to enhance the production form the wells. The remaining two (2) wells have a working interest of 100% WI and an NRI 65% with a reversion of 77.5% WI and 50.4% NRI under the same conditions.



The producing wells on the Louisiana properties were operating on a break-even basis and kept in production for maintaining the lease position at April 30, 2005.  It has been estimated in the engineering reserve reports that the Company would have to expend approximately $5 million in development costs to economically extract proven reserves on the properties.  Due to the fact that the Company, as at April 30, 2005, had not closed on a funding to show committed financing for the required development costs, the Company is unable to classify the reserves as proven reserves which are shown as zero in the reserves table below.



25 Hill Prospect



During January 2004, the Company had contracted for the right to participate in the 25 Hill Prospect, up to a 50 % W.I., depending on Sonoran's capital contribution to the development of the property and the drilling of oil and gas wells on the property. This contract had a cancellation provision if development was not undertaken and Sonoran exercised that rescinding right on August 5, 2004 as the management felt there were better opportunities available.



East Texas Property



On November 5, 2004, the Company completed the acquisition of interests in twelve (12) production wells located in the Lisa Layne Field, JRC Field and the Ann McKnight Unit situated in Wood and Smith Counties, Texas. In addition to these twelve (12) wells, Sonoran also acquired interests in three (3) associated salt water disposal wells and one water injection well. The Company acquired a net revenue interest of 32.5% with a working interest of 39.9% in the Ann McKnight Unit as well as net revenue interests of 72.1 % to 75% and working interests of 93.0% two 100% in the other two fields.



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b) RESERVES, ACREAGE AND SALES PRICE



The Company began acquiring properties during May of 2002, whereas prior to that, the Company was not involved in the Oil and Gas Industry. As such, all years prior to 2003 are shown as zero. The producing wells on the Texas properties have proven reserves as detailed below.



|                            | Crude Oil (BBLS) | Natural Gas (MCF)
|--------------------------- | ---------------- | -----------------
|Proved Producing (PDP)      | 194,410          | 0                
|Proved Non-Producing (PDNP) | 93,570           | 0                
|Proved Undeveloped (PUD)    | 32,580           | 0                
|Total Proven                | 320,560          | 0                
|                            |                  |                  





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



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



|                 | 2005   | 2004   | 2003   | 2002
|---------------- | ------ | ------ | ------ | ----
|                 | Gross  | Net    | Gross  | Net 
|Productive Wells |        |        |        |     
|Oil              | 17     | 16     | 10     | 10  
|Gas              | 0      | 0      | 0      | 0   
|                 |        |        |        |     
|Acreage          |        |        |        |     
|Oil - Developed  | 12,714 | 12,082 | 15,000 | 0   
|- Undeveloped    | 0      | 0      | 0      | 0   
|                 | 12,714 | 12,082 | 15,000 | 0   
|                 |        |        |        |     
|Gas - Developed  | 0      | 0      | 0      | 0   
|- Undeveloped    | 0      | 0      | 0      | 0   
|                 | 0      | 0      | 0      | 0   
|                 |        |        |        |     



Sonoran did not participate in the drilling of any new wells on any property that they had a working interest in during fiscal 2005.



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:





|                 | 2005    | 2004     | 2003     | 2002   
|---------------- | ------- | -------- | -------- | -------
|Sales price:     |         |          |          |        
|Crude oil        | $47.65  | $ 24.93  | $ 24.87  | $ n/a  
|                 |         |          |          |        
|Natural gas      | $0      | $   5.16 | $   4.99 | $   n/a
|                 |         |          |          |        
|Production costs | $ 46.48 | $  26.75 | $  10.80 | $  n/a 
|                 |         |          |          |        



The statistics for 2005 are for the East Texas property only as the Louisiana properties are being operated at levels to maintain ownership of working interest. The high production costs reflect work undertaken at acquisition to correct mechanical problems which was limiting production.



The average selling price of Sonoran's crude oil from East Texas at April 30, 2005, was approximately $50.87 per barrel and there are no gas sales.



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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). The Company had contemplated an investment in Savingsplus Internet, Inc. that was never consummated. The Savingsplus Director who filed suit was owed money by Savingsplus and, Management believes, may have felt that Sonoran's possible investment would have been the basis for his repayment. The original claim was filed in the British Columbia Supreme Court as Registry No. S004571 on August 23, 2000. 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 for 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. At this time, it appears, from the pleadings filed in this case, that the total amount claimed by the Plaintiff is $60,400 (Canadian) with interest dating from June 30, 2000. If all interest and principal are returned and no other parties contribute to the payment, then the total sum, after conversion into U.S. dollars, would apparently be $ 56,000
 as of April 30, 2005.  The Company supplied additional information to Korker's counsel in May 2003 and we've had no further contact since then.



Longbow, LLC v. Sonoran Energy, Inc. - Superior Court of California, County of Kern, Metropolitan Division Case No. S-1500-CV-25398-SPC



On or about March 8, 2004, a complaint was filed by Longbow, LLC against the Company alleging that Sonoran breached the agreement to purchase Longbow's interest in the Emjayco Glide #33 Property, the Keystone-Deer Creek Property and the Deer Creek-Merzonian Property.  The action essentially alleges that, according the agreements entered into between Longbow and Sonoran, Longbow had the right
of first refusal on the properties in the event that Sonoran offered those properties for sale.  In addition, Longbow claims that they are entitled to a percentage of the profits if the property is sold to a third party.  Subsequent to the execution of those agreements, Sonoran entered into an agreement to sell those properties to a third party, Harvest Worldwide, LLC.  Sonoran has filed a cross-complaint against
Harvest and Longbow seeking
the rescission of the
Harvest purchase agreements.  The Company is currently in the process of vigorously defending its position in this case and prosecuting its cross complaint.  This case has been consolidated with
Harvest Worldwide, LLC v. Longbow, LLC (Case no. S-1500-CV-253284-SPC). 
The trial
in this matter is estimated to begin in December, 2005.



John Howe and Brad Califf v. Sonoran Energy, Inc. - Superior Court of California, County of Kern, Metropolitan Division Case No. S-1500-CV-253638-RJA



On August 25, 2004, a complaint was filed by John Howe and Brad Califf against the Company alleging breach of contract for allegedly failing to fully and properly compensate the two individual plaintiffs pursuant to the terms of employment contract executed on or around November 15, 2003.
A
settlement has been
entered into
in this case
calling for the payment of 150,000 restricted common shares to each of the plaintiffs. The settlement
has been approv ed by Sonoran's Board of Directors.



Ironwood International, LLC v. Sonoran Energy, Inc. and Harvest Worldwide, LLC - Superior Court of California, County of Kern, Metropolitan Division Case No. S-1500-CV-254325-AEW



On or about November 23, 2004, Ironwood International, LLC filed a lawsuit against the Company and Harvest Worldwide, LLC for breach of contract with regard to several promissory notes, executed in favor of the Company and secured by several properties, including those which are the subject of the Longbow Action (described above).  This action alleges that Sonoran borrowed from Ironwood, an aggregate of $1.1 million and executed promissory notes secured by property.  Upon the sale of certain properties by Sonoran to Harvest Worldwide, Harvest agreed to assume the notes and was to make payments to Ironwood.  Harvest has allegedly failed to make any payments to Ironwood.  Ironwood is now bringing suit against the Company to recover the funds owed.  Subsequently, Sonoran filed a cross-complaint against Mark Roy Anderson, Harvest Worldwide, LLC, Longbow, LLC, and Aspen Exploration Corporation seeking rescission of the sales to Harvest for failure to pay any consideration and damages. This case has been consolidated with the Longbow case cited above.



Sonoran Energy, Inc v. Mark Roy Anderson et al



Mark Anderson has been sued, individually and in the form of his corporate alter egos, by Sonoran (Los Angeles County Superior Court Case No. BC327099), seeking rescission of all shares issued to these entities, with additional compensation due for various timing failures and legal exposures resulting from Anderson's various shortcomings. Anderson has cross-complained against Sonoran, alleging certain commissions earned for projects Sonoran has undertaken that occurred during the pendency of his (Camden Holdings) consulting agreement
.. This case is now moving into the early stages of discovery
 and ,
 as of now, the Company does not believe it has any monetary exposure.



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



The Company held its annual meeting on April 14, 2005 and presented the following proposals to the shareholders:



1.    To elect Six (6) Directors to the Company's Board of Directors, each to serve a staggered term as outlined in the bylaws and until their respective successors have been elected and qualified, or until their earlier resignation or removal. The Board of Directors intends to nominate the following individuals for election to the Board: Peter Ostenfeld-Rosenthal, Christopher Pitman, Mehdi Varzi, Charles Waterman, Rasheed Rafidi, and Ala Nuseibeh.



2.    To amend the Company's Articles of Incorporation in order to increase the number of common shares authorized for issuance from 75,000,000 to 250,000,000.



3.    To ratify the term of office of Flavio Bidese, former director, who has since retired, Russ Costin, current director, who is not seeking re-election.



All three motions passed.



Page 9

---



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 bid prices for each quarter of 2004 and 2003, and reflect inter-dealer prices without retail markup, markdown or commission.





|QUARTER ENDING   | HIGH BID | LOW BID
|---------------- | -------- | -------
|July 31, 2003    | $0.44    | $0.25  
|October 31, 2003 | $0.51    | $0.27  
|January 31, 2004 | $4.25    | $0.23  
|April 20, 2004   | $3.75    | $1.45  
|July 31,  2004   | $1.86    | $0.50  
|October 31, 2004 | $1.35    | $0.53  
|January 31, 2005 | $0.71    | $0.38  
|April 30, 2005   | $0.72    | $0.25  
|July 31, 2005    | $0.70    | $0.69  



At April 30, 2005, the Company had 602 shareholders of record, and an unknown number of additional holders whose stock is held in "street name".



The Company has paid one dividend on its common shares in 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. The warrants expired on July 25, 2005 and the exercise period was not extended.



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 CONDITION AND RESULTS OF OPERATIONS



GENERAL



The Company continued to look for and enter into agreements to grow Sonoran into a major independent oil and gas company operating in the global marketplace.



The Louisiana operations acquired in 2004 continued to produce at levels sufficient to hold leases as no developmental work was undertaken due to funding issues. Consequently there has been very limited production and Sonoran has had to relinquish their rights in two of the wells.



The company acquired the East Texas assets during November 2004 and production performance of the assets was below projections due to unforeseen mechanical problems experienced on a number of wells. The limited availability of equipment necessary to repair the wells and the problems associated with the water injection wells were major factors for the delay in bringing the wells back into increased production. As at year end work was being undertaken to remedy the water handling problems.



Sonoran 's Middle East office has been active in pursuing various oil field opportunities. Sonoran has signed an MOU with the Jordanian Natural Resources Author i ty for a Production Sharing Agreement for the AZRAQ Block. This block is the only producing block and Sonoran 's technical team believes that
additional oil production potential is possible. The final Production Sharing Agreement is subject to ratification by the Jordanian Parliament.



Management is confident that 2006 will see an increase in domestic production as well as the beginnings of developments in foreign properties





Page 10

---



LIQUIDITY AND CAPITAL RESOURCES



The Company had cash and cash equivalents of $62,313 as at April 30, 2005 for an increase of $29,004 when compared to April 30, 2004. Net capital spending of $ 1,736,188 used cash in 2005. This was partially offset by proceeds from a convertible note of $1,680,000. The components of the changes in cash for 2005 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 Auditor has issued a going concern comment but the Company believes that it will be able to source sufficient funds to develop its existing current assets and planned acquisitions so that these operations will be sufficient to fund the anticipated liquidity and capital resource needs of the Company for the fiscal year ended April 30, 2006.  At the present time, Management feels that there are opportunities to enhance existing wells and discussions have been held regarding efforts to tap into possible reserves on the oil properties.



The Company is not a party to off-balance sheet arrangements and does not engage in trading activities involving non-exchange traded contracts. In addition, the Company has no financial guarantees, 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.



ANALYSIS OF SIGNIFICANT CHANGES IN RESULTS OF OPERATIONS



Results of Operations for the Fiscal Year Ended April 30, 2005 compared to the Fiscal Year Ended April 30, 2004:



REVENUES

Revenue increased
 to
 $518,711 for the year ended
April 30, 2005
from the
$291,297 revenue
for the year ended
April 30, 2004. The increase in revenue reflects the acquisition s
 of the East Texas interests
during
November 2004 compared to the revenue from the assets disposed of in January 2004 .
 The fields operated in 2005 constitute a
completely different asset base
than those operated
in
2004 except for the
Louisiana properties,
which the Company acquired in January 2004.



OIL AND GAS PRODUCTION COSTS



Production costs
increased to
$ 702,028 for the year ended April 30, 2005
as compared to the
$293,363 production costs
for the year ended April 30, 2004.  The increase in the
operating expense reflects the operations of the Louisiana property plus the
work undertaken for the
East Texas properties f rom
November
1, 2004. T he re was considerable remedial work undertaken on the East Texas properties to bring the m
up to normal operati onal
 standards. The fields operated in 2005 are completely different
from those ope r ated during 200
4, except
 for Louisiana which the Company acquired in January 2004.



PROVISION FOR DEPLETION, DEPRECIATION AND AMORTIZATION



The provision for depletion, depreciation and amortization was $62,907 for the year ended April 30, 2005 compared to $67,777 for April 30, 2004.   The acquisition of the East Texas properties and the disposal of certain assets during January 2004 resulted in Sonoran having a completely different asset base ope r ated during 2005 than those held and operated during 2004. The notable exception is the Louisiana properties, which the Company acquired in January 2004.



STOCK BASED COMPENSATION



The Company
 used
 restricted stock
to
pay
 for various activities as discussed in Notes 4, in Item 7 of this 10KSB . This included incentive payments
to officers, payment for debt and consulting services associated with property acquisitions.



GENERAL AND ADMINISTRATIVE EXPENSES



General and administrative expenses increased substantially for the year ended April 30, 2005, when compared to the same period f or
2004. The Company incurred increased legal expense as a result of the work needed on the acquisitions and sales of properties. General and Administrative expense includes the costs for
M anagement
services, personnel,
I nvestor

R elations ,
A udit
, travel and office expenses. G iven the
move to a global operation with
experienced
oil and gas industry person nel
 at higher salaries plus
greatly
increased travel expense was a contributor to the increased costs .
 C onsultants
were hir ed
to assist the Company in searching for and getting introductions to potential acquisition projects as well as due diligence and geological reviews.



Page 11

---



OTHER INCOME (EXPENSE)



The charge for Impairment of oil and gas property of $71,078 reflects managements estimate of the impact of losing the rights to two of the Louisiana wells as d discussed in Note 6 contained in Notes to the Financial Statements in Item 7 of this 10-KSB.



Workover expense and ad valorem taxes are applicable to the two existing properties,  There was no expense accrued in 2004 for the Louisiana property as we acquired the property in the last quarter of the fiscal year.



The loss on disposal of Assets expense in 2004 is discussed in Note 6 contained in Notes to the Financial Statements in Item 7 of this 10-KSB report and represent the estimated cost of the equipment held by a merger candidate.



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.



Page 12

---



ITEM 7 - FINANCIAL STATEMENTS



SONORAN ENERGY, INC.

Index to Consolidated Financial Statements





|                                                                                                       | Page
|------------------------------------------------------------------------------------------------------ | ----
|Independent Auditors' Reports 2005 and 200                                                             | F-2 
|                                                                                                       |     
|Consolidated Balance Sheet at April 30, 2005                                                           | F-3 
|                                                                                                       |     
|Consolidated Statements of Operations for the
    years ended April 30, 2005 and 2004                  | F-4 
|                                                                                                       |     
|Consolidated Statement of Changes in
	Shareholders' Equity for the years ended April 30, 2005 and 2004 | F-5 
|                                                                                                       |     
|Consolidated Statements of Cash Flows for the
    years ended April 30, 2005 and 2004                  | F-6 
|                                                                                                       |     
|Notes to Consolidated Financial Statements                                                             | F-7 
|                                                                                                       |     

F-1

---

INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Shareholders

Sonoran Energy, Inc.



We have audited the accompanying consolidated balance sheet of Sonoran Energy, Inc. and its subsidiaries as of April 30, 2005 and the related consolidated statements of operations, changes in shareholders' equity/deficit, and cash flows for the year then ended.  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 audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  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 audit provides 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, 2005 and the results of their operations and their cash flows for the year then ended 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, 2005 of 4,031,271 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.



Epstein Weber & Conover, PLC.

Scottsdale, AZ

August 11, 2005

---

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, 2004 and the related consolidated statements of operations, changes
in shareholders' equity, and cash flows for the years ended April 30, 2004 and 2003.  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 the standards of the Public Company Accounting
Oversight Board (United States).  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, 2004 and the results of their operations and their cash flows for the years ended April 30,
2004 and 2003 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, 2004 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 Honeck, P.C.

Denver, Colorado

September 29, 2004



F-2

---

SONORAN ENERGY, INC.

Consolidated Balance Sheet

April 30, 2005



|Assets                                                                |                   
|--------------------------------------------------------------------- | ------------------
|                                                                      |                   
|Current assets:                                                       |                   
|Cash                                                                  | $        
		62,313
|Certificate of deposit (Note 1)                                       | 50,220            
|Accounts receivable                                                   | 148,213           
|Prepaid Expense                                                       | 43,128            
|Total current assets                                                  | 303,874           
|                                                                      |                   
|Oil and gas properties - full
		cost method                           |                   
|Proved, less accumulated depletion of $56,375                         | 1,973,915         
|Unproved, less impairment charge of $71,078 (Note 3)                  | 2,195,718         
|Equipment, less accumulated
		depreciation of $6,806                  | 39,913            
|Total capital assets                                                  | 4,209,546         
|                                                                      |                   
|Other assets:                                                         |                   
|Deferred finance charge (Note 7)                                      | 511,877           
|                                                                      | $  5,025,297      
|                                                                      |                   
|Liabilities and Shareholders'
		Deficit                               |                   
|                                                                      |                   
|Current liabilities:                                                  |                   
|Accounts payable                                                      | $ 
		1,516,892    
|Accounts payable - ad valorem tax                                     | 110,457           
|Indebtedness to related parties (Note 2)                              | 353,036           
|Accrued expenses                                                      | 1,493,136         
|Loan
		payable (Note 8)                                               | 302,945           
|Deferred rent                                                         | 31,744            
|Deferred gains on oil and gas property sales                          | 484,046           
|Total current liabilities                                             | 4,292,256         
|                                                                      |                   
|Long-term liabilities                                                 |                   
|Convertible debentures (Note 9)                                       | 2,045,936         
|Asset
		retirement obligation (Note 10)                               | 354,679           
|                                                                      | 2,400,615         
|                                                                      |                   
|Contingencies (Note 11)                                               | -                 
|                                                                      |                   
|Shareholders' deficit (Note 4):                                       |                   
|Series
		"A" convertible preferred stock, no par value;               |                   
|25,000,000 shares authorized, 1,000,000 shares issued and outstanding | 1,950,000         
|Common
		stock, no par value; 250,000,000 shares authorized           |                   
|31,372,389 shares issued and outstanding                              | 24,014,930        
|Paid-in Capital for stock options                                     | 1,430,887         
|Accumulated deficit                                                   | (29,063,391)      
|Total shareholders' deficit                                           | (1,667,574)       
|                                                                      | $     5,025,297   
|                                                                      |                   

See accompanying notes to consolidated financial statements.



F-3

---

SONORAN ENERGY, INC.

Consolidated Statements of Operations



|                                                    | For the Years Ended April 30,
|--------------------------------------------------- | -----------------------------
|                                                    | 2005                         
|Revenue                                             |                              
|Oil and gas sales                                   | $       511,802              
|Other                                               | 6,909                        
|Total revenue                                       | 518,711                      
|                                                    |                              
|Operating expenses:                                 |                              
|Oil and gas production costs                        | 702,028                      
|Workover expense                                    | 17,535                       
|Ad valorem and other taxes                          | 129,950                      
|Depletion, depreciation and amortization (Note 1)   | 62,907                       
|Stock-based compensation (Notes 2 and 4):           |                              
|Officer compensation                                | 1,392,000                    
|Employees                                           | 58,000                       
|Legal                                               | 25,500                       
|Stock options                                       | 1,407,462                    
|Consulting                                          | 360,250                      
|Directors                                           | 203,000                      
|Consulting, related party                           | -                            
|General and administrative                          | 3,289,632                    
|Impairment of oil and gas property (Note 3)         | 71,078                       
|Loss on disposal of assets (Note 6)                 | -                            
|Bad debt expense                                    | -                            
|Gain on liability settlements                       | -                            
|Total expenses                                      | 7,719,342                    
|                                                    |                              
|Interest income                                     | 220                          
|Interest expense                                    | (229,060)                    
|                                                    |                              
|Loss from continuing operations before income taxes | (7,429,471)                  
|                                                    |                              
|Income tax provision
    (Note 5)                   | -                            
|                                                    |                              
|Net loss                                            | $  (7,429,471)               
|                                                    |                              
|Net loss per common
    share:                      |                              
|Basic and diluted                                   | $          
	(0.28)          
|Weighted average common
    shares outstanding:     |                              
|Basic and diluted                                   | 26,981,319                   
|                                                    |                              





See accompanying notes to consolidated
financial statements.



F-4

---

SONORAN ENERGY, INC.

Consolidated Statement of Changes in Shareholders' Equity



|                                                                      | Series "A" Convertible Preferred Stock |  | Common Stock |  | Outstanding Common Stock Options/Warrants |  | Retained Deficit |  | Cumulative Translation Adjustment
		Other
		Comprehensive (Loss) |  | Total        
|--------------------------------------------------------------------- | -------------------------------------- |  | ------------ |  | ----------------------------------------- |  | ---------------- |  | ---------------------------------------------------------------- |  | -------------
|                                                                      | Shares                                 |  | Amount       |  | Shares                                    |  | Amount           |  |                                                                  |  |              
|                                                                      |                                        |  |              |  |                                           |  |                  |  |                                                                  |  |              
|Balance at April
		30, 2003                                           | -                                      |  | -            |  | 9,607,986                                 |  | 14,969,663       |  | 7,200                                                            |  | (16,804,670) 
|                                                                      |                                        |  |              |  |                                           |  |                  |  |                                                                  |  |              
|Common stock sales                                                    | -                                      |  | -            |  | 287,500                                   |  | 57,500           |  | -                                                                |  | -            
|Common stock
		dividend                                               | -                                      |  | -            |  | 753,542                                   |  | -                |  | -                                                                |  | -            
|Exercised common
		stock options                                      | -                                      |  | -            |  | 4,526,586                                 |  | 1,291,882        |  | (7,200)                                                          |  | -            
|Exercised common
		stock warrants                                     | -                                      |  | -            |  | 6,412                                     |  | 6,412            |  | -                                                                |  | -            
|Common stock
		cancellations                                          | -                                      |  | -            |  | (18,800)                                  |  | (13,000)         |  | -                                                                |  | -            
|Common stock issued
		in exchange for assumption of liabilities       | -                                      |  | -            |  | 1,050,053                                 |  | 840,043          |  | -                                                                |  | -            
|Common stock issued
		to an officer for compensation                  | -                                      |  | -            |  | 3,000,000                                 |  | 600,000          |  | -                                                                |  | -            
|Common stock issued
		in exchange for consulting services             | -                                      |  | -            |  | 1,804,461                                 |  | 364,858          |  | -                                                                |  | -            
|Common stock issued
		in exchange for interest expense                | -                                      |  | -            |  | 98,223                                    |  | 22,222           |  | -                                                                |  | -            
|Common stock issued
		in exchange for legal services                  | -                                      |  | -            |  | 160,000                                   |  | 32,000           |  | -                                                                |  | -            
|Common stock issued
		to related parties as payment for liabilities   | -                                      |  | -            |  | 179,844                                   |  | 44,961           |  | -                                                                |  | -            
|Common stock issued
		in exchange for debt payments                   | -                                      |  | -            |  | 2,151,424                                 |  | 1,526,128        |  | -                                                                |  | -            
|Common stock issued
		to an officer in exchange for debt payments     | -                                      |  | -            |  | 1,000,000                                 |  | 200,000          |  | -                                                                |  | -            
|Common stock issued
		in exchange for oil and gas properties          | -                                      |  | -            |  | 175,000                                   |  | 32,375           |  | -                                                                |  | -            
|Preferred stock
		issued in exchange for oil and gas properties       | 1,000,000                              |  | 1,950,0000   |  | -                                         |  | -                |  | -                                                                |  | -            
|Common stock issued
		in exchange for payment of expenses             | -                                      |  | -            |  | 502,931                                   |  | 402,345          |  | -                                                                |  | -            
|Common stock
		options issued to non-employees                        | -                                      |  | -            |  | -                                         |  | -                |  | 23,425                                                           |  | -            
|Comprehensive loss:                                                   |                                        |  |              |  |                                           |  |                  |  |                                                                  |  |              
|Net loss, year ended April 30, 2004                                   | -                                      |  | -            |  | -                                         |  | -                |  | -                                                                |  | (4,829,250)  
|Cumulative translation adjustment                                     | -                                      |  | -            |  | -                                         |  | -                |  | -                                                                |  | -            
|Comprehensive loss                                                    | -                                      |  | -            |  | -                                         |  | -                |  | -                                                                |  | -            
|                                                                      |                                        |  |              |  |                                           |  |                  |  |                                                                  |  |              
|Balance at April
		30, 2004                                           | 1,000,000                              |  | $1,950,000   |  | 24,531,620                                |  | $20,377,389      |  | $    23,425                                                      |  | $(21,633,920)
|                                                                      |                                        |  |              |  |                                           |  |                  |  |                                                                  |  |              
|Common
		stock sales (Note 4)                                         | -                                      |  | -            |  | 2,771,971                                 |  | 1,328,208        |  | -                                                                |  | -            
|Exercised common stock warrants (Note 4)                              | -                                      |  | -            |  | 150,512                                   |  | 38,012           |  | -                                                                |  | -            
|Common
		stock issued to officers for compensation (Note 4)           | -                                      |  | -            |  | 2,400,000                                 |  | 1,392,000        |  | -                                                                |  | -            
|Common
		stock issued to directors for services (Note 4)              | -                                      |  | -            |  | 350,000                                   |  | 203,000          |  | -                                                                |  | -            
|Common
		stock issued in exchange for consulting services (Note 4)    | -                                      |  | -            |  | 587,280                                   |  | 354,000          |  | 1,407,462                                                        |  | -            
|Common
		stock issued to employees for compensation (Note 4)          | -                                      |  | -            |  | 100,000                                   |  | 58,000           |  | -                                                                |  | -            
|Common
		stock issued in exchange for legal services (Note 4)         | -                                      |  | -            |  | 50,000                                    |  | 25,500           |  | -                                                                |  | -            
|Common
		stock issued in exchange for oil and gas properties (Note 4) | -                                      |  | -            |  | 300,000                                   |  | 210,000          |  | -                                                                |  | -            
|Common
		stock issued for payment of debt (Note 4)                    | -                                      |  | -            |  | 131,006                                   |  | 28,821           |  | -                                                                |  | -            
|Comprehensive loss:                                                   |                                        |  |              |  |                                           |  |                  |  |                                                                  |  |              
|Net loss, year ended April 30, 2005                                   | -                                      |  | -            |  | -                                         |  | -                |  | -                                                                |  | (7,429,471)  
|Cumulative translation adjustment                                     | -                                      |  | -            |  | -                                         |  | -                |  | -                                                                |  | -            
|Comprehensive loss                                                    | -                                      |  | -            |  | -                                         |  | -                |  | -                                                                |  | -            
|                                                                      |                                        |  |              |  |                                           |  |                  |  |                                                                  |  |              
|Balance
		at April 30, 2005                                           | 1,000,000                              |  | $1,950,000   |  | 31,372,389                                |  | $24,014,930      |  | $1,430,887                                                       |  | $(29,063,391)
|                                                                      |                                        |  |              |  |                                           |  |                  |  |                                                                  |  |              

See accompanying notes to consolidated financial statements.



F-5

---

SONORAN ENERGY, INC.

Consolidated Statements of Cash Flows



|                                                                                       | For the Years Ended April 30,
|-------------------------------------------------------------------------------------- | -----------------------------
|                                                                                       | 2005                         
|Cash flows from
    operating activities:                                              |                              
|Net loss                                                                               | $ 
	(7,429,471)              
|Adjustments to reconcile net loss to net cash used in operating activities:            |                              
|Depletion, depreciation and amortization                                               | 62,907                       
|Bad debt expense                                                                       | -                            
|Liability settlement gains                                                             | -                            
|Stock issued for payment of expenses                                                   | 379,500                      
|Stock compensation expense                                                             | 1,653,000                    
|Stock issued for interest expense                                                      | -                            
|Common stock options granted                                                           | 1,407,462                    
|Impairment of oil and gas properties                                                   | 71,078                       
|Loss on disposal of assets                                                             | -                            
|Changes in operating assets and liabilities:                                           |                              
|Receivables, prepaids and deferred other                                               | (703,218)                    
|Accounts payable, accrued expenses and other liabilities                               | 3,118,089                    
|                                                                                       |                              
|Net cash used in operating activities                                                  | (1,440,653)                  
|                                                                                       |                              
|Cash flows from
    investing activities:                                              |                              
|Office equipment purchases                                                             | (37,925)                     
|Payments for oil and gas working interests                                             | (1,517,470)                  
|Oil and gas equipment purchases                                                        | (62,992)                     
|Payment
	for certificate of deposit                                                    | (50,000)                     
|                                                                                       |                              
|Net cash used in investing activities                                                  | (1,668,387)                  
|                                                                                       |                              
|Cash flows from
    financing activities:                                              |                              
|Proceeds from notes payable                                                            | 165,000                      
|Repayment of notes payable                                                             | -                            
|Repayment of loans and advances                                                        | (15,176)                     
|Proceeds from convertible debt                                                         | 1,512,000                    
|Proceeds from related party advance                                                    | 100,000                      
|Proceeds from exercised options and warrants                                           | 38,012                       
|Proceeds from the sale of common stock                                                 | 1,328,208                    
|                                                                                       |                              
|Net cash provided by financing activities                                              | 3,128,044                    
|                                                                                       |                              
|Effect of cumulative translation
    adjustment on cash                                | -                            
|                                                                                       |                              
|Net change in cash                                                                     | 19,004                       
|                                                                                       |                              
|Cash, beginning of year                                                                | 43,309                       
|                                                                                       |                              
|Cash, end of year                                                                      | $        62,313              
|                                                                                       |                              
|Supplemental disclosure
    of cash flow information:                                  |                              
|Cash paid for income taxes                                                             | $                 
	-        
|Cash paid for interest                                                                 | $                 
	-        
|                                                                                       |                              
|Non-cash investing and
    financing activities:                                       |                              
|Common stock issued for payment of debt and current liabilities                        | $         28,121             
|Series A convertible preferred stock issued for acquisition of oil and gas
	properties | $                  
	-       
|Oil and gas property acquired in exchange for a promissory note and common
	stock      | $       210,000              
|                                                                                       |                              

See accompanying notes to consolidated financial statements.



F-6

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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.  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.



The Company has acquired 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 Company's interests in the properties vary depending on the availability of the interests and their locations.  At April 30, 2005, the Company owned working interests in oil and gas properties located within the States of Louisiana and Texas.



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, 2005.  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



F-7

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consolidation.  The Company's subsidiaries have been dormant since the Company entered the oil and gas industry.



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, 2005.



Restricted Cash

The Company was required to post a $50,000  Bond with the government for the operations in the East Texas field.. The funds are held by a financial institution in an investment certificate, which bears interest at a variable rate.



Equipment and Depreciation



Equipment is recorded at cost, less accumulated depreciation.  Major items and betterments are capitalized; minor items and repairs are expensed as incurred.  Depreciation is computed under the straight-line method over the estimated useful lives of the assets. Depreciation on equipment totaled $6,532 and $274 for the years ended April 30, 2005 and 2004, respectively.



Oil and Gas Producing Activity



The Company follows the full cost method of accounting for its oil and gas activities. 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.  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



F-8

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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.  Any excess is charged to expense during the period in which the excess occurs.



Sales of oil and gas properties, whether or not being amortized currently, are accounted for as adjustments of capitalized costs, with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center.  Abandonments of oil and gas properties are accounted for as adjustments of capitalized costs, and are amortized and subject to the cost center ceiling limitation.



The Company recorded deletion expense of $56,375  and $67,530 for the years ended April 30, 2005 and 2004, respectively.



Revenue Recognition



The Company utilizes the accrual method of accounting for crude oil revenues whereby revenues are recognized as the Company's entitlement share of the oil that is produced and delivered to a purchaser based upon its working interest in the properties.  The Company records a receivable (payable) to the extent that it receives less (more) than its proportionate share of the gas revenues.There are no significant gas imbalances at April 30, 2005.



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.



Net loss per share



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. The diluted net loss per shares excludes the effect of common stock options and warrants exercisable into 17,586,780 shares of common stock and debt convertible into approximately 3,508,000 shares of common stock because inclusion of such would be anti-dilutive.



F-9

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Accounts Receivable



The Company's accounts receivable at April 30, 2005 reflect amounts that are due from working interest owners in oil wells that the Company operates and the sale of crude oil to two primary customers.



The Company determines any required allowance by considering a number of factors including length of time trade accounts receivable are past due and the Company's previous loss history.  Receivables are considered past due when they are unpaid greater than thirty days.  The Company records a reserve account for accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.  There was no allowance for doubtful accounts at April 30, 2005.

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, as amended by SFAS 148.  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.



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



|Risk-free interest
		rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		. . . .     | 4.24%  
|----------------------------------------------------------------------------------------------------------- | -------
|Dividend yield . .
		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		. . . . . .  | 0.00%  
|Volatility factor .
		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		. . . . . . | 138.60%
|Weighted average
		expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  | 2 years



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



F-10

---



|Risk-free interest
		rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		. . . .     | 2.00%  
|----------------------------------------------------------------------------------------------------------- | -------
|Dividend yield . .
		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		. . . . . .  | 0.00%  
|Volatility factor .
		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		. . . . . . | 147.19%
|Weighted average
		expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  | 1 year 



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



|                                                                             | For the Years Ended April 30,
|---------------------------------------------------------------------------- | -----------------------------
|                                                                             | 2005                         
|                                                                             |                              
|Net loss, as reported                                                        | $    (7,440,009)             
|                                                                             |                              
|Add stock based compensation
		reported                                      | 3,414,462                    
|                                                                             |                              
|Deduct stock based compensation
		determined using the fair value     method | (3,955,488)                  
|Pro forma net loss                                                           | $    (7,981,035)             
|                                                                             |                              
|Basic and diluted net loss per
		common share, as reported                   | $            
		(0.28)       
|                                                                             |                              
|Pro Forma basic and diluted net
		loss per common share                      | $            
		(0.52)       
|                                                                             |                              



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.



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



F-11

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expenses.  The functional currency of the Company's foreign subsidiary is the local currency, the Canadian dollar.



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.



New Accounting Pronouncements

In June 2003 the FASB issued Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" SFAS No. 150 requires certain instruments, including mandatorily redeemable shares, to be classified as liabilities, not as part of shareholders' equity or redeemable equity.  For instruments that are entered into or modified after May 31, 2003, SFAS No. 150 is effective immediately upon entering the transaction or modifying the terms. For other instruments covered by Statement 150 that were entered into before June 1, 2003, Statement 150 is effective for the first interim period beginning after June 15, 2003. The Company has evaluated the provisions of SFAS No. 150. The redeemable preferred stock does not meet the criteria for classification as liabilities in accordance with SFAS No. 150.  Therefore, all of preferred stock that was previously presented between liabilities and equity on the balance sheet remains presented as such.



In November 2002, the FASB issued interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees. Including indirect Guarantees of Indebtedness of Others," which disclosures are effective for financial statements for periods ending after December 15, 2002.  While the Company has various guarantees included in contracts in the normal course of business, primarily in the form of indemnities, these guarantees would only result in immaterial increases in future costs, but do not represent significant commitments or contingent liabilities of the indebtedness of others.



In January 2003, the FASB issued interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46) which requires the consolidation of variable interest entities, as defined.  FIN 46 is applicable immediately for variable interest entities created after January 1, 2003. For variable interest entities created prior to January 1, 2003, the provisions of FIN 46 are applicable no later than July 1, 2003.  The Company does not believe that any material entities will be consolidated as a result of FIN 46.



In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation
- Transition and Disclosure - an amendment of FASB Statement No. 123.  SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value-based method of accounting for stock-based employee compensation.  In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both interim and annual financial statements about the



F-12

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method of accounting for stock-based employee compensation and the effect of the method used on reported results.  SFAS No. 148 is effective for financial statements issued for fiscal years ending after December 15, 2002.  The adoption of SFAS No. 148 did not have a material effect on its financial position or results of operations.



In December 2004 the FASB issued a revised Statement 123 (SFAS 123R),
"Accounting for Stock-Based Compensation" requiring public entities to measure the cost of employee services received in exchange for an award of equity instruments based on grant date fair value. The cost will be recognized over the period during which an employee is required to provide service in exchange for the award  usually the vesting period. The Company is evaluating the impact of this new pronouncement and has not yet determined  the effect of implementation will have on the Company's financial statements.



Note 2:Related Party Transactions



During the year ended April 30, 2005, the Company incurred $157,728 in joint interest billings to BPR Energy, Inc. as a result of operation of the leases in Louisiana (see Note 3).  The billings were partially unpaid as of April 30, 2005 and are included in the accompanying consolidated financial statements as
"indebtedness to related party".



During the year ended April 30, 2005, a party related to one of the officers of the Company lent Sonoran $100,000 repayable August 5, 2005 with an interest rate of 12%. The loan remained unpaid as of April 30, 2005 and is included in the accompanying consolidated financial statements as
"indebtedness to related party".



During the year ended April 30, 2004, the Company incurred operational and administrative expenses to a company managed by its then president and CEO, totaling $113,332.  The amount was unpaid as of April 30, 2004 and is included in the accompanying consolidated financial statements as
"indebtedness to related party".



During the last quarter of the year ended April 30, 2004, the Company incurred $110,384 in joint interest billings to BPR Energy, Inc. as a result of operation of the leases in Louisiana). The fees remained unpaid as of April 30, 2004 and are included in the accompanying consolidated financial statements as
"indebtedness to related party".



On December 17, 2004, prior to becoming a Company officer, a former CEO signed a subscription agreement to purchase 3 million shares of the Company's common stock at $.15 per share, or $450,000.  On December 18, 2004, the Company's Board of Directors resolved to reduce the price from $.15 to $.10 per share due to the restricted nature of the stock.  Finally, again on December 18, 2004, the Board resolved to approve a $300,000 signing bonus to the former CEO to be applied as payment for the subscription agreement and related 3 million shares of common stock.  Stock-based compensation related to the transaction totaled $600,000.  Because the transaction occurred between related parties, the stock was valued based on contemporaneous sales to unrelated third parties, or $.20 per share.



F-13

---



During the year ended April 30, 2004, the Company performed a cashless exercise of 2,550,000 stock options held by its then president and CEO.  The exercises resulted in the issuance of 2,389,577 shares of the Company's common stock.  Stock-based compensation related to the transaction totaled $650,779 based on the exercise price of the related options.



During the year ended April 30, 2004, the Company performed a cashless exercise of 350,000 stock options held by a relative of the Company's then president and CEO.  The exercise resulted in the issuance of 318,278 shares of the Company's common stock.  Stock-based compensation related to the transaction totaled $95,483 based on the exercise price of the related options.



During the year ended April 30, 2004, the Company issued 179,844 shares of its common stock to officers and employees as payment for accrued liabilities totaling $44,961.  Because the transaction occurred between related parties, the stock was valued based on contemporaneous sales to unrelated third parties.



During the year ended April 30, 2004, the Company issued 1,000,000 shares of its common stock to its former president as payment for a $200,000 promissory note.  Because the transaction occurred between related parties, the stock was valued based on contemporaneous sales to unrelated third parties.



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.



Note 3:Oil and Gas Properties



Acquisitions



BVR Prospect



On February 11, 2004, the Company acquired working interests in oil and gas properties from BPR Energy, Inc. ("BPR") in exchange for 1,000,000 shares of the Company's Series A convertible preferred stock with a stated value of $15.00 per share.  The Series A preferred stock is convertible to 1,000,000 restricted shares of the Company's common stock 180 days after the date of closing (August 9, 2004) at the option of the preferred stockholder.  If, at the time of conversion, the market price of the Company's common stock is not at $15.00 or above, the preferred stockholder will receive 100,000 additional restricted common shares or fraction thereof, for each dollar or fraction thereof the Company's common stock is below $12.00 per share.  The additional common shares issued may not exceed 1,000,000 shares.  The Company acquired an average 87% working interest in properties located in the Beauregard, Livingston, Rapides and Vernon Parishes in Louisiana.



F-14

---



The producing wells on the properties were not operating profitably at April 30, 2005.  In addition, it has been estimated in the engineering reserve reports that the Company would have to expend approximately $5 million in development costs to economically extract proven reserves on the properties.  Because the Company does not have existing funding or financing for the required development costs, the reserves cannot be classified as proven reserves.  Consequently, the BVR prospect is reflected in the accompanying consolidated financial statements as unproved properties.



The acquisition has been recorded based on the conversion of the preferred shares into 2 million shares of the Company's common stock, which had a market value of $1.95 per share on February 11, 2004.  Based on the traded market value of the common stock, the gross valuation of the transaction would be $3.9 million.  However, due to the Rule 144 restriction on the common stock and the fact that 2 million shares far exceeds the daily trading volume for the Company's stock, a discount of 50% has been estimated by the Company.  Consequently, the value of the unproved properties was estimated at $1.95 million.



25 Hill



On January 31, 2004, the Company purchased working interests in oil and gas properties from Summit Oil and Gas, Inc. ("Summit") for 1,687,500 shares of common stock valued at $1,350,000, based on $.80 per share.  The Company also issued 294,016 shares of common stock as payment for fees and commissions related to the transaction. The agreement provided Sonoran with an opportunity to acquire up to a 50% working interest depending on commitment of drilling funds which was budgeted at $10 million.



The Company subsequently rescinded the transaction in July 2004 due to non-performance on the part of Summit.  The Company has cancelled, but not reacquired, the shares issued in the transaction as of the date of this report.  The transaction is not reflected in the accompanying consolidated financial statements.



East Texas Property



In November 2004, the Company completed the acquisition of interests in twelve (12) production wells located in the Lisa Layne Field, JRC Field and the Ann McKnight Unit situated in Wood and Smith Counties, Texas. . In addition to these twelve (12) wells, Sonoran also acquired interests in three (3) associated salt water disposal wells and one water injection well. The Company acquired a net revenue interest of 32.5% with a working interest of 39.9% in the Ann McKnight Unit as well as net revenue interests of 72.1 % to 75% and working interests of 93.0% two 100% in the other two fields.



The Company acquired the property for a cash payment of $1,680,000, the issue of 300,000 shares valued at market prices on the date of issue for $210,000 and the vendor accepting $100,000 in accounts payable.  In addition the Company spent 85,840 on new equipment for the fields.



Dispositions



The Company did not dispose of any oil and gas properties during the year ended April 30, 2005.



F-15

---



Impairment



Release of Crowell Wells on the Louisiana Property:



Through a lack of funding to move forward in a timely manner with the drilling of the water disposal well necessary to bring the two Crowell wells back onto production, the land owner requested that Sonoran Energy relinquish the leases.  Sonoran agreed to this request and the wells and leases were relinquished in April 2005.



Sonoran still has the liability to abandon and restore the two well locations but anticipates that the resale value of the equipment which will be recovered from the wells will more than adequately offset the cost of abandonment.



Once funds are available to proceed with the Louisiana development, the possibility still exists that Sonoran may be able to renegotiate new leases with the landowner that will allow them to move forward with the original development program on these two wells



The Company recorded an impairment charge of $71,078 in the year ended April 30, 2005.



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.  As of April 30, 2005, the Company had 1,000,000 shares of Series
"A" convertible preferred stock issued and outstanding.  These shares were issued in connection with the acquisition of certain oil and gas properties

The Series A preferred stock is convertible to 1,000,000 restricted shares of the Company's common stock 180 days after the date of closing (August 9, 2004) at the option of the preferred stockholder.  The holder of these shares, BPR Energy, on May 5, 2005, elected to convert all of the preferred shares into 2,000,000 shares of common stock.  No additional shares of preferred remain outstanding.



Common Stock

During the year ended April 30, 2005, the Company issued 131,006 shares of its common stock as payment for debts totaling $28,821.



During the year ended April 30, 2005, the Company issued 300,000 shares of its common stock as part of the payment for the  acquisition of East Texas  totaling $210,000.



F-16

---



During the year ended April 30, 2005, the Company issued  2,771,971 shares of its common stock for private placements totaling 1,328,208 and 150,512 shares for warrants exercised totaling 38,012.

During the year ended April 30, 2004, the Company issued 1,050,053 and 502,931 (1,552,984 total) shares of its common stock to Camden Holdings, Inc. ("Camden") pursuant to a Stock Purchase Agreement, whereby Camden assumed liabilities and paid expenses on behalf of the Company totaling $840,043 and $402,345 ($1,242,388 total), respectively ($.80 per share) (see Note 8).



During the year ended April 30, 2004, the Company issued 98,223 shares of its common stock as payment for interest expense related to certain debts.  The transactions totaled $22,222 and were valued based on the traded market value of the common stock.



During the year ended April 30, 2004, the Company issued 2,151,424 shares of its common stock as payment for debts and related accrued interest totaling $1,526,128.



Stock-Based Compensation



During the year ended April 30, 2005, the Company issued 587,280 shares of its common stock to outside service providers, in exchange for financial consulting, investor relations and other consulting services. The value of the stock issued was recorded at the value of the services and totaled $354,000.  The services are included in the accompanying financial statements as
"stock-based compensation".



During the year ended April 30, 2005, the Company issued 50,000 shares of its common stock as payment for legal expense.  The transaction totaled $25,500 and was valued based on the traded market value of the common stock.



During the year ended April 30, 2005, the Company issued 2,850,000 shares of its common stock to officers, employees and directors in recognition of their services. The value of the stock issued was recorded at the quoted market price on the date of issuance and totaled $1,653,000.  The services are included in the accompanying financial statements as
"stock-based compensation".



During the year ended April 30, 2004, the Company issued 1,964,461 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, less a 50 percent discount for the restricted nature of the shares, and totaled $282,203.  The services are included in the accompanying financial statements as
"stock-based compensation".



During the year ended April 30, 2004, the Company issued 1,964,461 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, less a 50 percent discount for the restricted nature of the shares, and totaled $282,203.  The services are included in the accompanying financial statements as
"stock-based compensation".





F-17

---



During the year ended April 30, 2004, the Company performed a cashless exercise of 2,000,000 stock options held by a consultant.  The exercises resulted in the issuance of 1,818,731 shares of the Company's common stock.  Stock-based compensation related to the transaction totaled $545,619, based on the $.30 exercise price on the options.  The services are included in the accompanying financial statements as
"stock-based compensation".

Common Stock Options



A summary of the status of the Company's stock option awards as of April 30, 2005, and the changes during the period from May 1, 2003 through April 30, 2005 are presented below:



|                                |                             | Options Issued to Non-Employees | Weighted Average Exercise Price | Weighted Average Fair Value | Exercisable | Weighted Average Exercise Price - Exercisable
|------------------------------- | --------------------------- | ------------------------------- | ------------------------------- | --------------------------- | ----------- | ---------------------------------------------
|                                | Options Issued to Employees
|Outstanding, April 30,
    2003 | -                           | 150,000                         | $     0.25                      | $  
	0.05                   | 150,000     | $     0.25                                   
|                                |                             |                                 |                                 |                             |             |                                              
|Options granted                 | 2,200,000                   | 2,525,000                       | 0.38                            | 0.13                        | 4,725,000   | 0.38                                         
|Options exercised               | (1,000,000)                 | (2,500,000)                     | 0.30                            | 0.14                        | (3,500,000) | 0.30                                         
|Options cancelled               | -                           | -                               | -                               | -                           | -           | -                                            
|Outstanding, April 30,
    2004 | 1,200,000                   | 175,000                         | 0.57                            | 0.11                        | 1,375,000   | 0.57                                         
|                                |                             |                                 |                                 |                             |             |                                              
|Options granted                 | 8,500,000                   | 4,125,000                       | 0.58                            | 0.31                        | 12,625,000  | 0.57                                         
|Options exercised               | -                           | -                               | -                               | -                           | -           | -                                            
|Options cancelled               | -                           | -                               | -                               | -                           | -           | -                                            
|Outstanding, April 30,
    2005 | 9,700,000                   | 4,300,000                       | $     0.53                      | $   0.29                    | 14,000,000  | $   0.53                                     
|                                |                             |                                 |                                 |                             |             |                                              



The actual exercise prices on the  options granted during the year ended April 30, 2005 ranged from $.42 to $1.50.



Common Stock Dividend and Warrants



The Company declared an eight percent dividend payable to shareholders of record at the close of business on July 22, 2003.  The unit stock dividend, paid on August 22, 2003, consisted of one common share plus a warrant allowing shareholders to purchase one share for each ten shares of the Company's stock held on the record date at a $1.00 strike price.  The number of shares issued on August 22, 2003 totaled 753,542 and 941,642 related warrants were granted.  Shares issued prior to July 22, 2003 have been retroactively restated to reflect the impact at May 1, 2002.The unexercised warrants granted with the stock dividend expired on July 23, 2005.  Of the 941,642 warrants originally granted, only 6,950 were exercised.



F-18

---



As part of a private placement done during the year ended April 30, 2005, investors were granted warrants to purchase additional shares. The exercise price on 222,222 warrants was set at $1.00 per share and the price on 2,029,840 warrants was set at $1.50 per share.



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,
|-------------------------------------------------------------------- | ---------------------
|                                                                     | 2005                 
|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, 2005 and 2004 totaled $1,406,000and $1,923,703, respectively.  A current tax benefit $1,406,000 and $1,923,703 was recorded for the years ended April 30, 2005 and 2004, respectively.  These amounts were offset by and equal deferred income expense due primarily to the increase in the valuation allowance.  At April 30, 2005, the Company had net operating loss carryforwards of approximately $10,913,000.  The net operating loss carryforward expires through the year 2025.



At April 30, 2005, the Company had a deferred income tax asset of $5,934,000.  Of that amount,  $4,365,000 related primarily to net operating loss carryforwards and $1,569,000 relates to book and tax differences in the recognition of stock based compensation.  The deferred income tax asset is offset by an equal valuation allowance



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-19

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Note 6:Settlement with Former 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.



During January 2004, the Company negotiated a debt conversion agreement with FN.  The Company agreed to issue 704,786 shares of its common stock as full payment for debt and related accrued interest totaling $1,055,394.  In addition, the Company included a waiver against any claims for the Company's property and equipment that was held by FN.  The Company wrote-off the property and equipment held by FN resulting ina loss of $309,743, and other property and equipment disposed during the fiscal year totaling $51,553, resulting in a total loss of $361,296.  This is included in the accompanying consolidated financial statements as
"Loss on disposal of assets".



Note 7:   Other Assets



Deferred finance charges



The Company incurred commitment fees and finder fees for the Cornell Capital convertible debentures totaling $689,000. The commitment fee payable to Cornell Capital of $425,000 in the form of a non-interest bearing convertible note (see Note 9) has been discounted at 5% to reflect an imputed interest over the term of the note
resulting in a net commitments fee of $365,936 at the time of the agreement. The term of the debenture is three years and the Company has chosen to amortize the commitment and finder  fees over the life of the debenture resulting in a charge to interest expense this year of $122,859.





Note 8:Loan Payable



During July 2004 the Company issued a promissory note for $165,000 to Glencoe Capital Inc for the purposes of placing the advance payment on the Texas property. The note bears an interest rate of 12% per annum commencing on August 16th, 2004. Of this $15,000 was held by the lender to cover its fees for services. The term of the note was initially August 16, 2004, but the term was extended by verbal agreement between both parties. In addition,
Zenith Financial, as guarantor,  pledged 330,000 shares of the Company's
stock it held as collateral for the loan.  In November 2004, Glencoe
Capital, Inc. chose to foreclose on the collateral and sell the pledged shares
and by April 15, 2005 had sold all of the pledged shares.  The Company
recorded a liability to Zenith of $218,121 for the replacement of the sold
collateral.  The obligation to Zenith at April 30, 2005 includes 80,000
additional shares of the Company's common stock as a fee payable to Zenith.

F-20

---



During February 2004, Camden Holdings, Inc. ("Camden"), who is also a shareholder via a Stock Purchase Agreement (see Note 11) advanced the Company $100,000 for working capital. The loan does not carry an interest rate and is payable on demand.



Note 9:    Convertible Debentures



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



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



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



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



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



F-21

---



Securities and Exchange Commission, pending renegotiation of the contractual terms with Cornell.  A subsequent re-filing of this statement is anticipated in September, 2005. We cannot sell shares of common stock to Cornell Capital Partners, LP under the Standby Equity Distribution Agreement until such registration statement is declared effective by the Securities and Exchange Commission.



Convertible Debentures and Loans Payable at April 30 are comprised of the
following:



|                                                                                                                                    | 2005      |  | 2004   
|----------------------------------------------------------------------------------------------------------------------------------- | --------- |  | -------
|                                                                                                                                    |           |  |        
|Convertible
		debentures bearing interest at 5% repayable October 17, 2007                                                          | 1,680,000 |  | -      
|                                                                                                                                    |           |  |        
|Convertible
		debenture for commitment fee, non-interest bearing, discounted at an
		imputed rate of 5%, repayable October 17, 2007 | 365,936   |  | -      
|                                                                                                                                    |           |  |        
|Total convertible debentures                                                                                                        | 2,045,936 |  | -      
|                                                                                                                                    |           |  |        
|Loan payable to
		Camden Holdings, on demand and non-interest bearing                                                               | 87,824    |  | 100,000
|                                                                                                                                    |           |  |        
|Loan payable to
		Zenith Financial, on demand and non-interest bearing                                                              | 218,121   |  | -      
|                                                                                                                                    | 302,945   |  | 100,000
|                                                                                                                                    |           |  |        
|Loan from related
		party, due August 5, 2005 bearing interest at 12% (see Note 2)                                                  | 100,000   |  | -      
|                                                                                                                                    |           |  |        
|Totals                                                                                                                              | 2,448,881 |  | 100,000
|                                                                                                                                    |           |  |        

Principal payments due in years ended April 30:



2006                                       
$       402,945

2007                                        
2,045,936



Total                                   
$     2,448,881



Note 10:Asset Retirement Obligation



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



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



|Balance April 30, 2004             | $ | --     
|---------------------------------- | - | -------
|Impact of adoption of SFAS No. 143 |   | --     
|Addition to Liability              |   | 353,879
|Liability Settled                  |   | --     
|Accretion Expense                  |   | 800    
|Balance April 30, 2005             | $ | 354,679



Note 11:Concentrations and Contingencies



Concentrations



During the year ended April 30, 2005, the Company sold all of its crude oil and gas from Louisiana to Texon LP and all of it's crude oil from East Texas to Eastex Crude Company and Plains Marketing, LP.



From February 2004 through April 2004, crude oil from the BPR properties was sold to Texon LP under the terms of a contract between BPR and Texon LP.

From May 2003 through January 2004, the Company sold all of its crude oil, through its operating partner, Longbow LLC, to Pacific Marketing and Transportation LLC.



While the Company has utilized only a few customers over the past two years, 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.



F-22

---

Contingencies



The Company has been named as a defendant in a lawsuit filed by a director of Savingsplus Internet, Inc. for claiming the Company failed to pay a $35,000 loan to the director's company ("Korker"). Sonoran 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 to $59,000 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.



The Company has been named as defendant in a lawsuit filed by Longbow, LLC for approximately $185,000 representing their estimate of their share of the profit on the sale of the Company's working interests in the Keystone, Glide and Merzonian leases. This lawsuit was filed in the California Superior Court, Kern County (Case Number S-1500-CV-252398, SPC).  Longbow is using a liberal interpretation of the purchase agreements in order to claim a percentage of the proceeds of Sonoran's sale of its working interests to Harvest Worldwide.  Sonoran has filed a cross-complaint seeking monetary damages and a judicial interpretation of the "sale-for-profits" clause. Contemporaneously, Harvest Worldwide, the entity to which Sonoran sold these interests, has filed suit against Longbow for withholding distributions and to remove them as the "operator" of the leases.  In response, Longbow filed a cross-complaint in that action against Sonoran.  Sonoran intends to vigorously defend itself against these claims and to pursue its claims against Longbow.  It is management's view that Longbow will not prevail in their action and Sonoran will prevail on its cross-complaint.



The Company has been named in a lawsuit filed August 25, 2004 (Case no. S-1500-CV-253638 RIA) by John Howe and Brad Califf concerning their short lived consulting/employment agreements with respect to stock options contained in the agreements.



During November 2003, the Company entered into a Stock Purchase Agreement with Camden Holdings, whereby Camden agreed to purchase $3 million in common stock at a price equal to a 20 percent discount from the average 10-day
"bid" price starting on or before November 26, 2003 (determined as a price of $.80 per share).  In January 2004, under the terms of the Stock Purchase Agreement, Camden agreed to assume $840,043 of the Company's liabilities in exchange for 1,050,053 shares of common stock. A dispute has arisen as to the payments of the various debts assumed, between Camden and the company, which has resulted in litigation in the Los Angeles Superior Court.



During January 2004, the Company sold itsGlide, Keystone and Merzonian leases on the Deer Creek Oil Company property; the Malton-Black Butte, Denverton Creek, Maine Prairie and the Lambie Ranch Gas Fields; as well as the North West Lost Hills property to Harvest Worldwide, LLC ("Harvest") subject to the debt related to the properties, which totaled $1.2 million.This contract has also devolved into litigation among the various parties, currently proceeding in Kern County (Bakersfield, California), with a trial date estimated to occur in late December, 2005



F-23

---



Note 12:Oil and Gas Reserves and Related Financial Information



Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities



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



|                  | Year Ended
    April 30, 2005
|----------------- | -----------------------------
|                  |                              
|Acquisitions:     |                              
|Proved            | $           
	1,847,792      
|Unproved          | -                            
|Development costs | 85,841                       
|Exploration costs | -                            
|                  |                              
|Total             | $          
	1,933,633       
|                  |                              



Proved Oil and Gas Reserve Quantities (Unaudited)



At April 30, 2005 and 2004, the estimated oil and gas reserves presented herein were derived from reports prepared by an independent engineering firm and by an in-house engineer.  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.



Estimated quantities of proved reserves (all of which are classified as proved developed and are located within the United States), as well as the changes in proved reserves during the year ended April 30, 2005, are presented in the following tables:



|                                            | Crude Oil (Bls) |  | Natural Gas (Mcf)
|------------------------------------------- | --------------- |  | -----------------
|Proved developed reserves at April 30, 2004 | -               |  | -                
|Sale of reserves                            | -               |  | -                
|Purchase of reserves                        | 329,730         |  | -                
|Production                                  | (8,063)         |  | -                
|Proved developed reserves at April 30, 2005 | 321,667         |  | -                
|                                            |                 |  |                  

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



F-24

---



reserves are proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods.



Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserve Quantities



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 30, 2004 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, 2005
|--------------------------------------------------------------------- | -----------------------------
|                                                                      |                              
|Future cash inflows                                                   | $  17,038,600                
|Future cash outflows:                                                 |                              
|Production costs                                                      | (7,205,380)                  
|Development costs                                                     | (587,200)                    
|Future net cash flows before income taxes                             | 9,246,020                    
|                                                                      |                              
|Future income taxes                                                   | (1,273,800)                  
|Future net cash flows                                                 | 7,972,220                    
|Adjustment to discount future annual net cash
    flows at 10 percent | (3,275,822)                  
|                                                                      |                              
|Standardized measure of discounted future net
    cash flows          | $   4,696,398                
|                                                                      |                              



The following table summarizes the principal factors comprising the changes in the standardized measure of estimated discounted net cash flows:



|                                              | Year Ended
    April 30, 2005
|--------------------------------------------- | -----------------------------
|                                              |                              
|Standardized measure, beginning of period     | $                     
	-    
|Sales of oil and gas, net of production costs | (117,721)                    
|Purchase of reserves                          | 4,814,119                    
|Sale of reserves                              | -                            
|                                              |                              
|Standardized measure, end of period           | $       4,696,398            
|                                              |                              



F-25

---



Note 13:Lease Commitments



The Company has leased office premises in Chandler, Arizona and  Amman, Jordan. Future minimum payments required are:



Year 2006                                                $232,423

Year 2007                                                  156,423

Year 2008                                                  156,423

Year 2009                                                  156,423

Year 2010149,998

$851,961





Note 14:Subsequent Events



Baron Oil



On May 7, 2004, the Company signed a Merger Agreement to acquire Baron Oil AS ("Baron"), a Norwegian oil and gas company.  Baron has a presence across the Middle East and with an office in Amman, Jordan, and is positioned to attract oil and gas contracts in the region. Baron also specializes in the utilization of the latest proven technology and operational processes in the development, drilling and operating of onshore oil and gas fields.  Under the terms of the agreement, the Company would acquire all of the issued and outstanding shares of Baron in exchange for approximately 18,625,000 shares of the Company's common stock and the assumption of all Baron's outstanding stock options.  The Company has further agreed to provide an additional commitment of $20 million for the purposes of developing Baron projects.A precondition of this acquisition is the provision of audited financial information for Baron Oil and a transfer of valid and current lease assignments on the various properties controlled by Baron Oil.  These conditions have been delayed for many reasons, but the parties are proceeding in good faith to complete the transaction.



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



Scottsdale Oil Field Services



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



Under the terms of the agreement, the Company acquired all of the issued and outstanding shares of SOFS in exchange for 1,000,000 shares of the Company's restricted common stock. The Company further agreed to enter into employment contracts with the two existing officers and one direct employee covering an initial period of two years.



The agreement closed during the Company's 1st quarter of 2006.

F-26

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



None



ITEM 8A - CONTROLS AND PROCEDURES



(a) Disclosure Controls and Procedures. Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that a company files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.



We maintain disclosure controls and procedures designed to ensure that material information related to our company is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.



Under the supervision of our Chief Executive Officer and our Chief Financial Officer, we re-evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of April 30, 2005, the design and operation of such disclosure controls and procedures were effective.



ITEM 8B - OTHER INFORMATION



None.



Page 13

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PART III



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



Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's Officers and Directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the Securities and Exchange Commission (the "SEC"). Such Officers, Directors and ten percent shareholders are also required by SEC rules to furnish the Company with copies of all such forms that they file. The Company's initial registration statement on Form 10-SB became effective on or about April 5, 2000. Management is confident that all filings required are current as of the proxy date.



|Name                | Age | Current Position/Office | Position Held Since
|------------------- | --- | ----------------------- | -------------------
|Peter
	Rosenthal    | 43  | Director/President/CEO  | 2004               
|Rasheed
	Rafidi     | 38  | Director/CFO            | 2004               
|Ala
	Amine Nuseibeh | 43  | Director/VP             | 2004               
|Christopher Pitman  | 46  | Director                | 2003               
|Mehdi
	Varzi        | 59  | Director                | 2003               
|Charles
	Waterman   | 66  | Director                | 2003               



At the Annual meeting held April 14, 2005 Mr. Rosenthal, Mr. Rafidi and Mr. Nuseibeh were elected for three year terms and Mr. Pitman, Mr. Varzi and Mr. Waterman were elected for two year terms.



PETER ROSENTHAL, CHAIRMAN, CEO, PRESIDENT, DIRECTOR



Prior to joining Sonoran Energy, Inc Peter held the position of General Manager - Aberdeen Operations with Amerada Hess Corporation Prior to joining Amerada Hess Ostenfeld-Rosenthal worked for Elf Petroleum Norge, as a Specialist Engineer, Project Manager and Implementation Superintendent from 1993 to 1997. He has worked both onshore and offshore during his time with Elf.



Previous to that he was a consulting engineer assisting with the development of new concepts for floating Oil & Gas facilities, developing technical and commercial proposals for clients such as Chevron, Mobil and Shell, and project management of various projects, mainly within structural reliability and risk analysis (both technical and financial).



RASHEED RAFIDI, DIRECTOR, CFO



Mr. Rafidi. Rasheed has previously served as Managing Director of "Precise Business Consulting" in Amman, Jordan (2002 to 2004). PBC is a certified consulting firm providing conglomerate and



Page 14

---



professional financial and management advisory services specializing in mergers and acquisitions, company valuations, private equity placements, financial analysis and reporting, strategic planning and internal auditing. Rafidi has some 14 years' of professional experience as a consultant and CFO for national and international corporations including serving as CFO for an oil and gas procurement company (1997 to 2001) as well as a tobacco manufacturing company (2001 to 2002). Rasheed has obtained his bachelor's degree in Business Administration from the University of Toledo in the USA. In addition, Rasheed holds the following financial certifications: Certified Public Accountant (CPA), Certified Valuation Analyst (CVA), Certified Management Accountant (CMA), Certified in Financial Management (CFM), Certified Internal Auditor (CIA), and Certified Investment and Derivatives Auditor (CIDA).



ALA AMINE  NUSEIBEH, DIRECTOR, VP



Mr. Nuseibeh, 42, has been, since June, 2004, a Director and Vice President with Sonoran, responsible for operations in the Middle East and Caspian Sea areas.  Prior to that, from 2002 to June of 2004, he was the Middle Eastern partner and responsible person for operations of Baron Oil, a company involved in the identification and development of oil and gas fields, in the defined area.  For a portion of that time, and from 2001 to 2003, Mr. Nuseibeh was also a director of EDM AS, a Norwegian company engaged in the manufacture of large oil and gas drilling rigs.  From 1998 to the present, Mr. Nuseibeh has been, and remains, a director of Gulf & Caspian Limited, a UK company, specializing in the procurement and utilization of drilling products in the Middle East and Caspian regions.  Mr. Nuseibeh graduated from Buckinghamshire College with degrees in economics and business law.



CHRISTOPHER PITMAN, DIRECTOR



Mr. Pitman has extensive international oil and gas energy sector experience gained through working with oil companies, private equity investors, governments, investment banks and funding agencies. A permanent advisor to the World Bank, Mr. Pitman has also been retained as non-executive director and as a senior advisor at the board level to both private and public energy and investment companies actively involved in international mergers and acquisitions (1988 to Present). From 2003 to the present, he has been president of the largest worldwide seismic company PGS Equity Investments and is responsible for PGS's equity interests in several oil and gas companies and arranging financial structures with outside investors.



MEHDI VARZI, DIRECTOR



Mr. Varzi established Varzi Energy as an independent oil and gas consultancy in June 2001 after a 33-year career spanning oil, diplomacy and international finance. From 1982 - 2001, Mr. Varzi worked in the City of London, first as an oil consultant, specializing in OPEC and international oil market developments from 1982-1986 with stockbrokers Grieveson Grant; then as a Director of Energy Research with Kleinwort Benson (1986-1995), and then in the same position with Dresdner Kleinwort Wasserstein (1995-2001), retiring as Managing Director of Energy Research in 2001. From 1972-1981, Mr. Varzi served in the Iranian Ministry of Foreign Affairs, and was posted to the Iranian Embassy in Ankara from 1977-1981. From 1968-1972, Mr. Varzi served as a Senior Analyst in the International Affairs Section of the National Iranian Oil Company. Mr. Varzi regularly conducts briefings on world oil issues for private and state oil and gas companies and is currently involved in a number of oil and gas projects in the Middle East.



Page 15

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CHARLES WATERMAN, DIRECTOR



Mr. Waterman is the Chief Executive Officer and founding member of Jefferson Waterman International, a Washington, DC-based consultancy that advises clients on political, economic and military trends worldwide. Waterman has held several leading positions within the U.S. Central Intelligence Agency and as National Intelligence Officer in the Middle East (1963 to 1985), Mr. Waterman coordinated the intelligence input to policy deliberations in the Near East and South Asia. As a member of the Foreign Service, he spent many years living and working overseas in Kuwait, Cairo, Beirut, Amman and Jiddah. A recognized expert in the Middle East and the former Soviet Union, Mr. Waterman has extensive knowledge of the defense and petroleum industries, and has published extensively in foreign affairs journals.



Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers, directors and persons beneficially owning more than 10% of the Company's common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. The Company has undertaken an extensive review of the Section 16(a) reports filed on behalf of each person subject to Section 16(a) prior to April 30, 2005, to determine whether all of their reportable transactions in the Company's common stock were timely reported and to ensure proper reporting of all of their beneficial holdings. The review revealed that there were a number of holdings and transactions that were not timely reported and the Company has undertaken to assist the subject persons to file the necessary forms. The Company has also developed new procedures to ensure improved compliance with Section 16(a) on an on-going basis.



Based solely on copies of such forms furnished as provided above, to the Company's knowledge all reports required under Section 16(a) during the most recent fiscal year or prior years, except that none of the newly appointed/elected members of the Board of Directors has filed a Form 3.  These reports are intended to be filed as soon as possible.



Audit Committee Financial Expert



The entire Board of Directors of Sonoran Energy, Inc. serves as the Company's Audit Committee.  As of April 30, 2005, our Board of Directors has designated
one
audit committee financial expert s
 as that term is defined in Item 401(e)(2) of Regulation S-B.  Rasheed Rafidi serves as the audit committee financial expert s
 for the Company.   Mr.
Rafidi is not an
 independent director. Sonoran is currently searching for another independent financial expert to invite into the audit committee.



Code of Ethics



We have adopted a "Code of Ethics for Directors, Officers and Employees", a code of ethics that applies to all employees, including our executive officers. A copy of our Code of Ethics for Directors, Officers and Employees is filed with the Securities and Exchange Commission as



Page 16

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Exhibit 14.1 to this annual report. In the event that we make any amendments to, or grant any waivers of, a provision of the Code of Ethics for Directors, Officers and Employees that applies to the principal executive officer, principal financial officer, or principal accounting officer that requires disclosure under applicable SEC rules, we intend to disclose such amendment or waiver and the reasons therefore on a Form 8-K or on our next periodic report.



ITEM 10 - EXECUTIVE COMPENSATION



SUMMARY COMPENSATION TABLE



The following table sets forth the aggregate annual remuneration of Sonoran's Chief Executive Officer and the other executive officers whose annual salary and bonus exceeded $100,000 in the fiscal year ended April 30, 2005 (collectively, the "named executive officers"), and for the fiscal years ended April 30, 2004 and April 30, 2003, the Company's most recent and only meaningful fiscal years. All amounts are in U.S. dollars unless otherwise noted.



|                            |             | Annual Compensation | Long Term Compensation
|--------------------------- | ----------- | ------------------- | ----------------------
|Name and Principal Position | Fiscal Year | Salary              | Bonus                 
|                            |             |                     |                       
|Peter Rosenthal             | 2005        | $350,000(1)         | 0                     
|Director/CEO/President      | 2004        | n/a                 | n/a                   
|                            | 2003        | n/a                 | n/a                   
|                            |             |                     |                       
|Paul Bristol                | 2004        | $46,849(1)          | $600,000              
|Former CEO                  | 2003        | n/a                 | n/a                   
|                            | 2002        | n/a                 | n/a                   
|                            |             |                     |                       
|Rasheed M. Rafidi           | 2005        | $208,334(1)         | 0                     
|CFO                         | 2004        | n/a                 | n/a                   
|                            | 2003        | n/a                 | n/a                   
|                            |             |                     |                       
|Ala Amine Nuseibeh          | 2005        | $208,334(1)         | 0                     
|Vice-President              | 2004        | n/a                 | n/a                   
|                            | 2003        | n/a                 | n/a                   
|                            |             |                     |                       
|David Mackertich            | 2005        | $188,501(1)         | 0                     
|Vice-President              | 2004        | n/a                 | n/a                   



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|               | 2003 | n/a         | n/a | n/a           | n/a     | n/a       | n/a
|-------------- | ---- | ----------- | --- | ------------- | ------- | --------- | ---
|               |      |             |     |               |         |           |    
|Bill McFie     | 2005 | $250,000    | 0   | 0             | 350,000 | 1,000,000 | 0  
|Vice-President | 2004 | n/a         | n/a | n/a           | n/a     | n/a       | n/a
|               | 2003 | n/a         | n/a | n/a           | n/a     | n/a       | n/a
|               |      |             |     |               |         |           |    
|John Punzo     | 2005 | 0           | 0   | n/a           | 0       | 0         | 0  
|Former CEO     | 2004 | $120,000(1) | 0   | 180,000(1)(2) | 2,500   | 1,500,000 | 0  
|               | 2003 | $82,488(1)  | 0   | 0             | 0       | 0         | 0  



(1) Payment was accrued in debt

(2) Severance pay of 18 months



OPTION GRANTS IN FISCAL YEAR 2005



|                | Individual Grants                              
|--------------- | -----------------------------------------------
|Name            | Number of Securities Underlying Options Granted
|Peter Rosenthal | 250,000                                        
|                | 1,250,000                                      
|David Makertich | 250,000                                        
|                | 1,000,000                                      
|Bill McFie      | 250,000                                        
|                | 1,000,000                                      
|Rasheed Rafidi  | 250,000                                        
|                | 1,250,000                                      
|Ala Nuseibeh    | 250,000                                        
|                | 1,250,000                                      





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The following table provides the specified information concerning unexercised options held as of April 30, 2004, by the persons named in the Summary Compensation Table:





|                   |                             |  |                |  | Number of Securities Underlying Options at 4/30/04 |  | Value of Unexercised in the Money Options at 4/30/04
|------------------ | --------------------------- |  | -------------- |  | -------------------------------------------------- |  | ----------------------------------------------------
|Name               | Shares Acquired on Exercise |  | Value Realized |  | Exercisable                                        |  | Unexercisable                                       
|Peter Rosenthal    | n/a                         |  |                |  |                                                    |  |                                                     
|Rasheed Rafidi     | n/a                         |  |                |  |                                                    |  |                                                     
|Charles Waterman   | n/a                         |  |                |  |                                                    |  |                                                     
|Christopher Pitman | n/a                         |  |                |  |                                                    |  |                                                     
|Mehdi Varzi        | n/a                         |  |                |  |                                                    |  |                                                     
|Ala Nuseibeh       | n/a                         |  |                |  |                                                    |  |                                                     



ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following table sets forth the beneficial ownership of Common Stock of the Company as of the Record Date for the following: (i) each person or entity who is known to the Company to beneficially own more than 5% of the outstanding shares of the Company's Common Stock; (ii) each of the Company's Directors (and nominees for election as Directors); (iii) the Company's Chief Executive Officer and each of the officers ("Named Officers") named in the Summary Compensation Table herein; and (iv) all Directors and executive officers of the Company as a group.



The number and percentage of shares beneficially owned is determined under rules of the Securities and Exchange Commission ("SEC"), and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or dispositive power and also any shares that the individual has the right to acquire within sixty days of the Record Date through the exercise of any stock option or other right. Unless otherwise indicated in the footnotes, each person has sole voting and dispositive power (or shares such power) with respect to the shares shown as beneficially owned.



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|TITLE OF CLASS | NAME AND ADDRESS OF BENEFICIAL
      OWNER      | AMOUNT AND NATURE OF BENEFICIAL
      OWNERSHIP | PERCENT OF CLASS(2)
|-------------- | ----------------------------------------------- | ----------------------------------------------- | -------------------
|Common Stock   | Rasheed Rafidi                                  | 400,000                                         | 1.58%              
|Common Stock   | Ala Amine
	Nuesibeh                             | 400,000                                         | 1.58%              
|Common Stock   | David Mackertich                                | 350,000                                         | 1.38%              
|Common Stock   | Bill McFie                                      | 350,000                                         | 1.38%              
|Common Stock   | Russ Costin                                     | 188,849                                         | 0.75%              
|Common Stock   | Christopher Pitman                              | 50,000                                          | 0.20%              
|Common Stock   | Mehdi Varzi                                     | 50,000                                          | 0.20%              
|Common Stock   | Charles Waterman                                | 50,000                                          | 0.20%              
|Common Stock   | Peter Rosenthal                                 | 1,050,000                                       | 4.14%              
|Common Stock   | Current Directors and
      Officers as a Group | 2,489,249                                       | 9.83%              



ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



During the year ended April 30, 2005, the Company incurred $157,728 in joint interest billings to BPR Energy, Inc. as a result of operation of the leases in Louisiana (see Note3).  The billings were partially unpaid as of April 30, 2005 and are included in the accompanying consolidated financial statements as
"indebtedness to related party".



During the year ended April 30, 2005, a party related to one of the officers of the Company lent Sonoran $100,000 repayable August 5, 2005 with an interest rate of 12%. The loan remained unpaid as of April 30, 2005 and is included in the accompanying consolidated financial statements as
"indebtedness to related party".



During the year ended April 30, 2004, the Company incurred operational and administrative expenses to a company managed by its then president and CEO, totaling $113,332.  The amount was unpaid as of April 30, 2004 and is included in the accompanying consolidated financial statements as
"indebtedness to related party".



During the last quarter of the year ended April 30, 2004, the Company incurred $110,384 in joint interest billings to BPR Energy, Inc. as a result of operation of the leases in Louisiana). The fees remained unpaid as of April 30, 2004 and are included in the accompanying consolidated financial statements as
"indebtedness to related party".



On December 17, 2004, prior to becoming a Company officer, a former CEO signed a subscription agreement to purchase 3 million shares of the Company's common stock at $.15 per share, or $450,000.  On December 18, 2004, the Company's Board of Directors resolved to reduce the price from $.15 to $.10 per share due to the restricted nature of the stock.  Finally, again on December 18, 2004, the Board resolved to approve a $300,000 signing bonus to the former CEO to be applied as payment for the subscription agreement and related 3 million shares of common stock.  Stock-based compensation related to the transaction totaled $600,000.  Because the transaction occurred between related parties, the stock was valued based on contemporaneous sales to unrelated third parties, or $.20 per share.



Page 20

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During the year ended April 30, 2004, the Company performed a cashless exercise of 2,550,000 stock options held by its then president and CEO.  The exercises resulted in the issuance of 2,389,577 shares of the Company's common stock.  Stock-based compensation related to the transaction totaled $650,779 based on the exercise price of the related options.



During the year ended April 30, 2004, the Company performed a cashless exercise of 350,000 stock options held by a relative of the Company's then president and CEO.  The exercise resulted in the issuance of 318,278 shares of the Company's common stock.  Stock-based compensation related to the transaction totaled $95,483 based on the exercise price of the related options.



During the year ended April 30, 2004, the Company issued 179,844 shares of its common stock to officers and employees as payment for accrued liabilities totaling $44,961.  Because the transaction occurred between related parties, the stock was valued based on contemporaneous sales to unrelated third parties.



During the year ended April 30, 2004, the Company issued 1,000,000 shares of its common stock to its former president as payment for a $200,000 promissory note.  Because the transaction occurred between related parties, the stock was valued based on contemporaneous sales to unrelated third parties.



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.



Page 21

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PART IV



ITEM 13 - EXHIBITS



(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, 2005

Statements of Operations for the periods ended April 30, 2005 and 2004.

Statements of Shareholders' Equity for the periods ended April 30, 2005 and 2004.

Statements of Cash Flows for the periods ended April 30, 2005 and 2004.

Notes to Financial Statements.





(a) 3. EXHIBITS



3.1 - Articles of Incorporation - Cerotex Holdings, Inc.*

3.2 - Articles of Incorporation - Name change from Cerotex Holding, Inc. to Showstar Entertainment Corporation*

3.3 - Amendment to the Articles of Incorporation - Name change from Showstar Entertainment Corporation to Showstar Online.com, Inc.*

3.4 - Bylaws of Showstar - Name change from Certoex Holdings, Inc. to Showstar Entertainment Corporation to Showstar Online.com, Inc.*

3.5 - Amended Articles of Incorporation (filed with Definitive Proxy Statement on August 17, 2000)

3.6 - Amended Bylaws (filed with the Definitive Proxy Statement on August 17, 2000)

4.1 - Convertible Note

4.2 - Convertible Note

10.1 - Content Licensing Agreement with National Register Publishing, a division of Reed Elsevier, Inc.*

10.2 - Supplier Agreement - Leiberman's Gallery, LLP*

10.3 - Agreement dated October 29, 2000 regarding Proposed China Joint Venture*

10.4 - John Punzo Employment Contract dated May 27, 1999*

10.5 - Oil and Gas Purchase Agreement between Sonoran Energy, Inc. and Longbow, LLC for Emjayco Glide #33 Lease (dated October 5, 2002)(1)

10.6 - Oil and Gas Purchase Agreement between Sonoran Energy, Inc. and Longbow, LLC for Keystone/Deer Creek Property (dated October 5, 2002)(21)

10.7 - Deer Creek Property Purchase Agreement (dated February 7, 2003)*

10.8 - Denverton Creek/Malton Black Butte/Maine Prairie/Lambie Ranch Field Property Purchase Agreement (dated March 1, 2003)(1)

10.9 - Services Agreement between Sonoran and Paradigm (Punzo)(1)

14.1 - Code of Ethics

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

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

32.1 - Section 1350 Certification by Chief Executive Officer

32.2 - Section 1350 Certification by Chief Financial Officer



* Incorporated by reference (filed with Company's Form 10-SB on January 14, 2000).

(1) Incorporated by reference (filed with Form 10KSB for the year ended April 30, 2003)



(b) REPORTS ON FORM 8-K



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



Item 4.01. Changes in Registrant's Certifying Accountant



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(a) Previous independent accountants

(i) Effective February 2, 2005, Sonoran Energy, Inc. ("Registrant"), confirmed with its auditors, Cordovano and Honeck, P.C. ("Cordovano"), that the firm would no longer be representing the Registrant as its accountants. As of that date, Registrant informed Cordovano that Cordovano would be dismissed as the Registrant's accounting firm.



(ii) Cordovano last reported on Registrant's financial statements as of September 29, 2004. Registrant's financial statements for the past two years, as audited by Cordovano, included an independent auditor's report containing an explanatory paragraph describing the uncertainty as to the Company's ability to continue as a going concern.



(iii) The change of independent accountants was ratified by the Board of Directors of Registrant on February 2, 2005.



(b) New independent accountants

The Registrant has engaged Epstein, Weber & Conover, P.L.C. ("Epstein") as its new independent accountant on February 2, 2005. Prior to February 2, 2005 the Registrant had not consulted with Epstein regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Registrant's consolidated financial statements, and no written report or oral advice was provided to the Registrant by Epstein concluding there was an important factor to be considered by the Registrant in reaching a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K.



ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES



The following table sets forth the aggregate fees billed from May 1, 2004 to
April 30, 2005 by



Epstein Webber & Canover PLC



|                   |  |   |         
|------------------ |  | - | --------
|Audit Fees         |  | $ | 2,750.00
|Audit Related Fees |  | $ | 0       
|Tax Fees           |  | $ | 0       
|All Other Fees     |  | $ | 0       
|Total              |  | $ | 2,750.00

























































Page 23

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SIGNATURES



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





SONORAN ENERGY, INC.

(Registrant)



August 12, 2005



By: /s/ Peter Rosenthal

Peter Rosenthal

Director/President/CEO



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



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



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





Page 24

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Exhibit 31.1



Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, provides the following certification.



I, Peter Rosenthal, President of Sonoran Energy, Inc. ("Company"), certify that:



1. I have reviewed this annual report on Form 10-KSB of Sonoran Energy, Inc.;



2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to  make the statements made, in light of the circumstances under which such  statements were made, not misleading with respect to the period covered by  this annual report;



3. Based on my knowledge, the financial statements, and other financial  information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of  the Company as of, and for, the periods presented in this annual report;



4. The other certifying directors and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))  and internal control over financial  reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for   Sonoran and have:



a.  Designed such disclosure controls and procedures, or caused such  disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to Sonoran Energy, Inc.,  including its consolidated subsidiaries, is made known to us by other       within those entities, particularly during the period in which this report  is being prepared;



b. Designed such internal control over financial reporting, or caused  such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of  financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting  principles.



c.  Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about   the effectiveness of the disclosure controls and procedures, as of the end  of the period covered by this report on such evaluation; and



d.  Disclosed in this report any change in Sonoran Energy, Inc.'s internal control over financial reporting that occurred during Sonoran's fourth fiscal quarter that has materially affected, or is reasonably likely to  materially affect, Sonoran's internal control over financial reporting; and



5. The other certifying directors and I have disclosed, based on our most  recent evaluation of internal control over financial reporting, to the  Company's auditors and the audit committee of our board of directors (or  persons performing the equivalent functions):

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



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



Date: August 12, 2005



/s/ Peter Rosenthal

Peter Rosenthal, President

---



Exhibit 31.2



Pursuant to the requirements of Rule 13a-14 of the Securities Exchange Act of 1934, as amended, provides the following certification.



I, Rasheed Rafidi, Chief Financial Officer of Sonoran Energy, Inc. ("Company"), certify that:



1.  I have reviewed this annual report on Form 10-KSB of Sonoran Energy, Inc.;



2. Based on my knowledge, this annual report does not contain any untrue  statement of a material fact or omit to state a material fact necessary to  make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by  this annual report;



3.  Based on my knowledge, the financial statements, and other financial  information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this annual report;



4. The other certifying directors and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))  and internal control over financial  reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for Sonoran and have:



a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to Sonoran Energy, Inc., including its consolidated subsidiaries, is made known to us by other       within those entities, particularly during the period in which this report is being prepared;



b. Designed such internal control over financial reporting, or caused  such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of  financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting  principles.



c.  Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end  of the period covered by this report on such evaluation; and



d.  Disclosed in this report any change in Sonoran Energy, Inc.'s internal  control over financial reporting that occurred during Sonoran's fourth fiscal quarter that has materially affected, or is reasonably likely to  materially affect, Sonoran's internal control over financial reporting; and



5. The other certifying directors and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the  Company's auditors and the audit committee of our board of directors (or persons performing the equivalent functions):



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



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



Date:  August 12,  2005



/s/ Rasheed Rafidi

Rasheed Rafidi, CFO

---



Exhibit 32.1



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



In connection with the Annual Report of Sonoran Energy, Inc. on Form 10-KSB for the year ending April 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Peter Rosenthal, President of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



/s/ Peter Rosenthal

Peter Rosenthal

President

August 12, 2005

---



Exhibit 32.2



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



In connection with the Annual Report of Sonoran Energy, Inc. on Form 10-KSB for the year ending April 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Rasheed Rafidi, CFO of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



/s/ Rasheed Rafidi

Rasheed Rafidi

Chief Financial Officer

August 12, 2005