##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission file number: 000-27485
 SUN RIVER ENERGY, INC.
  Colorado
    
    84-1491159(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 5950 Berkshire Lane, Suite 1650, Dallas, Texas 75225
 (214) 369-7300
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS
 PART IFINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements
    
    
    1Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    22PART IIOTHER INFORMATION
    
    
    24Item 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    25Item 4. (Removed and Reserved)
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25EX-10.1EX-10.2EX-31.1EX-32.1
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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements.
 SUN RIVER ENERGY, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
 October 31,
    
    
    April 30,2010
    
    
    2010(Unaudited)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    82,678
    
    
    $
    39,817Accounts
receivable, net
    
    
    24,147
    
    
    
    Total Current Assets
    
    
    106,825
    
    
    
    39,817Oil and Gas Property (Full Cost Method), at cost
    
    
    4,020,693
    
    
    
    998,781Fixed Assets, net of depreciation
    
    
    118,298
    
    
    
    Goodwill
    
    
    286,605
    
    
    
    Deposits
    
    
    450,000
    
    
    
    Total Assets
    
    $
    4,982,421
    
    
    $
    1,038,598Liabilities and Stockholders Equity/(Deficit)Current LiabilitiesAccounts payable and accrued expenses
    
    $
    880,237
    
    
    $
    1,639,948Accounts payable  related party
    
    
    285,404
    
    
    
    Note payable  related party
    
    
    1,000,000
    
    
    
    Notes payable
    
    
    354,456
    
    
    
    1,204,295Total Current Liabilities
    
    
    2,520,097
    
    
    
    2,844,243Stockholders Equity/(Deficit)Common stock, $0.0001 par value; 100,000,000 shares
authorized,23,946,727 and 19,373,995 shares issued and
outstanding at October 31, 2010 and April 30, 2010, respectively
    
    
    2,396
    
    
    
    1,938Preferred
Stock, 10,000,000 share authorized no shares issued and outstanding at October 31,
2010 & April 30, 2010, respectively
    
    
    
    
    
    
    Additional paid-in capital
    
    
    13,161,699
    
    
    
    7,416,145Stock to be delivered for debt
    
    
    (470,435
    )
    
    
    (470,435
    )Deficit accumulated during the development stage
    
    
    (10,231,336
    )
    
    
    (8,753,293
    )Total Stockholders Equity/(Deficit)
    
    
    2,462,324
    
    
    
    (1,805,646
    )Total Liabilities and Stockholders Equity/(Deficit)
    
    $
    4,982,421
    
    
    $
    1,038,598
  1




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##### Table of Contents



SUN RIVER ENERGY, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months Ended
    
    
    For the Six Months Ended
    
    
    October 22, 2002October 31,
    
    
    October 31,
    
    
    (inception) to2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    October 31, 2010Revenue:
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operational expenses:Depreciation
    
    
    27,696
    
    
    
    540
    
    
    
    27,696
    
    
    
    540
    
    
    
    28,896Operating costs
    
    
    10,105
    
    
    
    
    
    
    
    10,105
    
    
    
    
    
    
    
    699,626General and administrative expenses
    
    
    932,670
    
    
    
    547,366
    
    
    
    1,938,101
    
    
    
    1,138,621
    
    
    
    7,888,287Total operational expenses
    
    
    970,471
    
    
    
    547,906
    
    
    
    1,975,902
    
    
    
    1,139,161
    
    
    
    8,616,809Net loss from operations
    
    
    (970,471
    )
    
    
    (547,906
    )
    
    
    (1,975,902
    )
    
    
    (1,139,161
    )
    
    
    (8,616,809
    )Other Income (Expenses)Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,032Interest expense
    
    
    (25,660
    )
    
    
    (29,783
    )
    
    
    (52,141
    )
    
    
    (60,459
    )
    
    
    (1,128,635
    )Forgiveness
of debt
    
    
    
    
    
    
    75,773
    
    
    
    
    
    
    
    75,773
    
    
    
    505,418Loss on claim release
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,298,603
    )Realized loss on sale of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (245,739
    )Gain on settlement of litigation
    
    
    550,000
    
    
    
    
    
    
    
    550,000
    
    
    
    
    
    
    
    550,000Total other income (expenses)
    
    
    524,340
    
    
    
    45,990
    
    
    
    497,859
    
    
    
    15,314
    
    
    
    (1,614,527
    )Net loss
    
    $
    (446,131
    )
    
    $
    (501,916
    )
    
    $
    (1,478,043
    )
    
    $
    (1,123,847
    )
    
    $
    (10,231,336
    )Per share informationNet loss per common shareBasic and diluted
    
    $
    (0.02
    )
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.07
    )Weighted average number of common
stock outstanding
    
    
    23,581,010
    
    
    
    17,467,512
    
    
    
    21,630,012
    
    
    
    17,053,762
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SUN RIVER ENERGY, INC.
(A Development Stage Company)CONSOLIDATED STATEMENT OF CASH FLOWS
 October 22, 2002For the Six Months Ended
    
    
    (Inception) toOctober 31,
    
    
    October 31,2010
    
    
    2009
    
    
    2010Cash Flows from Operating Activities:Net Loss
    
    $
    (1,478,043
    )
    
    $
    (1,123,847
    )
    
    $
    (10,231,336
    )Adjustments to reconcile net loss to net cash used
in operating activities:Depreciation
    
    
    27,696
    
    
    
    540
    
    
    
    28,896Unrealized gain on marketable securities
    
    
    
    
    
    
    
    
    
    
    40,765Equity issued for services and interest
    
    
    1,155,346
    
    
    
    781,590
    
    
    
    5,150,966Amortization of consulting stock
    
    
    
    
    
    
    
    
    
    
    115,000Foregiveness of debt
    
    
    
    
    
    
    (75,773
    )
    
    
    (75,773
    )Changes in current assets and liabilities:Increase in accounts receivable
    
    
    (24,147
    )
    
    
    
    
    
    
    (24,147
    )Increase in accounts payable and accrued liabilities
    
    
    (10,711
    )
    
    
    403,390
    
    
    
    1,408,363Increase in accounts payable  related party
    
    
    285,404
    
    
    
    
    
    
    
    285,404Cash acquired in acquisition
    
    
    188
    
    
    
    
    
    
    
    188Net Cash (Used) Received by Operating Activities
    
    
    (44,267
    )
    
    
    (14,100
    )
    
    
    (3,301,674
    )Cash Flows from Investing Activities:Decrease in oil and gas properties
    
    
    92,128
    
    
    
    
    
    
    
    92,128Increase in fixed assets
    
    
    
    
    
    
    
    
    
    
    (1,200
    )Increase in other assets
    
    
    
    
    
    
    
    
    
    
    (611,311
    )Sale of marketable securities
    
    
    
    
    
    
    
    
    
    
    52,600Acquisition  net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (813,001
    )Net Cash used in Investing Activities
    
    
    92,128
    
    
    
    
    
    
    
    (1,280,784
    )Cash Flows from Financing Activities:Common stock issued for cash
    
    
    
    
    
    
    
    
    
    
    1,444,750Common stock issued for debt/assets
    
    
    
    
    
    
    
    
    
    
    1,872,419Proceeds (Payments) from advances
    
    
    
    
    
    
    37,053
    
    
    
    43,062Proceeds (Payments) from notes payable
    
    
    (5,000
    )
    
    
    (20,000
    )
    
    
    1,325,780Merger accounting
    
    
    
    
    
    
    
    
    
    
    (20,875
    )Net Cash Provided by Financing Activities
    
    
    5,000
    
    
    
    17,053
    
    
    
    4,665,136Net increase (decrease) in Cash
    
    
    42,861
    
    
    
    2,953
    
    
    
    82,678Cash and Cash Equivalents  Beginning of Period
    
    
    39,817
    
    
    
    38,851
    
    
    
    Cash and Cash Equivalents  End of Period
    
    $
    82,678
    
    
    $
    41,804
    
    
    $
    82,678SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest expense
    
    $
    
    
    
    $
    
    
    
    $
    Cash paid for income taxes
    
    $
    
    
    
    $
    
    
    
    $
    SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:Issuance of common stock for payment of
debt and accrued interest
    
    $
    
    
    
    $
    828,289
    
    
    $
    847,279Issuance of common stock for payment of
promissory notes
    
    $
    1,639,127
    
    
    $
    
    
    
    $
    2,486,636Issuance of common stock for marketable
securities
    
    $
    
    
    
    $
    
    
    
    $
    400,000Issuance of common stock for other assets
    
    $
    
    
    
    $
    
    
    
    $
    440,000Issuance of common stock for oil and gas properties
    
    $
    2,114,000
    
    
    $
    
    
    
    $
    2,114,000Issuance of loan for oil and gas properties
    
    $
    1,000,000
    
    
    $
    
    
    
    $
    1,000,000Issuance of common stock equipment
    
    $
    387,500
    
    
    $
    
    
    
    $
    387,500Issuance of
common stock  for deposits
    
    $
    450,000
    
    
    $
    
    
    
    $
    450,000
  3




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SUN RIVER ENERGY, INC. & SUBSIDIARY
(A Development Stage Company)
Notes to the Consolidated Financial Statements
October 31, 2010
(Unaudited)
 Note 1  Organization, Basis of Presentation and Summary of Significant Accounting Policies
 Organization
   Basis of Presentation
 Consolidation
  Development Stage Company
  Interim Presentation
  4




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Significant Accounting Policies
 Use of Estimates
  Cash and Cash Equivalents
  Revenue Recognition
  Property and Equipment
  Goodwill
and Intangible Assets
  Oil and
Gas Properties, Full Cost Method
 
 Value of Financial Instruments
  Stock-Based Compensation
   Other Comprehensive Income
  5




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Loss Per Share
  Income Taxes
  Recently Issued Accounting Pronouncements
 Proposed Accounting Standard
Update (Topic 450)  Disclosure of Certain Loss Contingencies
  Note 2  Going Concern and Managements Plan of Operations
   Note 3  Property and Equipment, Net
  Computer equipment
    
    $
    102,952Furniture and fixtures
    
    
    43,042Property and Equipment, Cost
    
    
    145,994Less: Accumulated Depreciation
    
    
    (27,696
    )Property and Equipment, Net
    
    $
    118,298
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Note 4  Oil and Gas Properties, Leases and Mineral Rights
 Mineral Rights  New Mexico
   AssetYear
    
    Acquisition
    
    Development
    
    Sale of
    
    Impairment
    
    RetirementIncurred
    
    Costs
    
    Costs
    
    Properties
    
    of Properties
    
    Costs
    
    TotalBalance at April
30, 2010
    
    $
    998,781
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    998,171May 1, 2010 to
October 31, 2010
    
    $
    3,021,912
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,021,912Total
    
    $
    4,020,693
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4,020,693
   7




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Note 5  Acquisitions
 Acquisition of PC Operating Texas Inc.
   Cash
    
    $
    188Fixed assets
    
    
    145,994Accounts payable
    
    
    (45,287
    )Net assets acquired
    
    
    100,895Value of common stock
    
    
    387,500Goodwill
    
    $
    286,605
 Acquisition
of Certain Interests from FTP Oil and Gas LP
    8




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Acquisition of Katy Resources ETX, LLC  Pending
      Farmout Agreement with Devon Energy Production Co., L.P.
  9




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Note 6  Notes Payable
 Outstanding Notes Payable
   Notes Payable Converted to Common Stock
   10




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Note 7  Notes Payable  Related Party
 Outstanding Notes Payable  Related Party
  Notes Payable  Related Party Converted to Common Stock
   11




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Note 8  Stockholders Deficit
 Preferred Stock
  Common Stock
      Note 7)
  Warrants
   12




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2010Expected life
    
    1 yearVolatility
    

    62% - 151%Risk-free interest rate
    

    4.5% - 4.75%Dividend yield
    

    0
    Weighted
    
    WeightedAverage
    
    Average
    
    AggregateShares Under
    
    Exercise
    
    Remaining
    
    IntrinsicWarrant
    
    Price
    
    Contractual Life
    
    ValueOutstanding at May 1, 2010
    
    
    1,660,000
    
    
    $
    2.00
    
    
    1.54 years
    
    $
    Granted Exercised Expired
    
    
    238,056
    
    
    
    1.55
    
    
    3.00 years
    
    
    Outstanding at October
31, 2010
    
    
    1,895,056
    
    
    $
    1.94
    
    
    1.73 years
    
    $
    
 Note 9 Employment Agreements
   13




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Note 10  Litigation
 LPC Investments, LLC Litigation
   14




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LPC Investments, LLC v Sun River Energy,
Inc.
 Spencer Edwards Litigation
   Note 11  Subsequent Events
   15




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16




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 CAUTIONARY AND FORWARD LOOKING STATEMENTS
 In addition to statements of historical fact, this Quarterly Report on Form 10-Q for the quarter ended October 31, 2010 contains forward-looking statements. The presentation of
future aspects of
Sun River Energy, Inc. (Sun River, the Company or issuer) found in these statements is
subject to a number of risks and uncertainties that could cause actual results to differ materially
from those reflected in such statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect managements analysis only as of the date hereof.
Without limiting the generality of the foregoing, words such as may, will, expect, believe,
anticipate, intend, or could or the negative variations thereof or comparable terminology are
intended to identify forward-looking statements.
 These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause the Companys actual results to be materially different from any future
results expressed
or implied by the Company in those statements. Important facts that could prevent the Company from
achieving any stated goals include, but are not limited to, the following:
 Some of these risks might include, but are not limited to, the following:
 (a)
    
    volatility or decline of the Companys stock price;(b)
    
    potential fluctuation in quarterly results;(c)
    
    failure of the Company to earn revenues or profits;(d)
    
    inadequate capital to continue or expand its business, inability to raise
additional capital or financing to implement business plans;(e)
    
    failure to commercialize its technology or to make sales;(f)
    
    rapid and significant changes in markets;(g)
    
    litigation with or legal claims and allegations by outside parties; and(h)
    
    insufficient revenues to cover operating costs.
 The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully
review the
factors described in other documents the Company files, from time to time, with the SEC, including
the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed by the Company.
 Overview and Plan of Operations
   17




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Results of Operations
 Three Months Ended October 31, 2010 compared to the Three Months Ended October 31, 2009.
 Revenue.
 Operational Expenses
 Interest Expense.
 Gain on Settlement LPC Investments, LLC v Sun
River Energy, Inc.
 Net Loss
 18




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Six Months Ended October 31, 2010 compared to the Six Months Ended October 31, 2009.
 Revenue.
 Operational Expenses
 Interest
Expense.
 Debt Relief.
 Gain on Settlement. LPC Investments, LLC v Sun River Energy,
Inc.
 Net Loss
     19




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Operating Activities.
 Investing
Activities.
 Financing Activities.
 Conversion of Debt
  Critical Accounting Policies and Estimates
  Oil and Gas Properties and Reserves
   20




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Impairment of Long-lived Assets
  Stock-Based Compensation
  Recent Accounting Pronouncements
  Proposed Accounting Standard Update (Topic 450)  Disclosure of
Certain Loss Contingencies
 21




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Off Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Reduced Commodity Prices May Result in Ceiling Test Write-Downs and Other Impairments
   Reduced Commodity Prices May Impact Our Ability to Produce Economically
  
 Item 4. Controls and Procedures.
  22




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PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings.
 Holme, Roberts & Owen
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  DATE OF
    
    TITLE OF
    
    NO. OF
    
    
    
    CLASS OFSALE
    
    SECURITIES
    
    SHARES
    
    CONSIDERATION
    
    PURCHASER8/6/2010
    
    Common Stock
    
    
    100,000
    
    
    Consulting Agreement
$155,000
    
    Consultant8/30/2010
    
    Common Stock
    
    
    20,000
    
    
    Consulting Fee
$32,400
    
    Related Party8/31/2010
    
    Warrants
    
    
    20,000
    
    
    Consulting Fee
$7,600
    
    Related Party8/31/2010
    
    Common Stock
    
    
    40,908
    
    
    Promissory Note
$63,230
    
    Vendor9/30/2010
    
    Common Stock
    
    
    20,000
    
    
    Consulting Fee
$36,000
    
    Related Party9/30/2010
    
    Warrants
    
    
    20,000
    
    
    Consulting Fee
$7,840
    
    Related Party10/19/2010
    
    Common Stock
    
    
    20,000
    
    
    Consulting Fee
$41,000
    
    Related Party10/29/2010
    
    Warrants
    
    
    20,000
    
    
    Consulting Fee
$8,280
    
    Related Party
  24




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Item 3. Defaults Upon Senior Securities.
  
 Item 4. (Removed and Reserved).
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
 Exhibit No.
    
    Description10.1
    
    Promissory Note dated June 10, 2010 between Sun River Energy,
Inc. and J.H. Brech, LLC.10.2
    
    Promissory Note dated November 1, 2010 between Sun River
Energy, Inc. and Cicerone Corporate Development, LLC.31.1
    
    Certifications of Chief Executive Officer and Principal
Financial Officer pursuant to Section 302 of Sarbanes Oxley
Act of 200232.1
    
    Certifications of Chief Executive Officer and Principal
Financial Officer pursuant to Section 906 of Sarbanes Oxley
Act of 2002
 25




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SIGNATURES
  SUN RIVER ENERGY, INC.Date:  December 20, 2010
    By:
    /s/ Donal R. Schmidt, Jr.Name:
    Donal R. Schmidt, Jr.Title:
    President and CEO 26