UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q


(Mark One)





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





For the
quarterly period ended July 31,
2010





or





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





For the
transition period from _________to _________





Commission
file number: 000-27485





SUN RIVER ENERGY,
INC.


(Exact
name of registrant as specified in its charter)





Colorado
              84-1491159(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      No.)




5950 Berkshire Lane, Suite
1650, Dallas, Texas 75225


(Address
of principal executive offices) (Zip Code)




Registrant's
telephone number, including area code:(214)
739-9191




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


x Yes  ̈ No





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


 ̈ Yes  ̈ No





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer  ̈
            Accelerated
      filer  ̈Non-accelerated
      filer  ̈ (Do
      not check if a smaller reporting company) Smaller reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


 ̈ Yes x No


There
were 23,646,727 shares issued and outstanding of the registrant's Common Stock
as of September 8, 2010.





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.
                                                                  15Item 3. Quantitative and Qualitative Disclosures
      About Market Risk.
                                                                  20Item 4. Controls and
      Procedures.
                                                                  20PART II—OTHER INFORMATION
                                                                  22Item 1. Legal Proceedings.
                                                                  22Item 1A. Risk Factors.
                                                                  22Item 2. Unregistered Sales of Equity Securities
      and Use of Proceeds.
                                                                  22Item 3. Defaults Upon Senior
      Securities.
                                                                  23Item 4. (Removed and
    Reserved).
                                                                  23Item 5. Other Information.
                                                                  23Item 6. Exhibits.
                                                                  23


i


PART
I—FINANCIAL INFORMATION





Item
1. Financial Statements.




SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 BALANCE
SHEETS
 
 July 31,
                          
                          
                          April 30,2010
                          
                          
                          2010(Unaudited)
                          
                          
                          (Audited)AssetsCurrent
      Assets:Cash
      and cash equivalents
                          
                          $
                          39,817
                          
                          
                          $
                          39,817Total
      Current Assets
                          
                          
                          39,817
                          
                          
                          
                          39,817Fixed
      Assets, net of depreciation $1,740 and $1,200,
respectively
                          
                          
                          -
                          
                          
                          
                          -Other
      assets:Leases
                          
                          
                          220,000
                          
                          
                          
                          220,000Mineral
      rights
                          
                          
                          100,000
                          
                          
                          
                          100,000Wells
      in process and advances
                          
                          
                          678,781
                          
                          
                          
                          678,781Total
      Other Assets
                          
                          
                          998,781
                          
                          
                          
                          998,781Total
      Assets
                          
                          $
                          1,038,598
                          
                          
                          $
                          1,038,598Liabilities
      and Stockholders' DeficitCurrent
      liabilitiesAccounts
      payable
                          
                          $
                          473,601
                          
                          
                          $
                          876,055Accrued
      interest payable
                          
                          
                          200,733
                          
                          
                          
                          213,893Accrued
      litigation expense
                          
                          
                          550,000
                          
                          
                          
                          550,000Stock
      to delivered for debt
                          
                          
                          (470,435
                          )
                          
                          
                          (470,435
                          )Drilling
      bonds payable
                          
                          
                          37,507
                          
                          
                          
                          37,508Notes
      payable
                          
                          
                          1,832,338
                          
                          
                          
                          1,166,787Total
      Current Liabilities
                          
                          
                          2,623,744
                          
                          
                          
                          2,373,808Stockholders'  DeficitCommon
      stock, $0.0001 par value; 100,000,000 shares authorized 20,367,222 and
      19,373,995 issued at July 31, 2010 and April 30, 2010,
      respectively
                          
                          
                          2,037
                          
                          
                          
                          1,937Additional
      paid-in capital
                          
                          
                          5,931,462
                          
                          
                          
                          5,171,705APIC
      unexercised warrants
                          
                          
                          2,266,560
                          
                          
                          
                          2,228,460Deficit
      accumulated during the development stage
                          
                          
                          (9,785,205
                          )
                          
                          
                          (8,737,313
                          )Total
      Stockholders' Deficit
                          
                          
                          (1,585,146
                          )
                          
                          
                          (1,335,211
                          )Total
      Liabilities and Stockholders' Deficit
                          
                          $
                          1,038,598
                          
                          
                          $
                          1,038,598
 
 See the
notes to these financial statements.
  1
 
 SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 STATEMENTS
OF OPERATIONS
 (Unaudited)
 
 For the Three Months Ended
                    
                    
                    October 22, 2002July 31,
                    
                    
                    (inception) to2010
                    
                    
                    2009
                    
                    
                    July 31, 2010Revenue:
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Operational
      expenses:Consulting
      expenses
                    
                    
                    640,696
                    
                    
                    
                    426,597
                    
                    
                    
                    4,628,749Officer
      and Director fees
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    459,695Depreciation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,200Lease
      expenses
                    
                    
                    40,533
                    
                    
                    
                    -
                    
                    
                    
                    730,054Litigation
      expense
                    
                    
                    135,873
                    
                    
                    
                    -
                    
                    
                    
                    685,873General
      and administrative expenses
                    
                    
                    188,329
                    
                    
                    
                    164,658
                    
                    
                    
                    1,140,767Total
      operational expenses
                    
                    
                    1,005,431
                    
                    
                    
                    591,255
                    
                    
                    
                    7,646,338Net
      loss from operations
                    
                    
                    (1,005,431
                    )
                    
                    
                    (591,255
                    )
                    
                    
                    (7,646,338
                    )Other
      Income (Expenses)Interest
      income
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3,032Interest
      expense
                    
                    
                    (26,481
                    )
                    
                    
                    (30,676
                    )
                    
                    
                    (1,102,975
                    )Debt
      relief
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    505,418Loss
      on claim release
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1,298,603
                    )Realized
      loss on sale of assets
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (245,739
                    )Unrealized
      gain (loss) on investments
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -(26,481
                    )
                    
                    
                    (30,676
                    )
                    
                    
                    (2,138,867
                    )Net
      loss
                    
                    $
                    (1,031,912
                    )
                    
                    $
                    (621,931
                    )
                    
                    $
                    (9,785,205
                    )Per
      share informationNet
      loss per common shareBasic
                    
                    $
                    (0.05
                    )
                    
                    $
                    (0.04
                    )Fully
      diluted
                    
                    $
                    (0.05
                    )
                    
                    $
                    (0.04
                    )Weighted
      average number of common stock outstanding
                    
                    
                    18,640,916
                    
                    
                    
                    16,707,858
 
 See the
notes to these financial statements.
  2
 
 SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Statement
of Stockholders' Equity (Deficit)
 From
October 22, 2002 (Inception) through July 31, 2010
 (Unaudited)
 
 DeficitCOMMON STOCK
                                                                    
                                                                    
                                                                    Additonal
                                                                    
                                                                    
                                                                    APIC
                                                                    
                                                                    
                                                                    Accum. During
                                                                    
                                                                    
                                                                    TotalPaid-in
                                                                    
                                                                    
                                                                    Unexercised
                                                                    
                                                                    
                                                                    Development
                                                                    
                                                                    
                                                                    Stockholders'# of Shares
                                                                    
                                                                    
                                                                    Amount
                                                                    
                                                                    
                                                                    Capital
                                                                    
                                                                    
                                                                    Warrants
                                                                    
                                                                    
                                                                    Stage
                                                                    
                                                                    
                                                                    DeficitBalance
      - October 22, 2002
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -Stock
      issued for cash
                                                                    
                                                                    
                                                                    1,000
                                                                    
                                                                    
                                                                    
                                                                    1
                                                                    
                                                                    
                                                                    
                                                                    49
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    50Net
      Loss for Period
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (50
                                                                    )
                                                                    
                                                                    
                                                                    (50
                                                                    )Balance
      - December 31, 2002
                                                                    
                                                                    
                                                                    1,000
                                                                    
                                                                    
                                                                    
                                                                    1
                                                                    
                                                                    
                                                                    
                                                                    49
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (50
                                                                    )
                                                                    
                                                                    
                                                                    -Net
      Loss for Year
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -Balance
      - December 31, 2003
                                                                    
                                                                    
                                                                    1,000
                                                                    
                                                                    
                                                                    
                                                                    1
                                                                    
                                                                    
                                                                    
                                                                    49
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (50
                                                                    )
                                                                    
                                                                    
                                                                    -Net
      Loss for Year
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -Balance
      - December 31, 2004
                                                                    
                                                                    
                                                                    1,000
                                                                    
                                                                    
                                                                    
                                                                    1
                                                                    
                                                                    
                                                                    
                                                                    49
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (50
                                                                    )
                                                                    
                                                                    
                                                                    -Issuance
      of shares for Merger
                                                                    
                                                                    
                                                                    9,033,333
                                                                    
                                                                    
                                                                    
                                                                    903
                                                                    
                                                                    
                                                                    
                                                                    436,763
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    437,666Merger
      accounting
                                                                    
                                                                    
                                                                    484,500
                                                                    
                                                                    
                                                                    
                                                                    48
                                                                    
                                                                    
                                                                    
                                                                    (20,923
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (20,875
                                                                    )Value
      of subsidiary in excess of related party's basis
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (866,667
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (866,667
                                                                    )Net
      Loss for Year
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (350,050
                                                                    )
                                                                    
                                                                    
                                                                    (350,050
                                                                    )Balance
      - April 30, 2006
                                                                    
                                                                    
                                                                    9,518,833
                                                                    
                                                                    
                                                                    
                                                                    952
                                                                    
                                                                    
                                                                    
                                                                    (450,778
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (350,100
                                                                    )
                                                                    
                                                                    
                                                                    (799,926
                                                                    )Issuance
      of Stock for Cash
                                                                    
                                                                    
                                                                    795,000
                                                                    
                                                                    
                                                                    
                                                                    80
                                                                    
                                                                    
                                                                    
                                                                    397,420
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    397,500at
      $0.50 per share plus warrant at $0.75Issuance
      of Stock for Debt
                                                                    
                                                                    
                                                                    242,935
                                                                    
                                                                    
                                                                    
                                                                    24
                                                                    
                                                                    
                                                                    
                                                                    149,976
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    150,000at
      $0.62 per shareIssuance
      of Stock for Marketable Securities
                                                                    
                                                                    
                                                                    800,000
                                                                    
                                                                    
                                                                    
                                                                    80
                                                                    
                                                                    
                                                                    
                                                                    399,920
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    400,000at
      $0.50 per shareIssuance
      of Stock for Services
                                                                    
                                                                    
                                                                    309,000
                                                                    
                                                                    
                                                                    
                                                                    31
                                                                    
                                                                    
                                                                    
                                                                    154,469
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    154,500at
      $0.50 per shareIssuance
      of Stock for Lease acquisition
                                                                    
                                                                    
                                                                    880,000
                                                                    
                                                                    
                                                                    
                                                                    88
                                                                    
                                                                    
                                                                    
                                                                    439,912
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    440,000Issuance
      of Stock for Cash
                                                                    
                                                                    
                                                                    2,200,000
                                                                    
                                                                    
                                                                    
                                                                    220
                                                                    
                                                                    
                                                                    
                                                                    1,099,780
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    1,100,000Net
      Loss for Year
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (661,339
                                                                    )
                                                                    
                                                                    
                                                                    (661,339
                                                                    )Balance
      - April 30, 2007
                                                                    
                                                                    
                                                                    14,745,768
                                                                    
                                                                    
                                                                    
                                                                    1,475
                                                                    
                                                                    
                                                                    
                                                                    2,190,699
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (1,011,439
                                                                    )
                                                                    
                                                                    
                                                                    1,180,735Issuance
      of Stock for Services
                                                                    
                                                                    
                                                                    310,000
                                                                    
                                                                    
                                                                    
                                                                    31
                                                                    
                                                                    
                                                                    
                                                                    468,969
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    469,000at
      $1.51 per shareIssuance
      of Stock for Interest
                                                                    
                                                                    
                                                                    20,000
                                                                    
                                                                    
                                                                    
                                                                    2
                                                                    
                                                                    
                                                                    
                                                                    50,998
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    51,000at
      $2.55 per shareOptions
      issued
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    43,340
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    43,340Net
      Loss for Year
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (2,537,051
                                                                    )
                                                                    
                                                                    
                                                                    (2,537,051
                                                                    )Balance
      - April 30, 2008
                                                                    
                                                                    
                                                                    15,075,768
                                                                    
                                                                    
                                                                    
                                                                    1,508
                                                                    
                                                                    
                                                                    
                                                                    2,754,006
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (3,548,490
                                                                    )
                                                                    
                                                                    
                                                                    (792,976
                                                                    )Issuance
      of Stock for Servicesat
      average price of $0.47
                                                                    
                                                                    
                                                                    485,000
                                                                    
                                                                    
                                                                    
                                                                    48
                                                                    
                                                                    
                                                                    
                                                                    228,202
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    228,250Issuance
      of Stock for Interestat
      average price of $0.28
                                                                    
                                                                    
                                                                    100,000
                                                                    
                                                                    
                                                                    
                                                                    10
                                                                    
                                                                    
                                                                    
                                                                    27,990
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    28,000Issuance
      of Stock in exchange fordebt
      at an average price of $0.25
                                                                    
                                                                    
                                                                    500,000
                                                                    
                                                                    
                                                                    
                                                                    50
                                                                    
                                                                    
                                                                    
                                                                    124,950
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    125,000Exchange
      stock for cashless warrants
                                                                    
                                                                    
                                                                    156,655
                                                                    
                                                                    
                                                                    
                                                                    16
                                                                    
                                                                    
                                                                    
                                                                    (16
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -Warrants
      issued for services
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    36,060
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    36,060Warrants
      issued to directors
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    1,960,000
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    1,960,000Net
      loss for year
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (2,827,376
                                                                    )
                                                                    
                                                                    
                                                                    (2,827,376
                                                                    )Balance
      - April 30, 2009
                                                                    
                                                                    
                                                                    16,317,423
                                                                    
                                                                    
                                                                    
                                                                    1,632
                                                                    
                                                                    
                                                                    
                                                                    3,135,132
                                                                    
                                                                    
                                                                    
                                                                    1,996,060
                                                                    
                                                                    
                                                                    
                                                                    (6,375,866
                                                                    )
                                                                    
                                                                    
                                                                    (1,243,042
                                                                    )Issuance
      of stock for conversionof
      promissory notes
                                                                    
                                                                    
                                                                    2,290,036
                                                                    
                                                                    
                                                                    
                                                                    229
                                                                    
                                                                    
                                                                    
                                                                    572,280
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    572,509Issuance
      of stock for debt payment
                                                                    
                                                                    
                                                                    287,545
                                                                    
                                                                    
                                                                    
                                                                    29
                                                                    
                                                                    
                                                                    
                                                                    572,250
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    572,279Issuance
      of stock for services
                                                                    
                                                                    
                                                                    324,500
                                                                    
                                                                    
                                                                    
                                                                    32
                                                                    
                                                                    
                                                                    
                                                                    644,058
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    644,090Issuance
      of stock for services - officers
                                                                    
                                                                    
                                                                    125,000
                                                                    
                                                                    
                                                                    
                                                                    12
                                                                    
                                                                    
                                                                    
                                                                    247,988
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    248,000Issuance
      of stock for cashless
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    -warrant
      exercise
                                                                    
                                                                    
                                                                    29,491
                                                                    
                                                                    
                                                                    
                                                                    3
                                                                    
                                                                    
                                                                    
                                                                    (3
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -Issuance
      of warrants for services
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    248,380
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    248,380Net
      loss for period
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (2,377,427
                                                                    )
                                                                    
                                                                    
                                                                    (2,377,427
                                                                    )Balance
      - April 30, 2010
                                                                    
                                                                    
                                                                    19,373,995
                                                                    
                                                                    
                                                                    
                                                                    1,937
                                                                    
                                                                    
                                                                    
                                                                    5,171,705
                                                                    
                                                                    
                                                                    
                                                                    2,244,440
                                                                    
                                                                    
                                                                    
                                                                    (8,753,293
                                                                    )
                                                                    
                                                                    
                                                                    (1,335,211
                                                                    )Issuance
      of stock for conversionof
      promissory notes
                                                                    
                                                                    
                                                                    608,227
                                                                    
                                                                    
                                                                    
                                                                    62
                                                                    
                                                                    
                                                                    
                                                                    151,996
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    152,058Issuance
      of stock for services
                                                                    
                                                                    
                                                                    285,000
                                                                    
                                                                    
                                                                    
                                                                    29
                                                                    
                                                                    
                                                                    
                                                                    435,272
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    435,300Issuance
      of stock for services - officers
                                                                    
                                                                    
                                                                    100,000
                                                                    
                                                                    
                                                                    
                                                                    10
                                                                    
                                                                    
                                                                    
                                                                    172,490
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    172,500Issuance
      of stock for cashlesswarrant
      exercise
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    -Issuance
      of warrants for services
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    22,120
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    22,120Net
      loss for period
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    (1,031,912
                                                                    )
                                                                    
                                                                    
                                                                    (1,031,912
                                                                    )Balance
      - July 31, 2010
                                                                    
                                                                    
                                                                    20,367,222
                                                                    
                                                                    
                                                                    $
                                                                    2,037
                                                                    
                                                                    
                                                                    $
                                                                    5,931,462
                                                                    
                                                                    
                                                                    $
                                                                    2,266,560
                                                                    
                                                                    
                                                                    $
                                                                    (9,785,205
                                                                    )
                                                                    
                                                                    $
                                                                    (1,585,145
                                                                    )
 
 See the
notes to these financial statements.
  3
 
 SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 STATEMENT
OF CASH FLOWS
 (Unaudited)
 
 October 22, 2002For the Three Months Ended
                        
                        
                        (Inception) toJuly 31,
                        
                        
                        July 31,2010
                        
                        
                        2009
                        
                        
                        2010Cash
      Flows from Operating Activities:Net
      Loss
                        
                        $
                        (1,031,912
                        )
                        
                        $
                        (621,931
                        )
                        
                        $
                        (9,769,048
                        )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,200Unrealized
      gain on marketale securities
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        40,765Equity
      issued for services and interest
                        
                        
                        -
                        
                        
                        
                        394,770
                        
                        
                        
                        3,995,620Amortization
      of consulting stock
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        115,000Litigation
      expense
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        550,000Gain
      on debt
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (75,773
                        )Changes
      in current assets and liabilities:Increase
      in accounts payable and accrued liabilities
                        
                        
                        (415,615
                        )
                        
                        
                        197,947
                        
                        
                        
                        1,210,878Net
      Cash (Used In) Operating Activities
                        
                        
                        (1,447,527
                        )
                        
                        
                        (29,214
                        )
                        
                        
                        (3,931,358
                        )Cash
      Flows from Investing Activities:Increase
      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
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (1,372,912
                        )Cash
      Flows from Financing Activities:Common
      stock issued for cash
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        1,444,750Comon
      stock issued for debt/assets
                        
                        
                        781,977
                        
                        
                        
                        -
                        
                        
                        
                        1,896,977Proceeds
      (Payments) from advances
                        
                        
                        -
                        
                        
                        
                        51,467
                        
                        
                        
                        43,062Proceeds
      (Payments) from notes payable
                        
                        
                        665,550
                        
                        
                        
                        (20,000
                        )
                        
                        
                        1,996,330Merger
      accounting
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (20,875
                        )Net
      Cash Provided by Financing Activities
                        
                        
                        1,447,527
                        
                        
                        
                        31,467
                        
                        
                        
                        5,360,244Net
      increase (decrease) in Cash
                        
                        
                        -
                        
                        
                        
                        2,253
                        
                        
                        
                        55,974Cash
      and Cash Equivalents - Beginning of Period
                        
                        
                        39,817
                        
                        
                        
                        38,851
                        
                        
                        
                        -Cash
      and Cash Equivalents - End of Period
                        
                        $
                        39,817
                        
                        
                        $
                        41,104
                        
                        
                        $
                        55,974SUPPLEMENTAL
      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
                        
                        $
                        -
                        
                        
                        $
                        206,009
                        
                        
                        $
                        847,279Issuance
      of common stock for payment of promissory notes
                        
                        $
                        152,057
                        
                        
                        $
                        -
                        
                        
                        $
                        999,566Issuance
      of common stock for marketable securities
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        400,000Issuance
      of common stock for other assets
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        440,000Issuance
      of equity for services
                        
                        $
                        629,920
                        
                        
                        $
                        394,770
                        
                        
                        $
                        1,904,760
 
 See the
notes to these financial statements.
  4
  SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Notes
To The Financial Statements
 July
31, 2010
 (Unaudited)
  Note
1 – Organization, Basis of Presentation and Summary of Significant Accounting
Policies
  Organization
  Sun River
Energy, Inc. (the “Company”) was incorporated on October 22, 2002, under the
laws of the State of Colorado.
  Sun River
is an oil and gas exploration, development and production company engaged in
locating and developing petroleum resources primarily in the Raton Basin in
Colfax County, N.M. The Company’s past activities have targeted the
Mississippian and Pennsylvanian formations on the Company’s property in Colfax
County, N.M. As of July 31, 2010, Sun River held oil and gas mineral interests
in 158,960 gross acres (132,417 net acres) located in New Mexico. There are no
producing wells and three shut-in wells located on these
properties.
  See
Subsequent Material Events set forth in Note 7 below, which identifies
significant material changes to the ownership and management of the
Company.
  Basis
of Presentation
  Development
Stage Company
 
 The
Company has not earned any significant revenues from its limited principal
operations. Accordingly, the Company’s activities have been accounted for as
those of a “Development Stage Enterprise”. Among the disclosures required are
that the Company’s financial statements be identified as those of a development
stage company, and that the statements of operation, stockholders’ equity
(deficit) and cash flows disclose activity since the date of the Company’s
inception.
  Interim
Presentation
  In the
opinion of the management of the company, the accompanying unaudited financial
statements include all material adjustments, including all normal and recurring
adjustments, considered necessary to present fairly the financial position and
operating results of the Company for the periods presented.  The
financial statements and notes are presented as permitted by Form 10-Q, and do
not contain certain information included in the Company’s Annual Report on Form
10-K for the fiscal year ended April 30, 2010.  It is the Company’s
opinion that when the interim financial statements are read in conjunction with
the April 30, 2010 Annual Report on Form 10-K and its Current Reports on Form
8-K the disclosures are adequate to make the information presented not
misleading.  Interim results are not indicative of results for a full
year or any future period.
 
 Significant
Accounting Policies
  Use
of Estimates
 
 The
preparation of the financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
  Cash
and Cash Equivalents
  The
Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash
equivalents.
  Revenue
Recognition
  The
Company recognizes revenue when it is earned and expenses are recognized when
they occur.
  5
  SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Notes
To The Financial Statements
 July
31, 2010
 (Unaudited)
  Value
of Financial Instruments
  The
carrying amount of cash, accounts payable and notes payable is considered to be
representative of its fair value because of the short-term nature of this
financial instrument.
  Stock-Based
Compensation
  Under the
fair value recognition provisions, stock-based compensation cost is measured at
the grant date based on the fair value of the award and is recognized as
expenses on a straight-line basis over the requisite service period, which is
the vesting period.
  Prior to
May 1, 2009, the Company entered into a Consulting Agreement with a third party
for services. Payment for such services includes a monthly payment of 20,000
shares of the Company’s common stock and a warrant exercisable for 20,000 shares
of the Company’s common stock (see below). During the three months ended July
31, 2010, the Company issued 60,000 shares of the Company’s common stock to such
consultant. The Company recognized an expense of $88,800 (a range of $1.40 to
$1.64 per share, based on closing market prices on the date of issuance). During
the quarter ended July 31, 2010, warrants exercisable for 60,000 shares were
issued by the Company. During the quarter ended July 31, 2010, the warrants
exercisable for 60,000 shares had exercise prices ranging from $1.45 to $1.65
per share. The total fair value of the options at the date of grant was $22,120
and was recorded as consulting expense. The warrants have a term of two years
from the date of issuance. The warrants were valued using the Black-Scholes
model.
  Other
Comprehensive Income
  The
Company has no material components of other comprehensive income (loss), and
accordingly, net loss is equal to comprehensive loss in all
periods.
  Loss
Per Share
  The
Company provides a dual presentation of basic and diluted earnings or loss per
share (EPS) with a reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the diluted EPS computation.
Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity.
  Income
Taxes
  Deferred
income tax assets and liabilities are computed annually for differences between
the financial statements and tax basis of assets and liabilities that will
result in taxable of deductive amounts in the future based on enacted laws and
rates applicable to the periods in which the differences are expected to affect
taxable income (loss). Valuation allowance is established when necessary to
reduce deferred tax assets to the amount expected to be
realized.
  6
 
 SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Notes
To The Financial Statements
 July
31, 2010
 (Unaudited)
  Recently
Issued Accounting Pronouncements
  In July
2010, the Financial Accounting Standards Board (“FASB”) issued Proposed Accounting Standard Update
(Topic 450) – Disclosure ofCertain Loss
Contingencies.  This amendment would lower the current
disclosure threshold and broaden the current disclosure requirements to provide
adequate and timely information to assist users in assessing the likelihood,
potential magnitude, and potential timing (if known) of future cash outflows
associated with loss contingencies. For public entities, the new guidance would
be effective for fiscal years ending after December 15, 2010, and interim and
annual periods in subsequent fiscal years. The Company is currently evaluating
the impact of the future adoption of the Update.
  There
were various other accounting standards and interpretations issued in 2009 and
2010, none of which are expected to have a material impact on the Company’s
financial position, operations or cash flows.
  Note 2 – Going Concern and
Management’s Plan of Operations
  Going Concern
  The
Company’s financial statements for the three months ended July 31, 2010 have
been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal course of
business. The Company reported a net loss of $1,031,912 for the three months
ended July 31, 2010 and an accumulated deficit during the development stage of
$9,785,028. At July 31, 2010, the Company’s total current liabilities exceed
total current assets by $2,583,749.
  The
Company is in the development stage and has not earned any revenue from
operations. The Company’s ability to continue as a going concern is dependent
upon its ability to develop additional sources of capital or locate a merger
candidate and ultimately, achieve profitable operations. The accompanying
financial statements do not include any adjustments that might result from the
outcome of these uncertainties. Management is seeking new capital to support the
ongoing operations of the Company.
  Note
3 – Leases and Mineral Rights
  Mineral
Rights - New Mexico
  The
Mineral rights in New Mexico are valued at $100,000 on the financial statements
based on the predecessor’s cost basis.
 
 Note 4 – Notes
Payable
 
 Outstanding
Notes Payable
  On July
27, 2010, the Company issued to Cicerone Corporate Development, LLC, an
affiliate of the Company, a Commercial Promissory Note for $629,105 in
connection with their outstanding accounts payable balance. The Promissory Note
is unsecured, due on demand, bears a 4% per annum interest rate and provides for
a conversion into shares of the Company's common stock at $1.45 per
share.  At July 31, 2010, the note has a balance of $629,105 and
accrued interest of $275.77.  On August 3, 2010, the note was
converted to common stock in the amount of 433,867 restricted common shares of
the Company at the rate of $1.45 per share.
  On April
20, 2010, the Company issued a 4% unsecured corporate promissory note for
$148,861. The note is due on demand.  At July 31, 2010, the note has
an outstanding balance of $148,861 and accrued interest of
$1,664.   In August 2010, the principal and accrued interest were
both converted into 108,497 shares of the Company’s restricted common stock at
$1.38 per share.
  7
  SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Notes
To The Financial Statements
 July
31, 2010
 (Unaudited)
  In April
2010, the Company issued a 4% unsecured corporate promissory note to a vender
for outstanding amounts totaling $300,759. The note is due on demand. At July
31, 2010, the note has a principal balance of $300,750 and accrued interest of
$3,361. In August 2010, the principal and accrued interest where both converted
into 202,792 shares of the Company’s restricted common stock at $1.50 per
share.
  In April
2010, the Company issued a 4% unsecured corporate promissory note to an
individual for outstanding advances of $44,112. The note is due on demand. At
July 31, 2010, the note has a principal balance of $44,112 and accrued interest
of $493. In August 2010, the principal and accrued interest where both converted
into 29,744 shares of the Company’s restricted common stock at $1.50 per
share.
  In April
2010, the Company issued a 4% unsecured corporate promissory note in exchange
for a prior promissory note for outstanding accrued interest on promissory notes
that’s principal had been converted into shares of the Company’s restricted
common stock during the years ended April 30, 2010 and 2009. The promissory note
had a principal balance of $37,412. The note is due on demand. At July 31, 2010,
the note has a principal balance of $37,412 and accrued interest of $377. In
August 2010, the principal and accrued interest where both converted into 25,226
shares of the Company’s restricted common stock at $1.50 per share.
  In April
2010, the Company issued a 4% unsecured corporate promissory note in to an
individual for outstanding advances of $80,978.  The note is due on
demand.  At July 31, 2010, the note has a principal balance of $80,978
and accrued interest of $7,958.  In August 2010, the principal and
accrued interest where both converted into 54,601 shares of the Company’s
restricted common stock at $1.50 per share.
  In March
2009, the Company issued a 4% unsecured corporate promissory note to a vendor
for outstanding amounts owed totaling $88,230. The note is due on demand and
requires a monthly payment of $10,000. At July 31, 2010, the note has a
principal balance of $68,230 and accrued interest of $905.  In
September 2010,  the Company paid $5,000 in cash and converted the
remaining principal and accrued interest into 40,908 shares of the Company’s
restricted stock at $1.56 per share.
  In
February 2008, the Company issued an 18% unsecured corporate promissory note to
a vendor for outstanding amounts owed totaling $373,540. The note is due on
demand. At October 31, 2009, the note had a principal balance of $373,540 and
accrued interest of $96,895. On October 31, 2009, the Board of Directors
approved the issuance of 241,249 shares of the Company’s restricted common stock
as payment of the principal and accrued interest. While such stock has been
issued, the holder of the promissory note has not accepted the shares as
settlement and so the Company has continued to accrue interest on the promissory
note. At July 31, 2010, there was accrued interest of $147,185.
  In
October 2007, the Company issued a 7.5% unsecured corporate promissory note for
$211,855. The note is due on demand. During the year ended April 30,
2010,  $69,154 in principal of the promissory note was converted into
324,036 shares of the Company’s common stock ($0.25 per share). At July 31,
2010, the note has an outstanding balance of $142,701 and accrued interest of
$26,207. In August 2010, the principal and accrued interest where both converted
into 675,870 shares of the Company’s restricted common stock at $ 0.25 per
share.
  In April
2006, in exchange for $150,000, the Company issued a 6% secured corporate
promissory note. The note is secured by certain leases held by the Company. At
July 31, 2010, the note has an outstanding principal balance of $6,637 and
accrued interest of $1,295.
  On April
10, 2006, the Company issued a 6% secured corporate promissory note for
$600,000, to a shareholder of the Company, Mr. Robert A. Doak, Jr. The
promissory note had an original due date of March 31, 2007 and it has been
assigned to unrelated parties, the due date extended several times and now been
divided into several notes. The new unsecured promissory notes have an annual
interest rate of 7.5% and are due on demand. During the year ended April 30,
2010, principal and accrued interest of $340,263 was converted into 1,303,092
shares of the Company’s common stock.   During the three months
ended July 31, 2010 principal and accrued interest of  $156,211 was
converted into  608,227 shares of the Company’s common stock for
payment in full.
  8
  SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Notes
To The Financial Statements
 July
31, 2010
 (Unaudited)
  Note 5 –
Stockholders’ Deficit
 
 Preferred Stock
 
 At a
Special Meeting of the Shareholders of the Company on June 23, 2008, the
shareholders voted to authorize the creation of 25,000,000 shares of Preferred
Stock with a par value of $0.0001, to be issued in such classes or series and
with such rights, designations, privileges and preferences as to be determined
by the Company’s Board of Directors at the time of the issuance of any preferred
shares. No shares have been issued at this time, nor have any classes been
established.
  Common
Stock
  Prior to
May 1, 2009, the Company entered into a Consulting Agreement with a third party,
who has since become an affiliate of the Company, for services. Payment for such
services includes a monthly payment of 20,000 shares of the Company’s common
stock and a warrant exercisable for 20,000 shares of the Company’s common stock
(see Warrants below). During the three months ended July 31, 2010, the Company
issued 60,000 shares of the Company’s common stock to such consultant. The
Company recognized an expense of $22,120 (a range of $1.45 to $1.65 per share,
based on closing market prices on the date of issuance.)
  During
the three months  ended July 31, 2010, the Company issued 285,000
shares of its restricted common stock to individuals in return for their
services on the Company’s advisory board. The Company recognized an expense of
$435,300 (at prices ranging from $1.54 to $1.65  per share based on
closing market prices at the date of issuance.)
  During
the three months ended July 31, 2010, the Company issued 100,000 shares of its
restricted common stock to Mr. Sullivan, Mr. Kelloff and Mr. Leaver for their
services as officers of the Company (50,000, 30,000 and 20,000 shares,
respectively). The Company recognized an expense of $172,500 ($1.65 per share
based on closing market prices at the date of issuance.)
  During
the three months  ended July 31, 2010, the Company issued 608,227
shares of its common stock to holders of promissory notes as payment of
principal of $152,057 and accrued interest of $4,214 ($0.25 per share). (See
Note 4)
  Warrants
  During
the year ended April 30, 2009, the Company entered into a Consulting Services
Agreement with a third party for services. Payment for such services includes a
monthly payment of 20,000 shares of the Company’s common stock and a warrant
exercisable for 20,000 shares of the Company’s common stock. During the three
months ended July 31, 2010, the Company issued 60,000 shares of the Company’s
common stock to such consultant. During the three months ended July 31, 2010,
warrants exercisable for 60,000 shares were issued by the Company. The warrants
have a term of two years from the date of issuance, exercises prices based on
closing market price on the last day of the month of issuance and provide for a
cashless exercise.
  9
  SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Notes
To The Financial Statements
 July
31, 2010
 (Unaudited)
  During
the three months ended July 31, 2010, the warrants exercisable for 60,000 shares
had exercise prices ranging from $1.45 to $1.65 per share. The total fair value
of the warrants at the date of grant was $22,120 and was recorded as consulting
expense. The Company used the following assumptions to determine the fair value
of warrant grants during the three months ended July 31, 2010:
 2010Expected
      life
                          
                          1
      yearVolatility
                          
                          62%
      - 151%Risk-free
      interest rate
                          
                          4.5%
      - 4.75%Dividend
      yield
                          
                          0
  The
expected term of the warrants represents the period of time that the stock
options granted are expected to be outstanding based on historical exercise
trends. The expected volatility is based on the historical price volatility of
the Company’s common stock. The risk-free interest rate represents the U.S.
Treasury bill rate for the expected life of the related warrants.
  The
dividend yield represents our anticipated cash dividend over the expected life
of the warrants.
 
 A summary
of warrant activity for the three months ended July 31, 2010 is presented
below:
 WeightedShares
                                  
                                  
                                  Weighted
                                  
                                  Average
                                  
                                  
                                  AggregateUnder
                                  
                                  
                                  Average
                                  
                                  Remaining
                                  
                                  
                                  IntrinsicWarrant
                                  
                                  
                                  Exercise Price
                                  
                                  Contractual Life
                                  
                                  
                                  ValueOutstanding
      at May 1, 2010
                                  
                                  
                                  1,660,000
                                  
                                  
                                  $
                                  2.00
                                  
                                  1.54
      years
                                  
                                  
                                  $
                                  -Granted
                                  
                                  
                                  60,000
                                  
                                  
                                  
                                  -
                                  
                                  1.55
      years
                                  
                                  
                                  
                                  -Exercised
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -ExpiredOutstanding
      at  July 31, 2010
                                  
                                  
                                  1,720,000
                                  
                                  
                                  $
                                  .92
                                  
                                  1.40 years
                                  
                                  
                                  $
                                  -
  Note
6 – Litigation
  LPC Investments, LLCLitigation
  On
December 12, 2008, LPC Investments, LLC (LPC Investments) filed a lawsuit, in
the Jefferson County District Court, against the Company. The lawsuit alleges a
breach of contract against the Company in connection with the payment of an
unsecured, 8.75% promissory note and conversion of 2,200,000 shares of the
Company’s common stock into a preferred note. LPC Investments sought not only
payment of the unsecured, 8.75% promissory note and accrued interest but also
attorney fees. A payment of $75,645 has been made on the promissory
note.
  10
  SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Notes
To The Financial Statements
 July
31, 2010
 (Unaudited)
  On August
18, 2009, the Court granted the Motion to Dismiss filed by LPC in July 2009. The
case has been dismissed without prejudice and all claims against the Company
have been dropped, however LPC has not withdrawn its conversion notice and
demand. Therefore, the Company has recorded a $550,000 litigation liability in
connection with the conversion notice and demand.
  On
September 24, 2009, LPC Investments filed suit in the District Court of
Jefferson County, Colorado against the Company. Among other things, the suit
asks the Court to issue a declaratory judgment in requesting that 2.2 million
shares previously purchased by LPC Investments (the Disputed Shares) are indeed
owned by LPC Investments, and to direct the Company to co-operate with LPC
Investment's outstanding legend removal requests submitted to the Company's
transfer agent by LPC Investments. LPC Investments is also seeking payment of
attorney fees and costs. In that same litigation, on October 2, 2009, the
Company filed Counterclaims and Third Party Claims in the District Court of
Jefferson County, Colorado against LPC Investments and Kevin Paul. The claims
and the relief sought by the Company are substantially similar to the claims and
relief previously sought in the Douglas County litigation.
  On June
23, 2010, the Company entered into a confidential settlement agreement regarding
its litigation with LPC and Kevin Paul which require the purchase of 1,900,139
shares of common stock held by LPC and Paul over a specific period of time. As
July 23, 2010, 526,788 shares of stock have been purchased by third party
investors consistent with the terms of the settlement agreement.
  Spencer
Edwards Litigation
  On March
10, 2010, the Company filed an Original Petition and Application for Temporary
Injunction and Permanent Injunctive Relief in the County Court of Dallas County,
Texas. The case is styled: Sun River Energy, Inc., JH Brech, and Richard L.
Toupal v. Spencer Edwards, Inc. Cause No. cc-10—1676-E, in the County Court at
Law # 5, Dallas County, Texas.
 
 The suit
alleges among other things Spencer Edwards, Inc. has repeatedly violated Rule
144 of the U.S. Securities Act of 1933 in the selling of common shares of the
Company on the open market which was a basis of the underlying litigation
against Kevin Paul in Case No. 2009CV4859 the District Court of Jefferson
County, Division 8, Colorado. This case is in the discovery phase. The Company
is seeking actual damages and costs and attorney’s fees.
  11
 
 SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Notes
To The Financial Statements
 July
31, 2010
 (Unaudited)
 
 Note
7 – Subsequent Events
 
 Acquisition
Activity
 
 On August
3, 2010, the Company acquired all of the outstanding capital stock of PC
Operating Texas Inc. (“PC Operating”), a Texas corporation, pursuant to the
terms of a Share Purchase Agreement among the Company, Donal R. Schmidt Jr. and
Thimothy Wafford. In connection with the acquisition of PC Operating, the
Company issued a total of 250,000 shares of its restricted common stock, to each
of Messrs. Schmidt and Wafford, the shareholders of PC Operating.
 
 Subsequently,
the Company changed the name of PC Operating to Sun River Operating, Inc. Sun
River Operating, Inc. is a full service oil and gas operating company located in
Dallas Texas. It owns office equipment, software, furniture and personal
property that allow it to conduct operations in multiple geographic areas. In
addition, it employees a staff of two attorneys, a CPA, two accountants, a land
technical, a geologist and two petroleum engineers.
 
 On August
3, 2010, the Company also acquired leasehold and well bore interests from FTP
Oil & Gas LP (“FTP”), pursuant to the terms of a Purchase and Sale Agreement
between the Company and FTP. In consideration for the acquisition, the Company
issued an aggregate of 1,388,000 restricted shares of its common stock to FTP
owned by Messrs. Schmidt and Wafford and a convertible note in the principal
amount of $1,000,000.00 was issued to FTP. The convertible note has a term of
one year, bears interest at the rate of 8.0% per annum, and is convertible into
shares of the Company's Common Stock at a conversion rate of $1.50 per
share.
 
 The
acquisition of assets from FTP include approximately 2,148 gross acres (1,610
net acres) in Tom Green County, Texas, which consists of four prospects
developed by industry partner Fairchild Petroleum of Midland, Texas. In
addition, the Company acquired a 39% working interest of 29.25% net revenue
interest in two wells on the acreage as described
below.  Additionally, FTP assigned to the Company its rights, title
and interest in certain in certain participation agreements and a surface use
agreement.
 
 Effective
August 1, 2010, Mr. Schmidt was employed by the Company as the Chief Executive
Officer and President.  In addition, he was appointed as a director of
the Company where he serves as the Chairman of the Board of Directors consistent
with the bylaws of the Company.  At the same time, Mr. Wafford was
employed as the Chief Operating Officer of the Company and Mr. Robert Fields was
appointed to the Board of Directors.
 
 Issuance
and Conversion of Promissory Notes
 
 On August
3, 2010, the Cicerone Corporate Development , LLC Note Payable
for  $629,105 was converted to restricted common stock in the amount
of 433,867 shares at $1.45 per share.
 
 As set
forth in Note 4 above, on August 6, 2010, the Company converted an aggregate of
$1,416,341 of outstanding promissory notes into 1,530,597 shares of the
Company’s common stock. The promissory notes were converted at rates of $0.25
per share to $1.50 per share depending upon the terms of the individual
promissory notes.
 
 On
September 3, 2010, the Company paid $5,000 in cash and converted the remaining
balance of $63,229.66 of an outstanding promissory note into 40,908 shares of
the Company’s common stock.  The promissory note was converted at a
rate of $1.56 per share.
  12
 
 SUN
RIVER ENERGY, INC.
 (A
Development Stage Company)
 Notes
To The Financial Statements
 July
31, 2010
 (Unaudited)
 
 Stock
Issuance
 
 In July
2010, the Company issued 325,000 shares of its restricted common stock to its
officers and directors for services.
 
 The
Company has evaluated it activities subsequent to the three months ended July
31, 2010 through September 7, 2010 and found no other reportable subsequent
events, then those disclosed above.
  13


14


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 July 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





Sun River
is an oil and gas exploration, development and production company engaged in
locating and developing petroleum resources primarily in the Raton Basin in
Colfax County, N.M.  The Company’s principal business strategy has
been to use technologies new to a specific area to generate and develop
high-potential exploitation resources in this area.  Accordingly, its
principal business model has been the acquisition of oil and gas mineral
interests, either directly or indirectly, and the exploitation and development
of those properties. The Company’s past activities have targeted the
Mississippian and Pennsylvanian formations on the Company’s property in Colfax
County, N.M.  As of April 30, 2010, Sun River held oil and gas mineral
interests in 158,960 gross acres (128,357 net acres) located in New
Mexico.  There are no producing wells and three shut-in wells located
on these properties.


15


In August
2010, the Company acquired certain wells bore rights and oil and gas mineral
leases in Tom Green County, Texas, as described further below and a full service
oil & gas operating company located in Dallas, Texas, which owned office
equipment, software, furniture and personal property.





The
Company’s anticipated future development includes, but is not limited to,
further development of its New Mexico mineral interests, continued operations on
its recently acquired Tom Green County, Texas acreage which includes the
Stansberry # 1 well and of the Lora # 1 well.  The first well the
Stansberry # 1 was drilled to a total depth of 5,507 feet.  It is
completed in the Harkey Sand at between the 4,780 foot and the 4,784
intervals.  The well has a 1,650 psi shut in tubing pressure and is
awaiting a pipeline connection in conjunction with a gas marketing
agreement.  The second well the Lora # 1 was drilled to a total depth
of 4,807 feet.  The well remains shut in awaiting a completion attempt
in the 3,200 foot sands.  This sand is prolific in this area of the
Permian Basin in the nearby Christoval North Field.





Additionally,
the Company intends to identify and acquire additional mineral interest and
production in geological and geographical areas in which management has
technical and administrative experience.





To date,
the Company has no revenues. The Company will need substantial additional
capital to support its proposed future operations.  The Company has no
committed source for any funds as of the date hereof.  There can be
not assurances that any funds will be available when needed.  In the
event funds cannot be raised when needed, the Company may not be able to carry
out its business plan, may never achieve sales or royalty income, and could fail
in business as a result of these uncertainties.





The
independent registered public accounting firm's report on the Company's
financial statements as of April 30, 2010, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.





Results
of Operations





Three
Months Ended July 31, 2010 compared to the Three Months Ended July 31,
2009.





Revenue.  During
the three months ended July 31, 2010 and 2009, the Company did not recognize any
revenues from its operating activities.





Operational Expenses.During the three months
ended July 31, 2010, operating expenses, which are comprised of consulting
expenses, lease expenses, litigation expense and general and administrative
expenses, were $1,005,431 compared to $591,255 during the three months ended
July 31, 2009, which represents an increase of $414,176, or
70.1%.  Consulting expenses increased by $214,099, or 50.2% to
$640,696 for the three months ended July 31, 2010 from $426,597 for the
comparable period in 2009.  Consulting expenses increased primarily as
a result of fees due under consulting agreements, including a consulting
agreement with Cicerone Corporate Development, LLC, which were entered into
between the periods of July 2009 and October 2009.  Lease expenses
increased to $40,533 for the three months ended July 31, 2010 from $0 in the
comparable period in 2009.  Lease expenses increased as a result of
the payment of past due rent in the amount of $4,158 and the payment of $36,375
of land research costs related to the Company’s property in Colfax County, New
Mexico.  Litigation expense for the three months ended July 31, 2010
was $135,873 as compared to $0 for the three months ended July 31,
2009.  The litigation expense in 2010 was a result of litigation with
a shareholder which has now been settled along with ongoing litigation against a
brokerage firm for wrongfully trading in unregistered shares.  General
and administrative expenses increased by $23,671 to $188,329 for the three
months ended July 31, 2010 from $164,658 for the comparable period in
2009.  General and administrative expenses increased primarily as a
result of increase in insurance, dues and subscriptions, office expenses,
investor relation and other miscellaneous expenses.


16


Interest
Expense.The Company recognized interest expense of $26,481
during the three months ended July 31, 2010 compared to $30,676 for the same
period in 2009.  The decrease of $4,195 in interest expense resulted
from a decrease in notes payable.





Net Loss.  During
the three months ended July 31, 2010, the Company recognized a net loss of
$1,031,912, compared to a net loss of $621,931 for the comparable three months
in 2009.  The increase of $409,981 was due to the $414,176 increase in
operating expenses less the $4,195 decrease in interest expense discussed
above.





Liquidity and Capital
Resources





As of
July 31, 2010, the Company had cash and cash equivalents of $39,817 and a
working capital deficit of $ 2,583,927.  To date, the Company has not
generated any revenues from operations.  The Company has been
dependent upon loans from third parties and the issuance of securities to
finance the payment of operating expenses.  The Company will continue
to rely on loans and issuances of securities to generate cash until such time as
its operations generate revenue.





The
Company has no material commitments for capital expenditures within the next
year, however if operations are commenced, substantial capital will be needed to
pay for participation, investigation, exploration, acquisition and working
capital.  There can be no assurances the Company will obtain financing
for these operations.





Operating Activities.Net
cash used in operating activities was $1,447,527 for the three months ended July
31, 2010 as compared to net cash used in operating activities of $29,214 during
the comparable period in 2009.  This increase of $1,418,313 in cash
used in operating activities for the three months ended July 31, 2010 is
primarily a result of the $1,031,912 in net loss and the decrease in accounts
payable and accrued liabilities of $415,615 which resulted from the issuance of
notes payable in payment of amounts due to third parties for goods and services
provided to the Company.  Net cash used in operating activities for
the three months ended July 31, 2009 is a result of $621,931 in net loss
primarily offset by an increase in equity used for services and interest of
$394,770 and an increase in accounts payable and accrued liabilities of
$197,947.





Investing
Activities.  The net cash used in/provided by investing
activities was $0 for the three months ended July 31, 2010 and
2009.





Financing Activities. Net
cash provided by financing activities for the three months ended July 31, 2010
was $1,447,527 as compared to net cash provided by financing activities of
$31,467 in the comparable period in 2009.  During the three months
ended July 31, 2010, we received $665,550 in proceeds from the issuance of notes
and $781,977 from the issuance of common stock for debt.  During the
three months ended July 31, 2009, we used $20,000 to repay outstanding notes,
which was offset by the receipt of $51,467 in proceeds from advances primarily
from Michael A. Littman.


17


Conversion
of Debt





On August
6, 2010, the Company converted an aggregate of $1,416,341 of outstanding
promissory notes into 1,530,597 shares of the Company’s common
stock.  The promissory notes were converted at rates of $0.25 per
share to $1.50 per share depending upon the terms of the individual promissory
notes.  On September 3, 2010, the Company paid $5,000 in cash and
converted the remaining balance of $63,229.66 of an outstanding promissory note
into 40,908 shares of the Company’s common stock.  The promissory note
was converted at a rate of $1.56 per share.  The Company anticipates
converting all or a majority of the remaining debt to equity under the terms of
the respective promissory notes.  There can be no assurances however,
that the Company will be successful in converting its remaining outstanding
debts into common stock.





Critical Accounting Policies and
Estimates





The
preparation of the Company’s consolidated financial statements in conformity
with generally accepted accounting principles in the United States requires
management to make assumptions and estimates that affect the reported amounts of
assets, liabilities, revenues and expenses as well as the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period.  The following is a summary of the significant accounting
policies and related estimates that affect the Company’s financial
disclosures.





Oil and Gas Properties and
Reserves





We follow
the full cost method of accounting whereby all costs related to the acquisition
and development of oil and gas properties are capitalized into a single cost
center referred to as a full cost pool.  Depletion of exploration and
development costs and depreciation of production equipment is computed using the
units-of-production method based upon estimated proved oil and gas
reserves.  Under the full cost method of accounting, capitalized oil
and gas property costs less accumulated depletion and net of deferred income
taxes may not exceed an amount equal to the present value, discounted at 10%, of
estimated future net revenues from proved oil and gas reserves less the future
cash outflows associated with the asset retirement obligations that have been
accrued on the balance sheet plus the cost, or estimated fair value if lower, of
unproved properties.  Should capitalized costs exceed this ceiling, an
impairment would be recognized.





Estimating
accumulations of gas and oil is complex and is not exact because of the numerous
uncertainties inherent in the process.  The process relies on
interpretations of available geological, geophysical, engineering and production
data.  The extent, quality and reliability of this technical data can
vary.  The process also requires certain economic assumptions, some of
which are mandated by the Securities and Exchange Commission (“SEC”), such as
gas and oil prices, drilling and operating expenses, capital expenditures, taxes
and availability of funds.  The accuracy of a reserve estimate is a
function of the quality and quantity of available data; the interpretation of
that data; the accuracy of various mandated economic assumptions; and the
judgment of the persons preparing the estimate.





The most
accurate method of determining proved reserve estimates is based upon a decline
analysis method, which consists of extrapolating future reservoir pressure and
production from historical pressure decline and production data.  The
accuracy of the decline analysis method generally increases with the length of
the production history.  Since most of our wells have been producing
less than seven years, their production history is relatively short, so other
(generally less accurate) methods such as volumetric analysis and analogy to the
production history of wells of other operators in the same reservoir were used
in conjunction with the decline analysis method to determine the estimates of
our proved reserves including developed producing, developed non-producing and
undeveloped.  As our wells are produced over time and more data is
available, the estimated proved reserves will be redetermined on an annual basis
and may be adjusted based on that data.





Actual
future production, gas and oil prices, revenues, taxes, development
expenditures, operating expenses and quantities of recoverable gas and oil
reserves most likely will vary from any estimates.


18


Impairment of Long-lived
Assets





The cost
of our unproved properties is withheld from the depletion base as described
above, until it is determined whether or not proved reserves can be assigned to
the properties.  These properties are reviewed periodically for
possible impairment.  Our management reviews all unproved property
each quarter.  If a determination is made that acreage will be
expiring or that we do not plan to develop some of the acreage that is no longer
considered to be prospective, we record an impairment of the acreage and
reclassify the costs to the full cost pool.  We estimate the value of
these acres for the purpose of recording the related impairment.  The
impairments that we have recorded were estimated by calculating a per acre value
from the total unproved costs incurred for the applicable acreage divided by the
total net acres owned by us.  This per acre estimate is then applied
to the acres that we do not plan to develop in order to calculate the
impairment.  A change in the estimated value of the acreage could have
a material impact on the total impairment recorded by us, calculation of
depletion expense and the ceiling test analysis.





Stock-Based
Compensation





We
account for stock option grants and restricted stock awards by recognizing
compensation cost for stock-based awards based on the estimated fair value of
the award. Compensation cost is measured at the grant date based on the fair
value of the award and is recognized as an expense over the service period,
which generally represents the vesting period.  We use the
Black-Scholes option valuation model to calculate the fair value of option
awards.  This model requires us to estimate a risk free interest rate
and the volatility of our common stock price.  The use of a different
estimate for any one of these components could have a material impact on the
amount of calculated compensation expense.





Recent
Accounting Pronouncements




In June
2009, the Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Codification (“ASC”) 105, “Generally Accepted Accounting Principles”
(formerly Statement of Financial Accounting Standards (“SFAS”) No. 168, “The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles”). ASC 105 establishes the FASB ASC as the single source
of authoritative nongovernmental U.S. GAAP. The standard is effective for
interim and annual periods ending after September 15, 2009.  We
adopted the provisions of the standard on September 15, 2009, which did not have
a material impact on our financial statements.




In July
2010, the FASB issued Proposed
Accounting Standard Update (Topic 450) – Disclosure of Certain
Loss Contingencies.  This amendment would lower the current
disclosure threshold and broaden the current disclosure requirements to provide
adequate and timely information to assist users in assessing the likelihood,
potential magnitude, and potential timing (if known) of future cash outflows
associated with loss contingencies.  For public entities, the new
guidance would be effective for fiscal years ending after December 15, 2010, and
interim and annual periods in subsequent fiscal years.  The Company is
currently evaluating the impact of the future adoption of the
Update.





There
were various other accounting standards and interpretations issued in 2009 and
2010, none of which are expected to have a material impact on the Company’s
financial position, operations or cash flows.





Off
Balance Sheet Arrangements





From
time-to-time, we enter into off-balance sheet arrangements and transactions that
can give rise to off-balance sheet obligations.  As of July 31, 2010,
the off-balance sheet arrangements and transactions that we had entered into
included undrawn letters of credit, operating lease agreements and gas
transportation commitments.  The Company does not believe that these
arrangements are reasonably likely to materially affect its liquidity or
availability of, or requirements for, capital resources currently or in the
future.


19


Item
3. Quantitative and Qualitative Disclosures About Market Risk.





The
Company’s operations do not employ financial instruments or derivatives which
are market sensitive.  Short term funds are held in non-interest
bearing accounts and funds held for longer periods are placed in interest
bearing accounts.  Large amounts of funds, if available, will be
distributed among multiple financial institutions to reduce risk of
loss.  The Company's cash holdings do not generate interest
income.





Reduced Commodity
Prices May Result in Ceiling Test Write-Downs and Other
Impairments





We may be
required to write down the carrying value of our gas and oil properties as a
result of low gas and oil prices or if there are substantial downward
adjustments to the estimated proved reserves, increases in the estimates of
development costs or deterioration in the exploration results.





Investments
in unproved properties are also assessed periodically to ascertain whether
impairment has occurred.  Our evaluation of impairment of unproved
properties incorporates our expectations of developing unproved properties given
current and forward-looking economic conditions and commodity
prices.





Reduced Commodity
Prices May Impact Our Ability to Produce Economically





Significant
or extended price declines may adversely affect the amount of oil and natural
gas that we can produce economically.  A reduction in production could
result in a shortfall in our expected cash flows and require us to reduce our
capital spending or borrow funds to cover any such shortfall.  Any of
these factors could negatively impact our ability to replace our production and
our future rate of growth.





Item
4. Controls and Procedures.





Evaluation of Disclosure
Controls.  The Company’s Chief Executive and Principal
Financial Officer evaluated the effectiveness of the Company’s disclosure
controls and procedures as of the end of the Company’s fiscal quarter of 2010
pursuant to Rule 13a-15(b) of the Securities Exchange Act of
1934.  Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
by the 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 by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company’s
management, as appropriate to allow timely decisions regarding required
disclosure.  Based on his evaluation, the Chief Executive and
Principal Financial Officer concluded that the Company’s disclosure controls and
procedures were not effective as of July 31, 2010 as a result of certain
material weakness in the Company’s internal control over financial reporting
described in the Company’s Annual Report on Form 10-K for the fiscal year ended
April 30, 2010.




In
connection with the closing of certain acquisitions in August 2010, the
Company’s new management team has implemented new procedures relating to the
disbursement of cash for the payment of accounts payable, the approval of asset
acquisitions and the execution of contracts.  The Company’s management
team also continues to evaluate the Company’s disclosure controls and procedures
and will implement standard accounting procedures and control necessary to
ensure the effectiveness of its disclosure controls and procedures.




20


It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the
system are met. In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of future events. Because of these
and other inherent limitations of control systems, there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions.




Changes in Internal Control Over
Financial Reporting.  There have been no changes in our
internal control over financial reporting that occurred during the last fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.


21


PART
II—OTHER INFORMATION





Item
1. Legal Proceedings.





Holme,
Roberts & Owen





The
Company has made demand on its former legal counsel, Holme, Roberts & Owen
(“HRO”), and asserted that HRO committed malpractice with respect to HRO’s
representation of the Company against LPC and Paul in the case set forth
herein.  On August 26, 2010, the Company entered into a Settlement
Agreement with HRO, pursuant to which HRO agreed to waive all outstanding legal
fees in the amount of $79,552.81, plus interest and costs and pay the Company
$150,000 by September 15, 2010.





Item
1A. Risk Factors.





Not
Applicable.





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





The
Company has made the following unregistered sales of its securities from May 1,
2010 through July 31, 2010.





DATE OF
                                          SALE
                                        
                                        TITLE OF
                                          SECURITIES
                                        
                                        NO. OF
                                          SHARES
                                        
                                        CONSIDERATION
                                        
                                        CLASS OF
                                          PURCHASER5/6/10
                                        
                                        Common
      Stock
                                        
                                        
                                        175,000
                                        
                                        Promissory
      Note Conversion
                                        
                                        Business
      Associate5/31/10
                                        
                                        Warrant
                                        
                                        
                                        20,000
                                        
                                        Consulting
      Fees
                                        
                                        Business
      Associate6/7/10
                                        
                                        Common
      Stock
                                        
                                        
                                        100,000
                                        
                                        Promissory
      Note Conversion
                                        
                                        Business
      Associate6/17/10
                                        
                                        Common
      Stock
                                        
                                        
                                        40,000
                                        
                                        Consulting
      Fee
                                        
                                        Business
      Associate6/29/10
                                        
                                        Common
      Stock
                                        
                                        
                                        133,334
                                        
                                        Promissory
      Note Conversion
                                        
                                        Business
      Associate6/30/10
                                        
                                        Warrant
                                        
                                        
                                        20,000
                                        
                                        Consulting
      Fees
                                        
                                        Business
      Associate7/20/10
                                        
                                        Common
      Stock
                                        
                                        
                                        199,893
                                        
                                        Promissory
      Note Conversion
                                        
                                        Business
      Associate7/23/10
                                        
                                        Common
      Stock
                                        
                                        
                                        200,000
                                        
                                        Compensation
      for Services Y/E 4/30/2010
                                        
                                        Directors7/23/10
                                        
                                        Common
      Stock
                                        
                                        
                                        125,000
                                        
                                        Consulting
      Fee
                                        
                                        Officers7/31/10
                                        
                                        Warrant
                                        
                                        
                                        20,000
                                        
                                        Consulting
      Fees
                                        
                                        Business
      Associate


22





Exemption
from Registration Claimed





All of
the shares described above were issued by us in reliance upon an exemption from
the registration requirements of the Securities Act of 1933, as amended,
provided by Section 4(2).  All of the individuals and/or entities
listed above that purchased the unregistered securities were all known to us and
our management, through pre-existing business relationships, as long standing
business associates, friends, and employees.  All purchasers were
provided access to all material information, which they requested, and all
information necessary to verify such information and were afforded access to our
management in connection with their purchases.  All purchasers of the
unregistered securities acquired such securities for investment and not with a
view toward distribution, acknowledging such intent to us.  All
certificates or agreements representing such securities that were issued
contained restrictive legends, prohibiting further transfer of the certificates
or agreements representing such securities, without such securities either being
first registered or otherwise exempt from registration in any further resale or
disposition.





Item
3. Defaults Upon Senior Securities.





None.





Item
4. (Removed and Reserved).





Item
5. Other Information.





None.





Item
6. Exhibits.





Exhibit No.
              
              Description31.1
              
              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


23


SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned, hereunto
duly authorized.




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


24