UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

|X| ANNUAL  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
1934.

                    For the fiscal year ended April 30, 2008

      |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

          For the transition period from ____________ to _____________.

                        Commission File Number: 000-27485

                             SUN RIVER ENERGY, INC.
                             ----------------------
        (Exact name of small business issuer as specified in its chapter)

---------------------------------------- --------------------------------------
               Colorado                               84-1491159
---------------------------------------- --------------------------------------
    (State or other jurisdiction of      (IRS Employer Identification Number)
---------------------------------------- --------------------------------------

            10200 W. 44th Ave., Suite 433, Wheatridge, Colorado 80033
            ---------------------------------------------------------
                    (Address of principal executive offices)

                                 (303)-940-2090
                                 --------------
                           (Issuer's telephone number)

         Securities registered under Section 12(b) of the Exchange Act:

         Class                         Name of each exchange on which registered
--------------------------------------------------------------------------------
   Common Stock, $0.0001 Par Value                            OTCBB: SNRV

Securities registered under Section 12(g) of the Exchange Act:  None.

Check whether the issuer(1) filed all reports required to be filed by Section 13
or 15(d) of the  Exchange  Act during  the past 12 months  (or for such  shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. YES [X] NO[ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [ ] NO [X]


<PAGE>





State issuer's revenues for its most recent fiscal year:  $0

As of the close of trading  on August 12,  2008,  there were  15,075,768  common
shares  outstanding,  5,338,535  of  which  were  held  by  non-affiliates.  The
aggregate market value of the common shares held by non-affiliates, based on the
average  closing  bid and asked  prices on August 12,  2008,  was  approximately
$1,708,331.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

Transitional Small Business Disclosure Format (check one):    YES [  ] NO [X]

<PAGE>



                             SUN RIVER ENERGY, INC.
                        2008 ANNUAL REPORT ON FORM 10-KSB

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>                                                                                                <C>

                ITEM         DESCRIPTION                                                           PAGE
                ----         -----------                                                           ----

             Part I.

             Item 1.         Description of Business                                                    1

             Item 2.         Description of Property                                                   20

             Item 3.         Legal Proceedings                                                         21

             Item 4.         Submission of Matters to a Vote of Security Holders                       21

             Part II.

             Item 5.         Market for Common Equity and Related Stockholder Matters                  22

             Item 6.         Management's Discussion and Analysis or Plan of Operation                 24

             Item 7.         Financial Statements                                                      27

             Item 8.         Changes in and Disagreements With Accountants on Accounting and           27
                             Financial Disclosure

             Item 8a.        Controls and Procedures.                                                  28

             Item 8(a)T.     Internal Controls and Procedures                                          28

             Item 8b.        Other Information                                                         29

             Part III.

             Item 9.         Directors, Executive Officers, Promoters and Control Persons and          30

             Item 10.        Executive Compensation                                                    33

             Item 11.        Security Ownership of Certain Beneficial Owners and Management and        34
                             and Related Stockholder Matters

             Item 12.        Certain Relationships and Related Transactions, and Director              35
                             Independence
             Part IV.

             Item 13.        Index to Exhibits                                                         31

             Item 14.        Principal Accountant Fees and Services                                    35

             Signature                                                                                 36

</TABLE>

<PAGE>



                           FORWARD-LOOKING STATEMENTS

     In addition to historical information, some of the information presented in
this Annual Report on Form 10-KSB contains  "forward-looking  statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"). Although Sun River Energy, Inc., ("Sun River" or the "Company," which may
also be referred to as "we," "us" or "our") believes that its  expectations  are
based on  reasonable  assumptions  within  the  bounds of its  knowledge  of its
business and operations,  there can be no assurance that actual results will not
differ materially from our  expectations.  Such  forward-looking  statements are
subject to risks and  uncertainties  that could cause  actual  results to differ
materially from those anticipated,  including but not limited to, our ability to
reach satisfactorily  negotiated  settlements with our outstanding creditors and
raise debt and/or equity to fund negotiated  settlements  with our creditors and
to meet our ongoing  operating  expenses.  Cautionary  statements  regarding the
risks,  uncertainties  and other factors  associated with these  forward-looking
statements are discussed on page 12 below.  You are urged to carefully  consider
these factors,  as well as other information  contained in this Annual Report on
Form  10-KSB and in our other  periodic  reports  and  documents  filed with the
Securities and Exchange Commission ("SEC").

ITEM 1. DESCRIPTION OF BUSINESS

General

Sun River Energy, Inc. ("Sun River" or the "Company") was incorporated under the
laws of the State of  Colorado on April 30,  1998 as  Dynadapt  System,  Inc. to
raise capital for an Internet website related  project.  On August 18, 2006, the
Company  changed  its name to Sun River  Energy,  Inc.  in  connection  with the
acquisition of its wholly-owned  subsidiary Sun River Energy,  Inc. on April 21,
2006.

On April 21,  2006,  we  acquired  100% of the  issued  and  outstanding  shares
(8,633,333)  of Sun River Energy,  Inc. in exchange for 8,633,333  shares of the
Company's common stock, as part of a Plan and Agreement of Reorganization, dated
April 21,  2006.  As a result of the Plan and  Agreement of  Reorganization,  we
changed our business operations to focus on the development of the Company as an
independent  Energy  Company  engaged  in  the  exploration  of  North  American
unconventional natural gas properties and conventional oil and gas exploration.

As part of the  acquisition,  we acquired  120,000 acres of a mixture of fee oil
and gas mineral  interest,  some coal bed methane fee interest and 30,000 acres,
approximately,  of other fee mineral rights and 4,000 gross acres of leases that
we have now begun to explore for methane.

In April 2006, we signed a $64,000  secured  promissory  note with Nova Leasing,
LLC (Nova Leasing). The $64,000 promissory note had a due date of April 2008 and
was  secured by a lease for 640 acres in Natrona  County,  Wyoming.  In November
2006, we entered into a purchase  agreement  with Nova Leasing to acquire an 85%
working  interest  and an 80% net  revenue  interest  on leases in  Natrona  and
Converse  County,  Wyoming from Nova  Leasing,  LLC. The leases were acquired in
exchange for a $6,600,000  secured promissory note bearing 7.5% annual interest.
The  promissory  note was  secured by the leases on 14,000  acres in Natrona and
Converse  Counties in Wyoming.  On April 21,  2008,  the Company  entered into a
Release of Claim with Nova Leasing and in return for being released from payment
of the  outstanding  balance  of  $6,162,564  owed in  connection  with the $6.6
Million Dollar  Promissory note and the  outstanding  balance of $72,478 owed in
connection with the $64,000 Promissory Note, we returned the leases securing the
promissory notes to Nova Leasing.

Business Activities and Recent Developments

Our business operations are in the exploration and development of oil and gas in
the  exploration of North America  including  unconventional  natural gas in the
Rocky Mountain region. Specifically, in the area described below:

                                       1

<PAGE>





         -       Raton Basin, Colfax County New Mexico; and
         -       Natrona County, Wyoming.

Raton Basin

Our recent  field  operations  have been focused on exploring a coal bed methane
prospect located in the Raton Basin in Northern New Mexico.

We have  approximately  11,000 gross acres of coal bed methane  prospects in the
Raton  Basin,  of which  5,640 acres are fee (90%  interest)  and 4,730 acres of
which are a lease assignment. During the year ended April 30, 2008, we drilled 3
coal bed methane wells in the Raton Basin, Myers #1, #2, and #3. All three wells
have shown  multiple  coal zones,  which will be  completed to seek methane gas.
Based upon the data provided in the drilling of these wells,  we believe that in
the next 12  months we will be able to  developed  a 20 well  drilling  plan for
approximately  11,000 acres on 640 acre spacing.  We intend to frac the Myers #1
and #2 in the near  future to test  production  thereafter.  We have  perforated
multiple zones and intend to frac those zones.

We intend to operate all of our  prospects  in the Raton Basin and hold  working
interests  of 100% on a 80% NRI our  leases,  except  that we have a 25% working
interest in the Sun River #1, LLC a drilling syndication for the Myers #1 and #2
wells which was assembled in early 2007.

The Raton Basin  covers an area that is  approximately  80 miles long,  north to
south, and about 50 miles wide, east to west, encompassing southeastern Colorado
and  northeastern  New  Mexico.   The  Raton  Basin  contains  two  coal-bearing
formations,  the Vermejo  formation  coals  located at depths of between 450 and
4,000 feet and the shallower  Raton formation  coals,  located at the surface to
approximately 3,000 feet in depth.  Production from the Vermejo coals represents
approximately 79% of the total production from the Raton Basin and approximately
78% of the total proved  reserves in the Raton Basin.  To date,  the majority of
methane production has been from the Vermejo formation coals in Colorado and New
Mexico.

Development History

Exploration  for coal bed methane in the Raton Basin began in the late 1970s and
continued through the late 1980s,  with several  companies  drilling and testing
more than 100 wells during this  period.  The absence of a pipeline to transport
gas from the Raton Basin prevented  full-scale  development  until January 1995,
when Colorado  Interstate Gas Company  completed the  construction of the Picket
Wire Lateral.

Raton Basin Geology

We intend to explore for and  produce  coal bed  methane  from the high  quality
bituminous  coal  resource of the Raton Basin.  The basin is a large  asymmetric
sedimentary  trough that developed  along the western margin of an ancient Rocky
Mountain  seaway  during the  Cretaceous  and Tertiary  period  between 65 to 45
million years ago. Today,  the geologic history of what was once a lush tropical
coastline  and  alluvial  plain cut by  meandering  rivers,  which  subsequently
underwent deep burial, tectonism,  igneous intrusion, and uplift, is recorded in
the rocks of the region; the continued exploration of the basin by geologists is
increasing  the  understanding  of  the  coal  bed  methane  resource  base  and
identifying  new  hydrocarbon  systems and additional  unconventional  reservoir
types.

                                       2

<PAGE>





Our lease and fee mineral coal bed prospect  acreage sits in the southerly  half
of the basin. In the region,  the coal-bearing  strata are located  primarily in
two  major  groups,  the  Vermejo  and  Raton  formations,  and  represent  coal
development  in  two  slightly  contrasting  environments.   The  Vermejo  coals
represent peat  accumulation on an expansive  flat-lying  flood-plain  which was
partially  protected  from erosion by sandy coastal  barriers of the  underlying
Trinidad Sandstone, while the Raton coals represent peat development on a broad,
open, humid alluvial fan. Collectively,  both formations reflect the development
of  substantial  peat swamps and thick boggy  mires,  which  covered most of the
region  during  Cretaceous  and  Tertiary  times.  Subsequent  burial under high
pressures and temperatures has caused the original peat  accumulation to convert
into coal, which has high rank and  consequentially  high gas storage  capacity.
During burial,  small fractured surfaces (cleats) developed throughout the coal,
which, coupled with the tectonic forces acting on the region during the building
of the Rocky Mountains,  has provided significant permeability within the coals,
allowing for the extraction of coal bed methane gas and associated water.

We intend to produce  methane  from  Vermejo  coal beds.  Total net Vermejo coal
thicknesses  can  locally  approach up to 20 feet in various  individual  seams,
which seem may vary in thickness from one to 10 feet.

The shallower  Raton  formation coals are generally less continuous from well to
well, but  increasingly  represent a very  significant  resource  throughout the
basin. Total net Raton coal thickness locally approaches 15 feet in the existing
wells in many individual seams, which may vary in thickness from one to 10 feet.
Occasionally  interbedded  with the  Raton  coals are  large  sandstone  channel
complexes,  which are increasingly  identified as additional potential tight-gas
and unconventional  sand reservoirs.  We show to attempt completion in the Raton
Formation when we find it. We have it in our wells; Myers #1, #2 and #3.

PRODUCT INFORMATION

Coal Bed Methane Versus Traditional Natural Gas

Methane is the primary  commercial  component of the natural gas stream produced
from  traditional  gas wells.  Methane also exists in its natural  state in coal
seams.  Natural gas produced from  traditional  wells also contains,  in varying
amounts,  other hydrocarbons.  However,  the natural gas produced from coal beds
generally  contains  only  methane  and,  after  simple   dehydration,   becomes
pipeline-quality gas.

Coal bed methane production is similar to traditional  natural gas production in
terms of the physical  producing  facilities and the product produced.  However,
the  subsurface  mechanisms  that allow the gas to move to the  wellbore and the
producing  characteristics  of  coal  bed  methane  wells  differ  greatly  from
traditional natural gas production. Unlike conventional gas wells, which require
a porous and permeable reservoir, hydrocarbon migration and a natural structural
and/or  stratigraphic  trap,  coal bed methane  gas is trapped in the  molecular
structure of the coal itself until released by pressure  changes  resulting from
the removal of in situ water or natural gas in the micropore system.

Methane is created as part of the  coalification  process,  though coals vary in
their  methane  content  per ton.  In addition to residing in open spaces in the
coal structure,  methane is absorbed onto the inner coal surfaces. When the coal
is hydraulically  fracture stimulated and exposed to lower pressures through the
de-watering process, the gas is released from (desorbs from) the coal. Whether a
coal bed will produce  commercial  quantities of methane gas depends on the coal
quality,  its original content of gas per ton of coal, the thickness of the coal
beds,  the reservoir  pressure,  the rate at which gas is released from the coal
(diffusivity) and the existence of natural fractures and cleating (permeability)
through which the released gas can flow to the wellbore.  Frequently,  coal beds
are  partly or  completely  saturated  with  water.  As the  water is  produced,
internal  pressures on the coal are  decreased,  allowing the gas to desorb from
the coal and flow to the wellbore.  Unlike  traditional gas wells,  new coal bed
methane  wells often  produce  water for several  months and then,  as the water
production  decreases,  natural  gas  production  increases  as the  coal  seams
de-water.

                                      3

<PAGE>





In order to establish  commercial  gas  production  rates,  a permanent  conduit
between the  individual  coal seams and the  wellbore  must be created.  This is
accomplished by hydraulically  creating,  and propping open with special quality
sand,  artificial  fractures  within the coal seams  (known as  "fracing" in the
industry)  so the  pathway  for  water  and gas  migration  to the  wellbore  is
enhanced.  These  fractures  are filled  (propped)  with uniform  sized sand and
become the enhanced  conduits for water and methane to reach the well.  The rate
at which  the gas is  released  from the  coal  and the  ability  of gas to move
through the coal to the wellbore are the key determinants of the rate at which a
well will produce.

Deep Fractured Shales, Raton Conglomerate and Sandstone Reservoirs

There are possible  additional  unconventional  reservoir systems throughout the
Raton  Basin.   The  Company  intends  to  study   gas-charged   sandstones  and
conglomerates  interbedded  within the  currently  producing  Vermejo  and Raton
formation coals and deeper gas-bearing shale, which underlie the entire region.

The  conglomerate  and sandstones  sought reflect stacked large scale meandering
river  channel  complexes and regional  sandy braided  alluvial fans that at one
time crosscut the  Cretaceous-Tertiary  peat swamps.  During burial,  excess gas
generated  during the  coalification  process  locally became trapped within the
pore spaces of these  sandstones and now form "Tight-Gas Sand"  reservoirs.  The
increasing  recognition  of the  orientation  in the  subsurface of such ancient
drainage  system is allowing the  strategic  sighting of wells in specific  sand
prone areas, which may ultimately increase the region's total resource base.

The Raton Basin  shales,  termed the Niobrara and Pierre Shale  formations,  are
approximately  1,000 to 3,000-feet  thick and underlie the  currently  producing
intervals. The shales collectively reflect deposits of blanket-like organic rich
mudstones,  which accumulated in quiet water condition on the sea floor.  Deeper
exploratory  test wells  (2,000 to 6,000  feet) may  identify  areas of enhanced
fracture  permeability  and  could  open a  significant  "Shale  Gas"  resource.
Recently,  other  companies  have  started  focusing on these shales to produce,
using modern technology.

Coal Bed Methane Technology

Thin multi-layer coal bed methane and unconventional tight-gas reservoirs create
a multitude of challenges  for drilling,  reservoir  and  production  engineers,
including the challenge of minimizing  formation  damage and then  isolating and
completing  individual  zones in order to maximize  recovery of the  resource in
place.

Damage to the Raton Basin coals from conventional  drilling mud systems invading
the cleat fracture  surfaces and reducing their  permeability has been mitigated
by utilizing specialized air-drilling techniques using percussion air-hammers.

All coals in the Raton Basin require  hydraulic  fracture  stimulation to attain
economic  production  rates.  New techniques  uses high quality  nitrogen foamed
fluids as the fracturing media and combined with coiled tubing  fracturing units
to selectively  place proppant in individual  seams.  The Company  believes that
this fracturing technique will assist developing some of the region's resources.

                                       4

<PAGE>




Water Production and Disposal

Based on industry practice,  management  believes that the groundwater  produced
from the Raton  Basin  coal  seams  will not  exceed  permit  levels and will be
suitable  for  discharge  into  arroyos,   surface  water,   well-site  pits  or
evaporation  ponds pursuant to permits obtained from the State laws.  Recent gas
analyses  confirm  that the gas  stream  is 99% pure  methane  and  lacks  other
hydrocarbon sources of contamination. In some cases the water is of such quality
that it can be  discharged  to arroyos and surface  water  under  general  water
discharge  permits.  These permits may give the Company the  flexibility  to add
water  discharge  points on an as-needed  basis.  The Company  contract  with an
independent   water  sampling  company  that  collects  the  water  samples  and
monitorsall the Company's water management  program.  These monitoring costs are
directly  related  to the  number  of  well-site  pits,  evaporation  ponds  and
discharge  points.  Because water  originates in a natural  groundwater  system,
there is some  uncertainty  whether water currently being  discharged to streams
and arroyos will continue to meet permit  standards for total iron and suspended
solids.  Water not  meeting  these  discharge  standards  can be  disposed of in
well-site pits and evaporation ponds. When water of lesser quality is discovered
or Company wells produce water in excess of the applicable  permit  limits,  the
Company may have to drill  additional  disposal  wells to re-inject the produced
water into deeper sandstone  horizons.  Such drilling and disposal would require
the Company to obtain permits, similar to those obtained in the past.

Raton Basin Production Characteristics

Because of the  importance of removing  water from the coal seams to enhance gas
production,  the Company  expects that production from meagre wells may increase
because of the beneficial ambient effect of pressure reduction in adjacent, more
productive  wells.  Each well  creates its own "cone of  depression"  around the
wellbore. The Company believes that Raton Basin wells on adjacent 160-acre sites
will create  overlapping  cones of depression,  enhancing gas production in each
well within this  pattern.  In some cases this  pattern of  interference  can be
enhanced by drilling a fifth and sixth well in the 640-acre section.

Raton Basin gas contains insignificant amounts of contaminants, such as hydrogen
sulfide,  carbon dioxide or nitrogen that are sometimes  present in conventional
natural gas  production.  Therefore,  the properties of Raton Basin gas, such as
heat content per unit volume (British Thermal units, or "Btu"), are close to the
average properties of pipeline gas from conventional gas wells.

The  Company  has no proven  oil or gas or coal bed  methane  reserves,  nor any
production.  The Company intends to explore its Wyoming Acreage for conventional
Oil & Gas.

MARKET INFO

Gas Marketing and Transportation

We intend to sell any produced gas on an index basis to credit worthy  companies
including  utilities,  other end users and possibly energy marketing  companies.
Natural gas production  from the Raton Basin may be sold into the  Mid-Continent
through  Colorado  Interstate  Gas Company to the North or to Zia Natural Gas to
the South.

In the United  States,  oil and natural  gas  liquids  are sold under  contracts
extending  up to a  year  based  upon  monthly  refiner  price  postings,  which
generally  approximate  the price of West Texas  Intermediate  for crude oil and
Applicable Conway,  Kansas posting for natural gas liquids,  adjusted to reflect
transportation  costs and  quality.  In Canada,  oil and natural gas liquids are
sold under  short-term  contracts  at refiner  posted  prices  for  Alberta  and
Saskatchewan,  adjusted to reflect  transportation costs and quality. Our intent
is to sell our oil and natural  gas  liquids  are sold at spot market  prices or
under short-term contracts.

                                       5

<PAGE>





At this time, we do not have any transportation commitments in place.

Major Customers

We do not have any customers that represent in excess of 10% of our total sales,
since there have been no sales.  The Company does not believe that a loss of any
or all of these customers would have a material adverse effect on its business.

Competition

We intend to  compete  in  virtually  all  facets of oil and gas  business  with
numerous  other  companies,  including  many  that  have  significantly  greater
resources.  Such competitors may be able to pay more for desirable leases and to
evaluate,  bid for,  and  purchase  a  greater  number  of  properties  than the
financial  or personnel  resources  of the Company  will permit.  Our ability to
increase  reserves in the future will be  dependent on our ability to select and
acquire suitable  producing  properties and prospects for future exploration and
development.  The  availability  of a market for oil and natural gas  production
depends upon numerous factors beyond the control of producers, including but not
limited to the  availability  of other  domestic  or  imported  production,  the
locations and capacity of pipelines and the effect of federal, state, provincial
and local regulation on such production.

GOVERNMENT REGULATION OF THE OIL AND GAS INDUSTRY

General

Our  business is affected by numerous  laws and  regulations,  including,  among
others, laws and regulations relating to energy,  environment,  conservation and
tax.  Failure  to comply  with  these  laws and  regulations  may  result in the
assessment of administrative, civil and/or criminal penalties, the imposition of
injunctive  relief  or  both.  Moreover,  changes  in  any  of  these  laws  and
regulations could have a material adverse effect on our business. In view of the
many  uncertainties  with  respect to current and future  laws and  regulations,
including  their  applicability  to the Company,  we cannot  predict the overall
effect of such laws and regulations on its future operations.

We believe that our operations  comply in all material  respects with applicable
laws and  regulations  and that the existence and  enforcement  of such laws and
regulations have no more restrictive  effect on our method of operations than on
other similar companies in the energy industry.

The following  discussion contains summaries of certain laws and regulations and
is qualified in its entirety by the foregoing.

Federal Regulation of the Sale and Transportation of Oil and Gas

Various  aspects of our oil and natural gas operations are regulated by agencies
of the federal  government.  The Federal Energy Regulatory  Commission  ("FERC")
regulates  the  transportation  and sale for resale of natural gas in interstate
commerce  pursuant to the  Natural  Gas Act of 1938  ("NGA") and the Natural Gas
Policy Act of 1978 ("NGPA").  In the past, the federal  government has regulated
the prices at which oil and gas could be sold.  While "first sales" by producers
of natural  gas and all sales of crude oil,  condensate  and natural gas liquids
can currently be made at  uncontrolled  market  prices,  Congress  could reenact
price controls in the future.  Deregulation of wellhead sales in the natural gas
industry began with the enactment of the NGPA in 1978. In 1989, Congress enacted
the Natural Gas Wellhead  Decontrol Act (the "Decontrol Act"). The Decontrol Act
removed all NGA and NGPA price and non-price  controls  affecting wellhead sales
of natural gas effective January 1, 1993.

                                       6

<PAGE>





Commencing in April 1992, the FERC issued Orders Nos. 636, 636-A,  636-B,  636-C
and 636-D  ("Order No.  636"),  which  require  interstate  pipelines to provide
transportation  services separate,  or "unbundled," from the pipelines' sales of
gas. Also, Order No. 636 require pipelines to provide open access transportation
on a  nondiscriminatory  basis  that is  equal  for all  natural  gas  shippers.
Although  Order No. 636 does not  directly  regulate  the  Company's  production
activities,  the FERC has  stated  that it  intends  for Order No. 636 to foster
increased  competition  within all phases of the  natural  gas  industry.  It is
unclear  what  impact,  if any,  increased  competition  within the  natural gas
industry under Order No. 636 will have on the Company's activities.

The courts have largely  affirmed the significant  features of Order No. 636 and
numerous related orders pertaining to the individual pipelines, although certain
appeals  remain  pending  and the FERC  continues  to review and modify its open
access regulations.  In particular, the FERC is conducting a broad review of its
transportation regulations, including how they operate in conjunction with state
proposals  for  retail  gas  marketing   restructuring,   whether  to  eliminate
cost-of-service  rates for  short-term  transportation,  whether to allocate all
short-term capacity on the basis of competitive auctions, and whether changes to
long-term transportation policies may also be appropriate to avoid a market bias
toward  short-term  contracts.  In February  2000, the FERC issued Order No. 637
amending certain regulations governing interstate natural gas pipeline companies
in response to the development of more  competitive  markets for natural gas and
natural gas transportation. The goal of Order No. 637 is to "fine tune" the open
access  regulations  implemented by Order No. 636 and to accommodate  subsequent
changes in the market.  Key provisions of Order No. 637 include:  (1) permitting
value-oriented  peak/off peak rates to better  allocate  revenue  responsibility
between  short-term and long-term  markets;  (2) permitting  term-differentiated
rates, in order to better allocate risks between shippers and the pipeline;  (3)
revising  the   regulations   related  to   scheduling   procedures,   capacity,
segmentation,  imbalance management,  and penalties;  (4) retaining the right of
first refusal ("ROFR") and the five-year  matching cap for long-term shippers at
maximum rates, but significantly  narrowing the ROFR for customers that the FERC
does not seem to be captive; and (5) adopting new website reporting requirements
that include daily  transactional  data on all firm and interruptible  contracts
and daily  reporting of scheduled  quantities at points or segments.  Most major
aspects of Order No. 637 were upheld on judicial review,  though certain issues,
such as capacity  segmentation and rights of first refusal, were remanded to the
FERC,  which issued a remand order in October of 2002.  In January of 2004,  the
FERC denied  rehearing  of its October  2002 remand  order.  The Company  cannot
predict  whether  judicial review will be sought of the FERC's remand order and,
if so, whether and to what extent FERC's market reforms will survive such review
and, if they do,  whether the FERC's actions will achieve the goal of increasing
competition in markets in which the Company's natural gas is sold. However,  the
Company does not believe that it will be affected by any action taken materially
differently  than  other  natural  gas  producers  and  marketers  with which it
competes.

Commencing  in October  1993,  the FERC issued a series of rules (Order Nos. 561
and 561-A)  establishing  an indexing  system under which oil pipelines  will be
able to change their transportation rates, subject to prescribed ceiling levels.
The  indexing  system,  which  allows  pipelines  to make rate  changes to track
changes in the  Producer  Price Index for  Finished  Goods,  minus one  percent,
became effective  January 1, 1995. The Company does not believe that these rules
affect the Company any  differently  than other oil producers and marketers with
which it competes.

The FERC has also issued numerous orders  confirming the sale and abandonment of
natural gas gathering  facilities  previously owned by interstate  pipelines and
acknowledging that if the FERC does not have jurisdiction over services provided
thereon, then such facilities and services may be subject to regulation by state
authorities in accordance with state law. A number of states have either enacted
new laws or are  considering  the adequacy of existing laws affecting  gathering
rates and/or services.

                                       7

<PAGE>




Other state  regulation  of  gathering  facilities  generally  includes  various
safety,  environmental,  and  in  some  circumstances,   nondiscriminatory  take
requirements,  but does not generally entail rate regulation.  Thus, natural gas
gathering  may receive  greater  regulatory  scrutiny  of state  agencies in the
future.  The Company's  gathering  operations could be adversely affected should
they be  subject  in the  future  to  increased  state  regulation  of  rates or
services,  although  the Company  does not believe  that it would be affected by
such regulation any  differently  than other natural gas producers or gatherers.
In addition,  the FERC's approval of transfers of previously regulated gathering
systems to independent or pipeline  affiliated  gathering companies that are not
subject to FERC  regulation may affect  competition for gathering or natural gas
marketing services in areas served by those systems and thus may affect both the
costs and the nature of gathering  services  that may be available to interested
producers or shippers in the future.

We own  certain  natural  gas  pipeline  facilities  that we  believes  meet the
traditional  tests  the FERC has used to  establish  a  pipeline's  status  as a
gatherer  not  subject to the FERC's  jurisdiction.  Whether on state or federal
land,  natural gas  gathering  may receive  greater  regulatory  scrutiny in the
post-Order No. 636 environment.

We may conduct  certain  operations  on federal  oil and gas  leases,  which are
administered by the Minerals Management Service ("MMS").  Federal leases contain
relatively  standard terms and require  compliance with detailed MMS regulations
and orders, which are subject to change.  Among other restrictions,  the MMS has
regulations  restricting  the flaring or venting of natural gas, and the MMS has
proposed  to  amend  such   regulations   to  prohibit  the  flaring  of  liquid
hydrocarbons and oil without prior authorization.  Under certain  circumstances,
the MMS may require any company  operations on federal leases to be suspended or
terminated.  Any such suspension or termination  could  materially and adversely
affect the Company's  financial  condition,  cash flows and operations.  The MMS
issued a final rule that  amended its  regulations  governing  the  valuation of
crude oil produced from federal leases.  This rule,  which became effective June
1, 2000,  provides that the MMS will collect royalties based on the market value
of oil  produced  from  federal  leases.  On August 20,  2003,  the MMS issued a
proposed rule that would change certain  components of its valuation  procedures
for the calculation of royalties owed for crude oil sales.  The proposed changes
included  changing the valuation basis for transactions not at arm's-length from
spot to NYMEX  prices  adjusted  for  locality  and quality  differentials,  and
clarifying  the treatment of  transactions  under a joint  operating  agreement.
Final comments on the proposed rule were due on November 10, 2003. We has no way
of knowing  whether the MMS will implement the proposed  changes in a final rule
or what effect such changes, if implemented,  will have on the Company's results
of  operations,  However,  the Company does not believe that this  proposed rule
would affect it any differently than other producers and marketers of crude oil.
We have no federal leases as of date hereof.

Additional  proposals and proceedings that might affect the oil and gas industry
are pending  before  Congress,  the FERC,  the MMS,  state  commissions  and the
courts.  Our cannot predict when or whether any such  proposals and  proceedings
may become  effective.  In the past,  the natural gas  industry has been heavily
regulated.  There is no assurance that the regulatory approach currently pursued
by various agencies will continue  indefinitely.  Notwithstanding the foregoing,
we do not anticipate  that  compliance  with existing  federal,  state and local
laws, rules and regulations will have a material or significantly adverse effect
upon the capital  expenditures,  earnings or competitive position of the Company
or  its  subsidiaries.  No  material  portion  of our  business  is  subject  to
re-negotiation  of profits or  termination of contracts or  subcontracts  at the
election of the federal government.

The BLM controls  isolated parcels of federally owned surface and/or minerals in
the areas of  interests.  Drilling  and  development  of  federal  minerals  and
construction   activities  on  federal  surface  are  subject  to  the  National
Environmental  Policy  Act  ("NEPA").  BLM has not  completed  an  environmental
assessment  under NEPA.  To date,  no wells have been drilled on BLM minerals in
the Raton Basin.  In the Raton  Basin,  the BLM must  complete an  environmental
assessment,  and any future wells would need to be approved based on the results
of the environmental assessment.  Development of adjacent fee lands and minerals
within the Raton  Basin may  proceed  unhindered  and access to fee lands is not
expected to hinder by the presence of isolated parcels of federal surface.

                                       8

<PAGE>





Future activities within the Piceance and Uintah Basins will be subject to NEPA.
The scope and effect are not known at the present  time.  We do not have any BLM
leases as of this date.

State Regulations

Our  operations  are also subject to  regulation at the state level and, in some
cases, county, municipal and local governmental levels. Such regulation includes
(1)  requiring  permits  for the  drilling  of wells,  (2)  maintaining  bonding
requirements  in order to drill or operate wells and (3) regulating the location
of wells,  the  method  of  drilling  and  casing  wells,  the  surface  use and
restoration  of  properties  upon which  wells are  drilled,  the  plugging  and
abandoning  of wells and the disposal of fluids used and produced in  connection
with operations.  Our operations are also subject to various  conservation  laws
and  regulations.  These include (1) proration  units,  (2) the density of wells
that  may be  drilled,  and  (3)  the  unitization  or  pooling  of oil  and gas
properties.  In addition,  state  conservation  laws establish  maximum rates of
production from oil and gas wells,  which generally limit the venting or flaring
of gas and impose certain  requirements  regarding the ratability of production.
State  regulation of gathering  facilities  generally  includes  various safety,
environmental and, in some circumstances,  nondiscriminatory  take requirements,
but (except as noted above) does not  generally  entail rate  regulation.  These
regulatory  burdens  may  affect  profitability,  and the  Company  is unable to
predict the future cost or impact of complying with such regulations.

Environmental Regulations

We are subject to extensive  federal,  state, and local  environmental  laws and
regulations  that,  among other  things,  regulate the  discharge or disposal of
substances  into the  environment  and  otherwise  are  intended  to protect the
environment.  Numerous  governmental  agencies  issue rules and  regulations  to
implement and enforce such laws,  which are often difficult and costly to comply
with and which carry substantial administrative, civil and/or criminal penalties
and,  in some  cases,  injunctive  relief for  failure to comply.  Some laws and
regulations  relating  to the  protection  of the  environment  may,  in certain
circumstances,  impose "strict liability" for environmental contamination.  Such
laws and  regulations  render a person or company liable for  environmental  and
natural  resource  damages,  cleanup  costs  and,  in the case of oil  spills in
certain  states,  consequential  damages  without regard to negligence or fault.
Other  laws  and  regulations  may  require  the  rate  of oil and  natural  gas
production  to be below the  economically  optimal rate or may even  restrict or
prohibit  exploration  or  production  activities in  environmentally  sensitive
areas.  In addition,  state laws often require some form of remedial action such
as closure of inactive pits and plugging of abandoned wells to prevent pollution
from former or suspended operations. Moreover, from time to time, legislation or
other  initiatives  are  proposed to Congress or to state and local  governments
that would place more onerous conditions on the treatment,  storage, disposal or
clean-up of certain  oil and gas  exploration  and  production  wastes.  If such
legislation or other initiatives were to be enacted or adopted, it could have an
adverse impact on the operating costs of the Company, as well as the oil and gas
industry in general.  The regulatory  burden on the oil and natural gas industry
increases  our cost and risk of doing  business  and  consequently  affects  its
profitability.

                                       9

<PAGE>




Compliance with these environmental requirements,  including financial assurance
requirements and the costs associated with the cleanup of any spill,  could have
a material adverse effect upon our capital expenditures, earnings or competitive
position.  We  believe  that  it  is  in  substantial  compliance  with  current
applicable environmental laws and regulations and that continued compliance with
existing   requirements   will  not  have  a  material  adverse  impact  on  it.
Nevertheless,  changes in environmental  laws and regulations have the potential
to  adversely  affect our  operations.  For example,  the federal  Comprehensive
Environmental  Response,  Compensation  and  Liability  Act of 1980,  as amended
("CERCLA"),  also known as the "Superfund"  law, and analogous state laws impose
liability,  without regard to fault or the legality of the original conduct,  on
certain  classes  of  persons  with  respect  to  the  release  of a  "hazardous
substance"  into the  environment.  These  persons  include the current or prior
owner or operator of the disposal  site or sites where the release  occurred and
companies that transported disposed or arranged for the transport or disposal of
the hazardous  substances found at the site. Persons who are or were responsible
for releases of hazardous  substances  under CERCLA may be subject to strict and
joint  and  several  liability  for  the  costs  of  cleaning  up the  hazardous
substances  that have been  released  into the  environment  and for  damages to
natural resources, and it is not uncommon for the federal or state government to
pursue such claims. It is also not uncommon for neighboring landowners and other
third parties to file claims for personal injury or property or natural resource
damages  allegedly  caused  by  the  hazardous   substances  released  into  the
environment.  Under  CERCLA,  certain oil and gas materials and products are, by
definition, excluded from the term "hazardous substances."

We may own or lease numerous properties that have long been used for oil and gas
exploration and production.  Although the predecessor  owners utilized operating
and  disposal  practices  that  were  standard  for the  industry  at the  time,
hazardous  substances  in the past may have been  disposed  of or released on or
under  the  properties  owned or  leased  by the  Company  or on or under  other
locations  where such  substances  have been taken or placed  for  disposal.  In
addition, many of these properties have from time to time been operated by third
parties  whose  management  of  substances  was not  under  our  control.  These
properties and the  substances  disposed  thereon may be subject to CERCLA,  the
Resource  Conservation and Recovery Act, as amended and analogous state laws and
regulations.  Under such laws and regulations, we could be required to remove or
remediate  previously  disposed wastes (including wastes disposed of or released
by prior owners or operators) or property  contamination  (including groundwater
contamination by prior owners or operators),  or to perform remedial plugging or
pit closure operations to prevent future contamination.  We have no knowledge of
any environmental hazards as of date hereof.

In connection with our coal bed methane gas exploration we may from time to time
may conduct  production  enhancement  techniques,  including various  activities
designed to induce  hydraulic  fracturing of the coal bed.  While we may perform
its  production  enhancement  techniques  in  substantial  compliance  with  the
requirements  set  forth  by the  State  laws,  neither  State  nor the  federal
Environmental  Protection  Agency  ("EPA")  regulates  this  coal bed  formation
hydraulic  fracturing as a form of  underground  injection.  It is possible that
hydraulic  fracturing  of coal  beds for  methane  gas  production  will  become
regulated within the United States as a form of underground injection, resulting
in the imposition of stricter  performance  standards  (which, if not met, could
result in diminished  opportunities for methane gas production  enhancement) and
increased administrative and operating costs for the Company.

Management  cannot  predict  whether  potential  future  regulation of hydraulic
fracturing as a form of  underground  injection  would have an adverse  material
effect on our operations or financial position.  However, such regulation is not
expected  to be any more  burdensome  to the  Company  than it would be to other
similarly  situated  companies  involved in coal bed methane gas  production  or
tight gas sands production within the United States.
In our  coal bed  methane  gas  exploration  the  Company  typically  may  bring
naturally occurring groundwater to the surface as a by-product of the production
of methane gas. This "produced water" is either  re-injected into the subsurface
or stored or disposed of in evaporation  ponds or permitted  natural  collection
features  located on the surface at or near the  well-site  in  compliance  with
federal and state statutes and regulations. In some cases, the produced water is
used for stock watering,  agricultural  or dust  suppression  purposes,  also in
substantial compliance with federal, state and local laws and regulations. Under
the Federal Water  Pollution  Control Act (also  referred to as the "Clean Water
Act") and various  other state  requirements  and  regulations,  the EPA and the
State of  Colorado's  Department  of Public  Health and the  Environment  assert
administrative  and  regulatory  enforcement  authority  over the  discharge  of
produced water. Where we can meet federal and state regulatory  requirements and
applicable water quality  standards,  disposal of produced water by discharge to
surface water is an option.

                                       10

<PAGE>





The Clean Water Act  imposes  restrictions  and strict  controls  regarding  the
discharge of produced waters and other oil and gas wastes into navigable waters.
Permits must be obtained to discharge  pollutants into state and federal waters.
The Clean Water Act and  analogous  state laws  provide for civil,  criminal and
administrative  penalties  for any  unauthorized  discharges  of oil  and  other
hazardous  substances  in  reportable  quantities  and  may  impose  substantial
potential  liability for the costs of removal,  remediation  and damages.  State
water  discharge  regulations  and  the  federal  National  Pollutant  Discharge
Elimination  System  permits  applicable  to the oil and gas industry  generally
prohibit the discharge of produced  water,  sand and some other  substances into
coastal waters.  The cost to comply with zero discharges  mandated under federal
and state law is not expected to have a material adverse impact on the Company's
financial condition and results of operations.  Some oil and gas exploration and
production  facilities  are  required  to obtain  permits  for their storm water
discharges.  Costs may be incurred in connection with treatment of wastewater or
developing storm water pollution prevention plans.

Our  operations  may  involve  the use of  gas-fired  compressors  to  transport
collected gas; these  compressors  are subject to federal and state  regulations
for the  control of air  emissions.  We will  obtain  construction  permits  for
compression  it enjoys  production  from any coal bed methane.  However,  in the
future,  additional facilities could become subject to additional monitoring and
pollution control requirements as compressor facilities are expanded.

The Oil  Pollution  Act of 1990  ("OPA")  imposes  regulations  on  "responsible
parties"  related to the  prevention  of oil spills and  liability  for  damages
resulting  from spills in waters of the United  States.  A  "responsible  party"
includes the owner or operator of an onshore  facility,  vessel or pipeline,  or
the lessee or  permittee  of the area in which an offshore  facility is located.
OPA assigns strict,  joint and several liabilities to each responsible party for
oil removal costs and a variety of public and private damages, including natural
resource damages.  While liability limits apply in some  circumstances,  a party
cannot  take  advantage  of  liability  limits if the spill was  caused by gross
negligence or willful misconduct or resulted from violation of a federal safety,
construction or operating regulation, or if the party fails to report a spill or
to cooperate fully in the cleanup. Even if applicable,  the liability limits for
onshore  facilities require the responsible party to pay all removal costs, plus
up to $350 million in other damages. Few defenses exist to the liability imposed
by OPA.  Failure to comply with ongoing  requirements or inadequate  cooperation
during a spill event may subject a responsible party to administrative, civil or
criminal enforcement.

At this  time,  we are not  required  and  otherwise  have no  plans to make any
material  capital  expenditures  to  install  pollution  control  devices at any
facilities.

Title to Properties

As is  customary  in  the  oil  and  gas  industry,  only  a  preliminary  title
examination is conducted at the time the Company  acquires  leases of properties
believed to be suitable for drilling  operations.  Prior to the  commencement of
drilling  operations,  a thorough  title  examination of the drill site tract is
conducted  by  independent  attorneys.  Once  production  from a  given  well is
established,  the Company prepares a division order title report  indicating the
proper parties and  percentages  for payment of production  proceeds,  including
royalties.  The Company believes that the titles to its leasehold properties are
good and defensible in accordance with standards generally acceptable in the oil
and gas industry.

                                       11

<PAGE>




RISK FACTORS

Oil and gas prices are  volatile,  and an extended  decline in prices would hurt
the Company's profitability and financial condition.

We believe that the markets for oil and gas will  continue to be  volatile.  Any
substantial  or  extended  decline  in the price of oil or gas would  negatively
affect the Company's  financial  condition and results of operations.  Revenues,
operating results,  profitability,  future rate of growth and the carrying value
of oil and gas properties depend heavily on prevailing market prices for oil and
gas. A material decline could reduce tour cash flow and borrowing  capacity,  as
well as the value and the amount of its oil and gas  reserves.  Various  factors
beyond our control can affect prices of oil and gas. These factors include:

         o    worldwide and domestic supplies of oil and gas;

         o    the ability of the members of the Organization of Petroleum
              Exporting Countries (OPEC) to agree to and maintain oil price and
              production controls;

         o    political instability or armed conflict in oil or gas producing
              regions;

         o    the price and level of foreign imports;

         o    worldwide economic conditions;

         o    marketability of production;

         o    the level of consumer demands;

         o    the price, availability and acceptance of alternative fuels;

         o    the availability of pipeline capacity;

         o    weather conditions; and

         o    actions of federal, state, and local authorities.

These  external  factors and the volatile  nature of the energy  markets make it
difficult to estimate future commodity prices.

In addition,  we may be required to write down or impair the  carrying  value of
the  Company's oil and gas  properties  when oil and gas prices are depressed or
unusually volatile.  If a write-down is required, it would result in a charge to
earnings and book value.  Once incurred,  a write-down of oil and gas properties
is not  reversible  at a later date.  We  reviews,  on a  quarterly  basis,  the
carrying  value of its oil and gas  properties  under the full  cost  accounting
rules of the SEC.  Under these  rules,  capitalized  costs of proved oil and gas
properties,  as adjusted for estimated  asset  retirement  obligations,  may not
exceed the present value of estimated  future net revenues from proved reserves,
discounted at 10%.  Application of the ceiling test generally  requires  pricing
future revenue at the unescalated  prices in effect as of the end of each fiscal
quarter,  after  giving  effect to our cash  flow  hedge  positions,  if any and
requires a write-down for accounting  purposes if the ceiling is exceeded,  even
if prices were depressed for only a short period of time.

                                       12

<PAGE>





Our intended  operations  will require  large amounts of capital that may not be
recovered.

If the Company's  future  revenues were to decrease due to lower oil and natural
gas prices,  decreased  production or other reasons,  and if it could not obtain
capital through its credit  facilities or otherwise,  our ability to execute its
development plans,  replace its reserves or maintain its production levels could
be greatly limited.  Our current development plans will require it to make large
capital  expenditures for the exploration and development of its oil and natural
gas properties.

Historically,  the  Company  has  funded  its  capital  expenditures  through  a
combination of funds generated the issuance of equity, and short-term  financing
arrangements.  Additional  financing  may not be  available  to the  Company  on
acceptable  terms.  Future cash flows and the  availability of financing will be
subject to a number of variables, such as:

         o    the  success of the  Company's  prospects  in the Raton,
              and Powder  River  Basins;

         o    the Company's success in locating and producing reserves;

         o    the prices of oil and natural gas.

Issuing equity securities to satisfy the Company's financing  requirements could
cause substantial dilution to existing stockholders. In addition, debt financing
could lead to a diversion of cash flow to satisfy debt servicing obligations and
restrictions on the Company's operations.

Our exploratory and development drilling activities may not be successful.

The  Company's  future  drilling  activities  may  not be  successful,  and  our
management  cannot  be  sure  that  our  overall  drilling  success  rate or the
Company's  drilling  success rate for activity within a particular area will not
decline. In addition, the wells that we drill may not recover all or any portion
of  the  Company's  capital  investment  in  the  wells,  infrastructure  or the
underlying  leaseholds.  We are is  currently  in the early  stages  of  various
exploration  projects in the Rocky Mountain area of the United States and we can
offer  no  assurance  that  the  development  of these  projects  will  occur as
scheduled  or that actual  results  will be in line with our initial  estimates.
Unsuccessful   drilling  activities  could  negatively  affect  our  results  of
operations  and  financial  condition.  The  cost of  drilling,  completing  and
operating wells is often uncertain, and a number of factors can delay or prevent
drilling operations, including: o unexpected drilling conditions;

                  o    pressure or irregularities in formations;

                  o    equipment failures or accidents;

                  o    ability to hire and train personnel for drilling and
                       completion services;

                  o    adverse weather conditions;

                  o    compliance with governmental requirements; and

                  o    shortages or delays in the  availability  of drilling
                       rigs and the delivery of equipment.

                                       13

<PAGE>




In  addition,  we may not be able to  obtain  any  options  or lease  rights  in
potential drilling locations that it identifies.  There is no guarantee that the
potential  drilling  locations that we have  identified will ever produce oil or
natural gas.

Our Acquisition Activities may not be successful.

As  part  of  our  growth  strategy,  we may  make  additional  acquisitions  of
businesses and properties.  However,  suitable acquisition candidates may not be
available on terms and  conditions we find  acceptable,  and  acquisitions  pose
substantial  risks  to  our  business,   financial   condition  and  results  of
operations. In pursuing acquisitions,  we competes with other companies, many of
which have greater financial and other resources to acquire attractive companies
and properties.  Even if future  acquisitions  are completed,  the following are
some of the risks associated with acquisitions:

                  o    the acquired businesses or properties may not produce
                       revenues, earnings or  cash flow at anticipated levels;

                  o    the Company may assume  liabilities  that were not
                       disclosed or that exceed our estimates;

                  o    We  may  be  unable  to  integrate  acquired   businesses
                       successfully    and   realize    anticipated    economic,
                       operational and other benefits in a timely manner,  which
                       could  result in  substantial  costs and  delays or other
                       operational, technical or financial problems;

                  o    acquisitions could disrupt our ongoing business, distract
                       management,  divert  resources  and make it  difficult to
                       maintain  our current  business  standards,  controls and
                       procedures;

                  o    We may  finance  future  acquisitions  by issuing  common
                       stock for some or all of the purchase price,  which could
                       dilute  the   ownership   interests   of  the   Company's
                       stockholders; and

                  o We may incur additional debt related to future acquisitions.

We may be affected by the gas prices in the Rocky Mountain region.

Oversupply of gas and pipeline  capacity  issues,  as well as spot market prices
may affect prices achievable for any gas sales.

We  face  strong  competition  in the  oil and  gas  industry,  and  many of its
competitors have greater resources than the Company.

We operate in a highly  competitive  industry.  We will  competes with major oil
companies,  independent  producers and institutional  and individual  investors,
which are actively  seeking oil and gas properties  throughout the world,  along
with the equipment, labor and materials required to operate properties.  Many of
our competitors  have financial and  technological  resources  vastly  exceeding
those  available  to us Many oil and gas  properties  are sold in a  competitive
bidding process in which we may lack the technological  information or expertise
available to other bidders. We can offer no assurance that it will be successful
in  acquiring  and  developing   profitable  properties  in  the  face  of  this
competition.

                                       14

<PAGE>





Our  operations  are subject to the business and  financial  risk of oil and gas
exploration.

The business of exploring for and, to a lesser  extent,  developing  oil and gas
properties  is an activity that involves a high degree of business and financial
risk. Property acquisition  decisions generally are based on various assumptions
and  subjective  judgments  that are  speculative.  It is  impossible to predict
accurately the ultimate production  potential,  if any, of a particular property
or well.  Moreover,  the  successful  completion  of an oil or gas well does not
ensure a profit on  investment.  A  variety  of  factors,  both  geological  and
market-related, can cause a well to become uneconomic or marginally economic.

Our  business is subject to operating  hazards that could result in  substantial
losses.

The oil  and  natural  gas  business  involves  operating  hazards  such as well
blowouts,  craterings,  explosions,  uncontrollable flows of oil, natural gas or
well fluids,  fires,  formations with abnormal  pressures,  pipeline ruptures or
spills,  pollution,  releases of toxic gas and other  environmental  hazards and
risks, any of which could cause the Company a substantial loss. In addition,  we
may be held  liable  for  environmental  damage  caused  by  previous  owners of
property  it owns or  leases.  As a result,  the  Company  may face  substantial
liabilities  to third parties or  governmental  entities,  which could reduce or
eliminate funds available for exploration,  development or acquisitions or cause
the  Company  to  incur   losses.   An  event  that  is  not  fully  covered  by
insurance--for example, losses resulting from pollution and environmental risks,
which are not  fully  insurable--could  have a  material  adverse  effect on the
Company's financial condition and results of operations.

The Company may face unanticipated water disposal costs.

Where  groundwater  produced  from coal bed methane  projects  fails to meet the
quality requirements of applicable  regulatory agencies or methane wells produce
water in excess of the applicable  volumetric permit limit, we may have to drill
additional  disposal  wells to  re-inject  the  produced  water  back  into deep
underground  rock  formations.  The costs to dispose of this produced  water may
increase if any of the following occur:

         o    We cannot obtain future permits from applicable regulatory
              agencies;

         o    water of lesser quality is produced;

         o    Methane wells produce excess water; or

         o    new laws or  regulations  require  water to be  disposed  of in a
              different  manner.

We have limited protection for its technology and depends on technology owned by
others.

We intend to use operating  practices that  management  believes are of value in
developing  coal  bed  methane  resources.   In  most  cases,  patent  or  other
intellectual property protection is unavailable for this technology.  Our use of
independent  contractors  in most aspects of its  drilling  and some  completion
operations makes the protection of such technology more difficult.  Moreover, we
rely on the  technological  expertise  of the  independent  contractors  that it
retains for its oil and gas operations.  We do not have any long-term agreements
with these  contractors,  and management cannot be sure that we will continue to
have access to this expertise.

                                       15

<PAGE>




We must comply with complex federal, state, and local laws and regulations.

Federal,  state,  and local  authorities  extensively  regulate  the oil and gas
industry.  Noncompliance  with  these  statutes  and  regulations  may  lead  to
substantial  penalties,  and  the  overall  regulatory  burden  on the  industry
increases  the cost of doing  business  and, in turn,  decreases  profitability.
Regulations  affect  various  aspects  of oil and gas  drilling  and  production
activities,  including the pricing and marketing of oil and gas production,  the
drilling of wells (through permit and bonding requirements),  the positioning of
wells,  the  unitization  or  pooling of oil and gas  properties,  environmental
matters,  safety  standards,  the  sharing of markets,  production  limitations,
plugging and abandonment and  restoration.  These laws and regulations are under
constant review for amendment or expansion.

We  may  incur  substantial   costs  to  comply  with  stringent   environmental
regulations.

Our operations are subject to stringent and  constantly  changing  environmental
laws  and  regulations  adopted  by  federal,   state,  and  local  governmental
authorities.  We could be forced to expend significant  resources to comply with
new laws or  regulations,  or  changes  to  current  requirements.  Governmental
environmental  agencies have relatively little experience with the regulation of
coal  bed  methane  operations,   which  are   technologically   different  from
conventional oil and gas operations.  This inexperience has created  uncertainty
regarding  how these  agencies  will  interpret  air,  water and waste  laws and
regulations  and  other  requirements  to coal bed  methane  drilling,  fracture
stimulation methods,  production and water disposal operations. We will continue
to be subject to uncertainty associated with new regulatory  interpretations and
inconsistent  interpretations  between governmental  environmental  agencies. We
could face  significant  liabilities  to the  government  and third  parties for
discharges of oil,  natural gas or other pollutants into the air, soil or water,
and we could have to spend substantial amounts on investigations, litigation and
remediation.  Moreover,  failure by the  Company  to comply  with these laws and
regulations may result in the assessment of  administrative,  civil and criminal
penalties,  the imposition of  investigatory  and remedial  obligations  and the
issuance of injunctions that restrict or prohibit the performance of operations.
See  "--Government  Regulation  of  the  Oil  and  Gas   Industry--Environmental
Matters."

Our business will depend on transportation facilities owned by others.

The  marketability  of our gas production  depends in part on the  availability,
proximity and capacity of pipeline  systems owned by third parties,  and changes
in our contracts with these third parties could materially  affect the Company's
operations. The Company, through its subsidiaries,  has entered into a series of
firm transportation service agreements with pipeline companies providing for the
transportation  of our  natural  gas  production  from  the  Raton  Basin to the
Mid-Continent   markets.   See  "--Customers  and  Markets--Gas   Marketing  and
Transportation."

In addition,  federal, state, and local regulation of gas and oil production and
transportation,  tax and energy policies, changes in supply and demand, pipeline
pressures, and general economic conditions could adversely affect our ability to
transport its natural gas.

Market  conditions  could  cause  us  to  incur  losses  on  any  transportation
contracts.

                                       16

<PAGE>




General Risk Factors

Conflicts of Interest.

Certain conflicts of interest may exist between the Company and its officers and
directors.  They have  other  business  interests  to which  they  devote  their
attention,  and may be expected to  continue to do so although  management  time
should be devoted to the  business of the  Company.  As a result,  conflicts  of
interest may arise that can be resolved  only through  exercise of such judgment
as is consistent with fiduciary  duties to the Company.  See  "Management,"  and
"Conflicts of Interest."

Need For Additional Financing.

For its business plan to exploit oil, gas, and coal bed methane opportunities we
must seek additional financing,  which may or may not be available.  The Company
is  investigating  the  availability,  source,  or terms that  might  govern the
acquisition of additional  capital and will not do so until it determines a need
for additional  financing.  If not available,  our operations will be limited to
those that can be financed with its available capital.

Regulation of Penny Stocks.

Our  securities are subject to a Securities  and Exchange  Commission  rule that
imposes special sales practice  requirements upon  broker-dealers  who sell such
securities to persons other than established  customers or accredited investors.
For purposes of the rule, the phrase  "accredited  investors"  means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of  $1,000,000  or  having  an annual  income  that  exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000).  For
transactions  covered  by the  rule,  the  broker-dealer  must  make  a  special
suitability  determination for the purchaser and receive the purchaser's written
agreement  to the  transaction  prior to the  sale.  Consequently,  the rule may
affect the ability of  broker-dealers to sell our securities and also may affect
the  ability of  purchasers  in this  offering to sell their  securities  in any
market that might develop therefore.

In addition,  the  Securities  and Exchange  Commission  has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3,  15g-4,  15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act
of 1934, as amended. Because the securities of the Company may constitute "penny
stocks"  within the  meaning of the rules,  the rules would apply to the Company
and to its  securities.  The rules may  further  affect the ability of owners of
Shares to sell the  securities  of the Company in any market that might  develop
for them.

Shareholders  should  be  aware  that,  according  to  Securities  and  Exchange
Commission,  the  market  for penny  stocks has  suffered  in recent  years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the  security  by one or a few  broker-dealers  that are  often  related  to the
promoter or issuer; (ii) manipulation of prices through prearranged  matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices   involving   high-pressure   sales  tactics  and  unrealistic   price
projections  by  inexperienced  sales persons;  (iv)  excessive and  undisclosed
bid-ask  differentials  and  markups  by  selling  broker-dealers;  and  (v) the
wholesale dumping of the same securities by promoters and  broker-dealers  after
prices  have been  manipulated  to a desired  level,  along  with the  resulting
inevitable  collapse of those prices and with consequent  investor  losses.  The
Company's  management is aware of the abuses that have occurred  historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of  broker-dealers  who  participate in
the market,  management will strive within the confines of practical limitations
to prevent the  described  patterns from being  established  with respect to the
Company's securities.

                                       17

<PAGE>




Lack of  Operating  History.

The Company was  organized in April 1998 and remained  dormant until Spring 1999
when it raised money to explore a business plan involving internet websites. The
Company is not profitable. We have not had successful operating history. We face
all of the  risks  of a new  business  and the  special  risks  inherent  in the
investigation,  acquisition,  or involvement in a new business opportunity.  The
Company  must  be  regarded  as a new  or  "start-up"  venture  with  all of the
unforeseen costs,  expenses,  problems,  and difficulties to which such ventures
are subject.

Lack of Diversification.

Because of the limited  financial-resources that we have, it is unlikely that we
will be able to diversify its acquisitions or operations. The Company's probable
inability to diversify its activities into more than one area will subject us to
economic  fluctuations  within a particular  business or industry and  therefore
increase the risks associated with our operations.

Dependence upon Management; Limited  Participation  of  Management.

The Company currently has only three individuals who are serving as its officers
and  directors.  We will be heavily  dependent upon their skills,  talents,  and
abilities to implement its business plan, and may, from time to time,  find that
the inability of the officers and directors to devote their full time  attention
to  the  business  of  the  Company  results  in  a  delay  in  progress  toward
implementing its business plan. See "Management."  Because investors will not be
able to evaluate  the merits of possible  business  decisions by us, they should
critically assess the information concerning our officers and directors.

Lack of  Continuity in  Management.

The  Company  does not  have an  employment  agreement  with  its  officers  and
directors,  and as a result,  there is no assurance they will continue to manage
the  Company  in the  future.  In  connection  with  acquisition  of a  business
opportunity,  it is likely the current officers and directors of the Company may
resign subject to compliance with Section 14f of the Securities  Exchange Act of
1934.  A decision  to resign  will be based upon the  identity  of the  business
opportunity  and the nature of the  transaction,  and is likely to occur without
the vote or consent of the stockholders of the Company.

Indemnification of Officers and Directors.

Colorado  Revised  Statutes  provide for the  indemnification  of its directors,
officers, employees, and agents, under certain circumstances, against attorney's
fees and other expenses  incurred by them in any litigation to which they become
a party arising from their association with or activities on our behalf. We will
also  bear  the  expenses  of  such  litigation  for  any  directors,  officers,
employees,  or agents,  upon such person's promise to repay the Company therefor
if it is ultimately determined that any such person shall not have been entitled
to  indemnification.  This  indemnification  policy could result in  substantial
expenditures by us, which we will be unable to recoup.

Director's  Liability  Limited.

Colorado Revised  Statutes  exclude  personal  liability of its directors to the
Company and its  stockholders  for monetary damages for breach of fiduciary duty
except in certain specified circumstances. Accordingly, we will have a much more
limited right of action against its directors than otherwise  would be the case.
This  provision  does not affect the liability of any director  under federal or
applicable state securities laws.

                                       18

<PAGE>





Dependence upon Outside Advisors.

To supplement the business  experience of its officers and directors,  we may be
required to employ accountants,  technical experts,  appraisers,  attorneys,  or
other consultants or advisors.  The Company's President,  without any input from
stockholders,  will make the selection of any such advisors.  Furthermore, it is
anticipated  that such persons may be engaged on an "as needed"  basis without a
continuing  fiduciary  or other  obligation  to the  Company.  In the  event the
President of the Company considers it necessary to hire outside advisors, he may
elect to hire  persons  who are  affiliates,  if they are  able to  provide  the
required services.

Leveraged  Transactions.

Acquisitions  of a assets by the Company maybe  leveraged,  i.e., we may finance
the  acquisition of the assets by borrowing  against the assets of the business,
or against the projected future revenues or profits of the assets. If done, this
could  increase  our  exposure  to  larger  losses.  Assets  acquired  through a
leveraged  transaction  are profitable  only if it generates  enough revenues to
cover the  related  debt and  expenses.  Failure  to make  payments  on the debt
incurred to purchase  the  business  opportunity  could  result in the loss of a
portion or all of the assets  acquired.  There is no  assurance  that any assets
acquired through a leveraged  transaction will generate  sufficient  revenues to
cover the related debt and expenses.

Loss of Control by Present  Management and Stockholders.

We may consider an acquisition in which we would issue, as consideration for the
business  opportunity to be acquired,  an amount of the Company's authorized but
unissued common stock that could, upon issuance, represent the great majority of
the voting  power and equity of the Company.  The result of such an  acquisition
would be that the acquired  company's  stockholders and management would control
the Company, and persons unknown could replace our management at this time. Such
a merger  would  result in a greatly  reduced  percentage  of  ownership  of the
Company by its current shareholders.

Volatility of Stock Price.

There is no  significant  recent  history  relating  to the market  price of our
stock,  but what exists  indicates the market price is highly volatile and it is
very thinly  traded.  Factors  such as those  discussed  in this "Risk  Factors"
section may have a significant  impact upon the market price of the  securities.
Due to the low price of the securities,  many brokerage firms may not be willing
to effect  transactions in the securities.  Further,  many lending  institutions
will not permit the use of such securities as collateral for any loans.

We  depend  on key  personnel  and do not have  employment  agreements  with our
executive officers.

Our success  depends on the continued  services of our executive  officers and a
limited number of other senior management and technical personnel, and we do not
have employment agreements with these employees.  Loss of the services of any of
these people could result in financial losses and interruptions in operations.

We do not pay dividends.

We have never  declared  nor paid any cash  dividends  on our  common  stock and
management has no intention to do so in the near future.

                                       19

<PAGE>




RESERVES

The  Company  has no proven  oil or gas or  coalbed  methane  reserves,  nor any
production.

Employees

The  Company is a  development  stage  company  and  currently  has no  fulltime
employees.  Management of the Company expects to use consultants,  attorneys and
accountants as necessary,  and anticipates a need to engage at least 3 full-time
employees as it expands its oil and gas operations.

Office and Operations Facilities

The Company  leases its corporate  offices in Wheat Ridge,  Colorado.  The lease
covers approximately 400 square feet and is month to month.

ITEM 2. DESCRIPTION OF PROPERTIES/ASSETS/OIL AND GAS PROSPECTS

         (a) Real Estate.                   None.

         (b) Title to properties.

         The Company owns fee title to various  minerals on 150,000  gross acres
         approximately  in Colfax  County,  New Mexico  subject to a 10% royalty
         interest.  These  interests  constitute  oil, gas or coalbed methane on
         120,000  acres,  approximately,  and  50%  of oil  and  gas  rights  on
         approximately  10,000  acres and 20,000  acres  approximately  of other
         miscellaneous mineral rights.

         (c) Oil and Gas Leases and Interests

         (d) Patents.                       None.


                                       20

<PAGE>




 At April 30, 2008, the Company held undeveloped acreage as set forth below:
<TABLE>
<CAPTION>
<S>                     <C>              <C>             <C>               <C>            <C>               <C>


                           Developed Acres                 Undeveloped Acres                    Total Acres
     Location           Gross            Net             Gross             Net            Gross             Net
     --------           -----            ---             -----             ---            -----             ---

Colfax Co.
New Mexico                0               0             44,000            3,520           44,000           3,520

Colfax Co.
New Mexico                0               0             120,000          108,000         120,000          108,000

Colfax Co.
New Mexico                0               0             10,000            5,000           10,000           5,000

Wyoming                   0               0              2,560            2,137           2,560            2,137

                    --------------- --------------- ---------------- ---------------- --------------- ----------------
Total                     0               0             176,560          118,657         176,560          118,657

Historical Oil or Gas Production for Company

                                 2008                             2007                             2006
                                 ----                             ----                             ----
                     Natural Gas          Oil          Natural Gas         Oil          Natural Gas         Oil
Location                (MMcf)          (Mbbl)           (MMcf)           (Mbbl)          (MMcf)           (Mbbl)
--------                ------          ------           ------           ------          ------           ------

New Mexico                0                0                0               0                0               0
Wyoming                   0                0                0               0                0               0

                    --------------- ---------------- ---------------- --------------- ---------------- ---------------
Total                     0                0                0               0                0               0
</TABLE>

Productive Wells

During the year ended April 30, 2008,  the Company did not have any gross or net
producing wells.

ITEM 3. LEGAL PROCEEDINGS

We are  not a party  to any  material  pending  legal  proceedings,  and no such
proceedings are known to be contemplated.

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

On June 23, 2008, we held a Special Meeting of the  Shareholders of the Company.
At such meeting,  a majority of 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 issuance of any Preferred Shares. As of the filing of this document, the
Company's  Board of Directors has not  authorized  the issuance of any Preferred
Shares.

                                       21

<PAGE>




                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Common Stock is presently traded on the  over-the-counter  market on the OTC
Bulletin Board maintained by the Financial  Industry  Regulatory  Authority (the
"FINRA").  The OTCBB symbol for the Common Stock is "SNRV".  The following table
sets forth the range of high and low bid quotations for the Common Stock of each
full quarterly period during the fiscal year or equivalent period for the fiscal
periods indicated below. The quotations were obtained from information published
by the FINRA and reflect interdealer prices,  without retail mark-up,  mark-down
or commission and may not necessarily represent actual transactions.


                2008                        HIGH              LOW
                ----                        ----              ---
April 30, 2008                              $0.30             $0.29
January 31, 2008                             0.39              0.39
October 31, 2007                             0.60              0.60
July 31, 2007                                1.59              1.59

                2007                        HIGH              LOW
                ----                        ----              ---
April 30, 2007                              $1.50             $0.92
January 31, 2007                             1.75              0.15
October 31, 2006                             1.75              0.55
July 31, 2006                                2.00              0.55

At April 30,  2008,  there  were 83 holders  of record of the  Company's  common
stock. A significant  number of the shares are held in street name and, as such,
the  Company   believes  that  the  actual   number  of  beneficial   owners  is
significantly higher.

Dividends

The Company has not established a policy concerning payment of regular dividends
nor has it paid any  dividends  on its  common  stock to date.  Any  payment  of
dividends in the future will be determined by the Board of Directors in light of
conditions  then  existing,  including  restrictions  imposed  by the  Company's
preferred stock then outstanding,  the Company's earnings,  financial condition,
capital  requirements  and  debt  covenants,  if  any,  and  the  tax  treatment
consequences of paying dividends.

                                       22

<PAGE>




Effective  August 11, 1993, the SEC adopted Rule 15g-9,  which  established  the
definition  of a "penny  stock," for purposes  relevant to the  Company,  as any
equity  security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions.  For
any transaction  involving a penny stock, unless exempt, the rules require:  (i)
that a broker or dealer  approve a person's  account for  transactions  in penny
stocks;  and (ii) that the broker or dealer  receive from the investor a written
agreement  to the  transaction,  setting  forth the identity and quantity of the
penny  stock to be  purchased.  In order  to  approve  a  person's  account  for
transactions  in penny  stocks,  the broker or dealer must (i) obtain  financial
information  and investment  experience  and objectives of the person;  and (ii)
make a  reasonable  determination  that the  transactions  in penny  stocks  are
suitable for that person and that person has sufficient knowledge and experience
in financial  matters to be capable of evaluating the risks of  transactions  in
penny stocks.  The broker or dealer must also deliver,  prior to any transaction
in a penny stock, a disclosure  schedule prepared by the Commission  relating to
the penny stock market,  which,  in highlight  form, (i) sets forth the basis on
which the broker or dealer made the suitability  determination;  and (ii) states
that the broker or dealer received a signed, written agreement from the investor
prior to the  transaction.  Disclosure  also has to be made  about  the risks of
investing in penny stock in both public offerings and in secondary trading,  and
about  commissions   payable  to  both  the  broker-dealer  and  the  registered
representative,  current  quotations  for  the  securities  and the  rights  and
remedies available to an investor in cases of fraud in penny stock transactions.
Finally,  monthly statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in
penny stocks.

UNREGISTERED SALES OF EQUITY

The Company made the following  unregistered sales of its securities from May 1,
2007 to April 30, 2008
<TABLE>
<CAPTION>
<S>                    <C>                      <C>              <C>                                        <C>


                                                                             CONSIDERATION                   CLASS OF PURCHASER
     DATE OF SALE      TITLE OF SECURITIES      NO. OF SHARES                -------------                   ------------------
     ------------      -------------------      -------------

        5/7/07            Common Stock             100,000       Investment Banking Services                Accredited Investors
       5/31/07            Common Stock             20,000        Promissory Note Extension                   Business Associate
       6/30/07               Option                10,000        Consulting Agreement                        Business Associate
       7/10/07            Common Stock             100,000       Services in Association with Drilling       Business Associate
                                                                 activities
       7/10/07            Common Stock             60,000        Negotiation of Drilling Contracts           Business Associate
       7/31/07               Option                10,000        Consulting Agreement                        Business Associate
       8/31/07               Option                10,000        Consulting Agreement                        Business Associate
       9/30/07               Option                10,000        Consulting Agreement                        Business Associate
       10/31/07              Option                10,000        Consulting Agreement                        Business Associate
       10/31/07           Common Stock             150,000       Services in association with drilling       Business Associate
                                                                 activities
       11/30/07              Option                10,000        Consulting Agreement                        Business Associate


</TABLE>


                                       23

<PAGE>




Exemption from Registration Claimed

All of the sales by the Company of its unregistered  securities were made by the
Company in reliance upon Section 4(2) of the Act. All of the individuals  and/or
entities listed above that purchased the unregistered  securities were all known
to the Company and its 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
management of the Company 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 the  Company.  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  6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

CAUTIONARY AND FORWARD LOOKING STATEMENTS

In addition to statements of historical  fact, this Annual Report on Form 10-KSB
for the year ended  April 30,  2008  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.

There is no assurance that the Company will be  profitable,  the Company may not
be able to successfully develop, manage or market its products and services, the
Company may not be able to attract or retain qualified executives and technology
personnel,  the Company's products and services may become obsolete,  government
regulation may hinder the Company's business, additional dilution in outstanding
stock ownership may be incurred due to the issuance of more shares, warrants and
stock options,  or the exercise of warrants and stock  options,  and other risks
inherent in the Company's businesses.

                                       24

<PAGE>




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-QSB and Annual  Reports on Form  10-KSB  filed by the Company and any
Current Reports on Form 8-K filed by the Company.

Plan Of Operations

We had we had no revenues  during the year ended April 30, 2008. We have minimal
capital and minimal cash.

During the year ended April 30, 2008,  our operations  were focused  exploring a
coal bed methane  prospect  located in the Raton  Basin in Northern  New Mexico.
During the year ended April 30, 2008,  we drilled 3 coal bed mathne wells in the
Raton  Basin,  Myers #1, #2 and #3. All three  wells have  shown  multiple  coal
zones, which will be completed to seek methane gas.

Over the next twelve  months,  we intend to frac the Myers #1 and #2 in order to
test production thereafter. We have perforated multiple zones and intend to frac
these zones.

We intend to operate all of our  prospects  in the Raton Basin and hold  working
interest of 100% on a 80% NRI on our  leases,  except that we have a 25% working
interest in the Sun River #1, LLC, a drilling  syndication  for the Myers #1 and
#2 wells, which was assembled in early 2007.

On April 21,  2008,  the  Company  entered  into a Release of Claims,  with Nova
Leasing,  LLC,  the  holder  of a $6.6  Million  Promissory  Note and a  $64,000
Promissory  Note. In return for the  releasement of the Company from any further
payment  obligations  under the promissory  notes,  the Company returned to Nova
Leasing, LLC, all rights and interests into and/or entitlements to the following
leases:

(a) the working  interest in and the net revenue  interest on the lease totaling
640 acres in Natrona County,  Wyoming;  and (b) the 85% working  interest in and
the 80% net revenue  interest on certain leases  totaling  approximately  14,000
acres (gross) in Natrona and Converse County Wyoming, in the Powder River Basin.

In connection with the  forgiveness of debt and the return of the releases,  the
Company  recorded a loss for the year ended  April 30,  2008 of  $1,298,603  and
income of $429,645 in connection with the release of the debt.

We will need  substantial  additional  capital to support  our  proposed  future
operations. We have no revenues. We have no committed source for any funds as of
date  here.  No  representation  is made that any funds will be  available  when
needed.  In the event funds cannot be raised when needed,  we may not be able to
carry out our 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,  2008,  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  - Year Ended  December  31, 2007  Compared To Year Ended
December 31, 2006

During the year ended April 30, 2008 and 2007, the Company did not recognize any
revenues from its operating activities.

                                       25

<PAGE>




During the year ended April 30, 2008, operating losses were $975,666 compared to
$319,916  during the year ended April 30, 2007. The $655,750  increase is due to
the increased  operating activity level of the Company over the previous period.
The Company  incurred  $297,360 in  consulting  expenses  and  $640,228 in lease
expenses during the year ended April 30, 2008.

The Company recognized  interest expense of $512,875 during the year ended April
30, 2008.  Interest  expenses  increased by $233,604  compared to the year ended
April 30, 2007.  The increase is due to an increase in notes  payables  over the
fiscal  year to support  operations.  Interest  expense  includes  an expense of
$51,000. The Company issued 20,000 shares to Nova Leasing in connection with the
extension  of the $64,000 note held by Nova  Leasing.  The shares were deemed to
have a value of $51,000 based on the closing market price of $2.55 per share.

During the year ended  April 30,  2008,  the  Company  recognized  a net loss of
$2,537,051,  compared  to a net loss of  $661,339  for the year ended  April 30,
2008.  The increase of $1,875,712  was due the $655,750  increase in operational
expenses  combined  with the  $233,604  increase  in  interest  expense  and the
$1,298,603  loss on the release of claim offset by the $429,645 debt relief as a
result of the Release of Claim described above.

Liquidity and Capital Resources

During the year ended April 30,  2008,  the Company used cash of $521,671 in its
operating activities.  The Company had cash of $12,038 at April 30, 2008. During
the year ended April 30, 2008,  net losses of $2,537,051  were adjusted for $240
in depreciation, $12,035 in unrealized losses on marketable securities, $448,340
in consulting  expense for stock and options issued and $107,120 in amortization
of stock issued for consulting services.

The Company was used funds of $6,851,322  from investing  activities  during the
year ended  April 30,  2008.  We  expended  $188,678  on assets  and  recognized
$7,040,000  from the return of leases as part of a Release  of Claim,  described
above.

The Company used  $6,335,185 in its financing  activities  during the year ended
April 30,  2008.  During the year ended  April 30,  2008,  the Company had a net
decrease of cash $5,534.

During the year ended April 30, 2007, the Company used cash of $1,714,316 in its
operating  activities.  The Company  had a cash  balance of $17,572 at April 30,
2007. The Company used $7,040,000 in investing  activities during the year ended
April 30, 2007. The Company  received  $8,770,889 from its financing  activities
during the year ended April 30, 2007.

The Company during the year April 30, 2008, received $1,100,000 from the payment
of a subscription receivable. In exchange for the receivable, the Company issued
2,200,000 of its common shares at the time of the issuance of the  receivable in
April 2007.  The Company used these funds to make a payment on  $6,600,000  note
payable owed to Nova Leasing, LLC.

During the year ended April 30, 2008,  the Company  entered into a  twelve-month
consulting  services  agreement with a third party, in which the party agreed to
provide investment banking services. Compensation consisted of 100,000 shares of
the  Company's  restricted  common  stock with a market  value of  approximately
$115,000  (based  on a closing  market  price of $1.15 per share at the date the
transaction  was  entered  into).  The  deferred  cost is being  amortized  on a
straight-line  basis as earned over the twelve-month period from the date of the
agreement. During the year ended April 30, 2008, $107,120 was expensed.

                                       26

<PAGE>




During the year ended April 30, 2008, the Company entered into an agreement with
a third party for public relation services.  Compensation consists of options of
10,000 shares of the Company's  common stock per month,  to be issued at the end
of each month of  service.  The  options  are to have a term of 2 years from the
date of issuance and an exercise  price to be determined  by the closing  market
price on the last day of each month of service.  The options are fully vested at
issuance and will  provide for cashless  exercise.  The Company  granted  60,000
stocks  options to the third party at an exercise  prices  ranging from $0.70 to
$2.25 per share.  The fair value of the options at the date of grant was $43,430
and was recorded as compensation expense.

During the year ended April 30, 2008,  the Company  issued 100,000 shares of its
restricted  common stock as payment for  services in  connection  with  drilling
activities.  The shares had a value of $190,000, based on a closing market price
of $1.90 per share.

During the year ended April 30, 2008, the Company issued 50,000 shares to third
parties,  as payment for services in connection  with drilling  activities.  The
shares had a value of  $165,000,  based on an average  closing  market  price of
$1.10 per share.

At April 30,  2008,  marketable  securities  consist of 57,400  shares of common
stock of Tonga. These securities are carried at estimated fair value ($11,835 at
April 30, 2008) based upon quoted market prices. During the year ended April 30,
2008, the Company sold 149,700  shares and received funds of $299,400,  which it
used to support operations.

The Company will need to either  borrow or make private  placements  of stock in
order to fund operations. No assurance exists as to the ability to achieve loans
or make private placements of stock.

Going Concern

Our  independent  registered  public  accounting firm has stated in their report
included in this Form 10-KSB,  that the Company has recurring  operating  losses
and had negative  cash flows from  operations  for each of the years ended April
30, 2008 and 2007, and has an accumulated  deficit in the  development  stage of
$3,548,490 at April 30, 2008.  These factors,  among others,  raise  substantial
doubt about the Company's ability to continue as a going concern.

ITEM 7.   FINANCIAL STATEMENTS.

The audited  consolidated  financial  statements  and the related  notes are set
forth at pages F-1 through F-17 attached hereto.

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

None.

                                       27

<PAGE>




ITEM 8A.  CONTROLS AND PROCEDURES.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the  participation  of our management,  including
our principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure  controls and  procedures,  as such term is defined
under Rule 13a-15(e)  promulgated under the Securities  Exchange Act of 1934, as
amended (the Exchange Act). As a result of this evaluation,  we did not identify
any material  weaknesses in our internal control over financial  reporting as of
April 30, 2008.  Accordingly,  we  concluded  that our  disclosure  controls and
procedures were effective as of April 30, 2008.

Our internal controls over financial  reporting ("ICFR") are designed to provide
reasonable  assurance  regarding the reliability of financial  reporting and the
preparation  of  consolidated  financial  statements  for  external  purposes in
accordance with generally accepted accounting  principles.  Our internal control
over financial  reporting  includes  those policies and procedures  based on the
framework in Internal Control - Integrated  Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission that:

     i.   pertain to the  maintenance  of records that,  in  reasonable  detail,
          accurately and fairly reflect the transactions and dispositions of our
          assets;

     ii.  provide  reasonable   assurance  that  transactions  are  recorded  as
          necessary to permit preparation of consolidated  financial  statements
          in accordance with generally accepted accounting principles,  and that
          our receipts and  expenditures  are being made only in accordance with
          authorizations of our management and directors; and

     iii. provide reasonable  assurance regarding prevention or timely detection
          of  unauthorized  acquisition,  use or  disposition of our assets that
          could have a material effect on the consolidated financial statements.

ITEM 8(A)T.  INTERNAL CONTROLS AND PROCEDURES

Management's Annual Report on Internal Control Over Financial Reporting.

Management is responsible for  establishing  and maintaining  adequate  internal
control over financial reporting.  Our management conducted an evaluation of the
effectiveness  of our internal  control over  financial  reporting  based on the
framework in Internal Control - Integrated  Framework issued by the Committee of
Sponsoring  Organizations of the Treadway  Commission.  Based on our evaluation,
management  has  concluded,  as of April 30,  2008,  we did  maintain  effective
controls over the financial reporting process.

Inherent Limitations Over Internal Controls

Internal control over financial  reporting cannot provide absolute  assurance of
achieving  financial reporting  objectives because of its inherent  limitations,
including  the  possibility  of human error and  circumvention  by  collusion or
overriding of controls.  Accordingly,  even an effective internal control system
may not  prevent  or detect  material  misstatements  on a timely  basis.  Also,
projections of any evaluation of  effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions or
that the degree of compliance with the policies or procedures may deteriorate.

                                       28

<PAGE>




Attestation Report of the Registered Public Accounting Firm.

This  annual  report does not include an  attestation  report of our  registered
public  accounting  firm regarding  internal  control over financial  reporting.
Management's  report was not subject to  attestation  by our  registered  public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this annual report.

Changes in Internal Control Over Financial Reporting.

We have made no change in our internal control over financial reporting that has
materially affected,  or is reasonably likely to materially affect, our internal
control over financial reporting.

ITEM 8B.  OTHER INFORMATION.

None.

                                       29

<PAGE>



                                    PART III

ITEM 9. DIRECTORS,  EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

All  directors of the Company  hold office until the next annual  meeting of the
security holders or until their successors have been elected and qualified.  The
officers of the Company are  appointed by the board of directors and hold office
until their death,  resignation or removal from office. The Company's  directors
and executive  officers,  their ages,  positions held, and the duration of their
office are as follows:

Name                                        Position               Term
------                                      --------               ----

Wesley F. Whiting          President and Director                   Annual

Reginald T. Green          Secretary, and Director                  Annual

Thomas Anderson            Director                                 Annual

Stephen W. Weathers        Director                                 Annual

David Surgnier             Director                                 Annual

The  directors  named  above will  serve  until the next  annual  meeting of the
Company's  stockholders.  Directors  will be elected for  one-year  terms at the
annual stockholders' meeting. Officers will hold their positions at the pleasure
of the board of  directors,  absent  any  employment  agreement,  of which  none
currently  exists or is  contemplated.  There is no arrangement or understanding
between the directors and officers of the Company and any other person  pursuant
to which any  director  or officer  was or is to be  selected  as a director  or
officer.

Our directors and officers will devote such time to the Company's  affairs on an
"as  needed"  basis.  As a result,  the actual  amount of time,  which they will
devote to the Company's affairs,  is unknown and is likely to vary substantially
from month to month.

DIRECTORS AND EXECUTIVE OFFICERS

WESLEY F.  WHITING,  age 76.  Mr.  Whiting  has  served as the  President  and a
Director of the Company,  since 1999. Mr. Whiting was President,  Director,  and
Secretary of Berge Exploration,  Inc.  (1978-88) and President,  Vice President,
and director of NELX, Inc.  (1994-1998),  and was Vice President and director of
Intermountain  Methane  Corporation  (1988-1991),   and  President  of  Westwind
Production,  Inc.  (1997-1998).  He was a director of Kimbell deCar  Corporation
from 1998,  until 2000 and he has been  President  and a  director  of  Dynadapt
System,  Inc. since 1998. He was a Director of Colorado Gold & Silver, Inc. from
1999 to 2000. He was President and director of Business  Exchange  Holding Corp.
from 2000 to 2002 and Acquisition Lending, Inc. (2000-2002). He was director and
Vice  President of Utilitec,  Inc, 1999 to 2002, and has been Vice President and
director of Agro  Science,  Inc.  since 2001.  He was  President and director of
Premium  Enterprises,  Inc.  From October 2002 to December 31, 2002.  He is Vice
President and director of Evergreen Associates,  Inc. and Resource Science, Inc.
He was appointed  Director and Secretary of BSA SatelLINK,  Inc. in 2002. He was
President and Director of Fayber Group, Inc. 2003, 2005 when he resigned. He has
also been  Director of Life USA, Inc.  since 2003.  He has been  appointed as an
officer and  director  of Captech  Financial,  Inc. in May 2006.  He served as a
director of Baymark  Technologies,  Inc.  2005-2006.  He is a director of Cavion
Technologies, Inc. (2006) and Aspeon, Inc. (2006).

                                       30

<PAGE>





REGINALD T. GREEN, age 56, Mr. Green has served as the Secretary and Director of
the Company,  since 1999.  Mr. Green has been Secretary and Director of Dynadapt
Systems,  Inc.  since 1998.  Mr. Green has been co-owner and operator of Green's
B&R  Enterprises,  a wholesale  donut  baker  since 1983.  He has been an active
investor in small capital and high-tech  adventures  since 1987. Mr. Green was a
director of Colorado Gold & Silver,  Inc. in 2000. He was a director for Houston
Operating  Company in late 2004 until  December  2004.  He recently  served as a
director for Mountains West Exploration, Inc in 2005. He is a Director of Cavion
Technologies,  Inc. (2006) and Aspeon,  Inc. (2006) and has been appointed as an
officer and  director  of Captech  Financial,  Inc. in May 2006.  He served as a
director of Baymark Technologies, Inc. 2005-2006.

THOMAS ANDERSON, age 41, presently works as a Senior Environmental Scientist for
the Energy and Environmental  Engineering Division of Apogen Technologies in Los
Alamos,  New Mexico.  He earned his B.S. in Geology from Denison  University and
his M.S. in Environmental Science and Engineering from Colorado School of Mines.
Mr. Anderson has worked for past 16 years in the environmental consulting field,
providing environmental compliance, characterization and remediation services to
Department of Energy, Department of Defense, and industrial clients. He formerly
worked as a Senior Environmental Scientist at Concurrent Technologies Corp. from
November 2000 to December 2004. From March 2000 to November 2000 he was employed
as a hydrologist  at Stone & Webster  Engineering,  Inc. From July 1998 to March
2000  he  was  employed  by  advanced  Integrated   Management  Services  as  an
Environmental  Scientist/Engineer.  From 1997 to 1998 he was a graduate research
assistant  at  Colorado  School  of  Mines  in  the  Environmental  Science  and
Engineering Program.

STEPHEN  W.  WEATHERS,  age 47,  earned his B. S. in  Geology  from Boise  State
University.  He has  worked as an  environmental  geologist  both in the  mining
industry and oil and gas industry. His duties included permitting, environmental
compliance,   environmental   remediation/reclamation   and  natural  gas  asset
acquisitions  both in the United  States and  Canada.  Mr.  Weathers  worked for
Maxxim  Environmental/Terracon from 1997 through 1999 and presently works in the
environmental  remediation  division for a Duke Energy Field Services which is a
natural  gas  processing  company  (1999-2002).  Mr.  Weathers  also serves as a
director of Sun River Mining, Inc. which is seeking a business acquisition.

DAVID SURGNIER, age 58, Director Nominee, earned his B.S. in Mathematics in 1971
from the University of Oklahoma,  his B.S. in Petroleum Engineering in 1972 from
the University of Oklahoma,  and his M.S. in Petroleum  Engineering in 1984 from
the University of Texas. Mr. Surgnier currently serves as President/Engineer for
Delta Gas Corporation and Delta  Environmental  since 1992. From 1986 to 1992 he
was the Rocky Mountain Regional Manager for Completion Technology  International
of Denver,  Colorado. Mr. Surgnier was the Manager of Special Projects for Texas
Iron Works of Houston,  Texas from 1980-1986.  Mr. Surgnier was the Drilling and
Production Engineer from 1972-1980 for Atlantic Richfield Oil Company located in
Houston,  Texas and ARCO  Alaska.  Mr.  Surgnier  has 33 years  experience  as a
Petroleum  Engineer,   Project  and  Regional  Manager,   Technical  writer  and
presenter.  Developer,  Inventor and  co-Inventor  of Patented  and  Proprietary
equipment and products,  for the Petroleum and  Environmental  Industry.  He has
operated and managed  projects  onshore and  offshore in North & South  America,
North  Slope of Alaska,  Cook Inlet of Alaska and the Middle  East.  He has also
drilled  and  completed  domestic  water  supply  wells  for  individuals,   the
Chickasaw,  Choctaw and  Seminole  Nations,  and U.S.  Public  Health  Services.
Oilfield water supply wells for Cities Service Co., Framers Energy  Corporation,
Botcher Gas  Company,  Cameron Oil Company and Phillips  Petroleum  Corporation.
Municipal Water Supply Wells for the Cities of Stewart, McAlister, Stonewall Ada
and Tribbey,  Oklahoma.  He has been  Environmental  Consultant to Environmental
Resource  Management,  Biotreatment,  Inc., Aarow  Environmental,  Inc., Argonne
National  Laboratory  and the University of Chicago.  He has numerous  Patents &
Inventions  and has  written  many  professional  Articles  involving  petroleum
engineering.

                                       31

<PAGE>







Indemnification of Officers and Directors

As permitted by Colorado  Revised  Statutes,  we may indemnify its directors and
officers  against  expenses and  liabilities  they incur to defend,  settle,  or
satisfy any civil or criminal  action  brought  against them on account of their
being or having been Company's directors or officers unless, in any such action,
they are  adjudged to have acted with gross  negligence  or willful  misconduct.
Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to directors,  officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that, in the
opinion of the  Securities  and Exchange  Commission,  such  indemnification  is
against public policy as expressed in that Act and is, therefore, unenforceable.

Exclusion of Liability

The Colorado  Corporation Code excludes personal liability for its directors for
monetary  damages  based  upon  any  violation  of  their  fiduciary  duties  as
directors, except as to liability for any breach of the duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law,  acts in violation  of the  Colorado  Corporation  Act, or any
transaction from which a director receives an improper  personal  benefit.  This
exclusion of liability does not limit any right, which a director may have to be
indemnified,  and does not  affect any  director's  liability  under  federal or
applicable state securities laws.

Conflicts of Interest

Our officers and directors  will not devote more than a portion of their time to
the affairs of the Company.  There will be occasions when the time  requirements
of our business conflict with the demands of their other business and investment
activities.  Such  conflicts  may require  that we attempt to employ  additional
personnel.  There is no  assurance  that the  services of such  persons  will be
available or that they can be obtained upon terms favorable to the Company.

Officers and  directors  of the Company may  participate  in business  ventures,
which could be deemed to compete directly with the Company. Additional conflicts
of interest and non-arms length transactions may also arise in the future in the
event our officers or directors are involved in the  management of any firm with
which we transact business. Our Board of Directors has adopted a policy that the
Company  will not seek a merger  with,  or  acquisition  of, any entity in which
management  serve as officers  or  directors,  or in which they or their  family
members own or hold a  controlling  ownership  interest.  Although  the Board of
Directors  could  elect to change this  policy,  the Board of  Directors  has no
present intention to do so.

Section 16(a) Beneficial Ownership Reporting Compliance

Section  16(a) of the Exchange Act of 1934,  as amended,  requires the Company's
directors  and  executive  officers,  and  persons  who own  more  than 10% of a
registered  class  of the  Company's  equity  securities,  to file  with the SEC
reports of  ownership  and changes in ownership of Common Stock and other equity
securities of the Company.  Such  reporting  persons are required to furnish the
Company with copies of all Section 16(a) forms they file.

                                       32

<PAGE>




ITEM 10.  EXECUTIVE COMPENSATION.

                           Summary Compensation Table

The  following  table sets forth the cash and non-cash  compensation  paid by or
incurred  on behalf of the  Company to its Chief  Executive  Officer and certain
other executive officers for the years ended April 30, 2008, 2007 and 2006.
<TABLE>
<CAPTION>
<S>                     <C>    <C>        <C>      <C>        <C>        <C>            <C>               <C>            <C>
                      SUMMARY EXECUTIVES COMPENSATION TABLE

---------------------- ------- ---------- -------- ---------- ---------- -------------- ----------------- -------------- ----------
                                                                          Non-equity     Non-qualified
                                                                           incentive        deferred
                                                   Stock      Option         plan         compensation      All other
                                Salary     Bonus    awards     awards    compensation       earnings      compensation     Total
   Name & Position      Year      ($)       ($)       ($)        ($)          ($)             ($)              ($)          ($)
---------------------- ------- ---------- -------- ---------- ---------- -------------- ----------------- -------------- ----------

---------------------- ------- ---------- -------- ---------- ---------- -------------- ----------------- -------------- ----------
Wesley F. Whiting,      2008       0         0         0          0            0               0                0            0
President & Director    2007       0         0         0          0            0               0                0            0
                        2006       0         0         0          0            0               0                0            0
---------------------- ------- ---------- -------- ---------- ---------- -------------- ----------------- -------------- ----------

---------------------- ------- ---------- -------- ---------- ---------- -------------- ----------------- -------------- ----------
Redginald T. Green,     2008       0         0         0          0            0               0                0            0
Secretary & Director    2007       0         0         0          0            0               0                0            0
                        2006       0         0         0          0            0               0                0            0
---------------------- ------- ---------- -------- ---------- ---------- -------------- ----------------- -------------- ----------
</TABLE>


                  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END


The President and our most highly compensated  executive officers for the fiscal
year ended April 30, 2008 (the "Named  Executive  Officers") did not receive any
options, warrants or stock.

                             Option/SAR Grants Table

No options were granted during the fiscal years ended April 30, 2008 and 2007 to
our officers and/or directors.

                          Directors Compensation Table

The following table sets forth certain information concerning  compensation paid
to our directors for services as directors,  but not including  compensation for
services as officers  reported in the "Summary  Executives  Compensation  Table"
during the year ended April 30, 2008:
<TABLE>
<CAPTION>
<S>              <C>           <C>           <C>           <C>             <C>            <C>             <C>
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
                                                                           Non-qualified
                                                             Non-equity      deferred
                 Fees earned                                 incentive     compensation     All other
                  or paid in      Stock         Option          plan         earnings      compensation      Total
     Name            cash       awards ($)    awards ($)    compensation        ($)            ($)            ($)
                     ($)                                        ($)
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------

---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
Wesley F.           $ -0-         $ -0-         $ -0-          $ -0-           $ -0-          $ -0-          $ -0-
Whiting
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------

---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
Reginald T.        $ -0-         $ -0-         $ -0-          $ -0-           $ -0-          $ -0-          $ -0-
Green
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------

---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
Thomas Anderson     $ -0-         $ -0-          $-0-          $ -0-           $-0-           $ -0-          $ -0-
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------

---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
Stephen W.          $ -0-         $ -0-          $-0-          $ -0-           $-0-            $-0-          $-0-
Weathers
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------

---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
David Surginier     $ -0-         $ -0-          $-0-          $ -0-           $-0-            $-0-          $-0-
---------------- ------------- ------------- ------------- --------------- -------------- --------------- ------------
</TABLE>

                                       33

<PAGE>




The Company does not currently pay any cash fees to its directors,  nor does the
Company pay directors' expenses in attending board meetings.

ITEM 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

Beneficial Ownership

The following  table sets forth  certain  information  regarding the  beneficial
ownership of  outstanding  shares of Common  Stock as of April 30, 2008,  by (a)
each  person  known  by  the  Company  to own  beneficially  5% or  more  of the
outstanding shares of Common Stock, (b) the Company's directors, Chief Executive
Officer and executive  officers whose total  compensation  exceeded $100,000 for
the last  fiscal  year,  and (c) all  directors  and  executive  officers of the
Company as a group.
<TABLE>
<CAPTION>
<S>                           <C>                        <C>                        <C>

    Name And Address* of           Class of Equity         Amount and Nature of       Percent of Class(1)
    Beneficial Ownership                                     Beneficial Owner
----------------------------- -------------------------- -------------------------- -------------------------
Wesley F. Whiting,            Common Shares                       50,000                     0.32%
President & Director

Redginald T. Green, Director  Common Shares                       13,500                     0.09%
Director

Thomas Anderson, Director     Common Shares                       50,000                     0.32%

David Surginier,              Common Shares                       50,000                     0.32%
Director

Stephen W. Weathers,          Common Shares                       50,000                     0.32%
Director

LPC Investments, LLC.         Common Shares                      2,200,000                   14.16%

Nova Leasing, LLC             Common Shares                      1,200,000                   7.73%

Robert Doak                   Common Shares                      6,123,773                   39.5%

                                                         -------------------------- -------------------------
                                                                   213,500                    1.37%
All Directors and Executive Officers as a Group (5 persons)

</TABLE>

(1)      Based upon 15,075,768  shares of common stock issued and outstanding on
         April 30, 2008, warrants exercisable for 397,500 shares of common stock
         and options  exercisable  for 60,000 shares of common stock for a total
         of 15,533,268 shares of common stock.

(2)      Includes 2,941,666 shares of common stock held by New Mexico Energy,
         LLC, which is owned by Mr. Doak.

                                       34

<PAGE>




ITEM  12.  CERTAIN   RELATIONSHIP   AND  RELATED   TRANSACTIONS,   AND  DIRECTOR
INDEPENDENCE.

During the year ended April 30, 2008, we entered into a Release of Claims,  with
Nova Leasing, a greater then 5% shareholder of the Company. The Release of Claim
provided  that in return for being  released  from  payment  of the  outstanding
balance of $6,162,564 owed in connection with the $6.6 Million Dollar Promissory
Note  held by Nova  Leasing  and the  outstanding  balance  of  $72,478  owed in
connection  with the  $64,000  Promissory  Note  also held by Nova  Leasing,  we
returned the leases securing the promissory notes to Nova Leasing.

In the year ended  April 30,  2008,  LPC  Investments,  LLC, a greater  then 10%
shareholder  of the Company,  provided us with funds of $60,000 in the form of a
8.75%  Promissory  Note.  The note has a due date of  September  30, 2008 and is
unsecured.

ITEM 13.  INDEX TO EXHIBITS.

The following is a complete  list of exhibits  filed as part of this Form 10KSB.
Exhibit  number  corresponds  to the numbers in the Exhibit table of Item 601 of
Regulation S-K.

    Exhibit        Description of Document

     31.1         Certification by Chief Executive Officer. *
     31.2         Certification by Chief Financial Officer. *
     32.1         Section 906 Certification by Chief Executive Officer*
     32.2         Section 906 Certification by Chief Financial Officer*

---------------
*  Filed herewith.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

General.  Jaspers + Hall,  PC, CPAs ("JH") is the Company's  principal  auditing
accountant  firm. The Company's  Board of Directors has  considered  whether the
provisions of audit  services is compatible  with  maintaining  Jasper + Hall PC
independence.

Audit  Fees.  JH is billing the Company  $7,500 for the  following  professional
services: reviews of interim financial statements, audit of the annual financial
statement of the Company for the fiscal year ended April 30, 2008.

There  were no audit  related  fees in 2008 or 2007.  There  were no tax fees or
other fees in 2008 or 2007 paid to Auditors or Auditors affiliates.

The  Company's  Board  acts as the  audit  committee  and  had no  "pre-approval
policies and  procedures"  in effect for the auditors'  engagement for the audit
year, 2008 and 2007.

All audit work was performed by the auditors' full time employees.

                                       35


<PAGE>






             REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM


JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
-----------------------------------------------------------------------
9175 Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099

To the Board of Directors
Sun River Energy, Inc.

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the  accompanying  balance  sheet of Sun River  Energy,  Inc. (A
Development  Stage  Company)  as of April  30,  2008 and 2007,  and the  related
statements of operations,  cash flows, and changes in stockholders'  deficit for
the years then ended and for the period  October 22, 2002  (inception)  to April
30, 2008.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the company's  internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a  test  basis,  evidence  supporting  the  amounts  and  disclosures  in the
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of Sun River Energy,
Inc, at April 30, 2008 and 2007,  and the results of its operations and its cash
flows for the years then ended,  and for the period October 22, 2002 (inception)
to April 30, 2008, in conformity with accounting  principles  generally accepted
in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  described  in  Note 1 to the
financial  statements,  the Company is in the  development  stage and conditions
exist,  which raise substantial doubt about the Company's ability to continue as
a going concern.  Management's plans in regard to these matters are described in
Note 1. The  financial  statements  do not  include any  adjustments  that might
result from the outcome of this uncertainty.


August 13, 2008
/s/Jaspers + Hall PC


                                      F-1

<PAGE>
<TABLE>
<CAPTION>

                             SUN RIVER ENERGY, INC.
                          (A Development Stage Company)
                                 BALANCE SHEETS

<S>                                                                                      <C>                 <C>


                                                                                           April 30,
                                                                                             2008                2007
                                                                                         --------------      --------------

ASSETS:

   Current Assets:
      Cash                                                                                   $  12,038          $   17,572
      Marketable Securities                                                                     11,835             299,200
      Stock Subscription Receivable                                                                  -           1,100,000
                                                                                         --------------      --------------
Total Current Assets                                                                            23,873           1,416,772
                                                                                         --------------      --------------
Fixed Assets, net of depreciation $1,200 - $240                                                    960                   -

   Other Assets:
      Leases                                                                                   220,000           7,324,000
      Mineral Rights                                                                           100,000             100,000
      Wells in process and advances                                                            251,477                   -
                                                                                         --------------      --------------
Total Other Assets                                                                             571,477           7,424,000
                                                                                         --------------      --------------
TOTAL ASSETS                                                                                 $ 596,310          $8,840,772
                                                                                         ==============      ==============
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY:

    Current Liabilities:
        Accounts Payable                                                                     $ 378,071          $  505,298
        Accrued Interest Payable                                                                26,313                   -
        Notes Payable                                                                          992,782           6,746,637
        Notes Payable - Related Parties                                                              -             408,102
                                                                                         --------------      --------------
Total Current Liabilities                                                                    1,397,166           7,660,037
                                                                                         --------------      --------------
Stockholders' (Deficit) Equity:
    Preferred stock, $0.0001 par value; 25,000,000 authorized
        no shares issued and outstanding                                                             -                   -
    Common stock, $0.0001 par value; 100,000,000 shares                                          1,508               1,475
        authorized, 15,075,768 shares issued and outstanding
        as of April 30, 2008 and 14,745,768shares as of April 30, 2007
    Additional paid-in capital                                                               2,754,006           2,190,699
    Deferred consulting expense                                                                 (7,880)                  -
    Deficit accumulated during the development stage                                        (3,548,490)         (1,011,439)
                                                                                         --------------      --------------
Total Stockholders' Equity (Deficit)                                                          (800,856)          1,180,735
                                                                                         --------------      --------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY                                         $ 596,310          $8,840,772
                                                                                         ==============      ==============
 The accompanying notes are an integral part of these financial statements.

                                      F-2

</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                             SUN RIVER ENERGY, INC.
                          (A Development Stage Company)
                             STATEMENT OF OPERATIONS

<S>                                                <C>                      <C>                   <C>


                                                                   Year ended                     October 22,2002
                                                                    April 30,                      (Inception) to
                                                   -----------------------------------------
                                                       2008                     2007                April 30, 2008
                                                   ----------------         ----------------      ---------------------

Revenue:
   Miscellaneous Income                                $         -                $       -               $          -
                                                   ----------------         ----------------      ---------------------
Total Income                                                     -                        -                          -

Costs and Expenses:
      Consulting                                           297,360                  171,676                    619,086
      Accounting & Legal                                    12,082                   58,416                    270,548
      Lease Expenses                                       640,228                   41,296                    681,524
      Office Expenses                                       25,342                   48,267                     73,609
      Bank Charges                                             654                      261                        915
                                                   ----------------         ----------------      ---------------------
Total Expenses                                             975,666                  319,916                  1,645,682
                                                   ----------------         ----------------      ---------------------
Net Loss From Operations                                  (975,666)                (319,916)                (1,645,682)
                                                   ----------------         ----------------      ---------------------

Other Income and (Expenses)
      Interest expense                                    (512,875)                (279,271)                  (792,146)
      Interest income                                           76                      689                        765
      Debt Relief                                          429,645                        -                    429,645
      Loss on Claim Release                             (1,298,603)                       -                 (1,298,603)
      Realized (Loss) on sale of investments              (191,663)                 (10,041)                  (201,704)
      Unrealized (Loss) on investments                      12,035                  (52,800)                   (40,765)
                                                   ----------------         ----------------      ---------------------
Net Loss                                               $(2,537,051)               $(661,339)              $ (3,548,490)
                                                   ================         ================      =====================

Loss per common share                                  $     (0.17)               $   (0.06)
                                                   ================         ================

Weighted average number
of shares outstanding                                   14,985,877               11,588,530
                                                   ================         ================

 The accompanying notes are an integral part of these financial statements.

                                      F-3

</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                             SUN RIVER ENERGY, INC.
                          (A Development Stage Company)
                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                                 April 30, 2008
<S>                                     <C>                  <C>             <C>             <C>              <C>

                                                                                               Deficit
                                                   COMMON STOCK               Additonal  Deferred     Accum. During     Total
                                                                              Paid-in    Consulting    Development     Stockholders'
                                            # of Shares        Amount          Capital   Expense       Stage        Equity (Deficit)
                                           --------------    -----------     ------------ ---------    -------------    ------------

Balance - October 22, 2002                             -        $     -       $        -  $       -   $         -     $          -
Stock issued for cash                              1,000              1               49          -             -               50
Net 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          -             -          437,666
Merger 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          -             -          397,500
     at $0.50 per share plus warrant at $0.75
Issuance of Stock for Debt                       242,935             24          149,976          -             -          150,000
     at $0.62 per share
Issuance of Stock for Marketable Securities      800,000             80          399,920          -             -          400,000
     at $0.50 per share
Issuance of Stock for Services                   309,000             31          154,469          -             -          154,500
     at $0.50 per share
Issuance of Stock for Lease acquisition          880,000             88          439,912          -             -          440,000
Issuance of Stock for Cash                     2,200,000            220        1,099,780          -             -        1,100,000
Net Loss for Year                                      -              -                -          -      (661,339)        (661,339)
                                           --------------    -----------     ------------ ---------   -------------    -------------
Balance - April 30, 2007                      14,745,768          1,475        2,190,699          -    (1,011,439)       1,180,735
                                           --------------    -----------     ------------ ---------   -------------    -------------
Issuance of Stock for Services                   310,000             31          468,969          -             -          469,000
      at $1.51 per share
Issuance of Stock for Interest                    20,000              2           50,998          -             -           51,000
      at $2.55 per share
Options issued                                         -              -           43,340          -             -           43,340
Deferred Consulting Expense                            -              -                -     (7,880)            -           (7,880)
Net Loss for Year                                                                                 -    (2,537,051)      (2,537,051)

                                           --------------    -----------     ------------ ---------   -------------    -------------
Balance - April 30, 2008                      15,075,768        $ 1,508       $2,754,006  $  (7,880)  $(3,548,490)       $(792,976)
                                           ==============    ===========     ============ =========   =============    =============

 The accompanying notes are an integral part of these financial statements.

                                      F-4

</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                        SUN RIVER ENERGY, INC.
                    (A Development Stage Company)
                       STATEMENT OF CASH FLOWS

<S>                                                                    <C>               <C>             <C>

                                                                                 Year Ended              October 22, 2002
                                                                                 April 30,                (Inception) to
                                                                       ------------------------------
                                                                           2008             2007          April 30, 2008
                                                                       --------------    ------------    ------------------
Cash Flows from Operating Activities

     Net Loss                                                            $(2,537,051)     $ (661,339)         $ (3,548,490)
      Adjustments to reconcile net loss to
      net cash used by operating activities:
         Depreciation                                                            240               -                   240
         Unrealized loss on marketable securities                            (12,035)         52,800                40,765
         Stock and options issued for services and interest                  448,340         154,500               602,840
         Amortization of consulting stock                                    107,120               -               107,120
         Decerease (increase) in current assets                            1,399,400      (1,399,200)                  200
         Increase in accounts payable and accrued expenses                    72,315         138,923               577,613
                                                                       --------------    ------------    ------------------
Net Cash Used by Operating Activities                                       (521,671)     (1,714,316)           (2,219,712)
                                                                       --------------    ------------    ------------------
Cash Flows from Investing Activities
     Increase in fixed assets                                                 (1,200)              -                (1,200)
     Disposition and acquisition of Wyoming lease                          7,040,000      (7,040,000)                    -
     Increase in other assets                                               (187,478)              -              (187,478)
     Acquisition - net of cash acquired                                            -               -              (813,001)
                                                                       --------------    ------------    ------------------
Net Cash Provided by (Used In) Investing Activities                        6,851,322      (7,040,000)           (1,001,679)
                                                                       --------------    ------------    ------------------
Cash Flows from Financing Activities
     Stock issued for cash                                                         -       1,444,700             1,444,750
     Stock issued for debt/assets                                                  -         990,000               990,000
     (Payments on) Proceeds from notes payable                            (5,927,083)      6,528,087               819,554
     Payments on notes payable - related party                              (408,102)       (191,898)                    -
     Merger accounting                                                             -               -               (20,875)
                                                                       --------------    ------------    ------------------
Net Cash (Used In) Provided by Financing Activities                       (6,335,185)      8,770,889             3,233,429
                                                                       --------------    ------------    ------------------
                                                                                                          `
Net (Decrease) increase in Cash & Cash Equivalents                            (5,534)         16,573                12,038

Beginning Cash & Cash Equivalents                                             17,572             999                     -
                                                                       --------------    ------------    -----------------
Ending Cash & Cash Equivalents                                           $    12,038      $   17,572          $     12,038
                                                                       ==============    ============    ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     Cash paid for interest expense                                      $    13,739      $        -          $     13,739
                                                                       ==============    ============    ==================
     Cash paid for income taxes                                          $         -      $        -          $          -
                                                                       ==============    ============    ==================
NON-CASH TRANSACTIONS
     Stock issued for debt                                               $         -      $   150,000         $    150,000
     Stock issued for marketable securities                                        -          400,000              400,000
     Stock issued for other assets                                                 -          440,000              440,000
     Stock issued for services                                                     -          154,500              154,500
                                                                       --------------    ------------    ------------------
          Total non-cash transactions                                    $         -      $ 1,144,500         $  1,144,500
                                                                       ==============    ============    ==================

 The accompanying notes are an integral part of these financial statements.

                                      F-5

</TABLE>




<PAGE>



                             SUN RIVER ENERGY, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                 April 30, 2008

Note  1 -  Organization,  Basis  of  Presentation  and  Summary  of  Significant
Accounting Policies:

Organization:

Sun River Energy,  Inc. was incorporated on April 30, 1998, as Dynadapt Systems,
Inc.,  under the laws of the State of Colorado.  On April 28, 2006,  the Company
entered into an "Agreement  and Plan of  Reorganization"  with Sun River Energy,
Inc. (SRE), a privately held Colorado Corporation,  whereby the Company acquired
SRE for the purchase  price of 8,633,333  shares of the Company's  common stock.
The  acquisition of SRE was accounted for by the purchase  method of accounting.
Under purchase accounting, the total purchase price was allotted to the tangible
and intangible  assets and  liabilities of SRE based upon their  respective fair
values as of the closing date based upon valuations and other studies. On August
31, 2006,  the company voted to change its name from Dynadapt  Systems,  Inc. to
Sun River Energy,  Inc. to better reflect the focus and business purposes of the
Company.

The Company's is as an independent energy company engaged in the, exploration of
North American  unconventional  natural gas properties and  conventional oil and
gas exploration. Its intended operations are principally energy prospects in the
Rocky Mountain region including a coal bed methane prospect located in the Raton
Basin in Northern New Mexico and the Company is seeking other opportunities.

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" as set forth in Financial  Accounting
Standards Board  Statement No. 7 ("SFAS 7"). Among the  disclosures  required by
SFAS 7 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.

Going Concern

The Company's  financial  statements for the year ended April 30, 2008 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 $2,537,051 for the year ended April
30, 2008 and an accumulated  deficit during the development  stage of $3,548,490
as of April 30, 2008. At April 30, 2008, the Company's total current liabilities
exceed total current assets by $1,373,293.

                                      F-6

<PAGE>




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 revitalize
the Company.

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.

Marketable Securities

On August 17, 2006, in exchange for 800,000  shares of the Company's  restricted
common stock,  the Company  acquired 200,000 shares of the common stock of Tonga
Capital  Corporation  ("Tonga")  from  a  non-affiliate.  At  the  time  of  the
acquisition,  the Tonga shares had a market value of $400,000 ($0.50 per share).
The 800,000  shares of the Company's  stock issued for the shares had a value of
$400,000 ($0.50 per share).

At April 30,  2008,  marketable  securities  consist of 57,400  shares of common
stock of Tonga. These securities are carried at estimated fair value ($11,835 at
April 30,  2008) based upon quoted  market  prices,  and are included in current
assets in the Company's April 30, 2008 balance sheet.

Unrealized gains and losses are computed on the basis of specific identification
and are reported as a component of other income  (loss),  included as a separate
item  on  the  Company's  statement  of  operations.  The  Company  reported  an
unrealized gain on marketable  securities of $12,035 during the year ended April
30, 2008 (an unrealized loss of $ 52,800 for the year ended April 30, 2007).

Realized  gains,   realized  losses,  and  declines  in  value,   judged  to  be
other-than-temporary,  are  included  in other  income  (expense).  The  Company
recognized a loss on the sale of these shares of $191,663  during the year ended
April 30, 2008 (a realized loss of $10,041 for the year ended April 30, 2007).

                                      F-7

<PAGE>




Deferred Consulting Costs

In May  2007,  the  Company  entered  into a  twelve-month  consulting  services
agreement  with a third party,  in which the party agreed to provide  investment
banking  services.  Compensation  consisted of 100,000  shares of the  Company's
restricted common stock with a market value of approximately  $115,000 (based on
a  closing  market  price of $1.15  per  share at the date the  transaction  was
entered into) The deferred cost is being amortized on a  straight-line  basis as
earned over the twelve-month  period from the date of the agreement.  During the
year ended April 30, 2008, $107,120 was expensed.

Fair 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

The  Company  has  adopted  the  provisions  of  and  accounts  for  stock-based
compensation in accordance with Statement of Financial  Accounting Standards No.
123  -  revised  2004  ("SFAS  123R"),  "Share-Based  Payment",  which  replaced
Statement of Financial  Accounting  Standards No. 123 ("SFAS 123"),  "Accounting
for  Stock-based  Compensation",  and  supersedes APB Opinion No. 25 ("APB 25"),
Accounting  for Stock  Issued to  Employees".  Under the fair value  recognition
provisions of this statement,  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. The Company elected the  modified-prospective  method, under which prior
periods are not revised for comparative  purposes.  The valuation  provisions of
SFAS 123R  apply to new  grants and to grants  that were  outstanding  as of the
effective date and are subsequently  modified.  All options granted prior to the
adoption  of SFAS  123R  and  outstanding  during  the  periods  presented  were
fully-vested.

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

SFAS No.  128,  Earnings  per Share,  requires  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.

                                      F-8

<PAGE>





Recently Issued Accounting Pronouncements

In  September  2006,  the FASB issued SFAS No.  157,  "Fair Value  Measurements"
("SFAS No. 157").  SFAS No. 157 defines fair value,  establishes a framework for
measuring fair value in generally accepted accounting  principles ("GAAP"),  and
expands disclosures about fair value measurements.  This statement applies under
other accounting  pronouncements  that require or permit fair value  measurement
where the FASB has previously  determined that under those  pronouncements  fair
value is the  appropriate  measurement.  This statement does not require any new
fair value  measurements but may require  companies to change current  practice.
This statement is effective for those fiscal years  beginning after November 15,
2007 and to the interim  periods within those fiscal years. We believe that SFAS
No. 157 should not have a material  impact on our financial  position or results
of operations

In  February  2007,  the FASB issued  SFAS No.  159,  The Fair Value  Option for
Financial Assets and Financial  Liabilities (SFAS No. 159). SFAS No. 159 permits
entities to choose to measure,  on an item-by-item  basis,  specified  financial
instruments and certain other items at fair value.  Unrealized  gains and losses
on items for which the fair value  option has been  elected  are  required to be
reported in earnings  at each  reporting  date.  SFAS No. 159 is  effective  for
fiscal years  beginning  after  November 15, 2007,  the  provisions of which are
required to be applied prospectively. We believe that SFAS 159 should not have a
material impact on our financial position or results of operations

The Company adopted FASB  Interpretation  No. 48, "Accounting for Uncertainty in
Income  Taxes"  ("FIN 48") on May 1, 2007.  The  Company  did not  identify  any
controversial  tax  positions  taken  on open  tax  years  and did not  have any
unrecognized  tax benefits,  and there was no effect on the Company's  financial
condition  or  results of  operations  as a result of  implementing  FIN 48. The
Company files income tax returns in the U.S.  federal  jurisdiction  and various
state  jurisdictions.  The  Company  is no longer  subject to U.S.  federal  tax
examinations for years before 2003. State  jurisdictions  that remain subject to
examination  range from 2002 to 2006. The Company does not believe there will be
any material  changes in its unrecognized tax positions over the next 12 months.
The  Company's  policy  is  to  recognize  interest  and  penalties  accrued  on
unrecognized  tax benefits as a component of income tax expense.  As of the date
of  adoption  of FIN 48,  the  Company  did not have  any  accrued  interest  or
penalties  associated with any unrecognized tax benefits and no interest expense
or penalties were recognized during the quarter.

In  December  2007,  the FASB  issued  SFAS No.  141  (Revised  2007),  Business
Combinations,  or SFAS No. 141R.  SFAS No. 141R will change the  accounting  for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the  acquisition-date  fair value with  limited  exceptions.  SFAS No. 141R will
change the accounting  treatment and disclosure for certain  specific items in a
business   combination.   SFAS  No.  141R  applies   prospectively  to  business
combinations  for which the acquisition date is on or after the beginning of the
first  annual  reporting  period  beginning  on  or  after  December  15,  2008.
Accordingly,  any  business  combinations  we  engage  in will be  recorded  and
disclosed following existing GAAP until January 1, 2009. We expect SFAS No. 141R
will have an impact on accounting for business combinations once adopted but the
effect is dependent upon  acquisitions  at that time. We are still assessing the
impact of this pronouncement.

                                      F-9

<PAGE>




In December  2007,  the FASB issued SFAS No. 160,  "Noncontrolling  Interests in
Consolidated Financial Statements--An Amendment of ARB No. 51, or SFAS No. 160".
SFAS  No.  160  establishes  new  accounting  and  reporting  standards  for the
noncontrolling  interest  in a  subsidiary  and  for  the  deconsolidation  of a
subsidiary.  SFAS No. 160 is effective  for fiscal  years  beginning on or after
December 15, 2008. We believe that SFAS 160 should not have a material impact on
our financial position or results of operations.

In March  2008,  the FASB  issued  SFAS No. 161  "Disclosures  about  Derivative
Instruments and Hedging Activities". SFAS No. 161 requires additional disclosure
related to derivatives  instruments  and hedging  activities.  The provisions of
SFAS No. 161 are  effective  as of January 1, 2008 and the Company is  currently
evaluating the impact of adoption.

Note 2 - Leases and Mineral Rights:

Leases - Wyoming

On October 12, 2006, the Company  acquired an 85% working interest in an 80% Net
Revenue Interest on certain leases totaling  approximately  14,000 acres (gross)
in Johnson  County  Wyoming,  in the Powder  River  Basin.  The  purchase  price
included $6,600,000 in the form of a secured promissory note bearing interest at
7.5% with payments of  $1,100,000  on March 15, 2007,  $2,800,000 on October 15,
2007,  and  $2,700,000 on October 15, 2008,  plus interest and 880,000 shares of
restricted common stock of the Company.

On April 12, 2006, the Company  acquired a lease on 640 acres in Natrona County,
Wyoming.  The purchase price was a $64,000,  6% Promissory Note, dated April 12,
2006, with a due date of September 30, 2007. The note was secured by the lease.

On April 21,  2008,  the  Company  entered  into a Release of Claims,  with Nova
Leasing, LLC, the holder of both promissory notes. In return for the releasement
of the  Company  from any further  payment  obligations  under the $6.6  Million
Promissory Note and the $64,000  Promissory  Note, the Company  returned to Nova
Leasing, LLC, all rights and interests into and/or entitlements to the following
leases:

     (a)  the  working  interest  in and the net  revenue  interest on the lease
          totaling 640 acres in Natrona County, Wyoming; and

     (b)  the 85%  working  interest  in and the 80%  net  revenue  interest  on
          certain leases totaling  approximately 14,000 acres (gross) in Natrona
          and Converse County Wyoming, in the Powder River Basin.

In connection with the  forgiveness of debt and the return of the releases,  the
Company  recorded a loss for the year ended  April 30,  2008 of  $1,298,603  and
income of $429,645 in connection with the release of the debt.

Mineral Rights - New Mexico

The Mineral  rights in New Mexico are valued at $100,000,  which is based on the
predecessor basis in mineral rights.

                                      F-10

<PAGE>




In February of 2007 the Company  entered into an agreement with Sun River #1 LLC
to drill two wells on acreage  controlled by the Company in the Raton Basin area
of New Mexico. Terms of the agreement provide for a carried 25% working interest
in the two wells.  As of the date of these financial  statements  drilling is in
progress.

Note 3 - Notes Payable:

As of April 30, 2008, Notes Payable consisted of the following:
<TABLE>
<CAPTION>
<S>                                 <C>     <C>         <C>        <C>          <C>       <C>        <C>

                                    Rate    Principal   Repay      Balance      Interest  Due        Security
                                    ----    ---------   -----      -------      --------  ---        --------


Sharon K. Fowler         4/20/06    6.00%   $150,000    $119,363   $    30,637  $  2,035  9/30/07    Lease
Lender Facilities, LLC   10/8/07    7.5%    $314,527        -      $   314,527  $ 13,249  10/8/08    None
J. Bachmann              10/15/07   7.5%    $211,855    $   -      $   211,855  $     56 10/15/08    None
M.A. Littman             10/8/07    7.5%    $123,763        -      $   123,763  $  5,213  10/8/08    None
M.A. Littman             1/31/08    7.5%    $175,000        -      $   175,000  $  3,662  1/31/09    None
MA Littman               12/13/07   7.5%    $ 75,000        -      $    75,000  $  1,110 12/13/08    None
LPC Investments          1/31/08   8.75%    $ 62,000        -      $    62,000  $    989  1/31/09    None
</TABLE>

Note Payable - Related Party

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.  During the year
ended April 30,  2007,  the Company  made  payments of $191,898 on the note.  On
April 10, 2007,  Mr. Doak agreed to extend the payment of note for 6 months.  On
October 8, 2007,  Mr. Doak  assigned  the note and accrued  interest to Mr. M.A.
Littman and Lender  Facilities,  LLC in the amounts of  $123,763  and  $314,527,
respectively.  The new promissory notes have an annual interest rate of 7.5% and
a due date of October 15, 2008.

Note 4 -Stockholders' (Deficit) Equity:

Preferred Stock

At a Special  Meeting of the  Shareholders  of the Company on June 23, 2008, the
shareholders  voted to authorized 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.

Common Stock

Year Ended April 30, 2008

During the year ended April 30, 2008,  the Company  issued  20,000 shares of its
restricted  common  stock as  payment  for an  extension  on the due date of the
$64,000  promissory note due to Nova Leasing.  The shares had a value of $51,000
based on a closing market price of $2.55 per share.

During the year ended April 30, 2008,  the Company  issued 100,000 shares of its
restricted  common stock as payment for  services in  connection  with  drilling
activities.  The shares had a value of $190,000, based on a closing market price
of $1.90 per share.

                                      F-11

<PAGE>





During the year ended April 30,  2008,  the Company  issued  60,000  shares to a
third  party as payment for  services in  negotiating  drilling  contracts.  The
shares had a value of  $114,000,  based on a closing  market  price of $1.90 per
share.

During the year ended April 30, 2008, the Company issued 50,000 shares to third
parties,  as payment for services in connection  with drilling  activities.  The
shares had a value of  $165,000,  based on an average  closing  market  price of
$1.10 per share.

During the year ended April 30, 2008,  the Company  entered into a  twelve-month
consulting  services  agreement with a third party, in which the party agreed to
provide investment banking services. Compensation consisted of 100,000 shares of
the  Company's  restricted  common  stock with a market  value of  approximately
$115,000  (based  on a closing  market  price of $1.15 per share at the date the
transaction  was  entered  into).  The  deferred  cost is being  amortized  on a
straight-line  basis as earned over the twelve-month period from the date of the
agreement. During the year ended April 30, 2008, $107,120 was expensed.

Year Ended April 30, 2007

During the year ended April 30, 2007,  the Company  issued 795,000 shares of its
restricted common stock for cash of $397,500. The shares were sold for $0.50 per
share. In addition the Company,  issued warrants  exercisable for 397,500 shares
of common  stock.  The warrants have an exercise  price of $0.50 per share.  The
warrants were to expire on December 31, 2006,  but the Company  agreed to extend
their expiration date to June 30, 2007.

During the year ended April 30,  2007,  the  Company  issued  242,935  shares of
common stock as payment of outstanding debt of $150,000.

During the year ended April 30, 2007,  the Company  issued 800,000 shares of its
restricted  common  stock to a  non-affiliate  of the  Company,  in exchange for
400,000 shares of Tonga Capital Corporation.  The shares at the time of issuance
had a value of $400,000 ($0.50 per share) (Note 1).

During the year ended April 30, 2007,  the Company  issued 309,000 shares of its
restricted common stock for services. Of the 309,000 shares, 250,000 shares were
issued to officers and  directors of the Company.  The  remaining  59,000 shares
were  issued to an  unrelated  party for  services.  The  shares  had a value of
$154,500 ($0.50 per share) and were expensed at the time of issuance.

During the year ended April 30, 2007,  the Company  issued 880,000 shares of its
restricted  common  stock as part of the  acquisition  of leases of  property in
Jackson County,  Wyoming.  The  acquisition  included the issuance of promissory
notes  totaling  $6,600,000.  The shares were deemed to have a value of $440,000
($0.50 per share).

On April 30,  2007,  the  Company in a  subscription  agreement  agreed to issue
2,200,000  shares  of its  restricted  common  stock  in  exchange  for  cash of
$1,100,000. The shares had a purchase price of $0.50 per share. In May 2007, the
Company issued the 2,200,000 shares of its common stock and received $1,100,000,
in cash.

                                      F-12

<PAGE>




Options

On May 31, 2007,  the Company  entered into an agreement  with a third party for
public relation services.  Compensation  consists of options of 10,000 shares of
the Company's restricted common stock per month, to be issued at the end of each
month of  service.  The  options  are to have a term of 2 years from the date of
issuance and an exercise  price to be determined by the closing  market price on
the last day of each month of service.  The options are fully vested at issuance
and will provide for cashless exercise.

During the year ended April 30, 2008,  the Company  granted 60,000 stock options
to the third party at an exercise  prices ranging from $0.70 to $2.25 per share.
The fair value of the options at the date of grant was $43,340 and was  recorded
as compensation expense. The Company used the following assumptions to determine
the fair value of stock option grants during the year ended April 30, 2008:

                                                                 2008
                                                                 ----

                       Expected life                             1 year
                       Volatility                            117% - 130%
                       Risk-free interest rate             4.85% - 4.91%
                       Dividend yield                                 0

The Company did not grant any options during the year ended April 30, 2007.

The expected term of stock options  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 stock options.

The dividend yield  represents our  anticipated  cash dividend over the expected
life of the stock options.

A  summary  of stock  option  activity  for the year  ended  April  30,  2008 is
presented below:
<TABLE>
<CAPTION>
<S>                                         <C>                     <C>               <C>                  <C>


                                                                               Weighted Average
                                             Shares Under       Weighted          Remaining
                                                Option          Average        Contractual Life       Aggregate
                                                ------       Exercise Price    ----------------    Intrinsic Value
                                                             --------------                        ---------------

Outstanding at May 1, 2007                          -          $      -                   -           $      -
  Granted                                      60,000              1.00          1.37 years                  -
  Exercised                                         -                 -                   -                  -
  Expired                                           -                 -                   -                  -
                                            --------------       -------         ----------           --------
Outstanding at April 30, 2008                  60,000          $   1.00          1.93 years           $      -
                                            ==============       ========        ==========           ========
</TABLE>

At January 31, 2008, all outstanding and exercisable options were fully vested.

                                      F-13

<PAGE>




Warrants

At April 30,  2008,  the  following  warrants  to  purchase  common  stock  were
outstanding:

      Number of common
 shares covered by warrants        Exercise Price             Expiration Date
 --------------------------        --------------             ---------------

           365,000                      $0.75                  June 30, 2008
            32,500                      $1.00                  June 30, 2008
        -------------
           397,500

During the year ended  April 30,  2008,  the  Company  did not issue,  cancel or
expire any warrants.

Note 5 - 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.

                                 2008              2007
                                 ----              ----

Net loss carryforwards          $ 3,548,490     $ 1,011,439
Less valuation allowance        $(3,548,490)    $(1,011,439)
                                ------------    ------------
                                $         -     $         -
                                ============    ============

At April 30, 2008,  the Company has financial  reporting and net operating  loss
carry forwards of approximately $3,548,490 for which the tax effect has not been
recognized for financial  purposes.  Such losses expire in 2013, if not utilized
earlier

                                      F-14

<PAGE>

                                   SIGNATURES

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

                             SUN RIVER ENERGY, INC.

Date:  August 13, 2008                  By: /s/ Wesley F. Whiting
                                            ---------------------
                                                Wesley F. Whiting, President
                                                and Chief Executive Officer
                                                and Principal Accounting Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.


Date:  August 13, 2008               By: / s/Wesley F. Whiting
                                         ---------------------
                                             Wesley F. Whiting, President,
                                             and Director

Date:  August 13, 2008               By: /s/ Reginald T. Green
                                            ----------------------
                                             Reginald T. Green, Secretary
                                             and Director



Date:  August 13, 2008               By: /s/ Thomas Anderson
                                         -------------------
                                             Thomas Anderson, Director


Date:  August 13, 2008               By: /s/David Surgnier
                                          ------------------------
                                             David Surgnier, Director


Date:  August 13, 2008               By: /s/Stephen W. Weathers
                                         -----------------------------
                                            Stephen W. Weathers, Director


                                       36