FORM 10-KSB
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[X] ANNUAL  REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
    1934 For the fiscal year ended: April 30, 2006



                         Commission file number 0-29670

                               Dynadapt Systems, Inc.
                               -------------------
                 (Name of small business issuer in its charter)


                            CIK: 0001066551



Colorado                                         84-1491159
----------                                   --------------------
State or other jurisdiction of              IRS Employer ID Number
Incorporation or organization


Suite 210 E., 10200 W. 44th Ave., Wheat Ridge, CO 80033
---------------------------------------------------------
(Address of principal executive offices)

Issuer's telephone number:             (303) 940-2090
                                      -----------------
Securities registered under Section 12(b) of the Exchange Act: None
                                                               -----

Securities registered under Section 12(g) of the Exchange Act: Common Stock,
no par value (Title of class)

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 issuer was  required  to file such  reports),  and (2) has been
subject to such filing requirements for the past 90 days.

        Yes        No   X
           ----       ----

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 issuer'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]

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

Indicate  b  check mark  whether the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). __ Yes X No


Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). __ Yes  X No

As of August 10, 2006 435,000 shares of the Company's Common Stock, were held by
non-affiliates,  of a market value of $274,050 based upon the bid price of $.63
per share on August 10, 2006.

As of August 10 2006,  there were  9,518,833  common  shares  issuer  issued and
outstanding.



<PAGE>


                                TABLE OF CONTENTS


PART I

        Item 1.   Description of Business                                      3
        Item 2.   Description of Property                                     29
        Item 3.   Legal Proceedings                                           29
        Item 4.   Submission of Matters to a Vote of Security Holders         29

PART II

        Item 5.   Market for Common Equity and Related Stockholder
                  Matters                                                     30
        Item 6.   Management's Discussion and Analysis or Plan of
                  Operation                                                   31
        Item 7.   Financial Statements                                        33
        Item 8.   Changes in and Disagreements With Accountants on
                  Accounting and Financial Disclosure                         33
        Item 8a.  Controls and Procedures                                     34
        Item 8b.  Other Information                                           34

PART III

        Item 9.   Directors, Executive Officers, Promoters and Control
                  Persons; Compliance with Section 16(a) of the Exchange Act  34
        Item 10.  Executive Compensation                                      37
        Item 11.  Security Ownership of Certain Beneficial Owners and
                  Management                                                  38
        Item 12.  Certain Relationships and Related Transactions              39
        Item 13.  Exhibits and Reports on Form 8-K                            39
        Item 14.  Principal Accountant Fees and Services                      39

SIGNATURES                                                                    40




<PAGE>


PART I


ITEM 1. DESCRIPTION OF BUSINESS

General

     Dynadapt System, Inc.  ("Dynadapt" or the "Company") was incorporated under
the laws of the State of  Colorado  on April 30,  1998 to raise  capital  for an
Internet website related project.  During Spring 1999 the Company raised $25,000
from an exempt  Offering  under  Regulation  D, Rule 504 of the  Securities  and
Exchange Commission (the "Offering").

         The company  business plan  originally  was to develop a website design
which would respond to an Internet  user's computer speed and link the user to a
tier of the website  which best matched the user's  terminal  capabilities.  The
concept would theoretically have allowed more sophisticated  website tiers to be
accessed  by higher  capacity  computer  terminals.  After  expending  funds for
consulting  fees to analyze the concept  with  Internet  service  providers  and
computer science  technicians,  the company concluded that while elements of the
concept might be achievable  on a limited  basis,  the main concept could not be
achieved  at this point due to the large  number of  variables  in the  Internet
system.  The  company  then  decided  to modify  its  business  plan to look for
acquisitions in the information technology area. Due to the dot.com bust this
effort was unsuccessful.

The Company has adopted a new business plan in the energy industry with the
acquisition of Sun River Energy, Inc. as a wholly owned subsidiary.

General

     Dynadapt  Systems,  Inc.  ("the  Company") has changed its business plan to
focus  on  development  as  an  independent   energy  company  engaged  in  the,
exploration  of  North  American   unconventional  natural  gas  properties  and
conventional oil and gas exploration. The Company has acquired Sun River Energy,
Inc. as a wholly owned  subsidiary  which holds 150,000 acres of fee oil and gas
mineral  rights and 7,200 gross acres of leases upon which the company  hopes to
explore  for oil  and  gas.  Our  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.  The Company is also evaluating the additional prospects it
has obtained in Johnson and Natrona Counties Wyoming.

                                       1

<PAGE>

     The Company  maintains its principal  executive offices at #210 E, 10200 W.
44th Ave., Wheat Ridge, CO 80033, telephone (303) 940-2090.

     The authorized  capitalization  of the Company is 100,000,000  shares of no
par value common stock, of which 9,518,833 shares were issued and outstanding at
April 30, 2006.

     This  report on Form 8-K  contains  forward-looking  statements  within the
meaning  of  Section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"),  and Section 21E of the Securities  Exchange Act of 1934, as
amended (the "Exchange Act"), including statements regarding, among other items,
(1) the  Company's  business  plans,  (2)  anticipated  trends in the  Company's
business and its future results of operations,  (3) market conditions in the oil
and  gas  industry,  (4) the  ability  of the  Company  to  make  and  integrate
acquisitions,  (5) the impact of  governmentalregulation,  (6) financial  market
conditions.

     These  forward-looking  statements  are  based  largely  on  the  Company's
expectations  and are  subject to a number of risks and  uncertainties,  many of
which are beyond the Company's  control.  Actual results could differ materially
from those  implied by these  forward-looking  statements  as a result of, among
other things, (1) a decline in oil and natural gas production,  (2) a decline in
oil and  natural gas  prices,  (3)  incorrect  estimations  of required  capital
expenditures,  (4)  increases in the cost of drilling,  (5)  completion  and gas
collection,  (6) an increase in the cost of production  and  operations,  (7) an
inability  to meet  schedules  (8)  changes in general  economic  conditions  or
failure to ever  achieve  any  economic  production.  These and other  risks are
discussed under the heading "--Certain Risks." In light of these and other risks
and  uncertainties  of which the  Company  may be unaware  or which the  Company
currently deems  immaterial,  there can be no assurance that actual results will
be as projected in the forward-looking statements.

Business Activities and Recent Developments

Raton Basin

     The Company's current  operations  will initially be  focused on
exploring a coal bed methane prospect located in the Raton Basin in Northern New
Mexico, and assessing its other mineral acreage in Colfax County, New Mexico.

                                       2
<PAGE>

     The  Company  has  assignments  of  interest in 4, 730 acres of oil and gas
leases in the Raton Basin. The Company has approximately  10,380,000 gross acres
of coal bed  methane  prospects  in the Basin of which  5,640 acres are fee (90%
interest) and 4,730 acres of which are a lease assignment.  As of this date, the
Company had no proved  reserves  or  producing  wells.  The  Company's  drilling
program is planned to enable the  Company to build an  inventory  of  additional
drilling  locations.  The Company has identified at least 10 additional drilling
locations  on its Raton  Basin  prospect  The  Company  will  operate all of its
prospects  in the Raton Basin and holds  working  interests of 100% on a 80% NRI
for its prospects.

The Company intends to begin assessment and evaluation work on its Johnson and
Natrona County Wyoming prospects in summer of 2006 or early 2007.

Customers and Markets

Gas Marketing and Transportation

     The  Company  intends  sell any  produced  gas on an index  basis to credit
worthy companies including utilities, other end users and maybe energy marketing
companies.  Natural  gas  production  from the Raton  Basin  maybe sold into the
Mid-Continent through Colorado Interstate Gas Company.

        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.  The
Company's  oil and natural  gas liquids are sold at spot market  prices or under
short-term contracts.

        The Company has no transportation commitments.


Major Customers

        The  Company has no  customers  that  represent  in excess of 10% of the
Company's  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.

                                       3

<PAGE>

Competition

        The  Company  competes  in  virtually  all facets of its  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  permit.  The ability of the Company to
increase  reserves in the future will be  dependent on its 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

        The  Company's  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 the Company's  business.
In view of the many  uncertainties  with  respect to current and future laws and
regulations,  including their  applicability to the Company,  the Company cannot
predict  the  overall  effect  of  such  laws  and  regulations  on  its  future
operations.

        The Company believes that its 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 the  Company's
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 the  Company's  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,

                                        4
<PAGE>



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.

        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   requires   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

                                       5
<PAGE>

does not deem 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.

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.

                                       6

<PAGE>

        The  Company  owns  certain  natural  gas  pipeline  facilities  that it
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.

     The Company 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.  The  Company  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.  The Company  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,  the  Company  does 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.

                                       7

<PAGE>

     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.
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

        The  Company's  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. The Company's 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.

                                       8

<PAGE>

Environmental Matters

     The Company is 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 the Company's cost and risk of doing business and consequently affects
its profitability.

        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 the Company's  capital  expenditures,
earnings or competitive position. The Company believes 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 the Company's  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."

                                       9

<PAGE>


     The Company 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 the Company's  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, the Company 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.  The Company
has no knowledge of any environmental hazards as of date hereof.

     In  connection  with the  Company's  coal bed methane gas  exploration  the
Company  from  time to  time  may  conduct  production  enhancement  techniques,
including various activities designed to induce hydraulic fracturing of the coal
bed.  While the Company 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  the  Company's  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 the Company's 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


                                       10
<PAGE>

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  the  Company  can meet  federal  and  state  regulatory
requirements and applicable water quality standards,  disposal of produced water
by discharge to surface water is an option.

     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.

     The Company's  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.   The  Company  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.

                                       11
<PAGE>

        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 liability 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,  the Company is not  required and  otherwise  has 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.

Employees

        At April 30, 2006, the Company no employees.

Certain Risks

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

        The Company's management expects the markets for oil and gas to 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. Company 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 the
Company's cash flow and borrowing capacity,  as well as the value and the amount
of its oil and gas reserves. Various  factors beyond the Company's  control can
affect prices of oil and gas. These factors include:

                                       12
<PAGE>

         o
         worldwide and domestic supplies of oil and gas;

         o the  ability  of  the  members  of  the  Organization  of  Petroleum
          Exporting  Countries 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 demand;

         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,  the  Company  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. The Company  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

                                       13
<PAGE>

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 the  Company's  cash
flow hedge positions,  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.

     The  Company's  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, the Company's ability
to  execute  its  development  plans,  replace  its  reserves  or  maintain  its
production levels could be greatly limited.  The company's  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.

         The Company's  exploratory and development  drilling activities may not
be successful.

                                       14
<PAGE>

     The Company's  future  drilling  activities may not be successful,  and the
Company's  management cannot be sure that the Company's 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 the Company  drills may not
recover all or any portion of the  Company's  capital  investment  in the wells,
infrastructure  or the  underlying  leaseholds.  The Company is currently in the
early stages of various  exploration  projects in the Rocky Mountain area of the
United  States and the Company can offer no assurance  that the  development  of
these  projects  will occur as scheduled or that actual  results will be in line
with the Company's initial  estimates.  Unsuccessful  drilling  activities could
negatively affect the Company's  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.

        In  addition, the Company 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 the Company has identified will ever
produce oil or natural gas.

         The Company's acquisition activities may not be successful.

                                       15
<PAGE>

        As  part  of  the  Company's  growth  strategy,  the  Company  may  make
additional  acquisitions  of  businesses  and  properties.   However,   suitable
acquisition  candidates  may not be available on terms and  conditions  it finds
acceptable,  and acquisitions pose substantial risks to the Company's  business,
financial  condition and results of operations.  In pursuing  acquisitions,  the
Company 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 the Company's estimates;

         o
         the Company 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 the Company's  ongoing  business,  distract
         management,  divert  resources  and make it  difficult  to maintain the
         Company's current business standards, controls and procedures;

         o
         the Company 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
         the Company may incur additional debt related to future acquisitions.

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

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

        The  Company  operates  in a highly  competitive  industry.  The Company
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 the  Company's  competitors  have  financial  and
technological resources vastly exceeding those available to Company  Many oil
and gas properties are sold in a competitive

                                       16

<PAGE>



bidding process in which the Company may lack the  technological  information or
expertise available to other bidders. The Company can offer no assurance that it
will be successful in acquiring and developing profitable properties in the face
of this competition.

         The Company's 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.

         The  Company's  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, the
Company 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.

                                       17

<PAGE>

        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, the Company 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
         The Company 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.

         The Company has limited  protection  for its  technology and depends on
technology owned by others.

     The Company intends 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.  The
Company's  use of  independent  contractors  in most aspects of its drilling and
some  completion  operations  makes  the  protection  of  such  technology  more
difficult.  Moreover,  the Company relies on the technological  expertise of the
independent  contractors  that it retains  for its oil and gas  operations.  The
Company has no  long-term  agreements  with these  contractors,  and  management
cannot be sure that the Company will continue to have access to this expertise.

     The Company 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.

                                       18

<PAGE>

         The  Company  may  incur  substantial  costs to comply  with  stringent
environmental regulations.

     The Company's  operations are subject to stringent and constantly  changing
environmental  laws  and  regulations  adopted  by  federal,  state,  and  local
governmental  authorities.  The  Company  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.  The Company will continue to be subject to  uncertainty  associated
with new regulatory  interpretations  and inconsistent  interpretations  between
governmental   environmental   agencies.  The  Company  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 the Company 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."

     The Company's  business will depend on  transportation  facilities owned by
others.

     The  marketability  of the Company's gas production  depends in part on the
availability, proximity and capacity of pipeline systems owned by third parties,
and changes in the Company's 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  the  Company's  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 the
Company's ability to transport its natural gas.

         Market  conditions  could  cause  the  Company  to incur  losses on its
transportation contracts.

                                       19
<PAGE>

Other Risk Factors

1.  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."

2. Need For Additional Financing. For its business plan to exploit oil, gas, and
coal bed methane opportunities the Company 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,  the
Company's  operations  will be limited to those  that can be  financed  with its
available capital.

3.  Regulation  of Penny  Stocks.  The  Company's  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 the Company's  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

                                      20

<PAGE>

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.

4. 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. The Company has
no  successful  operating  history. The Company faces 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.

5. Lack of Diversification.  Because of the limited financial-resources that the
Company  has, it is  unlikely  that the Company  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  the  Company  to  economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.

6. Dependence upon Management; Limited Participation of Management. The Company
currently  has only  three  individuals  who are  serving  as its  officers  and
directors. The Company 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 the Company,
they should critically assess the information  concerning the Company's officers
and directors.

7. 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.

8. 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 behalf of the Company.  The Company will also
bear  the  expenses  of  such  litigation  for any of its  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 the Company, which it will be unable to recoup.

                                       21

<PAGE>

9.  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,  the Company 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.

10. Dependence upon Outside Advisors.  To supplement the business  experience of
its officers and directors,  the Company 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.

11.  Leveraged  Transactions.  Acquisitions  of a assets  by the  Company  maybe
leveraged,  i.e.,  the  Company 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 the Company's
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.

12.  Loss of Control by Present  Management  and  Stockholders.  The Company may
consider an  acquisition in which the Company would issue as  consideration  for
the business  opportunity  to be acquired an amount of the Company's  authorized

                                       22

<PAGE>

but  unissued  Common  Stock that  would,  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 the  Company's
management  at this  time.  Such a merger  would  result  in a  greatly  reduced
percentage of ownership of the Company by its current shareholders.

13. Volatility of Stock Price.  There is no significant  recent history relating
to the market price of the Company's 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.

14. The Company depends on key personnel and does not have employment agreements
with its executive officers.

     The Company's  success  depends on the continued  services of its executive
officers  and  a  limited  number  of  other  senior  management  and  technical
personnel,  and the  Company  does 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.

15. The Company does not pay dividends.

        The Company has never declared nor paid any cash dividends on its common
stock and management has no intention to do so in the near future.

AREAS OF BUSINESS FOCUS FOR THE COMPANY
---------------------------------------

Raton Basin Area of Interest

     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;
however,  the Company  believes it can  successfully  develop Raton formation
coal seams and interbedded sandstones as well.

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 Picketwire Lateral.

     The Company has working interests of between 80% and 100% in the known coal
bed of the Raton Basin Areas comprising approximately 6,000 gross acres.

                                       23
<PAGE>

Raton Basin Geology

     The Company seeks 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.

     The Company's prospect acreage sits in the southernly half of the basin and
contains some of the thickest  documented  net coal packages 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.

     The  Company  hopes to  produce  methane  from  wells  that  are  generally
completed in the  laterally  continuous  Vermejo coal.  Individual  Vermejo coal
seams can be readily  traced over  several  miles,  commonly  from well to well.
Total net Vermejo  coal  thickness  can locally  approach up to 100 feet in many
individual seams, which 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  90 feet 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.

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.

                                       24
<PAGE>

        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.

        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.

                                       25

<PAGE>

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 shales, 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.

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.

                                       26
<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 monitors
all 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 coalbed methane  reserves,  nor any
production.  The Company intends to explore its Wyoming Acreage for conventional
Oil & Gas.

                                       27
<PAGE>


<TABLE>
<CAPTION>

                        Historical Oil or Gas Production
                        --------------------------------

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



                                                2006                2005                2004
                                                ----                ----                ----

                                       Natural       Oil      Natural   Oil        Natural   Oil
                                         Gas        (Mbbl)      Gas    (Mbbl)        Gas    (Mbbl)
                                       (MMcf)                 (MMcf)               (MMcf)

Raton Basin                            0             0          0         0          0        0
Wyoming                                0             0          0         0          0        0
Wyoming                                0             0          0         0          0        0
New Mexico                             0             0          0         0          0        0

Total                                  0             0          0         0          0        0

</TABLE>




Productive Wells

        The  following  table sets  forth the number of gross and net  producing
wells the Company had as of April 30, 2006: None

Acreage


Drilling Activities

        The  Company's  drilling  activities  for the periods  indicated are set
forth below:
                                         Year Ended April 30,  2006

                               2006                                2005

                     Gross              Net               Gross              Net

Domestic
 Exploratory
 Wells
  Productive
  Water              0                 0                   0                   0
  Disposal
  Dry                0                 0                   0                   0

 Total               0                 0                   0                   0

 Development
 Wells
  Productive         0                 0                   0                   0
  Water              0                 0                   0                   0
  Dry                0                 0                   0                   0

 Total               0                 0                   0                   0


Administrative Offices

     The Company current business address is 10200 W. 44th Avenue,  Suite 210 E,
Wheat Ridge, Colorado 80033. The Company's telephone number is (303) 940-2090.

Employees

    The Company is a  development  stage company and currently has no 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.
Risk Factors




                                      28

<PAGE>

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.

DESCRIPTION OF PROPERTIES/ASSETS/OIL AND GAS PROSPECTS
         (a) Real Estate.                   None.

         (b) Title to properties.           The Company owns fee title to the
minerals on 150,000 acres in Colfax County New Mexico subject to a 10% royalty
interest and subject to a driling commintment to drill 4 exploratory wells by
April, 2007.

         (c) Oil and Gas Leases and Interests

         (d) Patents.                       None.

 At April 30, 2006, 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

Raton           0                   0                  152,235           136,788            152,2350           136,788
Basin
Wyoming         0                   0                    2,560             2,137              2,560             2,137
Wyoming         0                   0                      640               512                640               512

Total           0                   0                  157,200           141,249            157,200           141,249


</TABLE>


ITEM 2. DESCRIPTION OF PROPERTY

The Company has no property.  The Company currently  maintains a mailing address
at Suite 210 E, 10200 W. 44th Ave.,  Wheat Ridge, CO 80033.  The Company pays no
rent for offices.

ITEM 3. LEGAL PROCEEDINGS

    The Company is not a party to any  pending  legal  proceedings,  and no such
proceedings are known to be contemplated.

     No director, officer or affiliate of the Company, and no owner of record or
beneficial  owner of more than 5.0% of the  securities  of the  Company,  or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material  interest  adverse to the Company in  reference to
any litigation.

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

        No matters  were  submitted  by the  Company to a vote of the  Company's
shareholders through the solicitation of proxies or otherwise, during the fourth
quarter of the fiscal year covered by this report.

                                       29


<PAGE>

PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The  Company's  shares of common stock are  approved for trading  under the
symbol "DYDP" as of February 2006, on the Over-the-Counter Bulletin Board

Fiscal Year 2005                 High               Low

1st Quarter                      No Quote           No Quote
2nd Quarter                      "                  "
3rd Quarter                      "                  "
4th Quarter                      .10                0

The above  quotations  reflect  inter-dealer  prices,  without  retail  mark-up,
mark-down, or commission and may not necessarily represent actual transactions.

     At April 30, 2006,  there were 50 holders of record of the Company's stock,

  No dividends  have been paid to date and the  Company's  Board of
Directors does not anticipate paying dividends in the foreseeable future.

        Effective  August 11, 1993, the Securities and Exchange Commission  (the
"Commission")  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.

                                       30
<PAGE>

Dividends

        The Company has not paid any  dividends to date,  and has no plans to do
so in the immediate future.


ITEM  6.  MANAGEMENT'S   DISCUSSION  AND  ANALYSIS  OF  OPERATIONS  OR  PLAN  OF
OPERATIONS.

CHANGES IN FINANCIAL CONDITIONS

     Dynadapt  Systems,  Inc.  ("the  Company") has changed its business plan to
focus  on  development  as  an  independent   energy  company  engaged  in  the,
exploration  of  North  American   unconventional  natural  gas  properties  and
conventional oil and gas exploration. The Company has acquired Sun River Energy,
Inc. as a wholly owned  subsidiary  which holds 150,000 acres of fee oil and gas
mineral  rights and 7,200 gross acres of leases upon which the company  hopes to
explore  for oil  and  gas.  Our  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.  The Company is also evaluating the additional prospects it
has obtained in Johnson and Natrona Counties Wyoming.


RESULTS OF  OPERATIONS  FOR THE YEAR ENDED APRIL 30,  2006  COMPARED TO PREVIOUS
YEAR
- - ----------------------------------------------------------------------------

     The Company  had no revenues  during the year ended April 30, 2006 or 2005.
The Company  incurred  $350,050  expenses in the year in 2006 as a result of its
acquisition of Sun River Energy, Inc. compared to none in 2005. The net loss for
the year was  $350,050 in 2006 and none in 2005.  The loss per share was nominal
in the year in 2006 and none in 2005.

     Losses should be expected to continue  until a profitable  business can
be achieved through merger,  acquisition,  or development, of which there can be
no assurance.

                                       31
<PAGE>

     The Company intends raise capital via a private placement and will commence
evaluation  assessment  activities  and drill site  locations  on its acreage in
Colfax  County  New Mexico in the first  quarter of 2006.  It intends to drill 2
coal bed methane wells by September  2006 and to have  completed some drill site
evaluation  for  conventional  oil and gas on other acreage in Colfax County New
Mexico.  It plans to drill wells on at least 2 of its Wyoming  prospects by year
end 2006.

Liquidity and Capital Resources
- - -------------------------------

     The Company has no capital  resources or liquidity  except through  private
placement of stock.

     At year end,  the Company had no cash or  operating  capital and is reliant
upon  advances  from  shareholders  or loans to pay any expenses  incurred.  The
Company had current liabilities of $1,184,925 at year end.

     Since year end the  Company  has  achieved  $315,000  in private  placement
subscriptions.

NEED FOR ADDITIONAL FINANCING

     The Company did not have  capital  sufficient  to meet the  Company's  cash
needs,   including  the  costs  of  compliance  with  the  continuing  reporting
requirements  of the  Securities  Exchange Act of 1934. The Company will have to
seek loans or equity  placements to cover such cash needs.  Lack of its existing
capital may be a sufficient impediment to prevent it from accomplishing the goal
of expanding its operations. There is no assurance,  however, that without funds
it will ultimately allow company to carry out its business plans.  Subsequent to
year end the Company  achieved  $315,000  through a Private  Placement  of units
consisting of 2 shares of common stock and one common stock purchase  warrant to
purchase a share @ $.75 per share.

                                       32
<PAGE>

The  Company  will  need to raise  additional  funds to  expand  its oil and gas
operations in the future.

No commitments to provide additional funds have been made by management or other
stockholders.  Accordingly,  there can be no assurance that any additional funds
will be  available  to the Company to allow it to cover its expenses as they may
be incurred.

Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's  operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.

GOING CONCERN

The  Company's  auditor has issued a "going  concern"  qualification  as part of
their opinion in the Audit Report.  There is substantial doubt about the ability
of the Company to continue as a "going concern." During the year ended April 30,
2005, the Company generated no revenue,  has a working capital  deficiency,  and
current  liabilities  exceed  current  assets by  $1,184,000 approximately.


ITEM 7 - FINANCIAL STATEMENTS
------------------------------

     The  response to this item is submitted  as a separate  attachment  of this
report beginning on page F-1 to F 10.



 ITEM 8.  CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
- -----------------------------------------------------------------

The Company changed  accountants from Michael Johnson & Co. to Jaspers + Hall PC
as a result of the purchase of Michael Johnson & Co. by Jaspers + Hall PC.

The Change of  Accountants  was  approved  by the Board of  Directors.  No audit
committee exists other than the members of the Board of Directors.

In  connection  with audit of the two most recent  fiscal  years and through the
date of termination of the accountants,  no disagreements  exist with any former
accountant  on any  matter of  accounting  principles  or  practices,  financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the satisfaction of the former  accountant would have caused them to
make  reference  in  connection  with his  report to the  subject  matter of the
disagreement(s).

                                       33

<PAGE>

The audit  report by Michael  Johnson & Co.,  LLC.for the period ended April 30,
2005, contained an opinion which included a paragraph  discussing  uncertainties
related to  continuation  of the Registrant as a going concern.  Otherwise,  the
audit report by Michael Johnson & Co., LLC for the period April 30, 2005 did not
contain an adverse  opinion or  disclaimer  of  opinion,  nor was  qualified  or
modified as to uncertainty, audit scope, or accounting principles.

The audit report by Jaspers + Hall,  PC for the period  ended  April 30, 2006
contains an opinion which included a paragraph discussing  uncertainties related
to  continuation  of the  Registrant as a going  concern.  Otherwise,  the audit
report by Jaspers + Hall, PC for the period April 30, 2006 did not contain an
adverse  opinion or disclaimer  of opinion,  nor was qualified or modified as to
uncertainty, audit scope, or accounting principles.

         The principal  accountant's report on the financial  statements for any
of the past two years  contained no adverse  opinion or a disclaimer  of opinion
nor was qualified as to uncertainty, audit scope or accounting principles.


ITEM 8a CONTROLS AND PROCEDURES

Evaluation of Internal and Disclosure Controls
----------------------------------------------

     The  management  of the  company has  evaluated  the  effectiveness  of the
issuer's  disclosure  controls and procedures as of the end of the period of the
report,  April 30, 2006 (evaluation date) and have concluded that the disclosure
controls  internal controls and procedures are adequate and effective based upon
their evaluation as of the evaluation date.

     There were no changes in the small business  issuers  internal control over
financial  reporting  identified  in  connection  with  the  Company  evaluation
required by  paragraph  (d) of Rule 13a-15 or Rule 15d-15 under the Exchange act
that occurred  during the small business  issuers fourth fiscal quarter that has
materially  affected or is  reasonable  likely to materially  affect,  the small
business issuers internal control over financial reporting.

Item 8b.

Other Information
-----------------

     Subsequent to fiscal year end, the Company achieved a private placement of
units  consisting  of 2 shares and a stock  purchase  warrant  for  proceeds  of
$315,000.

PART III

.. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS COMPLIANCE
WITH SECTION 16a OF THE EXCHANGE ACT
--------------------------------------------------------------------
    The directors and executive  officers  currently  serving the Company are as
follows:

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

Wesley F. Whiting          President and Director                      Annual

Reginald T. Green          Secretary and Director                      Annual

                                       34
<PAGE>

     The directors  named above will serve until the next annual  meeting of the
Company's stockholders. Thereafter, 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.

     The  directors  and  officers of the  Company  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.

PRINCIPAL SHAREHOLDERS

DIRECTORS AND EXECUTIVE OFFICERS

                                CURRENT OFFICERS (as of April 30, 2006)

Name                                        Age               Position
----                                        ---               --------
Wesley F. Whiting                           73                President
Redgie. Green                               53                Secretary
----------------

WESLEY F. WHITING,  Director,  age 73. 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).

REDGIE GREEN, age 53, Secretary,  Treasurer and Director, 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.

                                       35

<PAGE>



The following individuals comprise the Directors as of August 10, 2006.

                               Board of Directors

Name                                        Age               Position
----                                        ---               --------
Wesley F. Whiting (1)                       73                Director
Redgie Green (1)                            53                Director
----------------------------
(1) See biographical information listed above.

     None  of the  Company's  directors  receives  any  compensation  for  their
respective  services  rendered  to the  Company,  nor have  they  received  such
compensation in the past. They all have agreed to act without compensation until
authorized by the Board of  Directors,  which is not expected to occur until the
Company has generated revenues from operations after consummation of a merger or
acquisition.  No retirement,  pension, profit sharing, stock option or insurance
programs  or other  similar  programs  have been  adopted by the Company for the
benefit of its employees.

Indemnification of Officers and Directors

     As permitted by Colorado  Revised  Statutes,  the Company 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  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

     The  officers  and  directors  of the  Company  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 the Company's  business conflict with the demands
of their other  business and investment  activities.  Such conflicts may require
that the Company 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.

                                       36

<PAGE>

Conflicts  of  Interest - General.  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 the  Company's  officers or  directors
are  involved in the  management  of any firm with which the  Company  transacts
business. The Company's 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.

The Company's officers and directors may actively negotiate or otherwise consent
to the  purchase of a portion of their  common  stock as a  condition  to, or in
connection with, a proposed merger or acquisition transaction. It is anticipated
that a  substantial  premium over the initial cost of such shares may be paid by
the purchaser in conjunction  with any sale of shares by the Company's  officers
and directors which is made as a condition to, or in connection with, a proposed
merger or acquisition  transaction.  The fact that a substantial  premium may be
paid to the Company's  officers and directors to acquire their shares  creates a
potential  conflict of interest for them in satisfying their fiduciary duties to
the Company and its other shareholders.  Even though such a sale could result in
a  substantial  profit  to them,  they  would be  legally  required  to make the
decision  based upon the best  interests of the Company and the Company's  other
shareholders, rather than their own personal pecuniary benefit.



ITEM 10. EXECUTIVE COMPENSATION
-------------------------------
<TABLE>
<CAPTION>

              SUMMARY COMPENSATION TABLE OF EXECUTIVES & DIRECTORS

                          Fiscal          Annual Compensation                             Awards
      Name and Principal   Year    Salary ($)     Bonus ($)      Other Annual             Restricted Stock   Securities
      Position                                                   Compensation ($)         Award(s)           Underlying
                                                                                          ($)                Options/
                                                                                                             SARs (#)
<S>                        <C>     <C>            <C>            <C>                      <C>                <C>
      Wesley F. Whiting,   2005    0              0              0                        0                  0
      President(1)
                           2004    0              0              0                        0                  0
                           2003    0              0              $9,830                   0                  0

      Reginald T. Green,   2005    0              0              0                        0                  0
      Secretary            2004    0              0              0                        0                  0
                           2003    0              0              0                        0                  0
</TABLE>

                                       37

<PAGE>

    Option/SAR Grants Table (None)

    Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR
  value (None)

    Long Term Incentive Plans - Awards in Last Fiscal Year (None)

     See "Certain  Relationships and Related  Transactions."  The Company has no
stock option, retirement, pension, or profit-sharing programs for the benefit of
directors, officers or other employees, but the Board of Directors may recommend
adoption of one or more such programs in the future.

EMPLOYEES STOCK COMPENSATION PLAN:

     The Company has no a stock  compensation  plan for employees  which provide
schedules of earnout and vesting based upon longevity of service.

         (b) Compensation of Certain Significant Employees.  None.

         (c) Family Relationships. None.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------

     The  following  table  sets  forth,  as of the  date of  this  Registration
Statement, the number of shares of Common Stock owned of record and beneficially
by  executive  officers,  directors  and  persons  who hold  5.0% or more of the
outstanding  Common Stock of the Company.  Also  included are the shares held by
all executive officers and directors as a group.

SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT AS OF APRIL 30,
2006.

There are currently  9,518,833 common Shares  outstanding after the acquisition
of  and Sun River Energy, Inc.

The following sets forth  information with respect to the Company's Common Stock
beneficially  owned by each  Officer  and  Director,  and by all  Directors  and
Officers  as a group as of April 30, 2006,

Title of Class    Name and Address        Amount and Nature          Percent of
                  Of Beneficial Owner*    of Beneficial Ownership    Class


Common Stock      Wesley F. Whiting         25,000                  less than 1%
                  Suite 210 E.
                  10200 W. 44th Ave.
                  Wheat Ridge, CO 80033

Common Stock      Redginald T. Green        25,000                  less than 1%
                  Suite 210 E.
                  10200 W. 44th Ave.
                  Wheat Ridge, CO 80033

All Directors and Executive
 Officers as a Group (2 persons)            50,000                  less than 1%
-----------------------------
* The beneficial owner's address is the same as the Company's principal office.

                                       38

<PAGE>

The following sets forth  information with respect to the Company's Common Stock
beneficially  owned  by  holders  of 5% or  more  of the  currently  issued  and
outstanding stock of the Company as of April 30, 2006.

Robert A. Doak (through his assigns
         New Mexico Energy, LLC of which he is manager)     7,333,333        77%

TOTAL OUTSTANDING SHARES COMMON STOCK:

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------

The Company  issued  7,333,333  shares to New Mexico  Energy LLC,  (beneficially
Robert A. Doak,  Jr.) and 1,000,000  shares to other  shareholders  of Sun River
Energy,  Inc. in exchange for 100% of the issued and  outstanding  shares of Sun
River Energy, Inc. Mr. Doak is considered a related party in this transaction,
by virtue of his percentage of ownership.

   No officer,  director, or affiliate of the Company has any direct or indirect
material  interest in any asset  proposed to be acquired by the Company  through
security holdings, contracts, options, or otherwise.

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------

(a)     No Exhibits are filed with this Annual Report.

(b)     Reports on Form 8-K

        Filed May 3, 2006
        Filed April 26, 2006

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
------------------------------------------------

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  MJC's
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, 2005 and 2006.

     Michael  Johnson & Co.  billed a total of $ 3,000 for the reviews in fiscal
2005.

         There were no audit related fees in 2004 or 2005. There were no
tax fees or other fees in  2004 or 2005 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, 2004 and 2005.

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




                                      39



<PAGE>

                               DYNADAPT SYSTEMS, INC.

                                    FORM 10-K

                          INDEX OF FINANCIAL STATEMENTS



                                                                          Pages

Auditors Report- Jaspers + Hall, PC                                          F-1

Balance Sheets                                                               F-2

Statements of Operations                                                     F-3

Statements of Cash Flow                                                      F-4

Statements of Stockholders'                                                  F-5

Notes to Financial Statements                                          F-6 - F-8


<PAGE>
                                       DYNADAPT SYSTEM, INC. AND SUBSIDIARY
                                           (A Development Stage Company)

                                               FINANCIAL STATEMENTS

                                         For the Year Ended April 30, 2006



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


             REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM

To the Board of Directors of
Dynadapt System, Inc.
Denver, CO

We have audited the  accompanying  balance  sheets of Dynadapt  System,  Inc. (a
Development  Stage  Company)  as of April  30,  2006 and 2005,  and the  related
statements of operations,  stockholders' equity (deficit) and cash flows for the
years then ended.  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 audits.

We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting  Oversight  Board  (United  States) per  standard  No. 1 of the PCAOB
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Dynadapt System,  Inc. as of
June 30, 2006 and 2005, and the results of its operations and its cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States.

The accompanying  financial  statements have been prepared  assuming the Company
will continue as a going concern. As discussed in Note 3, conditions exist which
raised  substantial  doubt  about the  Company's  ability to continue as a going
concern.  Management's  plans in regard to these  matters are also  described in
Note 3. The  financial  statements  do not  include any  adjustments  that might
result from the outcome of this uncertainty.


Jaspers + Hall, PC
Denver, Colorado
August 2, 2006


<PAGE>
<TABLE>
<CAPTION>

                      DYNADAPT SYSTEM, INC AND SUBSIDIARY
                         (A Development Stage Company)
                           Consolidatd Balance Sheets

<S>                                                                                     <C>                     <C>

                                                                                                       Audited
                                                                                        ------------------------------------
                                                                                                       April 30,
                                                                                             2006                  2005
                                                                                        ---------------         -----------
ASSETS:

   Current Assets:
      Cash                                                                                       $ 999                  $ -
                                                                                        ---------------         -----------
Total Current Assets                                                                               999                    -
                                                                                        ---------------         ------------
   Other Assets:
       Leases                                                                                  284,000                    -
       Mineral Rights                                                                          100,000                    -
       Goodwill for Mineral Rights                                                             866,667                    -
                                                                                        ---------------         ------------
Total Other Assets                                                                           1,250,667                    -

TOTAL ASSETS                                                                                $1,251,666                  $ -
                                                                                        ===============         ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
    Current Liabilities:
         Accounts Payable                                                                    $ 366,375             $ 16,325
         Notes Payable                                                                         218,550                4,550
         Notes payable - Related Parties                                                       600,000                    -
                                                                                        ---------------         ------------
Total Current Liabilities                                                                    1,184,925               20,875
                                                                                        ---------------         ------------
 Stockholders' Equity (Deficit):
    Common stock, $.0001 par value, 100,000,000 shares                                             951                   48
        authorized, 9,518,833 shares issued and outstanding
        as of April 30, 2006 and 485,500 shares as of April 30, 2005
    Additional Paid-In Capital                                                                 460,269               23,506
    Deficit accumulated during the
      development stage                                                                       (394,479)             (44,429)
                                                                                        ---------------         ------------
Total Stockholders' Equity (Deficit)                                                            66,741              (20,875)
                                                                                        ---------------         ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                        $1,251,666                  $ -
                                                                                        ===============         ============

</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-2

<PAGE>
<TABLE>
<CAPTION>

                     DYNADAPT SYSTEMS, INC. AND SUBSIDIARY
                         (A Development Stage Company)
                     Consolidated Statements of Operations





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

                                                      Year ended                                 April 30, 1998
                                                       April 30,                                 (Inception) to
                                                         2006                   2005             April 30, 2006
                                                    ----------------       ----------------      --------------
Revenue:
    Miscellaneous Income                                        $ -                    $ -                 $ --
                                                    ----------------       ----------------      --------------
Total Income                                                      -                      -

Costs and Expenses:
     Consulting                                             150,000                      -             167,830
     Accounting & Legal                                     200,050                      -             225,985
     Office Expense                                               -                      -                 422
     Bank Charges                                                 -                      -                 410
                                                    ----------------       ----------------      --------------
Total Expenses                                              350,050                      -             394,647
                                                    ----------------       ----------------      --------------
Net Loss From Operations                                   (350,050)                     -            (394,647)
                                                    ----------------       ----------------      --------------

Other Income
     Interest Expense                                             -                      -                 (20)
     Interest Income                                              -                      -                 188
                                                    ----------------       ----------------      --------------
Net Loss                                                  $(350,050)                   $ -           $(394,479
                                                    ================       ================      ==============
Per Share Information:
     Weighted average number
     of common shares outstanding                           532,806                485,500
                                                    ----------------       ----------------

Net Loss per common share                                   $ (0.66)                 $ -
                                                    ================       ================
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-3

<PAGE>
<TABLE>
<CAPTION>

                      DYNADAPT SYSTEM, INC. AND SUBSIDIARY
                         (A Development Stage Company)
           Consolidated Statements of Stockholders' Equity (Deficit)
                                 April 30, 2006





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


                                                                                                         Deficit
                                                         COMMON STOCKS              Additional          Accum. During      Total
                                                                                      Paid-In          Development     Stockholders'
                                                     # of Shares     Amount           Capital             Stage           Equity
                                                     -----------     ------           -------             -----           ------


Issuance of Stock for Services                         250,000           $ 25               $ -                  $ -           $ 25

Issuance of Stock for Cash                             233,000             23            23,277                    -         23,300

Issuance of Stock for Cash                               2,500              -               229                    -            229

Net Loss for Period                                          -              -                 -               (8,016)        (8,016)
                                                   ------------    -----------      ------------     ---------------- --------------
Balance - April 30, 1999                               485,500             48            23,506               (8,016)        15,538
                                                   ------------    -----------      ------------     ---------------- --------------
Net Loss for Year                                            -              -                 -              (15,706)       (15,706)
                                                   ------------    -----------      ------------     ---------------- --------------
Balance - April 30, 2000                               485,500             48            23,506              (23,722)          (168)
                                                   ------------    -----------      ------------     ---------------- --------------
Net Loss for Year                                            -              -                 -                 (120)          (120)
                                                   ------------    -----------      ------------     ---------------- --------------
Balance -  April 30, 2001                              485,500             48            23,506              (23,842)          (288)
                                                   ------------    -----------      ------------     ---------------- --------------
Net Loss for Year                                            -              -                 -                 (898)          (898)
                                                   ------------    -----------      ------------     ---------------- --------------
Balance - April 30, 2002                               485,500             48            23,506              (24,740)        (1,186)
                                                   ------------    -----------      ------------     ---------------- --------------
Net Loss for Year                                            -              -                 -                    -               -
                                                   ------------    -----------      ------------     ---------------- --------------
Balance - April 30, 2003                               485,500             48            23,506              (24,740)        (1,186)
                                                   ------------    -----------      ------------     ---------------- --------------
Net Loss for Year                                            -              -                 -              (19,689)       (19,689)
                                                   ------------    -----------      ------------     ---------------- --------------
Balance - April 30, 2004                               485,500             48            23,506              (44,429)       (20,875)
                                                   ------------    -----------      ------------     ---------------- --------------
Net Loss for Year                                            -              -                 -                    -               -
                                                   ------------    -----------      ------------     ---------------- --------------
Balance - April 30, 2005                               485,500             48            23,506              (44,429)       (20,875)
                                                   ------------    -----------      ------------     ---------------- --------------
Issuance of shares for
 Acquisition of Subsidiary                           8,333,333            833           401,833                    -        402,666
Issuance of stock for leases                           700,000             70            34,930                    -         35,000
Net Loss for Year                                            -              -                 -             (350,050)      (350,050)
                                                   ------------    -----------      ------------     ---------------  --------------
Balance - April 30, 2006                             9,518,833          $ 951         $ 460,269           $ (394,479)      $ 66,741
                                                   ============    ===========      ============     ================ ==============

</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-4

<PAGE>
<TABLE>
<CAPTION>

                      DYNADAPT SYSTEM, INC. AND SUBSIDIARY
                         (A Development Stage Company)
                     Consolidated Statements of Cash Flows

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

                                                                         Year ended                           April 30, 1998
                                                                         April 30,                            (Inception) to
                                                                            2006               2005           April 30, 2006
                                                                        -------------     ---------------     ------------
Cash Flows from Operating Activities:

     Net Loss                                                             $ (350,050)               $ -        $(394,479)
     Stock issued for services                                                     -                  -               25
     Stock issued for leases                                                  35,000                              35,000
     Adjustments to reconcile net loss to net cash used
        by operating activities:
     Increase in Accounts Payable                                            350,050                  -          366,375
                                                                        -------------     ---------------     ------------
Net Cash Used by Operating Activities                                         35,000                  -            6,921
                                                                        -------------     ---------------     ------------
Cash Flows from Investing Activities

    Acquisition - net of cash acquired                                      (848,001)                 -         (848,001)
                                                                        -------------     ---------------     ------------
Net Cash Used for Investing Activities                                      (848,001)                 -         (848,001)
                                                                        -------------     ---------------     ------------
Cash Flows from Financing Activities:
     Proceeds from notes payable                                             214,000                  -          218,550
     Proceeds from notes payable - related party                             600,000                             600,000
     Proceeds from stock issuance                                                  -                  -           23,529
                                                                        -------------     ---------------     ------------
Net Cash Used for Financing Activities                                       814,000                  -          842,079
                                                                        -------------     ---------------     ------------
Net Increase in Cash & Cash Equivalents                                          999                  -              999

Beginning Cash & Cash Equivalents                                                  -                  -                -
                                                                        -------------     ---------------     ------------
Ending Cash & Cash Equivalents                                                 $ 999                $ -            $ 999
                                                                        =============     ===============     ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
     Cash paid for Interest                                                      $ -                $ -             $ 20
                                                                        =============     ===============     ============
     Cash paid for Income Taxes                                                  $ -                $ -              $ -
                                                                        =============     ===============     ============
NON-CASH TRANSACTIONS
     Stock issued for services                                                   $ -                $ -             $ 25
                                                                        =============     ===============     ============
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                      F-5

<PAGE>

                      DYNADAPT SYSTEM, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                                 April 30, 2006


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

Organization:

The Company was  incorporated on April 30, 1998,  under the laws of the state of
Colorado.  The Company is in the  development  stages and was  organized for the
purpose of Internet Acquisitions.  On April 28, 2006 the Company entered into an
"Agreement  and Plan of  Reorganization"  with Sun River Energy,  Inc.  (SRE), a
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.  The Company's  fiscal year
end is April  30.  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.

Basis of Presentation - Development Stage Company:

The Company  has not earned any  significant  revenues  from  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.

Basis of Accounting:

The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with accounting  principles  generally  accepted in the
United States.

Cash and Cash Equivalents:
-------------------------

The Company  considers all highly  liquid debt  instruments,  purchased  with an
original maturity of three months or less, to be cash equivalents.

Principles of Consolidation:

The  accompanying  consolidated  financial  statements  include the  accounts of
Dynadapt  Systems,  Inc. and its wholly owned subsidiary Sun River Energy,  Inc.
All significant  inter-company balances and transactions have been eliminated in
the consolidation.

Use of Estimates:

The  preparation  of  financial   statements,   in  conformity  with  accounting
principles generally accepted in the United States,  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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.

                                      F-6

<PAGE>



                      DYNADAPT SYSTEM, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                                 April 30, 2006

Net Loss Per Share:

Net loss per share is based on the  weighted  average  number  of common  shares
outstanding during the period.

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.

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.

Note 2 - Federal Income Taxes:

The Company has made no provision  for income taxes  because  there have been no
operations to date causing income for financial statements or tax purposes.

The  Financial  Accounting  Standards  Board  (FASB)  has  issued  Statement  of
Financial Accounting  Standards Number 109 ("SFAS 109").  "Accounting for Income
Taxes",  which  requires  a change  from the  deferred  method  to the asset and
liability  method of accounting for income taxes.  Under the asset and liability
method,  deferred  income  taxes  are  recognized  for the tax  consequences  of
"temporary  differences" by applying  enacted  statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax basis of existing assets and liabilities.

Note 3 - Going Concern

The Company's financial  statements have been prepared on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.

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.

Note 4 - Capital Stock Transactions:

The  authorized  capital  stock of the Company is  100,000,000  shares of common
stock at $.0001 par value.  During the period ended April 30, 2006,  the Company
issued  8,633,333  shares of common stock for  acquisition  of Sun River Energy,
Inc..

                                      F-7

<PAGE>

                      DYNADAPT SYSTEM, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                                 April 30, 2006

Note 5 - Segment Information:

Dynadapt System,  Inc.  operates  primarily in a single operating  segment,  the
business of Oil and Gas well drilling and mineral rights.

Note 6 - Notes Payable

Notes Payable

As of April 30, 2006, the Notes Payable consist of the following:
<TABLE>
<CAPTION>
<S>                                                                                     <C>

         Note payable to Jerrold Bachman ,  - shareholder - non-interest bearing,
          unsecured due upon demand for expenses of company.                            $  4,550

         Note payable to Nova Leasing, Inc. with an interest rate of 6% per annum,
         due upon written demand.  Secured by property leases.                             64,000

         Note payable to Sharon K. Fowler, with an interest rate of 6% per annum,
         $75,000 is due on September 30, 2006 and $75,000 due on January 15, 2007.
         Secured by property leases.                                                      150,000
                                                                                          -------


                                    Total Notes Payable                                   $218,550
                                                                                          ========
</TABLE>

Note Payable - Related Party

         Note payable to Robert A. Doak,  Jr,,  with an interest  rate of 6% per
         annum,  $300,000 is due 10 days after  completion of private  placement
         and the balance of $300,000 is due January 2, 2007.  Secured by mineral
         rights.

                                  Total Notes Payable - Related Party  $600,000
                                                                        ========

Note 7 - Leases and Mineral Rights:

The property is valued at $214,000 for 3,200 acres of leases in Wyoming assigned
from Nova  Leasing,  Inc. and Sharon  Fowler.  This is the amount of the 2 notes
listed in Note 6. The Mineral  rights in New Mexico are valued at $966,667 which
is comprised of a note for Robert Doak, Jr. for $600,000,  plus 7,333,333 shares
of stock issued at $.05 per share ($366,667) to Robert Doak by Sun River Energy,
Inc. who had a predecessor basis of $100,000 in the mineral rights..

                                      F-8

<PAGE>



                      DYNADAPT SYSTEM, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                                 April 30, 2006


Note 8 - Financial Accounting Developments:

Recently issued Accounting Pronouncements

In December  2004,  the FASB issued SFAS No. 123R  (revised  2004)  "Share-Based
Payment"  which amends FASB  Statement  No. 123 and will be effective for public
companies  for  interim  or annual  periods  beginning  June 15,  2005.  The new
statement  will require  entities to expense  employee  stock  options and other
share-based payments. The new standard may be adopted in one of three ways - the
modified  prospective  transition method, a variation of the modified transition
method or the  modified  retrospective  transition  method.  The  Company  is to
evaluate how it will adopt the standard and the  evaluation  the effect that the
adoption  of SFAS  123R will  have on the  financial  position  and  results  of
operations.

In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs, an amendment
of ARB No. 43,  Chapter  4." The  statement  amends the  guidance in ARB No. 43,
Chapter 4, Inventory Pricing,  to clarify the accounting for abnormal amounts of
idle facility expense,  freight,  handling costs and wasted material (spoilage).
Paragraph  5 of ARB No.  43,  Chapter  4  previously  stated  that  "under  some
circumstances,  items such as idle facility expense,  excessive spoilage, double
freight  and  rehandling  costs may be so abnormal  as to require  treatment  as
current period charges". SFAS No. 151 requires that those items be recognized as
current-period  charges  regardless  of whether  they meet the  criterion of "so
abnormal".  In  addition,  this  statement  requires  that  allocation  of fixed
production overhead to the costs of conversion be based on the prospectively and
are effective for inventory  costs incurred  during fiscal years beginning after
June 15, 2005, with earlier  application  permitted for inventory costs incurred
during  fiscal years  beginning  after the date this  Statement  is issued.  The
adoption  of SFAS No.  151 does not have an  impact on the  Company's  financial
position and results of operations.

In December 2004, the FASB issued SFAS No. 153, Exchange of Non-monetary Assets,
an  amendment  of APB  Opinion  No.  23. The  guidance  in APB  opinion  No. 29,
Accounting  for  Non-monetary  Transactions,  is  based  on the  principle  that
exchange  of  non-monetary  assets  should be  measured on the fair value of the
assets  exchanges.  The  guidance in that  Opinion,  however,  included  certain
exceptions to that principle.  This Statement amends Opinion 29 to eliminate the
exception for non-monetary  exchanges of similar  productive  assets that do not
have commercial substance. A non-monetary has commercial substance if the future
cash flows of the entity are expected to change significantly as a result of the
exchange.  SFAS No. 153 is effective  for  non-monetary  exchanges  occurring in
fiscal  periods  beginning  June 15,  2005.  The adoption of SFAS No. 153 is not
expected to have an impact on the  Company's  financial  position and results of
operations.

In March 2005,  the FASB  issued FASB  Interpretation  No. 47,  "Accounting  for
Conditional Asset Retirement  Obligations"  ("FIN 47"). FIN 47 provides guidance
relating to the identification of and financial  reporting for legal obligations
to perform an asset retirement activity. The Interpretation requires recognition
of a liability for the fair value of a conditional  asset retirement  obligation
when incurred if the liability's fair value can be reasonably estimated.  FIN 47
also defines  when an entity would have  sufficient  information  to  reasonably
estimate  the fair value of an asset  retirement  obligation.  The  provision is
effective no later than the end of fiscal years ending after  December 15, 2005.
The Company  will adopt FIN 47 beginning  the first  quarter of fiscal year 2006
and  does  not  believe  the  adoption  will  have  a  material  impact  on  its
consolidated financial position or results of operations or cash flows.



                                     F-9
<PAGE>


                      DYNADAPT SYSTEM, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                                 April 30, 2006

Note 8 - Financial Accounting Developments (Cont):

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections"  ("SFAS 154") which replaces  Accounting  Principles Board Opinions
No. 20 "Accounting  Changes" and SFAS No. 3,  "Reporting  Accounting  Changes in
Interim  Financial  Statements-An  Amendment  of APB  Opinion  No. 28." SFAS 154
provides guidance on the accounting for and reporting of accounting  changes and
error  corrections.  It  establishes  retrospective  application,  or the latest
practicable  date,  as the required  method for reporting a change in accounting
principle and the  reporting of a correction of an error.  SFAS 154 is effective
for accounting changes and a correction of errors made in fiscal years beginning
after  December  15,  2005 and is  required  to be adopted by the Company in the
first quarter of 2006.  The Company is currently  evaluating the effect that the
adoption  of SFAS 154 will  have on its  results  of  operations  and  financial
condition but does not expect it to have a material impact.

In June 2005, the Emerging  Issues Task Force,  or EITF,  reached a consensus on
Issue 05-6,  Determining  the  Amortization  Period for Leasehold  Improvements,
which requires that leasehold  improvements  acquired in a business  combination
purchased subsequent to the inception of a lease be amortized over the lesser of
the  useful  life of the  assets  or a term  that  includes  renewals  that  are
reasonably  assured at the date of the business  combination  or purchase.  EITF
05-6 is effective for periods beginning after July 1, 2005. We do not expect the
provisions  of  this  consensus  to  have a  material  impact  on the  financial
position, results of operations or cash flows.

Note 9 - Subsequent Event:

As of April 28, 2006, the commencement of a private  placement of sale of common
stock of Dydnapt  Systems,  Inc.  was  instituted.  At June 30,  2006 a total of
150,000 shares have been purchased for a total of $275,000.

                                      F-10
<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.


                                                    Dynadapt Systems, Inc.

Date:   August 10, 2006                        By:/s/ Wesley F. Whiting
                                                    -------------------------
                                                    Wesley F. Whiting, President


        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 10, 2006           By:/s/Wesley F. Whiting
                                ----------------------------------------
                                Wesley F. Whiting, President and Director


Date: August 10, 2006            By:/s/Reginald T. Green
                                -----------------------------------------
                                Reginald T. Green, Secretary and Director



                                       40