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

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 2011

                                       OR

[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

      For the transition period from _____________ to ___________________.

                        Commission file number: 000-51425

                              Rancher Energy Corp.
               -------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Nevada                                         98-0422451
---------------------------------              ---------------------------------
(State or other jurisdiction of                    (I.R.S. Employer Identifi-
 incorporation or organization)                           cation No.)


                           999 18th Street, Suite 2700
                                Denver, CO 80202
                    (Address of principal executive offices)

                                 (303) 629-1125
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements  for the past 90 days. Yes [X]     No [ ]

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this Chapter)  during the  preceding 12 months (or for such shorter  period that
the registrant was required to submit and post such files).  Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]               Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
Small reporting company [X]

<PAGE>

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

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
                                                             Yes [ ] No [X]

As of August 15, 2011,  119,316,723 shares of Rancher Energy Corp. common stock,
$.00001 par value, were outstanding.


















                                       2
<PAGE>

<TABLE>
<CAPTION>
                                        Table of Contents
                                 PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements
<S>      <C>

         Balance Sheets - June 30, 2011 (unaudited) and March 31, 2011................................4

         Statements of Operations (Unaudited) for Three Months Ended
           June 30, 2011 and 2010.....................................................................5

         Statement of Changes in Stockholders' Equity for the Three Months Ended
           June 30, 2011 (unaudited)..................................................................6

         Statements of Cash Flows (Unaudited) for the Three Months Ended June 30, 2011 and 2010.......7

         Notes to Financial Statements (Unaudited)....................................................8

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations.......15

Item 3.  Quantitative and Qualitative Disclosures About Market Risk..................................20

Item 4.  Controls and Procedures.....................................................................21


                                   PART II - OTHER INFORMATION

Item 1.  Legal Proceedings...........................................................................22

Item 1A. Risk Factors................................................................................22

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.................................22

Item 3.  Defaults Upon Senior Securities.............................................................22

Item 4.  Rescinded and Reserved......................................................................22

Item 5.  Other Information...........................................................................23

Item 6.  Exhibits....................................................................................23

SIGNATURES...........................................................................................24
</TABLE>



                                       3
<PAGE>

                                 Part I - Financial Information


<TABLE>
<CAPTION>


Item 1.   Financial Statements

                                      Rancher Energy Corp.
                                     (Debtor-in-possession)
                                         Balance Sheets

                                                                                      June 30, 2011       March 31, 2011
                                                                                    -------------------- --------------------
                                 ASSETS                                                (unaudited)
                                 ------
<S>                                                                                   <C>                 <C>
Current assets:
   Cash and cash equivalents                                                          $     3,319,231     $      3,883,228
   Restricted cash                                                                            500,066              500,066
   Accounts receivable and prepaid expenses                                                   424,485              420,875
   Current assets of discontinued operations                                                  474,619               45,229
                                                                                    -----------------------------------------
        Total current assets                                                                4,718,401            4,849,398
                                                                                    -----------------------------------------

Furniture and equipment, net of accumulated depreciation of $139,150
   and $127,662 respectively                                                                  198,532              210,020
Deposits and other assets                                                                     200,350                  350
Long-term assets of discontinued operations                                                      -                 814,354
                                                                                    -----------------------------------------
        Total other assets                                                                    398,882            1,024,724
                                                                                    -----------------------------------------

            Total assets                                                              $     5,117,283     $      5,874,122
                                                                                    =========================================

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued liabilities - post petition                           $       660,600     $      1,155,151
   Current liabilities of discontinued operations                                              39,463               58,191
                                                                                    -----------------------------------------
        Total current liabilities, not subject to compromise                                  700,063            1,213,342

Liabilities subject to compromise                                                           1,137,038            1,136,928
                                                                                    -----------------------------------------

        Total liabilities                                                                   1,837,101            2,350,270
                                                                                    -----------------------------------------

Commitments and contingencies (Notes 2, 4 and 5)

Stockholders' equity:
    Common stock, $0.00001 par value, 275,000,000 shares authorized at June 30,
   2011 and March 31, 2011; 119,316,723 shares issued and outstanding at June
     30, 2011 and March 31, 2011                                                                1,194                1,194
   Additional paid-in capital                                                              93,193,008           93,193,008
   Accumulated deficit                                                                    (89,914,020)         (89,670,350)
                                                                                    -----------------------------------------
          Total stockholders' equity                                                        3,280,182            3,523,852
                                                                                    -----------------------------------------

          Total liabilities and stockholders' equity                                  $     5,117,283     $      5,874,122
                                                                                    =========================================


           The accompanying notes are an integral part of these financial statements.
                                               4
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                      Rancher Energy Corp.
                                     (Debtor-in-possession)
                                    Statements of Operations
                                           (Unaudited)

                                                                                              For Three Months Ended
                                                                                                     June 30,
                                                                                      -----------------------------------------
                                                                                              2011                   2010
                                                                                      -------------------     -----------------
<S>                                                                                    <C>                     <C>

Revenue                                                                                $             -         $            -
                                                                                      -------------------     -----------------

Operating expenses:
     General and administrative expenses                                                        222,814                 381,413
     Depreciation and amortization                                                               11,488                  28,769
                                                                                      -------------------     -----------------
          Total operating expenses                                                              234,302                 410,182
                                                                                      -------------------     -----------------

        Loss from operations                                                                   (234,302)               (410,182)
                                                                                      -------------------     -----------------

Other income (expense):
     Interest expense and financing costs                                                        (5,934)                 (4,387)
     Interest and other income                                                                  100,485                  11,342
                                                                                      -------------------     -----------------
          Total other income                                                                     94,551                   6,955
                                                                                      -------------------     -----------------

            Loss before reorganization items and discontinued operations                       (139,751)               (403,227)

Reorganization items -
     professional and legal fees                                                                (97,596)               (140,475)
                                                                                      -------------------     -----------------

            Loss from continuing operations                                                    (237,347)               (543,702)

Discontinued operations -
     loss from discontinued operations                                                           (6,323)               (416,589)
                                                                                      -------------------     -----------------

              Net loss                                                                 $       (243,670)       $       (960,291)
                                                                                      ===================     =================

     Net loss per share from continuing operations                                     $          (0.00)       $         (0.00)
                                                                                      ===================     =================
     Net loss per share from discontinued operations                                   $          (0.00)       $         (0.00)
                                                                                      ===================     =================
     Basic and diluted net loss per share                                              $          (0.00)       $         (0.01)
                                                                                      ===================     =================

     Basic and diluted weighted average shares outstanding                                  119,316,723            119,316,723
                                                                                      ===================     =================



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

                                               5
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

					     Rancher Energy Corp.
	                          Statement of Changes in Stockholders' Equity
	                            For the Three Months Ended June 30, 2011
	                                           (Unaudited)


                                                                                                                    Total
                                                                         Additional           Accumulated       Stockholders'
                                           Shares         Amount      Paid-In Capital           Deficit            Equity
                                           ------         ------      ---------------           -------            ------
<S>                                    <C>               <C>         <C>               <C>                  <C>

Balance, April 1, 2011                    119,316,723      $1,194    $     93,193,008  $      (89,670,350)  $     3,523,852

  Net loss                                          -           -                 -              (243,670)         (243,670)

                                       ----------------- ----------- ----------------- -------------------- -----------------
Balance, June 30, 2011                    119,316,723      $1,194    $     93,193,008  $      (89,914,020)   $    3,280,182
                                       ================= =========== ================= ==================== =================

















           The accompanying notes are an integral part of these financial statements.
                                                6
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                      Rancher Energy Corp.
                                     (Debtor-in-possession)
                                    Statements of Cash Flows
                                           (unaudited)



                                                                                                   Three Months Ended June 30,
                                                                                            ----------------------------------------
                                                                                                 2011                    2010
                                                                                            -----------------    -------------------


<S>                                                                                         <C>                  <C>

Cash flows from operating activities:

      Net loss                                                                                $    (243,670)      $       (960,291)


Adjustments to reconcile net loss from continuing operations to

      cash used for operating activities, before reorganization items:

      Loss from discontinued operations								      6,323		   416,589

      Reorganization items, net                                                                      97,596                140,475

      Depreciation and amortization                                                                  11,488                 28,769

      Stock-based compensation expense                                                                  -                   75,059

Changes in operating assets and liabilities:

      Accounts receivable, prepaid expenses and other assets                                         (3,610)                (7,905)

      Accounts payable and accrued liabilities                                                     (329,980)               299,202
                                                                                            -----------------    -------------------
        Net cash used for operating activities, before reorganization items                        (461,853)                (4,812)


Operating cash flows used for reorganization activities -

      professional fees for services rendered in connection with the Chapter 11
      proceeding                                                                                   (262,057)              (161,458)
                                                                                            -----------------    -------------------

        Net cash used for operating activities                                                     (723,910)              (166,270)
                                                                                            -----------------    -------------------
Cash flows used for investing activities -

      purchases of furniture, fixtures and equipment                                                    -                   (5,177)
                                                                                            -----------------    -------------------

Discontinued operations:

      Operating cash flows                                                                          159,913                426,306

      Investing cash flows                                                                                -               (145,512)
                                                                                            -----------------    -------------------

        Net cash provided by discontinued operations                                                159,913                280,794
                                                                                            -----------------    -------------------


 (Decrease) increase in cash and cash equivalents                                                  (563,997)               109,347

Cash and cash equivalents, beginning of period                                                    3,883,228                372,286
                                                                                            -----------------    -------------------

Cash and cash equivalents, end of period                                                      $   3,319,231        $       481,633
                                                                                            =================    ===================

   The accompanying notes are an integral part of these financial statements.
                                        7
</TABLE>

<PAGE>


                              Rancher Energy Corp.
                             (Debtor-in-possession)
                          Notes to Financial Statements
                                   (unaudited)

Note 1 - Organization and Summary of Significant Accounting Policies

Organization

         Rancher   Energy  Corp.   ("Rancher   Energy"  or  the  "Company")  was
incorporated  in the  state  of  Nevada  on  February  4,  2004.  The  Company's
operations  have included  acquisition  of,  exploration  for,  development  and
production  of  oil  and  natural  gas.  These   activities  have   historically
concentrated on applying  secondary and tertiary  recovery  technology to older,
previously productive fields in North America.

Basis of Presentation

         The accompanying unaudited financial statements include the accounts of
the Company's wholly owned  subsidiary,  Rancher Energy Wyoming,  LLC, a Wyoming
limited  liability  company that was formed on April 24, 2007.  In  management's
opinion,  the  Company  has  made all  adjustments,  consisting  of only  normal
recurring adjustments,  necessary for a fair presentation of financial position,
results of operations,  and cash flows. The financial  statements should be read
in conjunction with financial statements included in the Company's Annual Report
on Form 10-K for the year  ended  March 31,  2011.  The  accompanying  financial
statements have been prepared in accordance with accounting principles generally
accepted in the United  States for interim  financial  information.  They do not
include all  information  and notes  required by generally  accepted  accounting
principles  for  complete  financial  statements.  However,  except as disclosed
herein,  there has been no material change in the  information  disclosed in the
notes to financial  statements  included in the Company's  Annual Report on Form
10-K for the year  ended  March 31,  2011.  Operating  results  for the  periods
presented are not necessarily indicative of the results that may be expected for
the full year.

Bankruptcy Filing

            On October 28, 2009,  the Company  filed a voluntary  petition  (the
"petition") for  reorganization  relief ("the Bankruptcy  Filing") in the United
States  Bankruptcy  Court,  District of Colorado under Chapter 11 of Title 11 of
the U.S. Bankruptcy Code (the "Bankruptcy  Court"). The Company will continue to
operate its business as  "debtor-in-possession"  under the  jurisdiction  of the
Bankruptcy  Court and in accordance  with the applicable  provisions of the Code
and orders of the Bankruptcy Court. See Note 2 "Proceedings  Under Chapter 11 of
the Bankruptcy Code" for details regarding the Bankruptcy Filing and the Chapter
11 case.

         The accompanying  financial  statements have been prepared on the basis
of accounting principles  applicable to a going concern,  which contemplates the
realization of assets and  extinguishment of liabilities in the normal course of
business.  However,  the petition raises  substantial  doubt about the Company's
ability to remain a going concern. The Company's continuation as a going concern
may be contingent  upon,  among other things,  (i)  acquiring  assets;  (ii) the
ability of the Company to generate  cash from  operations;  (iii) the ability of
the Company to maintain  adequate cash on hand;  (iv) the ability of the Company
to obtain  confirmation of and to consummate a plan of reorganization  under the
Bankruptcy Code; and, (v) the cost,  duration and outcome of the  reorganization
process.  We are currently  evaluating various courses of action with respect to
our operations when, and if, we exit from bankruptcy.  There can be no assurance
that any our efforts to do so will be  successful.  The  accompanying  financial
statements do not include any adjustments  that might result should we be unable
to  continue  as a going  concern.  In the  event  the  Company's  restructuring
activities  are not  successful,  certain  adjustments  in the carrying value of
assets and liabilities, the revenues and expenses reported and the balance sheet
classifications used may be necessary.

         Financial   Accounting  Standards  Board  (FASB)  Accounting  Standards
Codification  (FASB  ASC)  852-10  "Financial  Reporting  During  Reorganization
Proceedings," which is applicable to companies in Chapter 11, generally does not
change the manner in which financial  statements are prepared.  However, it does
require that the financial  statements for periods subsequent to the filing of a

                                       8
<PAGE>

Chapter 11 case distinguish transactions and events that are directly associated
with the reorganization  from the ongoing operations of the business.  Revenues,
expenses,  realized  gains and  losses,  and  provisions  for losses that can be
directly  associated with the  reorganization  and restructuring of the business
must be  reported  separately  as  reorganization  items  in the  statements  of
operations  beginning in the period ending  December 31, 2009. The balance sheet
must distinguish  prepetition liabilities  subject to compromise from both those
prepetition   liabilities   that  are  not   subject  to  compromise   and  from
post-petition  liabilities.  Liabilities that  may be  affected  by  a  plan  of
reorganization  must be reported at the amounts expected to be allowed,  even if
they  may  be  settled  for  lesser  amounts.  In  addition,   cash  flows  from
reorganization  items, if any, must be disclosed  separately in the statement of
cash flows.  The Company  adopted FASB ASC 852-10  effective on October 28, 2009
and  currently  segregates  those  items as  outlined  above  for all  reporting
periods.

Use of Estimates in the Preparation of Financial Statements

         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 oil and gas
reserves,   assets  and  liabilities,   disclosure  of  contingent   assets  and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting periods.  Actual results could differ
from those estimates. The Company has relied on estimates of oil and gas reserve
quantities,  and estimates of the useful lives of fixed assets, as the basis for
calculations of depletion, depreciation, and amortization (DD&A) and impairment,
which have  historically  represented a  significant  component of the financial
statements.

Accounts Receivable

         Accounts receivable include $250,000 due in connection with the sale of
the Company's oil and gas  properties.  Additionally,  legal  expenses  incurred
through June 30, 2011 of approximately $76,000 relating to the Company's pending
litigation (see Note 5 -  Contingencies  below) are also  reimbursable  from the
purchaser  of the  Company's  oil and  gas  properties.

Oil and Gas Producing Activities

         The Company uses the  successful  efforts  method of accounting for its
oil  and  gas  properties.   Under  this  method  of  accounting,  all  property
acquisition costs and costs of exploratory and development wells are capitalized
when  incurred,  pending  determination  of  whether  the well has found  proved
reserves.  If an exploratory  well does not find proved  reserves,  the costs of
drilling  the well are  charged  to  expense.  Exploratory  dry hole  costs  are
included in cash flows from investing activities as part of capital expenditures
within  the  statements  of cash  flows.  The  costs of  development  wells  are
capitalized  whether or not proved reserves are found. Costs of unproved leases,
which may become  productive,  are reclassified to proved properties when proved
reserves are  discovered  on the  property.  Unproved oil and gas  interests are
carried  at the lower of cost or  estimated  fair  value and are not  subject to
amortization.

         Geological  and  geophysical  costs  and  the  costs  of  carrying  and
retaining  unproved  properties  are expensed as incurred.  DD&A of  capitalized
costs   related  to  proved  oil  and  gas   properties   is   calculated  on  a
property-by-property  basis  using the  units-of-production  method  based  upon
proved reserves.  The computation of DD&A takes into consideration  restoration,
dismantlement, and abandonment costs and the anticipated proceeds from salvaging
equipment.

         The Company reviews its long-lived  assets for impairments  when events
or changes in  circumstances  indicate that  impairment may have  occurred.  The
impairment test for proved properties compares the expected  undiscounted future
net cash flows on a property-by-property  basis with the related net capitalized
costs, including costs associated with asset retirement obligations,  at the end
of each  reporting  period.  Expected  future cash flows are  calculated  on all
proved  reserves  using a  discount  rate and price  forecasts  selected  by the
Company's  management.  The discount rate is a rate that management  believes is

                                       9
<PAGE>

representative  of current  market  conditions.  The price  forecast is based on
NYMEX strip pricing, adjusted for basis and quality differentials, for the first
three to five years and is held constant  thereafter.  Operating  costs are also
adjusted as deemed  appropriate  for these  estimates.  When the net capitalized
costs exceed the  undiscounted  future net revenues of a field,  the cost of the
field is reduced to fair value,  which is determined using discounted future net
revenues.  An  impairment  allowance is provided on unproved  property  when the
Company  determines  the property will not be developed or the carrying value is
not realizable.  The sale of substantially  all of the Company's assets in March
2011 resulted in the Company  having no oil and gas properties at June 30, 2011.

Net Loss Per Share

         Basic net loss per common share of stock is  calculated by dividing net
loss available to common  stockholders by the  weighted-average of common shares
outstanding during each period.  Diluted net loss per common share is calculated
by  dividing  adjusted  net  loss  by  the  weighted-average  of  common  shares
outstanding,  including the effect of other dilutive  securities.  The Company's
potentially dilutive securities consist of in-the-money  outstanding options and
warrants to purchase the  Company's  common  stock.  Diluted net loss per common
share does not give  effect to  dilutive  securities  as their  effect  would be
anti-dilutive.

         The treasury  stock  method is used to measure the  dilutive  impact of
stock options and warrants.  The  following  table details the  weighted-average
dilutive and anti-dilutive  securities related to stock options and warrants for
the periods presented:

                                    For the Three Months Ended June 30,
                                    -----------------------------------
                                        2011                 2010
                                   ---------------       --------------
        Dilutive                         -                     -
        Anti-dilutive                66,073,564           66,838,564

Reclassification

         Certain amounts prior period amounts have been reclassified to  conform
to the current period presentation.  Such reclassifications had no effect on net
loss.

Other Significant Accounting Policies

         Other accounting policies followed by the Company are set forth in Note
1 to the Financial Statements included in its Annual Report on Form 10-K for the
year  ended  March 31,  2011,  and are  supplemented  in the Notes to  Financial
Statements  (unaudited)  in this  Quarterly  Report  on Form  10-Q for the three
months ended June 30,  2011.  These  unaudited  financial  statements  and notes
should be read in conjunction  with the financial  statements and notes included
in the Annual Report on Form 10-K for the year ended March 31, 2011.

Recent Accounting Pronouncements

         There were various updates issued recently,  none of which are expected
to have a  material  impact on the  Company's  financial  position,  results  of
operations  or  cash  flows.

Note 2 - Proceedings Under Chapter 11 of the Bankruptcy Code

         On  October  28,  2009  (the  "Petition  Date"),  the  Company  filed a
voluntary  petition for relief under Chapter 11 of the Bankruptcy  Code with the
Bankruptcy  Court.  The  petition  was filed in order to enable  the  Company to
pursue  reorganization  efforts under  Chapter 11 of the  Bankruptcy  Code.  The
Company  continues  to operate its  business as  debtor-in-possession  under the

                                       10
<PAGE>

jurisdiction  of the  Bankruptcy  Court and in  accordance  with the  applicable
provisions  of the  Bankruptcy  Code and  orders  of the  Bankruptcy  Court.  In
general, as debtor-in-possession,  the Company is authorized under Chapter 11 to
continue to operate as an ongoing  business,  but may not engage in transactions
outside of the  ordinary  course of business  without the prior  approval of the
Bankruptcy Court.

         No  assurance  can be  provided  as to what  values,  if  any,  will be
ascribed in the bankruptcy proceedings to the Company's prepetition liabilities,
common stock and other  securities.  Based upon the status of the Company's plan
of  reorganization,  it is  uncertain  whether  holders of our  securities  will
receive any payment in respect of such securities.

         Subject to certain exceptions under the Bankruptcy Code, the Bankruptcy
Filing  automatically  enjoins,  or stays,  the  continuation of any judicial or
administrative  proceedings or other actions against the Company or its property
to recover on,  collect or secure a claim  arising  prior to the Petition  Date.
Thus, for example,  creditor  actions to obtain  possession of property from the
Company,  or to create,  perfect or enforce any lien against the property of the
Company,  or to collect on or otherwise exercise rights or remedies with respect
to a Prepetition  claim are enjoined unless and until the Bankruptcy Court lifts
the automatic stay.

         In order to successfully  exit Chapter 11 bankruptcy,  the Company will
need  to  propose,  and  obtain  Bankruptcy  Court  confirmation  of,  a plan of
reorganization that satisfies the requirements of the Bankruptcy Code. A plan of
reorganization  would,  among other  things,  resolve the  Debtors'  prepetition
obligations,  set forth the revised capital  structure of the newly  reorganized
entity, and provide for corporate governance subsequent to exit from bankruptcy.

         Under  section  365 of the  Bankruptcy  Code,  the  Company may assume,
assume and assign, or reject executory contracts and unexpired leases, including
real property and equipment  leases,  subject to the approval of the  Bankruptcy
Court and certain other  conditions.  Rejection  constitutes a  court-authorized
breach of the lease or contract in question and, subject to certain  exceptions,
relieves the Company of its future  obligations under such lease or contract but
creates  a deemed  prepetition  claim  for  damages  caused  by such  breach  or
rejection.  Parties  whose  contracts  or leases are  rejected  may file  claims
against the Company for  damages.  The Company did not reject any leases  during
the three months ended June 30, 2011.

         The Company sold  substantially  all of its assets  effective  March 1,
2011 and the currently  proposed plan of reorganization  restricts the Company's
management to  liquidating  the  Company's  assets and making  distributions  on
allowed  claims  until  all  allowed  claims  are  satisfied  and  reserves  are
established for disputed claims. When and if all allowed claims are satisfied or
fully  reserved  for,  it is not known at this time  whether  the  Company  will
commence new business  opportunities or liquidate,  and the mechanism for making
this  determination  has yet to be  established.  The  ability of the Company to
continue as a going concern is dependent upon, among other things, (i) acquiring
assets; (ii) the ability of the Company to generate cash from operations;  (iii)
the ability of the Company to maintain  adequate cash on hand;  (iv) the ability
of  the  Company  to  obtain  confirmation  of  and  to  consummate  a  plan  of
reorganization  under the  Bankruptcy  Code;  and,  (v) the cost,  duration  and
outcome of the  reorganization  process.  Uncertainty as to the outcome of these
factors raises  substantial  doubt about the Company's  ability to continue as a
going concern.  The Company is currently evaluating various courses of action to
address the operational issues it is facing.  There can be no assurance that any
of these efforts will be successful.  The accompanying  financial  statements do
not include any  adjustments  that might result  should the Company be unable to
continue as a going concern.

         As a  result  of the  Bankruptcy  Filing,  realization  of  assets  and
liquidation  of liabilities  are subject to  uncertainty.  While  operating as a
debtor-in-possession  under  the  protection  of  Chapter  11,  and  subject  to
Bankruptcy  Court  approval or otherwise  as  permitted in the normal  course of
business,  the Company may sell or otherwise  dispose of assets and liquidate or
settle  liabilities  for amounts  other than those  reflected  in the  financial
statements.  No  adjustments  to liabilities  were  recognized  during the three
months ended June 30, 2011.


                                       11
<PAGE>

         Further,  a plan of reorganization  could materially change the amounts
and  classifications  reported  in  our  financial  statements.  Our  historical
financial statements do not give effect to any adjustments to the carrying value
of assets or amounts of liabilities  that might be necessary as a consequence of
confirmation of a plan of reorganization.

         Under the priority scheme  established by the Bankruptcy  Code,  unless
creditors agree otherwise, post-petition liabilities and prepetition liabilities
must be satisfied or reserved for in full before shareholders of the Company are
entitled  to receive any  distribution  or retain any  property  under a plan of
reorganization.  The ultimate recovery, if any, to creditors and shareholders of
the Company will not be determined until confirmation and consummation of a plan
of reorganization.  No assurance can be given as to what values, if any, will be
ascribed  in the  Bankruptcy  to each of these  constituencies  or what types or
amounts of distributions,  if any, they would receive.  Accordingly, the Company
urges that  extreme  caution be  exercised  with  respect to existing and future
investments in any of the Company's liabilities and/or securities.

Reorganization Items

         Reorganization items represent the direct and incremental costs related
to the Company's  Chapter 11 case,  such as professional  fees incurred,  net of
interest income earned on accumulated cash during the Chapter 11 process.  These
restructuring  activities may result in additional charges and other adjustments
for  expected  allowed  claims  (including  claims that have been allowed by the
Court) and other  reorganization  items that could be material to the  Company's
financial position or results of operations in any given period.

Liabilities Subject to Compromise

         Liabilities  subject to compromise  include  the following  prepetition
liabilities:

<TABLE>
<CAPTION>

                                               June 30, 2011          March 31, 2011
                                            -------------------     ------------------
<S>                                         <C>                     <C>

Accounts payable, trade                      $      176,726          $      176,616
Other payables and accrued liabilities              820,312                 820,312
Convertible notes payable                           140,000                 140,000
                                                                    ------------------
                                            -------------------
                                             $    1,137,038          $    1,136,928
                                            ===================     ==================
</TABLE>

Note 3 - Discontinued Operations

          In  March  2011,  we  completed  the  sale  of all of our  oil and gas
properties  and  substantially  all fixed assets.  The financial  results of our
business  related to oil and gas operations have been classified as discontinued
operations  in our  Statements  of  Operations  for all periods  presented.  The
following  summarizes  components  of  loss  from  the  Company's   discontinued
operations for the three months ended June 30, 2011 and 2010:

<TABLE>
<CAPTION>

                                                              2011                   2010
                                                       ------------------    -------------------
<S>                                                    <C>                   <C>

Revenue                                                  $            -       $     1,177,049
                                                       ------------------    -------------------

Operating expenses                                                2,283             1,134,544
                                                       ------------------    -------------------

Operating income (loss) from discontinued operations             (2,283)               42,505

Other expenses from discontinued operations, net                 (4,040)             (459,094)
                                                       ------------------    -------------------

       Net loss from discontinued operations              $      (6,323)      $      (416,589)
                                                       ==================    ===================
</TABLE>


                                       12
<PAGE>

         The assets and liabilities  relating to the Company's  discontinued oil
and gas  operations  are  reflected as assets and  liabilities  of  discontinued
operations in the  accompanying  balance  sheets.  The following  summarizes the
components of these assets and liabilities  included in the accompanying balance
sheets:

<TABLE>
<CAPTION>

                                                                 June 30, 2011            March 31, 2011
                                                                -------------------    ------------------
<S>                                                             <C>                    <C>

Assets:

Current assets of discontinued operations:
     Accounts receivable                                          $        3,265         $       45,229
     Deposits and other assets                                           471,354                    -
                                                                -------------------    ------------------
                                                                         474,619                 45,229
                                                                -------------------    ------------------

Long-term assets of discontinued operations - other
    assets                                                                   -                  814,354
                                                                -------------------    ------------------

          Total assets of discontinued operations                 $      474,619         $      859,583
                                                                ===================    ==================

Liabilities:


Current liabilities of discontinued operations -
     accounts payable and accrued liabilities                     $       39,463         $       58,191
                                                                ===================    ==================
</TABLE>

Note 4 - Convertible Promissory Notes Payable

         On October 27, 2009, the Company issued  Convertible  Promissory  Notes
(the "Promissory Notes") totaling $140,000.  One hundred thousand dollars of the
Promissory  Notes were issued to officers and/or  directors  ($25,000 each). The
remainder  of the  Promissory  Notes was issued to  existing  shareholders.  The
Promissory  Notes bear  interest  at an annual  rate equal to the greater of (i)
12%, or (ii) the prime rate (as  published in the Wall Street  Journal) plus 3%.
The Promissory Notes are convertible, at the holder's option, into shares of the
Company's  common  stock at a conversion  price of $0.02 per share,  at any time
during  the term of the  Promissory  Notes.  The  Promissory  Notes  matured  on
November 1, 2010,  and all  obligations  and payments  due under the  Promissory
Notes are subordinate to the Company's senior debt. As a result of the Company's
Chapter 11 bankruptcy  filing  described in Notes 1 and 2 above, the Company was
not able to pay principal and accumulated  interest on the Promissory Notes when
due.  Subject to certain  exceptions  under the  Bankruptcy  Code, the Company's
bankruptcy  filing  automatically  enjoins,  or stays,  the  continuation of any
judicial or  administrative  proceedings or other actions against the Company or
its  property  to recover  on,  collect or secure a claim  arising  prior to the
Petition Date.

Note 5 - Contingencies

Pending Litigation

         On February 12,  2010,  the Company  filed an  adversary  action in the
Bankruptcy  Court  against the former  holder of a senior  secured  note payable
seeking to avoid certain ownership  interests assigned to the Company's previous
lender in connection with the Term Credit  Agreement and amendments  thereto and
seeking other damages.  On March 18, 2010, the Company's previous lender filed a
motion with the Court to dismiss the  complaint.  On October 21, 2010, the Court
issued an order on the Motion to  Dismiss  dismissing  three of the nine  claims
made in the  adversary  action.  The Company is actively  pursuing the remaining
claims.  The  Company is unable to  predict a likely  outcome  or  estimate  the
possible  benefit should the Company  prevail in the  litigation.  In connection
with  the sale of the  Company's  oil and gas  properties  in  March  2011,  the
purchaser has agreed to reimburse up to $250,000 of legal  expenses  incurred in
connection with this adversary action.

                                       13
<PAGE>

Threatened Litigation

         In a letter  dated  February  18,  2009  sent to each of the  Company's
Directors, attorneys representing a group of persons who purchased approximately
$1,800,000 of securities (in the aggregate) in the Company's  private  placement
offering  commenced in late 2006,  alleged that securities laws were violated in
that offering.  In April 2009, the Company entered into tolling  agreements with
the  purchasers  to toll the statutes of  limitations  applicable  to any claims
related to the private placement.  The Company's Board of Directors directed the
Special  Committee to  investigate  these  allegations.  The Company  denies the
allegations and believes they are without merit.  The Company cannot predict the
likelihood of a lawsuit being filed, its possible  outcome,  or estimate a range
of possible losses, if any, that could result in the event of an adverse verdict
in any such  lawsuit.  Any suit  against the Company is stayed by the Chapter 11
case, and,  insofar as these claims are asserted  against the Company,  they are
subject to the claim  process  imposed by the  Bankruptcy  Code and the possible
subordination  under Section 510(b) of the Bankruptcy  Code. The purchasers have
filed Proofs of Claim with the Bankruptcy Court in the amount of $1,776,050 plus
ancillary amounts purported to be damages attributable to the alleged securities
violations.  On January 24, 2011,  the Company filed  objections to these claims
seeking  disallowance and in June 2011, the Bankruptcy Court rendered a decision
that these claims are subordinated to unsecured claims. The merits of the claims
otherwise  have not yet been  addressed by the  Bankruptcy  Court and the matter
therefore remains open and subject to appeal.

Note 6 - Income Taxes

         As of June 30,  2011,  because  the  Company  believes  that it is more
likely than not that its net  deferred tax assets,  consisting  primarily of net
operating  losses,  will not be utilized  in the  future,  the Company has fully
provided for a valuation of its net deferred tax assets.

         The Company is subject to United States  federal  income tax and income
tax from multiple state jurisdictions.  Currently,  the Internal Revenue Service
is not reviewing any of the Company's  federal income tax returns,  and agencies
in states  where the Company  conducts  business  are not  reviewing  any of the
Company's state income tax returns.  All tax years remain subject to examination
by tax authorities, including for the period from February 4, 2004 through March
31, 2011.

Note 7 - Share-Based Compensation

Grant of Options to Directors

         On October 27, 2009,  in  conjunction  with the execution of Management
Retention  Agreements  (the "Retention  Agreement"),  each of the Company's four
directors  was granted  options to  purchase  2,500,000  share of the  Company's
common stock at an exercise price of $0.035 per share.

         The Company recognized stock based compensation expense relating to the
directors'  options of $57,269 for the three months  ended June 30, 2010.  As of
June 30,  2011,  all  directors'  options have vested and there was no remaining
compensation expense to be recognized.

2006 Stock Incentive Plan

         As of June 30, 2011, there were 1,441,000 options outstanding under the
2006 Stock Incentive Plan and 8,559,000 options are available for issuance.  The
company recognized stock based compensation  expense of $17,790 during the three
months  ended  June 30,  2010.  At June 30,  2011,  and there  was no  remaining
compensation expense to be recognized.


                                       14
<PAGE>


Note 8 - Related Party Transactions

A director  of the  Company is a partner in the law firm that acts as counsel to
the  Company.  Legal  fees  and  expenses  from the law  firm in the  amount  of
approximately  $27,000 and $12,000  during the three  months ended June 30, 2011
and  2010,  respectively,   are  included  in  the  accompanying  statements  of
operations.  As of June 30, 2011,  the Company  owed the law firm  approximately
$45,000.

A director of the Company is a partner in a firm that provides field supervision
and consulting  services to the Company.  Fees and expenses from the firm in the
amount of  approximately  $0 and $39,000  during the three months ended June 30,
2011 and 2010,  respectively,  are included in the  accompanying  statements  of
operations.  As  of  June  30,  2011,  the  Company  owed  the  consulting  firm
approximately $15,000.


Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations

Forward-Looking Statements

         The statements contained in this Quarterly Report on Form 10-Q that are
not  historical  are  "forward-looking  statements",  as that term is defined in
Section 21E of the  Securities  Exchange Act of 1934,  as amended (the  Exchange
Act), that involve a number of risks and  uncertainties.  These  forward-looking
statements include, among others, the following:

     o    Business strategy;
     o    Ability  to  develop  a  plan  of  reorganization  acceptable  to  the
          Bankruptcy Court and to emerge from bankruptcy;
     o    Ability  to  obtain  any  additional  financial  resources  needed  to
          continue operations, to repay secured debt, and to purchase additional
          oil and gas properties;
     o    Inventories, projects, and programs;
     o    Other anticipated capital expenditures and budgets;
     o    Future cash flows and borrowings;
     o    The availability and terms of financing;
     o    Oil reserves;
     o    Ability to obtain permits and governmental approvals;
     o    Technology;
     o    Financial strategy;
     o    Realized oil prices;
     o    Production;
     o    Lease  operating  expenses,  general  and  administrative  costs,  and
          finding and development costs;
     o    Availability and costs of drilling rigs and field services;
     o    Future operating results; and
     o    Plans, objectives, expectations, and intentions.

         These  statements  may be  found  under  "Management's  Discussion  and
Analysis of Financial  Condition and Results of Operations",  and other sections
of this Quarterly Report on Form 10-Q.  Forward-looking statements are typically
identified by use of terms such as "may", "could",  "should",  "expect", "plan",
"project",   "intend",   "anticipate",    "believe",   "estimate",    "predict",
"potential",  "pursue",  "target" or  "continue",  the negative of such terms or
other comparable  terminology,  although some forward-looking  statements may be
expressed differently.

         The forward-looking  statements  contained in this Quarterly Report are
largely based on our expectations,  which reflect estimates and assumptions made
by our management.  These  estimates and  assumptions  reflect our best judgment
based on  currently  known  market  conditions  and other  factors.  Although we
believe such estimates and  assumptions  to be  reasonable,  they are inherently

                                       15
<PAGE>

uncertain  and involve a number of risks and  uncertainties  that are beyond our
control. In addition,  management's assumptions about future events may prove to
be  inaccurate.   Management  cautions  all  readers  that  the  forward-looking
statements contained in this Quarterly Report on Form 10-Q are not guarantees of
future performance, and we cannot assure any reader that such statements will be
realized or the  forward-looking  events and  circumstances  will occur.  Actual
results  may  differ  materially  from  those  anticipated  or  implied  in  the
forward-looking  statements  due to the  factors  listed in the  "Risk  Factors"
section and elsewhere in our Annual Report on Form 10-K for the year ended March
31,  2011.  All  forward-looking  statements  speak  only as of the date of this
Quarterly Report on Form 10-Q. We do not intend to publicly update or revise any
forward-looking  statements  as a result of new  information,  future  events or
otherwise.  These cautionary  statements qualify all forward-looking  statements
attributable to us or persons acting on our behalf.

Organization

         We are an  independent  energy  company that  explores for and develops
produces,  and  markets oil and gas in North  America.  Through  March 2011,  we
operated four oil fields in the Powder River Basin,  Wyoming.  Since October 28,
2009,  we have been  operating as  debtor-in-possession  under Chapter 11 of the
United States Bankruptcy Code.

         Effective  March 1,  2011,  we sold all of our oil and gas  properties,
which has allowed us to  eliminate  the  majority  of our debt and also  provide
financial resources during our continuing reorganization.

         The following  summarizes  our goals and objectives for the next twelve
months:

     o    Minimize  our  operating  and  administrative  expenses  while  we are
          reorganizing;
     o    Successfully  emerge  from  bankruptcy  under  the  provisions  of  an
          approved plan of reorganization; and
     o    Pursue and analyze oil and gas related opportunities for us, should we
          successfully emerge from bankruptcy.

Proceedings under Chapter 11

         On  October  28,  2009  (the  "Petition  Date"),  we filed a  voluntary
petition for relief under  Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy  Code") in the United  States  Bankruptcy  Court for the District of
Colorado (the "Court") (Case number  09-32943).  The petition was filed in order
to enable the Company to pursue  reorganization  efforts under Chapter 11 of the
Bankruptcy   Code.   The  Company   continues   to  operate   its   business  as
debtor-in-possession  under  the  jurisdiction  of the  Bankruptcy  Court and in
accordance  with the applicable  provisions of the Bankruptcy Code and orders of
the  Bankruptcy  Court.  In  general,  as  debtor-in-possession,  the Company is
authorized under Chapter 11 to continue to operate as an ongoing  business,  but
may not  engage in  transactions  outside  of the  ordinary  course of  business
without the prior approval of the Bankruptcy Court.

         No  assurance  can be  provided  as to what  values,  if  any,  will be
ascribed in the bankruptcy proceedings to the Company's prepetition liabilities,
common stock and other  securities.  Based upon the status of the Company's plan
of reorganization,  we currently believe that it is uncertain whether holders of
our  securities  will  receive  any  payment  in  respect  of  such  securities.
Accordingly,  extreme  caution  should be exercised with respect to existing and
future investments in any of these liabilities or securities.

         Subject to certain exceptions under the Bankruptcy Code, the Bankruptcy
Filing  automatically  enjoins,  or stays,  the  continuation of any judicial or
administrative  proceedings or other actions against the Company or its property
to recover on,  collect or secure a claim  arising  prior to the Petition  Date.
Thus, for example,  creditor  actions to obtain  possession of property from the
Company,  or to create,  perfect or enforce any lien against the property of the
Company,  or to collect on or otherwise exercise rights or remedies with respect
to a Prepetition  claim are enjoined unless and until the Bankruptcy Court lifts
the automatic stay.

                                       16
<PAGE>

         In order to successfully  exit Chapter 11 bankruptcy,  the Company will
need  to  propose,  and  obtain  Bankruptcy  Court  confirmation  of,  a plan of
reorganization that satisfies the requirements of the Bankruptcy Code. A plan of
reorganization  would,  among other  things,  resolve the  Debtors'  prepetition
obligations,  set forth the revised capital  structure of the newly  reorganized
entity, and provide for corporate governance subsequent to exit from bankruptcy.

         Under  section  365 of the  Bankruptcy  Code,  the  Company may assume,
assume and assign, or reject executory contracts and unexpired leases, including
real property and equipment  leases,  subject to the approval of the  Bankruptcy
Court and certain other  conditions.  Rejection  constitutes a  court-authorized
breach of the lease or contract in question and, subject to certain  exceptions,
relieves the Company of its future  obligations under such lease or contract but
creates  a deemed  prepetition  claim  for  damages  caused  by such  breach  or
rejection.  Parties  whose  contracts  or leases are  rejected  may file  claims
against the Company for  damages.  The Company did not reject any leases  during
the three months ended June 30, 2011.

         The Company sold  substantially  all of its assets  effective  March 1,
2011 and the Company's  currently proposed plan of reorganization  restricts the
Company's   management  to   liquidating   the   Company's   assets  and  making
distributions  on allowed  claims  until all allowed  claims are  satisfied  and
reserves are established for disputed claims. When and if all allowed claims are
satisfied  or fully  reserved  for,  it is not  known at this time  whether  the
Company will commence new business opportunities or liquidate, and the mechanism
for making  this  determination  has yet to be  established.  The ability of the
Company to continue as a going  concern is dependent  upon,  among other things,
(i)  acquiring  assets;  (ii) the ability of the  Company to generate  cash from
operations;  (iii) the ability of the Company to maintain adequate cash on hand;
(iv) the ability of the Company to obtain  confirmation  of and to  consummate a
plan of  reorganization  under the Bankruptcy Code; and, (v) the cost,  duration
and  outcome of the  reorganization  process.  Uncertainty  as to the outcome of
these factors raises  substantial  doubt about the Company's ability to continue
as a going  concern.  The Company is  currently  evaluating  various  courses of
action to address the operational issues it is facing. There can be no assurance
that  any of  these  efforts  will be  successful.  The  accompanying  financial
statements do not include any  adjustments  that might result should the Company
be unable to continue as a going concern.

         As a  result  of the  Bankruptcy  Filing,  realization  of  assets  and
liquidation  of liabilities  are subject to  uncertainty.  While  operating as a
debtor-in-possession  under  the  protection  of  Chapter  11,  and  subject  to
Bankruptcy  Court  approval or otherwise  as  permitted in the normal  course of
business,  the Company may sell or otherwise  dispose of assets and liquidate or
settle  liabilities  for amounts  other than those  reflected  in the  financial
statements.  No  adjustments  to liabilities  were  recognized  during the three
months ended June 30, 2011.

         Further,  a plan of reorganization  could materially change the amounts
and  classifications  reported  in  our  financial  statements.  Our  historical
financial statements do not give effect to any adjustments to the carrying value
of assets or amounts of liabilities  that might be necessary as a consequence of
confirmation of a plan of reorganization.

         The adverse  publicity  associated  with the Bankruptcy  Filing and the
resulting  uncertainty  regarding the Company's  future prospects may hinder the
Company's  prospective business activities and its ability to operate,  fund and
execute a prospective  business plan by impairing relations with property owners
and potential lessees,  vendors and service providers;  negatively impacting the
ability of the Company to attract,  retain and  compensate  key  executives  and
employees and to retain employees  generally;  limiting the Company's ability to
obtain trade credit;  and limiting the Company's ability to maintain and exploit
existing properties and acquire and develop new properties.

         Under the priority scheme  established by the Bankruptcy  Code,  unless
creditors agree otherwise, post-petition liabilities and prepetition liabilities
must be satisfied or reserved for in full before shareholders of the Company are
entitled  to receive any  distribution  or retain any  property  under a plan of
reorganization.  The ultimate recovery, if any, to creditors and shareholders of
the Company will not be determined until confirmation and consummation of a plan
of reorganization.  No assurance can be given as to what values, if any, will be
ascribed  in the  Bankruptcy  to each of these  constituencies  or what types or

                                       17
<PAGE>

amounts of distributions,  if any, they would receive.  Accordingly, the Company
urges that  extreme  caution be  exercised  with  respect to existing and future
investments in any of the Company's liabilities and/or securities.

Results of Operations

         With the sale of  substantially  all of the  Company's  assets in March
2011, the Company's results of operations are presented as follows:

     o    Results of the Company's  continuing  operations  for the three months
          ended June 30,  2011 as compared  to the three  months  ended June 30,
          2010; and
     o    Results of the Company's discontinued  operations for the three months
          ended June 30,  2011 as compared  to the three  months  ended June 30,
          2010.

Three  months  ended June 30,  2011  Compared  to Three  Months  June 30, 2010 -
Continuing Operations.

         The  following is a  comparative  summary of our results of  continuing
operations:

                                                 Three Months Ended June 30,
                                                  2011               2010
                                             ----------------   ----------------

    Revenues                                   $          -       $          -
                                             ================   ================

    Operating expenses:
      General and administrative                     222,814           381,413
      Depreciation and amortization                   11,488            28,769
                                             ----------------   ----------------
        Total operating expenses                     234,302           410,182
                                             ----------------   ----------------

    Loss from operations                            (234,302)         (410,182)
                                             ----------------   ----------------

    Other income (expense):
      Interest expense and financing costs            (5,934)           (4,387)
      Interest and other income                      100,485            11,342
                                             ----------------   ----------------
        Total other income                            94,551             6,955
                                             ----------------   ----------------

    Loss before  reorganization items               (139,751)         (403,227)

    Reorganization items, net                        (97,596)         (140,475)
                                             ----------------   ----------------

    Net loss from continuing operations        $    (237,347)     $   (543,702)
                                             ================   ================

         Overview.  For the three months ended June 30, 2011,  we reported a net
loss  from  continuing  operations  of  ($237,347),  or  ($0.00)  per  basic and
fully-diluted  share,  compared to a net loss of ($543,702) or ($0.01) per basic
and fully-diluted share, for the corresponding three months of 2010. Discussions
of individually significant period to period variances follow.

         General and administrative expense. For the three months ended June 30,
2011, we incurred general and administrative expenses of $222,814 as compared to
$381,413 for the corresponding three months ended June 30, 2010. The decrease of
$158,599 resulted  primarily from decreases in compensation and office expenses.

                                       18
<PAGE>

Savings in compensation expense resulted from stock option awards not being made
in 2011,  offset, in part, by decreased  overhead  recoveries due to the Company
not having any field  operations  during the three  months  ended June 30, 2011.
Office expenses decreased primarily as a result of lower rent expense associated
with the April 2011 relocation of the Company's headquarters.

         Reorganization  items.  Reorganization  items totaling  $97,596 for the
three  months ended June 30, 2011  include  those items of expense  specifically
related to our  reorganization  following the filing of a voluntary petition for
relief under  Chapter 11 of the  Bankruptcy  Code with the  Bankruptcy  Court on
October 28, 2009.  These costs consist  entirely of  professional  fees to legal
counsel for assistance with our reorganization plan and other bankruptcy related
matters. We expect these expenses will continue to be significant as we progress
through the bankruptcy process.

         Interest and other income. In January 2011, the Company entered into an
agreement to assign  interests in a CO2 supply agreement to Merit Energy Company
("Merit"). In return for this assignment, the Company receives a fee of $.03 per
Mcf purchased by Merit under this supply agreement,  which expires at the end of
2012. During the three months ended June 30, 2011, the Company recognized income
of approximately $79,000 for purchases made under this supply agreement.

Three  months  ended June 30,  2011  Compared  to Three  Months  June 30, 2010 -
Discontinued Operations.

         The following is a comparative summary of our results from discontinued
operations:

<TABLE>
<CAPTION>

                                                                 2011               2010
                                                           ---------------    ---------------
<S>                                                        <C>                <C>

Revenue                                                    $            -     $    1,177,049
                                                           ---------------    ---------------

Operating expenses                                                  2,283          1,134,544
                                                           ---------------    ---------------

  Operating (loss) income from discontinued operations             (2,283)            42,505

Other expenses from discontinued operations, net                   (4,040)          (459,094)
                                                           ---------------    ---------------

    Net loss from discontinued operations                  $       (6,323)    $     (416,589)
                                                           ===============    ===============
</TABLE>

         Overview.  For the three months ended June 30, 2011,  we reported a net
loss of ($6,323) or ($0.00) per basic and fully-diluted share, compared to a net
loss of  ($416,589)  or  ($0.00)  per basic  and  fully-diluted  share,  for the
corresponding  three months of 2010.  With the sale of all of the  Company's oil
and gas properties in March 2011, the Company had no revenue or notable expenses
relating to discontinued operations during the three months ended June 30, 2011.

Liquidity and Capital Resources

         The report of our independent  registered public accounting firm on the
financial  statements  for the years ended  March 31, 2011 and 2010  includes an
explanatory  paragraph relating to the uncertainty of our ability to continue as
a going concern. We are in bankruptcy and have incurred a cumulative net loss of
approximately  $90.0 million for the period from inception (February 4, 2004) to
June 30, 2011.

         In March 2011, we sold all of our oil and gas income  producing  assets
which  enabled us to pay off all secured debt and left us with net cash proceeds
of  approximately  $3,500,000 and a receivable from the transaction of $250,000.
We do not have any  sources  of revenue  and our  projected  interest  and other
income is not  sufficient  to sustain  our ongoing  general and  administrative,
legal and reorganization costs. We expect to receive proceeds from the return of
funds we have on deposit for oil and gas  environmental  and  performance  bonds
with the State of Wyoming.  These amounts total  approximately  $471,000 and are
expected to be returned during the remainder of 2011. We expect that our monthly
operating expenses will exceed monthly operating income by approximately $70,000
until we are able to pursue other business activities.

                                       19
<PAGE>

         We continue to operate our business as "debtor-in-possession" under the
jurisdiction  of the Court and in accordance  with the applicable  provisions of
the Bankruptcy Code and orders the Court. As debtors-in-possession,  the Company
is  authorized  to continue to operate as an ongoing  business,  and may pay all
debts and honor all  obligations  arising in the ordinary course of our business
after the  Petition  Date.  However,  we may not pay  creditors  on  account  of
obligations  arising before the Petition Date or engage in transactions  outside
the ordinary course of business without approval of the Court,  after notice and
an opportunity for a hearing.

         We have prepared and filed all required financial and operating reports
and other  documents  with the Court.  There is no assurance the Company will be
able to emerge from bankruptcy as an operating business, and if so, that we will
be able to raise the capital or funds  necessary to analyze and pursue other oil
and gas related opportunities.

         The following is a summary of Rancher Energy's comparative cash flows:

<TABLE>
<CAPTION>

                                                                For the Three Months Ended
                                                                         June 30,
                                                             ------------------------------------
                                                                 2011                2010
                                                             ---------------     ----------------
<S>                                                          <C>                 <C>

   Cash flows used for continuing operations:
   Operating activities, including reorganization items        $  (723,910)       $     (166,270)
   Investing activities                                                   -               (5,177)

   Cash flows from (used for) discontinued operations:
   Operating activities                                        $    159,913       $      426,306
   Investing activities                                                   -             (145,512)
</TABLE>

         Cash flows used for continuing operations increased in 2011 as compared
to 2010,  primarily due to the Company settling certain  liabilities  associated
with the sale of  substantially  all of its  assets in March  2011 and  payments
issued for professional and legal fees associated with the ongoing bankruptcy.

         Cash flows from  operating  activities of  discontinued  operations for
2011  included  the  return  of  certain  amounts   previously  on  deposit  for
performance  bonds  relating  to oil and gas  properties  sold.  Funds  used for
investing activities in 2010 include the cost of work performed to establish oil
production in a new zone of an existing well.

Off-Balance Sheet Arrangements

         We have no material  off-balance sheet  arrangements nor do we have any
unconsolidated subsidiaries.

Critical Accounting Policies and Estimates

         Critical  accounting  policies  and  estimates  are provided in Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  and Item 8. Financial  Statements and  Supplementary  Data, both of
which are  included in Part II of our Annual  Report on Form 10-K for the fiscal
year ended March 31, 2011. Additional footnote disclosures are provided in Notes
to  Financial  Statements  (unaudited),  which are include in Item 1.  Financial
Statements to this Quarterly Report on Form 10-Q for the three months ended June
30, 2011.


                                       20
<PAGE>

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Commodity Price Risk

         Because we are not currently  operating on any oil and gas  properties,
we are not exposed to market risk relating to the pricing  applicable to the oil
and gas commodity markets.  However,  our ability to raise additional capital at
attractive  rates,  any future  revenues  from oil and gas  operations,  and our
profitability  will  depend  substantially  upon the  market  prices  of oil and
natural  gas,  which  fluctuate  widely.  To the  extent we are able to  acquire
additional oil and gas producing  properties,  exposure to this risk will become
significant. We expect commodity price volatility to continue.

Financial Market Risk

The debt and equity markets have exhibited  adverse  conditions in recent years.
The  unprecedented  volatility and upheaval in the capital markets  impacted our
ability to refinance  or extend our existing  short term debt when it matured on
October 15, 2009. Going forward,  market  conditions may affect the availability
of capital for prospective lenders or purchasers of or equity.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

         We  conducted  an  evaluation   under  the  supervision  and  with  the
participation of our management,  including our Chief Executive Officer,  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures.  The term "disclosure  controls and procedures," as defined in Rules
13a-15(e) and 15d-15(e)  under the  Securities  Exchange Act of 1934, as amended
(Exchange  Act),  means  controls  and other  procedures  of a company  that are
designed to ensure that  information  required to be disclosed by the company in
the reports it files or submits  under the Exchange Act is recorded,  processed,
summarized and reported, within the time periods specified in the Securities and
Exchange  Commission's rules and forms.  Disclosure controls and procedures also
include,  without  limitation,  controls and procedures  designed to ensure that
information  required to be  disclosed by a company in the reports that it files
or  submits  under the  Exchange  Act is  accumulated  and  communicated  to the
company's  management,  including its principal  executive  officer,  or persons
performing similar functions, as appropriate to allow timely decisions regarding
required  disclosure.  The  conclusion  by our  Chief  Executive  Office  is the
identification  of the following  material weakness in our internal control over
financial reporting and, as a result of this material weakness,  we concluded as
of March 31,  2011 and as of the end of the  period  covered  by this  Quarterly
Report that our disclosure controls and procedures were not effective.

         We did not  adequately  segregate  the  duties of  different  personnel
within our Accounting Department due to an insufficient  complement of staff and
inadequate management oversight.

         We have  limited  accounting  personnel  with  sufficient  expertise in
generally  accepted  accounting  principles to enable  effective  segregation of
duties with respect to recording  journal  entries and to allow for  appropriate
monitoring of financial  reporting  matters and internal  control over financial
reporting.  Specifically, the Acting Chief Accounting Officer has involvement in
the creation and review of journal entries and note disclosures without adequate
independent  review and  authorization.  This control deficiency is pervasive in
nature and  impacts all  significant  accounts.  This  control  deficiency  also
affects  the  financial   reporting   process  including   financial   statement
preparation and the related note disclosures.

Changes in Internal Control over Financial Reporting

         There have been no  changes  in our  internal  control  over  financial
reporting during the most recently completed fiscal quarter that have materially
affected,  or are reasonably likely to materially  affect,  our internal control
over financial reporting.


                                       21
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

         On October 28, 2009, the Company filed a voluntary  petition for relief
in the United States Bankruptcy Court (the "Court"),  District of Colorado under
Chapter 11 of Title 11 of the U.S.  Bankruptcy Code (the "Bankruptcy Code"). The
Bankruptcy proceedings are discussed in further detail in Part 1 of this filing.

         On February 12, 2010, the Company filed an adversary  proceeding in the
Bankruptcy  Court  against  GasRock  Capital  LLC,  Case No.  10-01173-MER.  The
complaint  seeks to recover the 10% NPI  conveyed to GasRock  (the  "Lender") in
connection  with the  Eighth  Amendment  to the Term  Credit  Agreement  and the
additional 1% ORRI conveyed to the Lender in October 2008 in connection  with an
extension of the short term note. The primary basis of the complaint is that the
Lender gave less than fair  equivalent  value for the conveyances at a time when
the  Company  was  insolvent,  or when the  conveyances  left the  Company  with
insufficient  capital. In other words, the Company has claimed that the value of
the conveyances was in excess of a reasonable fee for the extensions,  and, as a
result, the conveyances were  "constructively  fraudulent" under both applicable
Bankruptcy law and the Uniform Fraudulent Transfers Act.

         In addition,  the Company has  challenged the conveyance of the NPI and
the 1% ORRI,  together with the original 2% ORRI conveyed to the Lender when its
loan was first made,  on the  grounds  that they  should be re-characterized  as
security  interests  and not outright  transfers of title.  The Company has also
claimed  that the  conveyances  rendered  the loan  usurious  under  Texas  law.
Further,  the  Company  has  sought  to have  the NPI  and 1%  ORRI  avoided  as
preferences  under  Sections  547  of  the  Bankruptcy  Code  and  to  equitably
subordinate  the Lender's  claim.  Although the Company  believes its claims are
well-taken,  the Company  expects the Lender to  vigorously  defend  against the
complaint,  and no assurance can be given that the Company will be successful in
whole or in part.  On October 21,  2010,  the Court  issued an order  dismissing
three of nine claims made in the adversary action regarding re-characterization.
The  Company  plans to  pursue  the  remaining  claims  and may move to have the
Bankruptcy Court reconsider the dismissal of the re-characterization claims.

         See  also  Note 5 -  Contingencies,  included  in  Part  1 -  Financial
Statements of this quarterly filing, for a description of threatened litigation.

ITEM 1A. Risk Factors

Not applicable to smaller reporting companies.

ITEM 2.  CHANGES IN SECURITIES

NONE.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

NONE.

ITEM 4.  RESERVED AND RESCINDED


                                       22
<PAGE>

ITEM 5.  OTHER INFORMATION

NONE.

ITEM 6.  EXHIBITS
The  following is a complete  list of exhibits  filed as part of this Form 10-Q.
Exhibit  numbers  correspond  to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.

     Exhibit 31.1 Certification of Chief Executive Officer and Acting Chief
                  Financial Officer pursuant to Section 302 of the Sarbanes-
                  Oxley Act*

     Exhibit 32.1 Certification of Principal Executive Officer and Acting Chief
                  Financial Officer pursuant to Section 906 of the Sarbanes-
                  Oxley Act*
     101.INS      XBRL Instance Document (1) (2)
     101.SCH      XBRL Taxonomy Extension Schema Document (1) (2)
     101.CAL      XBRL Taxonomy Extension Calculation Linkbase Document (1) (2)
     101.DEF      XBRL Taxonomy Extension Definition Linkbase Document (1) (2)
     101.LAB      XBRL Taxonomy Extension Label Linkbase Document (1) (2)
     101.PRE      XBRL Taxonomy Extension Presentation Linkbase Document (1) (2)

(1)  Pursuant to Rule 406T of  Regulation  S-T,  this  interactive  data file is
deemed not filed or part of a registration  statement or prospectus for purposes
of  Sections  11 or 12 of the  Securities  Act of 1933,  is deemed not filed for
purposes of Section 18 of the Securities  Exchange Act of 1934, and otherwise is
not subject to liability under these sections.

(2) To be filed  within the 30-day  grace  period  provided  for first time XBRL
filers.

*Filed herewith.








                                       23
<PAGE>

                                   SIGNATURES
         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.
                                             RANCHER ENERGY CORP.

Dated:  August 18, 2011                      By: /s/ Jon C. Nicolaysen
                                                 ---------------------
                                                 Jon C. Nicolaysen, President,
                                                 Chief Executive Officer, and
                                                 Acting Chief Accounting
                                                 Officer


























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