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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-QSB

(Mark One)

x QUARTERLY REPORT
  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September 30, 2005

OR

 ̈ TRANSITION REPORT
  UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACTFor the transition period from _____________to _____________

Commission file number 000-51241

RED SKY RESOURCES
INC.(Exact name of small business issuer as specified in its
charter)

|Nevada                                                 | 98-0443283                       
|------------------------------------------------------ | ---------------------------------
|(State or other jurisdiction of
      incorporation or | (IRS Employer Identification No.)
|organization)                                          |                                  

Suite 2410, 650 West Georgia Street, PO Box 11524Vancouver, British Columbia, V6B 4N7, Canada(Address
of principal executive offices)

(604) 689-8336(Issuers telephone number)

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

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date: 2,196,500
shares of common stock are issued and outstanding as of November 10, 2005.

Transitional Small Business Disclosure Format (Check one): Yes
   ̈ No x

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

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PART I  FINANCIAL INFORMATION

Item
1.           Financial
Statements.

These financial statements have been prepared by Red Sky
Resources Inc. (the Company) without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted in accordance with such SEC rules and regulations. In the opinion of
management, the accompanying statements contain all adjustments necessary to
present fairly the financial position of the Company as of September 30, 2005,
and its results of operations, stockholders equity, and its cash flows for the
three and nine month periods ended September 30, 2005 and 2004. The results for
these interim periods are not necessarily indicative of the results for the
entire year. The accompanying financial statements should be read in conjunction
with the financial statements and the notes thereto filed as a part of the
Companys Form SB-2.

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|RED SKY RESOURCES INC.           
|---------------------------------
|(An exploration stage enterprise)
|Balance Sheets                   
|(Unaudited)                      
|                                 
|(Expressed in
      U.S. Dollars)

|                                                                                       |   | September 30 |   |   | December 31 |  
|-------------------------------------------------------------------------------------- | - | ------------ | - | - | ----------- | -
|                                                                                       |   | 2005         |   |   | 2004        |  
|                                                                                       |   |              |   |   |             |  
|ASSETS                                                                                 |   |              |   |   |             |  
|                                                                                       |   |              |   |   |             |  
|Current assets                                                                         |   |              |   |   |             |  
|Cash and
      cash equivalents                                                        | $ | 9,676        |   | $ | 81,934      |  
|                                                                                       |   |              |   |   |             |  
|Total current
      assets                                                             |   | 9,676        |   |   | 81,934      |  
|                                                                                       |   |              |   |   |             |  
|                                                                                       |   |              |   |   |             |  
|Mineral Property (Note 2)                                                              |   | -            |   |   | -           |  
|                                                                                       |   |              |   |   |             |  
|Oil and gas property (Note 4)                                                          |   | -            |   |   | -           |  
|                                                                                       |   |              |   |   |             |  
|Total assets                                                                           |   | 9,676        |   |   | 81,934      |  
|                                                                                       |   |              |   |   |             |  
|LIABILITIES                                                                            |   |              |   |   |             |  
|                                                                                       |   |              |   |   |             |  
|Current liabilities                                                                    |   |              |   |   |             |  
|Accounts
      payable and accrued liabilities                                         | $ | 10,625       |   | $ | 2,825       |  
|                                                                                       |   |              |   |   |             |  
|Total current
      liabilities                                                        |   | 10,625       |   |   | 2,825       |  
|                                                                                       |   |              |   |   |             |  
|STOCKHOLDERS (DEFICIT) EQUITY                                                         |   |              |   |   |             |  
|                                                                                       |   |              |   |   |             |  
|Share capital                                                                          |   |              |   |   |             |  
|Preferred stock, $0.0001 par value,
      5,000,000 shares authorized, none issued and |   |              |   |   |             |  
|outstanding                                                                            | $ | -            |   | $ | -           |  
|Common stock, $0.0001 par value,
      100,000,000 shares authorized, 2,196,500 issued |   |              |   |   |             |  
|and outstanding (December 31, 2004 -
      2,196,500)                                  |   | 220          |   |   | 220         |  
|                                                                                       |   |              |   |   |             |  
|Additional paid in capital                                                             |   | 129,405      |   |   | 129,405     |  
|Deficit accumulated during the exploration stage                                       |   | (130,574     | ) |   | (50,516     | )
|                                                                                       |   |              |   |   |             |  
|Total stockholders (deficit) equity                                                   |   | (949         | ) |   | 79,109      |  
|                                                                                       |   |              |   |   |             |  
|Total liabilities and stockholders (deficit)
      equity                             | $ | 9,676        |   | $ | 81,934      |  

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

---

|RED SKY RESOURCES INC.                                                      
|----------------------------------------------------------------------------
|(An exploration stage enterprise)                                           
|For the period from inception (October 14, 2001) to
      September 30, 2005
|Statements of Stockholders Equity                                          
|(Unaudited)                                                                 
|                                                                            
|(Expressed in
      U.S. Dollars)                                           

|                                                         |                 |  |              |  |           |  |             |  |               |  | Deficit     |   |                  |  
|-------------------------------------------------------- | --------------- |  | ------------ |  | --------- |  | ----------- |  | ------------- |  | ----------- | - | ---------------- | -
|                                                         |                 |  |              |  |           |  |             |  |               |  | accumulated |   |                  |  
|                                                         |                 |  |              |  |           |  |             |  | Additional    |  | during      |   | Total            |  
|                                                         | Preferred Stock |  | Common Stock |  | paid-in   |  | exploration |  | Stockholders | 
|                                                         | Shares          |  | Amount       |  | Shares    |  | Amount      |  | capital       |  | stage       |   | equity (deficit) |  
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Stocks issued at $0.0001 per share in
      October 2001 | -               |  | -            |  | 1,500,000 |  | 150         |  | -             |  | -           |   | 150              |  
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Net loss for the period                                  | -               |  | -            |  | -         |  | -           |  | -             |  | (542        | ) | (542             | )
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Balance,December 31, 2001                                | -               |  | -            |  | 1,500,000 |  | 150         |  | -             |  | (542        | ) | (392             | )
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Stocks issued at $0.15 per share in                      | -               |  | -            |  | 196,500   |  | 20          |  | 29,455        |  | -           |   | 29,475           |  
|February 2002                                            |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Net loss for the
      period                            | -               |  | -            |  | -         |  | -           |  | -             |  | (9,283      | ) | (9,283           | )
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Balance,December 31, 2002                                | -               |  | -            |  | 1,696,500 |  | 170         |  | 29,455        |  | (9,825      | ) | 19,800           |  
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Net loss for the
      period                            | -               |  | -            |  | -         |  | -           |  | -             |  | (24,450     | ) | (24,450          | )
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Balance,December 31, 2003                                | -               |  | -            |  | 1,696,500 |  | 170         |  | 29,455        |  | (34,275     | ) | (4,650           | )
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Stocks issued at $0.20 per share in                      |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|December 2004                                            | -               |  | -            |  | 500,000   |  | 50          |  | 99,950        |  | -           |   | 100,000          |  
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Net loss for the period                                  | -               |  | -            |  | -         |  | -           |  | -             |  | (16,241     | ) | (16,241          | )
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Balance,December 31, 2004                                | -               |  | -            |  | 2,196,500 |  | 220         |  | 129,405       |  | (50,516     | ) | 79,109           |  
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Net loss for the period                                  | -               |  | -            |  | -         |  | -           |  | -             |  | (80,058     | ) | (80,058          | )
|                                                         |                 |  |              |  |           |  |             |  |               |  |             |   |                  |  
|Balance,September 30, 2005                               | -               |  | -            |  | 2,196,500 |  | 220         |  | 129,405       |  | (130,574    | ) | (949             | )

The accompanying notes are an integral part of these
financial statements

---

|RED SKY RESOURCES INC.           
|---------------------------------
|(An exploration stage enterprise)
|Statements of Operations         
|(Unaudited)                      
|                                 
|(Expressed in
      U.S. Dollars)

|                                          |   | Cumulative       |   |   |               |   |   |               |   |   |               |   |   |               |  
|----------------------------------------- | - | ---------------- | - | - | ------------- | - | - | ------------- | - | - | ------------- | - | - | ------------- | -
|                                          |   | October 14,      |   |   | Three Months  |   |   | Three Months  |   |   | Nine Months   |   |   | Nine Months   |  
|                                          |   | 2001(inception)  |   |   | Ended         |   |   | Ended         |   |   | Ended         |   |   | Ended         |  
|                                          |   | to September 30, |   |   | September 30, |   |   | September 30, |   |   | September 30, |   |   | September 30, |  
|                                          |   | 2005             |   |   | 2005          |   |   | 2004          |   |   | 2005          |   |   | 2004          |  
|                                          |   |                  |   |   |               |   |   |               |   |   |               |   |   |               |  
|General and administrative
      expenses |   |                  |   |   |               |   |   |               |   |   |               |   |   |               |  
|Bank charges                              | $ | 909              |   | $ | 21            |   | $ | 47            |   | $ | 243           |   | $ | 388           |  
|Consulting fees                           |   | 4,068            |   |   | -             |   |   | -             |   |   | -             |   |   | -             |  
|Management fees                           |   | 16,050           |   |   | -             |   |   | 5,350         |   |   | -             |   |   | 16,050        |  
|Mineral property expenditures             |   | 49,725           |   |   | 3,767         |   |   | 817           |   |   | 39,538        |   |   | 8,332         |  
|Oil and gas property
      recoveries     |   | -                |   |   | -             |   |   | -             |   |   | -             |   |   | (22,580       | )
|Office and miscellaneous                  |   | 5,018            |   |   | 837           |   |   | -             |   |   | 1,440         |   |   | 682           |  
|Professional fees                         |   | 45,823           |   |   | 2,348         |   |   | -             |   |   | 32,714        |   |   | 3,238         |  
|Transfer agent and filing fees            |   | 8,981            |   |   | 860           |   |   | 500           |   |   | 6,123         |   |   | 1,298         |  
|                                          |   |                  |   |   |               |   |   |               |   |   |               |   |   |               |  
|Net loss for the period                   | $ | (130,574         | ) | $ | (7,833        | ) | $ | (6,714        | ) | $ | (80,058       | ) | $ | (7,408        | )
|                                          |   |                  |   |   |               |   |   |               |   |   |               |   |   |               |  
|Basic and diluted loss per
      share    |   |                  |   |   |               |   |   |               |   |   |               |   |   |               |  
|Net loss per share                        |   |                  |   |   | (0.00         | ) |   | (0.00         | ) |   | (0.04         | ) |   | (0.00         | )
|                                          |   |                  |   |   |               |   |   |               |   |   |               |   |   |               |  
|Weighted average number of                |   |                  |   |   |               |   |   |               |   |   |               |   |   |               |  
|common shares outstanding                 |   |                  |   |   | 2,196,500     |   |   | 1,696,500     |   |   | 2,196,500     |   |   | 1,696,500     |  

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

---

|RED SKY RESOURCES INC.           
|---------------------------------
|(An exploration stage enterprise)
|Statements of Cash Flows         
|(Unaudited)                      
|                                 
|(Expressed in
      U.S. Dollars)

|                                                                 |   | Cumulative     |   |   |               |   |   |               |   |   |               |   |   |               |  
|---------------------------------------------------------------- | - | -------------- | - | - | ------------- | - | - | ------------- | - | - | ------------- | - | - | ------------- | -
|                                                                 |   | October 14,    |   |   |               |   |   |               |   |   |               |   |   |               |  
|                                                                 |   | 2001           |   |   | Three Months  |   |   | Three Months  |   |   | Nine Months   |   |   | Nine Months   |  
|                                                                 |   | (inception) to |   |   | Ended         |   |   | Ended         |   |   | Ended         |   |   | Ended         |  
|                                                                 |   | September 30,  |   |   | September 30, |   |   | September 30, |   |   | September 30, |   |   | September 30, |  
|                                                                 |   | 2005           |   |   | 2005          |   |   | 2004          |   |   | 2005          |   |   | 2004          |  
|                                                                 |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Cash flows from (used in)
      operating activities             |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Net loss for the period                                          | $ | (130,574       | ) | $ | (7,833        | ) | $ | (6,714        | ) | $ | (80,058       | ) | $ | (7,408        | )
|Changes in non-cash
      working capital items:                 |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|-
      accounts payable and accrued liabilities                 |   | 10,625         |   |   | 1,873         |   |   | (4,447        | ) |   | 7,800         |   |   | 56            |  
|                                                                 |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Net cash used in operating activities                            |   | (119,949       | ) |   | (5,960        | ) |   | (11,161       | ) |   | (72,258       | ) |   | (7,352        | )
|                                                                 |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Cash flows from (used in) financing
      activities             |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Proceeds from issuance
      of common stock                     |   | 129,625        |   |   | -             |   |   | -             |   |   | -             |   |   | -             |  
|Due from a related party                                         |   | -              |   |   | -             |   |   | -             |   |   | -             |   |   | 11,570        |  
|Due to a related party                                           |   | -              |   |   | -             |   |   | (10,700       | ) |   | -             |   |   | -             |  
|                                                                 |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Net cash (used in) from financing activities                     |   | 129,625        |   |   | -             |   |   | (10,700       | ) |   | -             |   |   | 11,570        |  
|                                                                 |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Increase (decrease) in
      cash and cash equivalents           |   | 9,676          |   |   | (5,960        | ) |   | (21,861       | ) |   | (72,258       | ) |   | 4,218         |  
|                                                                 |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Cash and cash equivalents (deficiency),beginning of
      period |   | -              |   |   | 15,636        |   |   | 26,072        |   |   | 81,934        |   |   | (7            | )
|                                                                 |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Cash and cash equivalents, end of period                         | $ | 9,676          |   | $ | 9,676         |   | $ | 4,211         |   | $ | 9,676         |   | $ | 4,211         |  
|                                                                 |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Supplemental cash flow
      information:                        |   |                |   |   |               |   |   |               |   |   |               |   |   |               |  
|Interest expenses paid                                           | $ | -              |   | $ | -             |   | $ | -             |   | $ | -             |   | $ | -             |  
|Income taxes paid                                                |   | -              |   |   | -             |   |   | -             |   |   | -             |   |   | -             |  

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

---

|RED SKY RESOURCES INC.           
|---------------------------------
|(An exploration stage enterprise)
|Notes to Financial Statements    
|September 30, 2005               
|(Unaudited)                      
|(Expressed in
      U.S. Dollars)

|1. | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The accompanying unaudited interim balance sheets,
      statements of operations, statements of shareholders equity and cash
      flows reflected all adjustments, consisting of normal recurring
      adjustments and other adjustments, that are, in the opinion of management,
      necessary for a fair presentation of the financial position of the
      Company, at September 30, 2005 and the results of operations,
      shareholders equity and cash flows for the interim period ended September
      30, 2005. The accompanying unaudited financial statements have been
      prepared in accordance with the instruction from Form 10-QSB pursuant to
      the rules and regulations of the Securities and Exchange Commission and,
      therefore, do not include all information and notes normally provided in
      audited financial statements and should be read in conjunction with the
      Companys financial statements for the fiscal year ended December 31,
      2004. The result of operations for the interim periods presented is not
      necessarily indicative of the results to be expected for the full year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The accompanying financial statements have been prepared
      in conformity with generally accepted accounting principles in the United
      States of America, which contemplates continuation of the Company as a
      going concern. However, the Company has sustained substantial operating
      losses in recent years resulting in a substantial accumulated deficit. As
      of September 30, 2005, the Company had a total of $9,676 in cash; however
      this amount is insufficient to sustain operations over the course of the
      next twelve months. These factors raise substantial doubt about the
      Companys ability to continue as a going concern. The ability of the
      Company to meet its commitments as they become payable is dependent on the
      ability of the Company to obtain necessary financing or achieving a
      profitable level of operations. To meet these objectives, the Company
      plans to seek additional equity and expects to raise funds through private
      or public equity investment in order to support existing operations and
      expand the range and scope of its business. There is no assurance that
      such additional funds will be available for the Company on acceptable
      terms, if at all. Management believes that actions presently taken to
      revise the Companys operating and financial requirements provide the
      opportunity for the Company to continue as a going concern. The Companys
      ability to achieve these objectives cannot be determined at this time.
      There are no assurances that the Company will be successful in achieving
      these goals.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2. | Mineral Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | During the year ended December 31, 2004, the Company
      staked twenty-five mining claims located in the Iliamna Recording District
      of Southwestern Alaska. As the claims do not contain any known reserves,
      the acquisition costs were expensed during the year ended December 31,
      2004. The mineral claims are renewable on the 1st of every September
      conditional on paying the annual filing fee of $2,500 to the State of
      Alaska by November 30, 2005 and meeting mineral exploration expenditure of
      $10,000 or by paying cash in lieu of mineral exploration expenditures. As
      at September 30, 2005, and as at the filing date of this quarterly report,
      the Company has not paid the $2,500 annual fee or filed the documents
      evidencing the $10,000 in mineral exploration expenditure has been
      satisfied. It is the Companys intent to pay the annual fee and file the
      necessary documents with the State of Alaska by the November 30, 2005
      deadline.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3. | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | During the nine months ended September 30, 2005, the
      Company paid management fees of $nil (nine months ended September 30, 2004
      - $16,050) to the sole officer and director of the Company. At September
      30, 2005, $557 (December 31, 2004 $nil) was included in accounts payable
      and accrued liabilities that was due to the sole officer and director of
      the Company. Amounts due are payable under normal trade payable terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4. | Oil and Gas Property                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In June 2003, the Company entered into a farmout
      agreement with Banks Energy Inc. (Banks), a related company by virtue of
      sharing a common officer and director, for the right to earn a 10.75% net
      revenue interest in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---

|RED SKY RESOURCES INC.           
|---------------------------------
|(An exploration stage enterprise)
|Notes to Financial Statements    
|September 30, 2005               
|(Unaudited)                      
|(Expressed in U.S.
      Dollars)

one section of land by paying 12.75% of
the drilling, completing and tie-in costs. The section of land is located in
Tehama County, California. In July 2003, the Company expended $22,580 for the
drilling costs on a well on the property, which represented 12.75% of the
estimated drilling costs.

In December 2003, Banks entered into an
agreement with the operator of the property to sell all of its working interests
in the property, including the Companys 10.75% working interest, back to the
operator for a minor loss. In conjunction with the sale, Banks agreed to
reimburse the Company in full for all its exploration expenditures incurred on
the property to date. The Company received $22,580 from Banks during the year
ended December 31, 2004 for the reimbursement.

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Item
2.           Managements
Discussion and Analysis or Plan of Operations.

FORWARD LOOKING STATEMENTS

This Quarterly Report may contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 that involve
risks and uncertainties. In particular such forward-looking statements may be
found in this section. The following discussion and analysis of the financial
condition and results of operations should be read in conjunction with the
financial statements and related notes included in our Form SB-2 filed March 15,
2005. Words or phrases such as will, hope, expect, intend, plan or
similar expressions are generally intended to identify forward-looking
statements. Those statements involve risks and uncertainties that could cause
actual results to differ materially from the results discussed herein. The
principal risks and uncertainties that may affect our actual performance and
results of operations include the following: general economic conditions;
exploration successes, continued availability of capital and financing; adverse
weather; governmental regulation; changes in governmental and public policy;
changes in economic conditions specific to our business; competition;
availability of equipment and qualified personnel and unexpected operational
difficulties. Other risks and uncertainties may also affect the outcome of our
actual performance and results of operations. You are cautioned not to place
undue reliance on the forward-looking statements made in this Managements
Discussion and Analysis or Plan of Operations.

Overview

We are in the business of mineral exploration. We acquired
twenty-five mineral claims in southwestern Alaska via staking which we believe
are prospective for gold and copper. Our mineral claims consist of twenty-five
quarter sections which cover approximately 4,000 acres or 6.25 square miles. The
State of Alaska requires an annual rental fee of $2,500 and a minimum
exploration work expenditure of $10,000 on the 1st of September of
each year to keep the claims in good standing. The $2,500 payment and proof of
work must be paid and filed with the State of Alaska within 90 days of the
1st of September. We intend to extend the mineral claims to September
1, 2006 by paying the necessary filing fee of $2,500 and filing documentation to
support a minimum of $10,000 was spent on the claims before November 30, 2005.
Our objective is to conduct mineral exploration activities on the property in
order to assess whether it possesses commercially exploitable reserves of
minerals. To date, we have not discovered an economically viable mineral deposit
on the mineral claims, and there is no assurance that we will discover one. A
great deal of further exploration will be required before a final evaluation as
to the economic and legal feasibility for our future development is determined.

Phase One Exploration of Mineral Claims

In late May 2005, we conducted the first phase of exploration
on the mineral claims consisting of an induced polarization survey and a ground
magnetic survey. The cost of the program was approximately $37,800 which
exceeded our initial estimate by $7,800. The increase was a result of higher
than expected costs for mobilization, demobilization and labor. The work program
commenced in mid May 2005 and lasted approximately ten days.

We commissioned a report on the results of phase one from a
consulting geophysics firm. The report stated the induced polarization survey
encountered various ground conditions during the survey resulting in varying
degrees of quality data. There were features of interest on several of the
induced polarization lines surveyed but no conclusive evidence can be obtained
from the acquired chargeability readings. The combined effects of poor weather
conditions, a possible frost layer and the existence of a highly resistive
overburden resulted in very low voltage potential.

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Plan of Operations

Our plan of operations for the next twelve months is to
continue exploration of our mineral claims by completing the following
objectives within the time periods specified. Our ability to complete these
objectives is contingent upon obtaining the funding necessary, which we plan on
doing through an equity issue:

1. We plan to repeat certain portions of the induced
polarization survey conducted in phase one in order to gather data before making
a decision to move to phase two. The costs to repeat phase one is budgeted at
$35,000 and additional funds will have to be raised in order to conduct this
work program planned for the summer of 2006.

2. If warranted by the results of phase one, we intend to
proceed with phase two of our recommended exploration program. Phase two is
estimated to cost $23,000. We anticipate that we will have to raise additional
funding in order to conduct the phase two program. If we obtain the necessary
financing, we anticipate that phase two would be conducted during the summer of
2006 or 2007 and would take approximately six weeks to complete.

3. We anticipate spending approximately $2,000 in ongoing
general and administrative expenses per month for the next twelve months, for a
total anticipated expenditure of $24,000 over the next twelve months. The
general and administrative expenses for the year will consist primarily of
professional fees for the audit and legal work relating to our regulatory
filings throughout the year, as well as transfer agent fees, annual mineral
claim fees and general office expenses.

During the next twelve month period, we anticipate that we will
not generate any revenue. Accordingly, we will be required to obtain additional
financing in order to continue our plan of operations. We believe that debt
financing will not be an alternative for funding additional phases of
exploration as we do not have tangible assets to secure any debt financing. We
anticipate that additional funding will be in the form of equity financing from
the sale of our common stock or through shareholder or related party loans.
However, we do not have any financing arranged and we cannot provide investors
with any assurance that we will be able to raise sufficient funding from the
sale of our common stock to fund our exploration programs. In the absence of
such financing, we will not be able to continue exploration of our mineral
claims and our business plan will fail. Even if we are successful in obtaining
equity financing to fund our exploration program, there is no assurance that we
will obtain the funding necessary to pursue any advanced exploration of our
mineral claims following the completion of phase two. If we do not continue to
obtain additional financing, we will be forced to abandon our mineral claims and
our plan of operations We may consider entering into a joint venture arrangement
to provide the required funding to develop the mineral claims. We have not
undertaken any efforts to locate a joint venture partner for the mineral claims.
Even if we determined to pursue a joint venture partner, there is no assurance
that any third party would enter into a joint venture agreement with us in order
to fund exploration of our mineral claims. If we entered into a joint venture
arrangement, we would likely have to assign a percentage of our interest in our
mineral claims to the joint venture partner.

Results of Operations

We have had no operating revenues since our inception on
October 14, 2001 through to the September 30, 2005. We anticipate that we will
not generate any revenues for so long as we are an exploration stage company.
Our activities have been financed from the proceeds of share subscriptions. From
our inception, on October 14, 2001, to September 30, 2005, we have raised a
total of $129,625 from private offerings of our securities.

For the nine month period ended September 30, 2005, we incurred
operating costs of $80,058 compared to operating costs of $7,408 during the nine
month period ended September 30, 2004. The increase was the

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result of the completion of the initial phase of exploration on our Alaska mineral property and our filing a registration statement with the Securities and Exchange Commission (the SEC) and becoming a reporting company under the
Securities Exchange Act of 1934 (the 1934 Act).  For the three month period ended September 30, 2005, we incurred operating costs of $7,833 compared to operating costs of $6,714 during the three month period ended September 30,
2004.

During the nine months ended September 30, 2005, we incurred mineral property expenditures of $39,538 relating to the phase one work program and the preparation of geological reports on the Alaskan mineral property, of which $3,767 was
incurred in the three months ended September 30, 2005. Mineral property expenditures during the nine months ended September 30, 2004 were $8,332, of which $817 was incurred in the three months ended September 30, 2004.

During the nine months ended September 30, 2005, we incurred $32,714 in professional fees for the legal and accounting costs of our Form SB-2 registration statement and our Form 10-QSB quarterly reports filed during the period. During the three
months ended September 30, 2005, we incurred $2,348 in professional fees for the legal and accounting costs of our Form 10-QSB quarterly reports filed during the period. We will continue to incur legal and accounting costs as a reporting company
under the 1934 Act.

During the nine months ended September 30, 2004, our operating costs included $16,050 in management fees paid to Mr. Lee, our sole executive officer, for compensation of his services. We also reported a recovery of oil and gas expenditures of
$22,580 relating to a sale of our interest in an oil gas property in California during this period.

Liquidity and Capital resources

At September 30, 2005, we had cash on hand of $9,676 and a working capital deficit of $949. This compares with cash on hand of $81,934 and working capital of $79,109 as at December 31, 2004. The decrease in working capital between
the periods was due to our net loss of $80,058 during the nine months ended September 30, 2005. We do not believe our cash on hand is sufficient to pay for the costs of our general and administrative expenses for the next twelve months. In
addition, our ability to complete the next phase of our recommended work program will be subject to us obtaining adequate financing as these expenditures will exceed our cash reserves. We anticipate that additional funding will be in the form of
equity financing from the sale of our common stock or through shareholder or related party loans, although there are no assurances any such financing will be completed.

Cash used in operating activities was $72,258 for the nine month period ended September 30, 2005 largely due to our expenditures for the phase one work program and our filing a registration statement with the SEC and becoming a reporting company
under the 1934 Act. This compares with cash used in operating activities of $7,352 for the nine months ended September 30, 2004.  Cash used in operating activities during this period included a recovery of $22,580 in oil and gas
expenditures.

At September 30, 2005, $557 was included in accounts payable and accrued liabilities that was due to the sole officer and director of the Company. Amounts due are payable under normal trade payable terms.

By September 1, 2005, we must have completed $10,000 in annual labor or exploration expenditures on our mineral claims and file confirmation of the work with the applicable mining recordings office of the State of Alaska by November 30, 2005 or
make payment in lieu. Although we believe we have satisfied the $10,000 annual labor requirement for the current year, there are no assurances the State of Alaska will accept our filing. In addition, by November 30, 2005, we must make payment to
the State of Alaska of an annual rental fee of $2,500 for our twenty-five mineral claims, to keep our claims in good standing. We plan to make this payment by November 30, 2005.

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READERS SHOULD REFER TO RISK FACTORS SET OUT IN THE FORM
SB-2 WE FILED MARCH 15, 2005, TO SEE RISK FACTORS THAT COULD AFFECT AND
SUBSTANTIALLY ALTER OUR PLAN OF OPERATION.

Item
3.           Controls and
Procedures.

As required by Rule 13a-15 under the Exchange Act, we carried
out an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures as of September 30, 2005, being the date of
our most recently completed fiscal quarter. This evaluation was carried out
under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, Mr. D. Barry Lee. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in timely alerting management
to material information relating to us required to be included in our periodic
SEC filings. There have been no significant changes in our internal controls or
in other factors that could significantly affect internal controls subsequent to
the date we carried out our evaluation.

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SECs rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and our Chief
Financial Officer, to allow timely decisions regarding required disclosure.

During our most recently completed fiscal quarter ended
September 30, 2005 there were no changes in our internal control over financial
reporting that have materially affected, or are reasonably likely to affect, our
internal control over financial reporting.

The term internal control over financial reporting is defined
as a process designed by, or under the supervision of, the registrants
principal executive and principal financial officers, or persons performing
similar functions, and effected by the registrants board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

|(a) | Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the registrant;                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(b) | Provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of the registrant are being made only in
      accordance with authorizations of management and directors of the
      registrant; and
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(c) | Provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      registrants assets that could have a material effect on the financial
      statements.                                                                                                                                              

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PART II.  OTHER INFORMATION

Item
1.           Legal
Proceedings.

We are not party to any legal proceedings.

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

We did not issue any securities without registration pursuant
to the Securities Act of 1933 during the nine months ended September 30,
2005.

Item
3.           Default upon
Senior Securities.

None.

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

No matters were submitted to our security holders for a vote
during the third quarter of our fiscal year ending December 31, 2005.

Item
5.           Other
Information.

None.

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Item
6.           Exhibits.

|Exhibit |                                                                                                                                                             
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                      
|        |                                                                                                                                                             
|3.1(1)  | Articles of Incorporation                                                                                                                                   
|        |                                                                                                                                                             
|3.2(1)  | By-Laws                                                                                                                                                     
|        |                                                                                                                                                             
|3.3(1)  | Articles of Merger, as filed
        with the Nevada Secretary of State                                                                                     
|        |                                                                                                                                                             
|3.4(1)  | Certificate of Merger, as filed
        with the Delaware Secretary of State                                                                                
|        |                                                                                                                                                             
|5.1(2)  | Opinion of Lang Michener
        LLP, with consent to use, regarding the legality of the securities being
        registered                                
|
|        |                                                                                                                                                             
|10.1(1) | Farmout Agreement with
        Banks Energy Inc. (formerly, Banks Ventures Ltd.) dated June 1, 2003                                                         
|
|        |                                                                                                                                                             
|10.2(1) | Mining Quitclaim Deed dated August
        16, 2004                                                                                                         
|        |                                                                                                                                                             
|10.3(2) | Agreement and Plan
        of Merger between Red Sky Resources Inc. and Pacific Petroleum Inc. dated
        December 6, 2004                               
|
|        |                                                                                                                                                             
|10.4(2) | Mineral Exploration
        Management Services Agreement between Red Sky Resources Inc. and Alaska
        Earth Sciences Inc. dated March 7, 2005         
|
|        |                                                                                                                                                             
|10.5(3) | Geophysical Survey
        Agreement between Red Sky Resources Inc. and SJ Geophysical Ltd. dated
        April 14, 2005                                    
|
|        |                                                                                                                                                             
|31.1(4) | Certification
        Statement of the Chief Executive Officer pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002.                           
|
|        |                                                                                                                                                             
|31.2(4) | Certification
        Statement of the Chief Financial Officer pursuant to Section 302 of the
        Sarbanes-Oxley Act of 2002.                           
|
|        |                                                                                                                                                             
|32.1(4) | Certification
        Statement of the Chief Executive Officer and Chief Financial Officer pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002
|

|(1) | Filed as an exhibit to our registration statement on
      Form SB-2 filed with the Commission on January 28, 2005                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Filed as an exhibit to our Amendment No. 1 to our
      registration statement on Form SB-2 filed with the Commission on March 15,
      2005.
|(3) | Filed as an exhibit to our Form 10-QSB filed with the
      Commission on May 13, 2005.                                                       
|(4) | Filed as an exhibit to this Form 10-QSB.                                                                                                      

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SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|RED SKY RESOURCES INC. |  |                                     |                  
|---------------------- |  | ----------------------------------- | -----------------
|                       |  |                                     |                  
|Signature              |  | Title                               | Date             
|                       |  |                                     |                  
|                       |  | President, Chief Executive Officer, |                  
|/S/ D. Barry Lee       |  | Chief Financial Officer and         |                  
|**D. Barry Lee**       |  | Director (Principal Executive       | November 10, 2005
|                       |  | Officer and Principal Accounting    |                  
|                       |  | Officer)                            |                  
|                       |  |                                     |                  

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