U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q


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


                     For the quarter ended November 30, 2009


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


                For the transition period from ______ to _______


                          COMMISSION FILE NO. 000-52782


                            MAINLAND RESOURCES, INC.
                 ______________________________________________
                 (Name of small business issuer in its charter)


              NEVADA                                              90-0335743
_________________________________                            ___________________
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)


                       20333 STATE HIGHWAY 249, SUITE 200
                              HOUSTON, TEXAS 77070
                    ________________________________________
                    (Address of principal executive offices)


                                 (281) 469-5990
                           ___________________________
                           (Issuer's telephone number)


Securities registered pursuant to Section         Name of each exchange on which
            12(b) of the Act:                              registered:
                   NONE


          Securities registered pursuant to Section 12(g) of the Act:
                              COMMON STOCK, $0.0001
          ___________________________________________________________
                                (Title of Class)


Indicate by checkmark whether the issuer:  (1) has 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 [ ]


<PAGE>


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  (Section
229.405 of this  chapter)  during the  preceding  12 months (or for such shorter
period that the registrant was required to submit and post such files.

Indicate by check mark whether the registrant is a large  accelerated  filed, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer [ ]                                Accelerated filer [X]

Non-accelerated filer   [ ]                        Smaller reporting company [ ]

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

                                 Yes [ ] No [X]

Applicable  Only  to  Issuer  Involved  in  Bankruptcy  Proceedings  During  the
Preceding Five Years.

                                       N/A

Indicate by  checkmark  whether the issuer has filed all  documents  and reports
required to be filed by Section 12, 13 and 15(d) of the Securities  Exchange Act
of 1934 after the distribution of securities under a plan confirmed by a court.

                                 Yes [ ]  No [ ]

                    Applicable Only to Corporate Registrants

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the most practicable date:

Class                                        Outstanding as of  January 13, 2010
Common Stock, $0.0001                        80,969,502*

*Increased from 40,484,751 shares of common stock to 80,969,502 shares of common
stock based upon the June 16, 2009 Forward Stock Split.


                                       2


<PAGE>


                            MAINLAND RESOURCES, INC.

                                    Form 10-Q


Part 1.   FINANCIAL INFORMATION                                                4

Item 1.   FINANCIAL STATEMENTS                                                 4
             Balance Sheets                                                    5
             Statements of Operations                                          6
             Statements of Cash Flows                                          7
             Notes to Financial Statements                                     8

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                               19

Item 3.   Quantitative and Qualitative Disclosures About Market Risk          32

Item 4.   Controls and Procedures                                             33

Part II.  OTHER INFORMATION                                                   34

Item 1.   Legal Proceedings                                                   34

Item 1A.  Risk Factors                                                        34

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds         35

Item 3.   Defaults Upon Senior Securities                                     36

Item 4.   Submission of Matters to a Vote of Security Holders                 36

Item 5.   Other Information                                                   36

Item 6.   Exhibits                                                            40


                                       3


<PAGE>


PART I

ITEM 1. FINANCIAL STATEMENTS
















                            MAINLAND RESOURCES, INC.
                          (A Production Stage Company)

                              FINANCIAL STATEMENTS

                                NOVEMBER 30, 2009
                                   (Unaudited)



















                                       4


<PAGE>


<TABLE>
<CAPTION>
                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                                 BALANCE SHEETS
                                 (U.S. Dollars)

                                                                            November 30,       February 28,
                                                                                2009               2009
___________________________________________________________________________________________________________
                                                                             (unaudited)         (audited)
<S>                                                                       <C>                <C>

CURRENT ASSETS
   Cash                                                                   $    482,104       $    150,276
   Accounts receivable                                                         500,985            373,045
   Deposit on properties (Note 3)                                            1,300,000          1,100,000
   Financing costs; net of accumulated amortization of $300,161              1,068,000                  -
___________________________________________________________________________________________________________

   Total current assets                                                      3,351,089          1,623,321
___________________________________________________________________________________________________________

OIL AND GAS PROPERTIES, (Note 3)
   Proved, net of accumulated depletion $182,937 (2009 -12,000)              3,295,448            775,011
   Unproved                                                                  3,938,113                  -
___________________________________________________________________________________________________________

   Total Oil and Gas Properties                                              7,233,561            775,011
___________________________________________________________________________________________________________

      TOTAL ASSETS                                                        $ 10,584,650       $  2,398,332
===========================================================================================================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and accrued liabilities                               $  1,148,682       $     70,230
   Promissory note (Note 4)                                                  5,800,000                  -
___________________________________________________________________________________________________________

      TOTAL CURRENT LIABILITIES                                              6,948,682             70,230
___________________________________________________________________________________________________________

CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY (Note 5)
Common stock, 400,000,000 shares authorized with $0.0001 par value
Issued and outstanding - 80,969,502 common shares                                8,097              3,962
   (February 28, 2009 - 79,230,002)
Additional paid-in-capital                                                  18,368,062         16,056,099
Deficit accumulated during exploration stage                               (14,567,020)       (13,731,959)
Accumulated deficit                                                           (173,171)                 -
___________________________________________________________________________________________________________

      TOTAL STOCKHOLDERS' EQUITY                                             3,635,968          2,328,102
___________________________________________________________________________________________________________

      TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                            $ 10,584,650       $  2,398,332
===========================================================================================================


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

</TABLE>

                                       5


<PAGE>

<TABLE>
<CAPTION>
                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                                       Three months ended                  Nine months ended
                                                          November 30,                        November 30,
                                                  _____________________________       ______________________________

                                                     2009              2008              2009               2008
                                                  ___________       ___________       ___________       ____________
<S>                                               <C>               <C>               <C>               <C>

REVENUES
   Oil and gas revenue                            $   634,574       $         -       $ 2,118,927       $          -
____________________________________________________________________________________________________________________

GENERAL AND ADMINISTRATIVE EXPENSES
   Operating costs and taxes                          208,278                 -           618,887                  -
   Depletion allowance                                 52,540                 -           170,937                  -
   Consulting fees (Note 6)                            60,371            44,123           264,352            536,480
   Management fees - related party (Note 7)            74,667            30,000           159,039             86,000
   Marketing expenses                                       -            24,280            62,003            921,107
   Office and general                                  35,512            20,514           124,447             67,848
   Professional fees                                   92,518            66,333           202,219            179,029
   Salary expense (Note 6)                                  -         1,182,500         1,148,000         10,797,185
____________________________________________________________________________________________________________________

                                                     (523,886)       (1,367,750)       (2,749,884)       (12,587,649)
____________________________________________________________________________________________________________________

NET OPERATING LOSS                                    110,668        (1,367,750)         (630,957)       (12,587,649)

OTHER ITEMS
   Gain on settlement of debt                               -                 -                 -             33,239
   Interest income                                        232             1,085               700              7,112
   Interest expense                                   (66,883)                -           (78,841)                 -
   Financing costs (Note 4)                          (217,208)                -          (300,161)                 -
____________________________________________________________________________________________________________________

NET LOSS                                             (173,171)       (1,366,665)       (1,009,259)       (12,547,298)
____________________________________________________________________________________________________________________

Foreign currency translation adjustment                     -                 -                 -                422
____________________________________________________________________________________________________________________

COMPREHENSIVE LOSS                                $ (173,171)       $(1,366,665)      $(1,009,259)      $(12,546,876)
====================================================================================================================

BASIC LOSS PER COMMON SHARE                       $     (0.00)      $   (0.02)        $     (0.01)      $      (0.16)
====================================================================================================================

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING-BASIC                    80,969,500        79,230,000        80,438,015         76,377,536
====================================================================================================================


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

</TABLE>

                                       6


<PAGE>

<TABLE>
<CAPTION>
                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                                          Nine months ended November 30,
                                                                         _________________________________
                                                                             2009                2008
                                                                         ____________        _____________
<S>                                                                      <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                              $ (1,009,259)       $ (12,547,298)
   Adjustments to reconcile net loss to net cash used in operating
      activities:
   - Non-cash mineral property expenditures (recoveries)                            -              (33,239)
   - Depletion                                                                170,937                    -
   - Stock-based compensation (Note 6)                                      1,148,000           10,797,185
   - Non-cash consulting fees (Note 5)                                         16,125                    -
   - Amortized financing cost                                                 300,161                    -
CHANGES IN OPERATING ASSETS AND LIABILITIES
   - Accounts receivable                                                     (127,940)                   -
   - Accounts payable - related parties                                             -               (6,138)
   - Accounts payable and accrued liabilities                                   3,702               60,256
__________________________________________________________________________________________________________

NET CASH FROM (USED IN) OPERATING ACTIVITIES                                  501,726           (1,729,234)
__________________________________________________________________________________________________________

CASH FLOWS FROM INVESTING ACTIVITIES
   Investment in oil and gas property                                      (6,520,298)          (1,846,775)
   Deposit on properties                                                     (200,000)                   -
__________________________________________________________________________________________________________

NET CASH FLOWS USED IN INVESTING ACTIVITIES                                (6,720,298)          (1,846,775)
__________________________________________________________________________________________________________

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds on sale of common stock                                                 -            3,950,000
   Proceeds from exercised warrants                                         1,153,000                    -
   Promissory note payable                                                  5,800,000                    -
   Payment of financing cost                                                 (402,600)                   -
__________________________________________________________________________________________________________

NET CASH PROVIDED BY FINANCING ACTIVITIES                                   6,550,400            3,950,000
__________________________________________________________________________________________________________

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                             -                  422
__________________________________________________________________________________________________________

INCREASE IN CASH                                                              331,828              374,413

CASH, BEGINNING OF PERIOD                                                     150,276               19,495
__________________________________________________________________________________________________________

CASH, END OF PERIOD                                                      $    482,104        $      93,908

==========================================================================================================

SUPPLEMENTAL CASH FLOW INFORMATION AND
   NONCASH INVESTING AND FINANCING ACTIVITIES:
   Cash paid for interest                                                $     78,841        $           -
   Common stock issued for satisfaction of liability                     $          -        $      50,000
   Common stock issued for consulting fees                               $     16,125        $           -


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

</TABLE>

                                       7


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
________________________________________________________________________________

Mainland Resources Inc. (the "Company") is an exploration stage company that was
incorporated  May 12,  2006 in the State of Nevada  for the  purpose  of mineral
exploration.  During  2008,  the Company  entered  into an option  agreement  on
certain oil and gas leaseholds in the state of Louisiana  (refer to Note 3). The
Company  now  intends  to  locate,  explore,  acquire  and  develop  oil and gas
properties in the United  States.  The Company began  drilling its first well in
October 2008.  The first well was completed at the end of January 2009 and is in
production.  The Company  began  drilling  its second well in April 2009.  It is
expected to be completed by the end of February 2010. The Company began drilling
its third well in May 2009. The third well was completed and began  producing in
the middle of August 2009.

GOING CONCERN
The Company  commenced  operations  on May 12,  2006.  Although  the Company has
realized  revenues,  as of November  30,  2009,  the Company has an  accumulated
deficit during the  exploration  stage of $14,567,020 an accumulated  deficit of
$173,171. The ability of the Company to continue as a going concern is dependent
on raising  capital to fund ongoing  operations  and carry out its business plan
and ultimately to attain profitable operations. Accordingly, these factors raise
substantial  doubt as to the Company's  ability to continue as a going  concern.
These financials do not include any adjustments  relating to the  recoverability
and  classification  of recorded asset amounts or amounts and  classification of
liabilities  that might result from this  uncertainty.  To date, the Company has
funded its initial  operations  by way of private  placements  of common  stock,
advances from related parties and bridge loan financing. During fiscal 2009, the
Company  completed a private placement of $4,000,000 at $0.33 per unit with each
unit  consisting  of one  common  share and one half  warrant at $0.67 per share
exercisable  for a period  of one  year  from  issuance  (refer  to Note 5).  In
addition,  during the nine months ended  November 30, 2009,  1,729,500  warrants
were exercised at $0.67 for net proceeds to the company of $1,153,000. On August
10,  2009,  the Company  closed a  $3,500,000  bridge loan  financing  which was
replaced  effective  October 16,  2009 with a secured  senior line of credit for
$40,000,000 of which $5,800,000 had been advanced as of November 30, 2009 (refer
to Note 4).

UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying  unaudited interim consolidated  financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and  with the  instructions  to Form  10-Q.  They do not
include  all  information  and  footnotes  required by United  States  generally
accepted  accounting  principles  for complete  financial  statements.  However,
except  as  disclosed  herein,  there  have  been  no  material  changes  in the
information  disclosed  in the notes to the  financial  statements  for the year
ended  February 28, 2009  included in the  Company's  Annual Report on Form 10-K
filed  with the  Securities  and  Exchange  Commission.  The  interim  unaudited
financial  statements  should  be  read  in  conjunction  with  those  financial
statements  included  in the  Form  10-K.  In the  opinion  of  Management,  all
adjustments  considered necessary for a fair presentation,  consisting solely of
normal recurring  adjustments,  have been made.  Operating  results for the nine
months ended  November 30, 2009 are not  necessarily  indicative  of the results
that may be expected for the year ending February 28, 2010.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
________________________________________________________________________________

ORGANIZATION
The  Company  was  incorporated  on May 12,  2006 in the  State of  Nevada.  The
Company's fiscal year end is February 28.

BASIS OF PRESENTATION
These financial  statements are presented in United States dollars and have been
prepared  in  accordance  with  United  States  generally  accepted   accounting
principles.

OIL AND GAS PROPERTIES
The  Company  follows  the full cost  method of  accounting  for its oil and gas
operations  whereby all costs related to the acquisition of methane,  petroleum,
and natural gas interests are capitalized. Under this method, all productive and
non-productive  costs  incurred  in  connection  with  the  exploration  for and
development of oil and gas reserves are capitalized. Such costs include land and


                                       8


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________

OIL AND GAS PROPERTIES (CONTINUED)
lease acquisition  costs,  annual carrying charges of non-producing  properties,
geological and geophysical costs, costs of drilling and equipping productive and
non-productive  wells,  and direct  exploration  salaries and related  benefits.
Proceeds from the disposal of oil and gas properties are recorded as a reduction
of the related  capitalized  costs without  recognition of a gain or loss unless
the  disposal  would  result in a change of 20 percent or more in the  depletion
rate. The Company currently operates solely in the U.S.

Depreciation  and depletion of proved oil and gas  properties is computed on the
units-of-production   method  based  upon  estimates  of  proved  reserves,   as
determined by  independent  consultants,  with oil and gas being  converted to a
common unit of measure based on their relative energy content.

The costs of acquisition  and  exploration  of unproved oil and gas  properties,
including  any  related  capitalized   interest  expense,  are  not  subject  to
depletion,  but  are  assessed  for  impairment  either  individually  or  on an
aggregated  basis. The costs of certain  unevaluated  leasehold acreage are also
not  subject to  depletion.  Costs not  subject to  depletion  are  periodically
assessed for possible  impairment  or  reductions  in  recoverable  value.  If a
reduction in  recoverable  value has  occurred,  costs  subject to depletion are
increased or a charge is made  against  earnings  for those  operations  where a
reserve base is not yet established.

Estimated future removal and site  restoration  costs are provided over the life
of  proven  reserves  on  a  units-of-production  basis.  Costs,  which  include
production equipment removal and environmental  remediation,  are estimated each
period by management based on current regulations, actual expenses incurred, and
technology and industry  standards.  The charge is included in the provision for
depletion and depreciation and the actual  restoration  expenditures are charged
to the accumulated provision amounts as incurred.

The Company applies a ceiling test to capitalized  costs which limits such costs
to the aggregate of the estimated  present value,  using a ten percent  discount
rate of the estimated  future net revenues from production of proven reserves at
year end at market  prices less future  production,  administrative,  financing,
site  restoration,  and  income  tax costs  plus the lower of cost or  estimated
market value of unproved  properties.  If  capitalized  costs are  determined to
exceed estimated future net revenues,  a write-down of carrying value is charged
to depletion in the period.

ASSET RETIREMENT OBLIGATIONS
The Company has adopted the provisions of FASB ASC 410-20 "Asset  Retirement and
Environmental  Obligations," which requires the fair value of a liability for an
asset  retirement  obligation  to be  recognized  in the  period  in which it is
incurred  if a  reasonable  estimate of fair value can be made.  The  associated
asset  retirement  costs are  capitalized as part of the carrying  amount of the
related oil and gas properties. As of November 30, 2009, there has been no asset
retirement obligations rendered.

USE OF ESTIMATES
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenues and expenses during the period.  Actual results
could differ from those  estimates.  Significant  areas  requiring  management's
estimates  and  assumptions  are  the   determination   of  the  fair  value  of
transactions  involving  common  stock,  stock  based  compensation,   financial
instruments  as well as  deferred  tax  balances  and  asset  impairment  tests.
Further, depreciation,  depletion and amortization of oil and gas properties and
the impairment of oil and gas properties are determined  using  estimates of oil
and gas reserves. There are numerous uncertainties in estimating the quantity of
reserves  and in  projecting  the  future  rates of  production  and  timing  of
development  expenditures,  including future costs to dismantle,  dispose, plug,
and restore the Company's  properties.  Oil and gas reserve  engineering must be
recognized as a subjective  process of estimating  underground  accumulations of
oil and gas that cannot be measured in an exact way.  Proved reserves of oil and
natural gas are  estimated  quantities  that  geological  and  engineering  data
demonstrate with reasonable certainty to be recoverable in the future from known
reservoirs under existing conditions.

FINANCIAL INSTRUMENTS
The fair  value of the  Company's  financial  assets and  financial  liabilities
approximate their carrying values due to the immediate or short-term maturity of
these financial instruments.


                                       9


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________

CONCENTRATIONS OF CREDIT RISK
Financial  instruments that potentially subject the Company to concentrations of
credit  risk  consist  principally  of cash  and  cash  equivalent  accounts  in
financial  institutions.  As of November 30, 2009,  the Company's  cash and cash
equivalents do not exceed federally insured limits.

EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per share includes no dilution and is computed by dividing
income available to common stockholders by the weighted average number of common
shares  outstanding for the period.  Dilutive  earnings (loss) per share reflect
the  potential  dilution of  securities  that could share in the earnings of the
Company.  Where  applicable,  dilutive  loss per share is equal to that of basic
loss per share as the effects of stock  options and warrants  have been excluded
as they are anti-dilutive.

REVENUE RECOGNITION
Oil and natural gas revenues are recorded  using the sales  method,  whereby the
Company  recognizes  oil and natural gas revenue  based on the amount of oil and
gas sold to  purchasers,  when  title  passes,  the amount is  determinable  and
collection is reasonably assured. Actual sales of gas are based on sales, net of
the associated  volume charges for processing fees and for costs associated with
delivery,  transportation,  marketing, and royalties in accordance with industry
standards.  Operating costs and taxes are recognized in the same period in which
revenue is earned.

INCOME TAXES
The Company follows the liability  method of accounting for income taxes.  Under
this method,  deferred tax assets and  liabilities are recognized for the future
tax  consequences  attributable to differences  between the financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
balances.  Deferred tax assets and  liabilities  are measured  using  enacted or
substantially  enacted tax rates  expected to apply to the taxable income in the
years in which those  differences  are expected to be recovered or settled.  The
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized  in income in the  period  that  includes  the date of  enactment  or
substantive  enactment.  As at November 30, 2009,  the Company had net operating
loss carryforwards,  however, due to the uncertainty of realization, the Company
has provided a full  valuation  allowance for the deferred tax assets  resulting
from these loss carryforwards.

STOCK-BASED COMPENSATION
The Company has adopted  FASB ASC 718-10,  "Compensation-  Stock  Compensation",
which requires the compensation  cost related to share-based  payments,  such as
stock options and employee stock purchase  plans, be recognized in the financial
statements based on the grant-date fair value of the award.

The Company accounts for equity  instruments  issued in exchange for the receipt
of goods or  services  from other than  employees  in  accordance  with FASB ASC
718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at
the estimated fair market value of the  consideration  received or the estimated
fair  value  of the  equity  instruments  issued,  whichever  is  more  reliably
measurable.  The value of equity instruments issued for consideration other than
employee  services is determined on the earliest of a performance  commitment or
completion  of  performance  by the  provider of goods or services as defined by
FASB ASC 505-50.

RECENT ACCOUNTING PRONOUNCEMENTS
In June 2009,  the FASB issued FASB ASC 855-10,  "Subsequent  Events."  FASB ASC
855-10 establishes  general standards of accounting for and disclosure of events
that occur  after the balance  sheet date but before  financial  statements  are
issued or are  available to be issued.  FASB ASC 855-10  applies to both interim
financial  statements  and  annual  financial  statements.  FASB ASC  855-10  is
effective for interim or annual  financial  periods  ending after June 15, 2009.
The  adoption  of FASB ASC 855-10 in the second  quarter of Fiscal  2010 did not
have a material impact on our consolidated financial statements.

In June 2009, the FASB issued FASB ASC 860-10,  "Transfers and Servicing",  FASB
ASC 860-10  eliminates  the concept of a  "qualifying  special-purpose  entity,"
changes the  requirements  for  derecognizing  financial  assets,  and  requires
additional  disclosures  in order to enhance  information  reported  to users of
financial  statements  by  providing  greater  transparency  about  transfers of
financial  assets,  including  securitization  transactions,   and  an  entity's
continuing  involvement  in and  exposure  to the risks  related to  transferred
financial assets.  FASB ASC 860-10 is effective for fiscal years beginning after
November 15, 2009. The Company will adopt FASB ASC 860-10 in fiscal 2010.


                                       10


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________

RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
The Company will adopt FASB ASC 860-10 during its fiscal year  commencing  March
1, 2010.  The Company  does not expect that the adoption of FASB ASC 860-10 will
have a material impact on the financial statements.

In June 2009, the FASB issued FASB ASC 810-10,  "Consolidation",  which included
the  following:  (1) the  elimination  of the exemption for  qualifying  special
purpose  entities,  (2) a new approach for determining who should  consolidate a
variable-interest  entity,  and (3) changes to when it is  necessary to reassess
who should consolidate a variable-interest  entity. FASB ASC 810-10 is effective
for the first annual  reporting period beginning after November 15, 2009 and for
interim  periods  within that first annual  reporting  period.  The Company will
adopt FASB ASC  810-10 in fiscal  2010.  The  Company  does not expect  that the
adoption  of FASB ASC  810-10  will  have a  material  impact  on the  financial
statements.

In June 2009, the FASB issued FASB ASC 105-10,  "Generally  Accepted  Accounting
Principles  replaces  SFAS  No.  162,  which  establishes  the  FASB  Accounting
Standards   Codification   ("Codification")   as  the  source  of  authoritative
accounting  principles  recognized by the FASB to be applied by  nongovernmental
entities in the  preparation  of financial  statements in conformity  with GAAP.
Rules and  interpretive  releases  of the  Securities  and  Exchange  Commission
("SEC")  under  authority  of  federal  securities  laws  are  also  sources  of
authoritative  GAAP for SEC  registrants.  The FASB  will no  longer  issue  new
standards in the form of Statements,  FASB Staff  Positions,  or Emerging Issues
Task Force Abstracts;  instead the FASB will issue Accounting Standards Updates.
Accounting  Standards  Updates will not be  authoritative  in their own right as
they will only serve to update the Codification. The issuance of FASB ASC 105-10
and the Codification does not change GAAP. FASB ASC 105-10 becomes effective for
interim and annual periods ending after September 15, 2009.  Management does not
expect  the  adoption  of FASB  ASC  105-10  to have a  material  impact  on the
Company's financial position, cash flows and results of operations.

NOTE 3 - OIL AND GAS PROPERTIES
________________________________________________________________________________

EAST HOLLY PROSPECT
On February 27, 2008, the Company entered into an option  agreement (the "Option
Agreement") with Kingsley Resources,  Inc.  ("Kingsley"),  pursuant to which the
Company  acquired  all the  right,  title and  interest  Kingsley  has in and to
certain  leasehold  estates in the state of Louisiana  ("the Leases") which were
the subject of a purchase  agreement  dated  December  11,  2007,  and  modified
February 1, 2008  (collectively,  the "Leasehold  Purchase  Agreement")  between
Kingsley  and Permian  Basin  Acquisition  Fund  ("Permian"),  pursuant to which
Kingsley  had the right to acquire the  sub-surface  rights  provided for in the
Leases.  In order to  complete  the  acquisition  of the Leases the  Company was
required  to pay  $100,000  on April  2,  2008 to  Kingsley  and  assume  all of
Kingsley's  obligations  under the Leasehold  Purchase  Agreement.  On March 14,
2008,  the Company  completed the Option  agreement  and the Leasehold  Purchase
Agreement at a total cost of $687,596, which includes the $100,000 that was paid
on April 2, 2008, for approximately 2,551 net acres.

Subsequent to the period on December 21, 2009, the Company  acquired,  under its
agreement  with  Petrohawk,  an  additional  159.3 net acres for $412,985 and on
December 23, 2009 the Company  also  acquired an  additional  51.96 net acres in
conjunction  with  Petrohawk  for $94,731  within the Cotton  Valley/Haynesville
trend in the State of Louisiana.

COTTON VALLEY/ HAYNESVILLE
The Company has leased various other properties totalling  approximately 144 net
acres,  consisting of  approximately 84 net acres leased as of February 29, 2008
and added 60 net acres  leased  during  the year  ended  February  28,  2009 for
additional  consideration of $22,753.  These additional property leases,  within
the Cotton  Valley/Haynesville  trend in the state of  Louisiana,  are for three
year terms.  The Company has a 100%  Working  Interest  and a 75% N.R.I.  in the
leases comprising a total of 2,695 net acres.

PETROHAWK VENTURE AGREEMENT
On July 14, 2008,  The Company  entered into a binding  venture  agreement  with
Petrohawk  Energy  Corporation  ("Petrohawk")  for the joint  development of the
Haynesville Shale on the Company's  properties ("the Leases") in De Soto Parish,
Louisiana.  Effective  August 4, 2008,  the Company  entered  into a  definitive
binding agreement with Petrohawk consummating the transaction on July 14, 2008.


                                       11


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 3 - OIL AND GAS PROPERTIES (CONTINUED)
________________________________________________________________________________

PETROHAWK VENTURE AGREEMENT (CONTINUED)
Under the terms of the Agreement,  Petrohawk has agreed to pay 100% of the costs
of  development  associated  with the first well drilled below the Cotton Valley
Formation,  including drilling,  completing and fracture stimulating, as well as
costs up to and including pipeline connection.  Petrohawk has also agreed to pay
80% of all costs of the second well  drilled on the Leases below the base of the
Cotton Valley with the Company  paying the  remaining 20% of the costs.  For the
third and all  subsequent  wells  drilled  on the  Leases  below the base of the
Cotton Valley Formation, Petrohawk will pay 60% and the Company will pay 40%.

The Company  will  transfer  60% of its De Soto Parish  leases to  Petrohawk  at
closing,  but only as the  Leases  relate  to all  depths  below the base of the
Cotton Valley  Formation,  and  specifically  the Haynesville  Shale.  Petrohawk
agrees to gather and market the Company's  production from above the base of the
Cotton Valley Formation, pursuant to a mutually acceptable agreement.

GRIFFITHS 11- #1
The first  well under the  Petrohawk  Agreement,  the  Griffiths  11- #1,  began
drilling in October 2008.  The well  commenced  production at the end of January
2009.

STEVENSON DOUGLAS LLC. 16 - #1
The second well under the Petrohawk  Agreement,  the Steven Douglas LLC 16 - #1,
began  drilling in April 2009.  The Company  expects the well to be completed by
the beginning of February 2010.

DEHAN 15 - #1-H
The  third  well  under the  Petrohawk  Agreement,  the  Dehan 15 - #1-H,  began
drilling  in May 2009.  The well  commenced  production  in the middle of August
2009.

MISSISSIPPI PROSPECT
On September 3, 2008, the Company signed an Option  Agreement with Westrock Land
Corp to  acquire  5,000 net acres in mineral  oil and gas leases  located in the
State of Mississippi.  In accordance with the terms and provisions of the Option
Agreement;  (i ) the Company will acquire a 100% working  interest and a 75% net
revenue  interest  in the  Leases;  (ii) the  Company  has agreed to pay certain
acquisition  costs per net  mineral  acres and also paid a  $500,000  deposit on
September  3, 2008 to secure  the  Option  Agreement;  (iii) the  balance of the
acquisition  costs totalling  $2,275,000 will be due and payable upon completion
of the due  diligence,  to be completed by the Company no later than October 15,
2008.  The Option  Agreement  was  subsequently  extended on each of October 15,
2008,  November  30,  2008,  April 16, 2009 and June 1, 2009  whereby the option
period  has been  extended  until  January  20,  2010.  Additional  deposits  of
$250,000,  $100,000,  $250,000,  $100,000 and $100,000  were paid on October 17,
2008,  December 1, 2008, December 29, 2008, April 27, 2009, May 6, 2009 and June
5,  2009  for a total  deposit  to  date  of  $1,300,000  (February  28,  2009 -
$1,100,000).

MISSISSIPPI HAYNESVILLE/BOSSIER PROSPECT
On June 23, 2009, the Company signed an Option Agreement with Westrock Land Corp
to acquire  approximately  8,000 net acres in mineral oil and gas leases located
in the State of Mississippi.  In accordance with the terms and provisions of the
Option  Agreement;  (i ) the Company will acquire a 100% working  interest and a
minimum 75% net revenue  interest in the Leases;  (ii) the Company has agreed to
pay certain  acquisition  costs per net  mineral  acres by August 31,  2009.  On
August 28, 2009, the Company amended the Option  Agreement to expand the acreage
to include an  additional  225 acres thus  aggregating  approximately  8,225 net
acreage subject to the Option Agreement. The Company further agreed to advance a
payment of $300,000  towards the total  purchase  price of the acreage under the
Option  Agreement  on August 31,  2009.  On October 13, 2009 the Company paid an
addition  $900,000 towards the purchase price of the property and paid the final
instalment  of  $2,090,060  on  November 3, 2009 for a total  purchase  price of
$3,290,060.

Effective  on  September  17,  2009,  the  Board  of  Directors  of the  Company
authorized  the execution of a letter  agreement (the "Letter  Agreement")  with
American Exploration Corporation,  a Nevada corporation ("American Exploration")
to jointly develop  contiguous  acreage known as the Buena Vista Area located in
Mississippi (the "Joint Development Project").  In accordance with the terms and
provisions  of the Letter  Agreement:  (i)  American  Exploration  has agreed to
commit  approximately  5,000  net  acres and the  Company  has  agreed to commit
approximately 5,000 net acres to the Joint Development Project; (ii) the Company
shall be the operator of the Joint  Development  Project;  (iii) the Company has
agreed to pay 80% of the initial well  drilling and  completion  costs to earn a
51% working interest in the well and the total Joint  Development  Project;  and
(iv)American  Exploration has agreed to pay 20% of the initial well drilling and
completion  costs to earn a 49% working interest in the well and the total Joint


                                       12


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 3 - OIL AND GAS PROPERTIES (CONTINUED)
________________________________________________________________________________

Development  Project.  Also in accordance  with the terms and  provisions of the
Joint Development Project, future costs, including drilling and completions, for
oil and gas activities of the net acreage in the Joint Development  Project will
be split on a 51% / 49% basis  between  the Company  and  American  Exploration,
respectively.  The  Company  must  acquire the  acreage  committed  to the Joint
Development  Project from an unrelated third party on or before October 15, 2009
when the Letter Agreement  terminates and is no longer in force and effect.  The
Company completed the transaction as per above paragraph.

The Company's Oil and Gas properties are made up as follows:

                                            November 30,       February 29,
                                               2009                2009
___________________________________________________________________________


Oil and Gas Properties:
   Proved, subject to depletion             $ 3,478,385         $ 787,011
   Unproved, not subject to depletion         3,938,113                 -
___________________________________________________________________________

                                              7,416,498           787,011
   Accumulated depletion                      (182, 937)          (12,000)
___________________________________________________________________________

Total Oil and Gas Properties                $ 7,233,561         $ 775,011
===========================================================================


The following is a summary of the transactions  involving the Company's unproven
properties not subject to depletion:

                               Acquisition     Development
                                  Costs           Costs           Total
__________________________________________________________________________

Balance, February 28, 2008     $     9,176     $         -     $     9,176

Incurred during the year           702,923          74,912         777,835
Reallocated to proven and
   subject to depletion           (712,099)        (74,912)       (787,011)
__________________________________________________________________________

Balance, February 29, 2008               -               -               -

Incurred during the period       3,290,060       3,339,427       6,629,487
Reallocated to proven and
   subject to depletion                  -      (2,691,374)     (2,691,374)
__________________________________________________________________________

Balance, November 30, 2009     $ 3,290,060     $   648,053     $ 3,938,113
==========================================================================


Depletion of proved oil and gas properties  during the period ended November 30,
2009 was computed on the units-of-production  method based upon estimated proved
reserves of 13.169 Bcf,  reserves  produced during the period of 647,160 Mcf and
net  capitalized  costs  to be  amortized  totaling  $3,478,385  resulting  in a
depletion cost of $170,937 for the period and total accumulated  depletion costs
as of November 30, 2009 of $182,937.

NOTE 4 - PROMISSORY NOTE
________________________________________________________________________________

Effective  July 21, 2009,  the Board of Directors of the Company  authorized the
execution of a $3,500,000  senior secured bridge loan with Guggenheim  Corporate
Funding LLC ("Guggenheim")  (the "Loan Agreement").  The Company closed the Loan
Agreement effective August 10, 2009 with a maturity date of December 1, 2009. In
connection with the bridge loan, $2,000,000 was advanced to the Company with the
remaining  $1,500,000 to be advanced after certain  conditions are met. The term
financing also proposes non-binding  conditions for a $10,000,000 senior secured
advancing line of credit to be negotiated between the Company and Guggenheim.


                                       13


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 4 - PROMISSORY NOTE (CONTINUED)
________________________________________________________________________________

On October  16,  2009,  the Board of  Directors  of the Company  authorized  the
execution of a senior secured advancing line of credit agreement with a maturity
date of October  16, 2011 (the "Line of Credit  Agreement").  The Line of Credit
Agreement  represents a $40,000,000  line of credit facility with Guggenheim and
certain  other  lenders.  The  advances  has been used to retire the  $2,000,000
outstanding  on the $3,500,000  senior  secured bridge loan indicated  above and
will fund well completion costs and property acquisition costs.

The original  bridge loan and the line of credit bear  interest at the higher of
12% or bank prime rate plus 7.00%  calculated  and paid on a monthly  basis,  of
which $78,841 was paid through  November 30, 2009. The line of credit is secured
by way of a  first-priority  security  interest in all of the  Company's  assets
including the Company's  interest in the AMI  (including  but not limited to all
properties  and  leasehold  within  the  DeSoto  Acreage  and  the  Buena  Vista
prospect).  In addition, the Company has agreed to assign a permanent overriding
royalty  interests  ("ORRI") to  Guggenheim  ranging from 2.5%  (proportionately
reduced  from the  Company's  working  interest)  on any  acreage  now  owned or
hereafter  acquired  within  the AMI.  If the  Company  repays  the  outstanding
principal  early,  and an  agreed  rate of  return  has  not  been  realized  by
Guggenheim, an additional ORRI of 5.5% will be added to the permanent ORRI until
Guggenheim realizes the required rate of return,  after which only the permanent
ORRI  will  remain.   Additionally,   Guggenheim  will  participate  through  an
associated  company  as a 10%  working  interest  partner  in the  drilling  and
development of the Company's Mississippi project.

The Company paid financing fees in connection  with the original  bridge loan of
$415,600 which were being  amortized over the life of the loan of which $249,276
was amortized through October 16, 2009. The then unamortized balance of $166,324
along with $952,561 of additional costs incurred in connection with the new line
of credit will be  amortized  over the life of the line of credit to October 16,
2011. A total of $50,885 of this balance was amortized through November 30, 2009
leaving an unamortized balance of $1,068,000.

NOTE 5 - STOCKHOLDERS' EQUITY
________________________________________________________________________________

(A)      SHARE CAPITAL

The Company's  capitalization  is 400,000,000  common shares with a par value of
$0.0001 per share.

On February 25, 2008, the directors of the Company approved a special resolution
to undertake a forward split of the common stock of the Company on a basis of 20
new shares for 1 old share which was effective  March 11, 2008. On May 12, 2008,
the  directors  of the Company  approved a special  resolution,  to  undertake a
forward  split of the common stock of the Company on the basis of 1.5 new shares
for 1 old  share  which  was  effective  May 29,  2008.  On June 12,  2009,  the
directors of the Company approved a special  resolution,  to undertake a forward
split of the  common  stock of the  Company on a basis of 2 new shares for 1 old
share which was effective on July 15, 2009.

All references in these financial  statements to number of common shares,  price
per share and weighted average number of common shares  outstanding prior to the
20:1 forward stock split on March 11, 2008, the 1.5:1 forward stock split on May
29, 2008 and the 2:1 forward  stock split on July 15, 2009 have been adjusted to
reflect these stock splits on a retroactive basis, unless otherwise noted.

(B)      PRIVATE PLACEMENTS

On June 15, 2006, the Company issued  12,000,000  unregistered  shares of common
stock at $0.0000143 per share for proceeds of $172.

On October 6, 2006, the Company issued 25,020,000  unregistered shares of common
stock at a price of $0.000715 per share for proceeds of $17,892.

On October 15, 2007, the Company issued 24,000,000 unregistered shares of common
stock at a price of $0.00085 per share for proceeds of $20,452.

Between May 1, 2008 and July 22, 2008, the Company completed a private placement
of 12,000,000  unregistered  units at $0.33 per unit for proceeds of $4,000,000.
Of this  amount,  $50,000 was by way of a settlement  of debt and the  remaining
$3,950,000  was  received in cash.  Each unit  consists of one common  share and
one-half  non-transferable  share purchase warrant;  one whole  non-transferable
purchase warrant is exercisable at $0.67 per share for a period of one year from
the date of issuance ending on May 1, 2009.


                                       14


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 5 - STOCKHOLDERS' EQUITY (CONTINUED)
________________________________________________________________________________

(C)      OTHER ISSUANCES

On July 15, 2006, the Company issued 6,210,000 shares of common stock at a price
of $0.00071 per share on settlement of $4,440 for mineral property acquisition.

On March 17,  2009,  the  Company  issued  5,000  shares  of common  stock at an
estimated  fair  value  of $1.78  per  share  as per the  terms of a  consulting
agreement that became effective March 1, 2009.

On June 15,  2009,  the  Company  issued  5,000  shares  of  common  stock at an
estimated  fair  value  of $1.45  per  share  as per the  terms of a  consulting
agreement that became effective March 1, 2009.

(D)      SHARE PURCHASE WARRANTS

On April 29, 2009,  the Company  extended  expiration of the 6,000,000  warrants
from May 1, 2009 to June 1, 2009.

During the period,  a total of 1,729,500  warrants  were  exercised at $0.67 per
share with net proceeds of $1,153,000 to the Company and the remaining 4,270,500
warrants expired unexercised.

The Company's share purchase warrants activity for the period ended November 30,
2009 is summarized as follows:
                                                                Weighted average
                                            Weighted average      remaining In
                              Number of      exercise Price       contractual
                              Warrants         per share        life (in years)
________________________________________________________________________________

Balance, February 29, 2008             -         $    -                  -
Issued                         6,000,000           0.67                  -
Expired                                -              -                  -
Exercised                              -              -                  -
________________________________________________________________________________

Balance,  February 29, 2008    6,000,000           0.67               0.17
Issued                                 -              -                  -
Expired                       (4,270,500)          0.67                  -
Exercised                     (1,729,500)          0.67                  -
________________________________________________________________________________

Balance, November 30, 2009             -         $    -                  -
================================================================================

NOTE 6 - STOCK OPTION PLAN

On April 7, 2008, the Board of Directors of the Company  ratified,  approved and
adopted a Stock  Option  Plan for the  Company  allowing  for the grant of up to
4,400,000 options to acquire common shares with terms of up to 10 years. On July
9, 2008,  the Board of Directors of the Company  ratified,  approved and amended
the Stock  Option  Plan for the  Company  increasing  the  allowable  grant from
4,400,000  options to 7,600,000  options.  On September  22, 2009,  the Board of
Directors  of the Company  ratified,  approved and amended the Stock Option Plan
for the  Company  increasing  the  allowable  grant  from  7,600,000  options to
12,000,000  options.  In the event an  optionee  ceases to be  employed by or to
provide  services to the Company for reasons other than cause,  any Stock Option
that is vested and held by such optionee may be exercisable  within up to ninety
calendar days after the effective date that his position ceases. No Stock Option
granted under the Stock Option Plan is transferable. Any Stock Option held by an
optionee at the time of his death may be exercised by his estate within one year
of his death or such longer period as the Board of Directors may  determine.  On
September 22, 2009,  the Board of Directors  approved the amendment to the Stock
Option Plan, which authorizes an increase in share options to 12,000,000.


                                       15


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 6 - STOCK OPTION PLAN (CONTINUED)
________________________________________________________________________________

As approved by the Board of  Directors,  on April 7, 2008,  the Company  granted
4,200,000  fully  vested  stock  options  to  certain  officers,  directors  and
management  of the Company at $0.59 per share for terms of ten years.  The total
fair value of these  options at the date of grant was estimated to be $2,457,000
and was determined using the Black-Scholes option pricing model with an expected
life of 5 years,  a risk free interest rate of 2.75%, a dividend yield of 0% and
expected  volatility  of 260% and was  recorded  as a stock  based  compensation
expense in 2009.

As approved by the Board of Directors, between July 9, 2008 and August 19, 2008,
the Company  granted a total of 2,700,000  fully vested stock options to certain
officers and directors of the Company at prices  ranging from $2.10 per share to
$3.18 per share for terms of ten years. The total fair value of these options at
the date of grant was estimated to be $7,157,685  and was  determined  using the
Black-Scholes  option  pricing  model with the following  assumptions;  expected
lives of 5 years, risk free interest rates ranging from 3.07% - 3.12%,  dividend
yields of 0% and expected  volatility  of 260% and was recorded as a stock based
compensation expense in 2009.

As approved by the Board of Directors, on November 18, 2008, the Company granted
a total of 500,000  fully vested  stock  options to a director of the Company at
$2.50 per share for terms of ten years. The total fair value of these options at
the date of grant was estimated to be $1,182,500  and was  determined  using the
Black-Scholes option pricing model with the following  assumptions;  an expected
life of 5 years,  a risk free interest rate of 2.22%, a dividend yield of 0% and
expected  volatility  of 260% and was  recorded  as a stock  based  compensation
expense in 2009.

As approved by the Board of Directors,  on February 4, 2009, the Company granted
a total of 600,000 fully vested stock options to two directors of the Company at
$1.50 per share for terms of ten years. The total fair value of these options at
the  date of  grant  was  estimated  at  $1,197,000  and  determined  using  the
Black-Scholes option pricing model with the following  assumptions;  an expected
life of 5 years,  a risk free interest rate of 1.91%, a dividend yield of 0% and
expected  volatility  of 260% and was  recorded  as a stock  based  compensation
expense in 2009.

Also effective  February 4, 2009,  the Company  cancelled  1,800,000  previously
granted  and fully  vested  options to a former  director at $0.59 per share and
re-priced  to $1.50 per share,  3,200,000  previously  granted and fully  vested
options with original  exercise prices ranging from $2.10 per share to $3.18 per
share with all other terms remaining unchanged from the original issuances.  The
estimated  incremental  fair  value  resulting  from the  modification  of these
options of $8,500 was recorded as a stock based compensation expense in 2009.

As approved by the Board of Directors, on August 14, 2009, the Company granted a
total of 800,000  fully vested stock  options to two directors of the Company at
$1.50 per share for terms of ten years. The total fair value of these options at
the  date of  grant  was  estimated  at  $1,148,000  and  determined  using  the
Black-Scholes option pricing model with the following  assumptions;  an expected
life of 5 years,  a risk free interest rate of 2.51%, a dividend yield of 0% and
expected  volatility  of 260% and was  recorded  as a stock  based  compensation
expense in 2009.

On  September  22, 2009 the Company  granted an  aggregate  of  3,000,000  stock
options  to the Chief  Financial  Officer  of the  Company  under the 2008 Stock
Option Plan, as amended, with such terms and provisions of the grant,  including
exercise price and duration of exercise period,  to be determined at the time of
grant as follows:  (a)  1,500,000  Stock  Options  vesting  when the Company has
successfully  raised equity funding in the amount of $10,000,000 and (b) 500,000
Stock  Options  vesting when the Company has completed its listing and commences
trading of its shares of common  stock with a  designated  trading  symbol  (the
"Trading  Date") with the NYSE Amex  Equities,  formerly  known as the  American
Stock Exchange ("NYSE Amex Equities");  (c) 500,000 Stock Options vesting at the
one year  anniversary  date of the Trading  Date,  and (d) 500,000 Stock Options
vesting at the second year  anniversary  date of the Trading Date.  The exercise
price at each  vesting date shall be the lesser of (a) the  thirty-day  weighted
average  price of the  Company's  shares  of common  stock  prior to each of the
respective  vesting  dates and (b) the issue price of the shares of common stock
in the equity financings above.

On  September  22, 2009 the Company  granted an  aggregate  of  1,500,000  stock
options to the  President of the Company,  under the 2008 Stock Option Plan,  as
amended,  with such terms and provisions of the grant,  including exercise price
and  duration  of  exercise  period,  to be  determined  at the time of grant as
follows:  (a) 500,000 Stock  Options  vesting when the Company has completed its
listing and  commences  trading of its shares of common  stock with a designated
trading symbol (the "Trading Date") with the NYSE Amex Equities,  formerly known
as the American Stock Exchange ("NYSE Amex Equities"); (b) 500,000 Stock Options
vesting at the one year  anniversary  date of the Trading Date,  and (c) 500,000


                                       16


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 6 - STOCK OPTION PLAN (CONTINUED)
________________________________________________________________________________

Stock Options vesting at the second year  anniversary  date of the Trading Date.
The  exercise  price  at  each  vesting  date  shall  be the  lesser  of (a) the
thirty-day  weighted average price of the Company's shares of common stock prior
to each of the respective vesting dates and (b) the issue price of the shares of
common stock in the equity financings above.

The Company's  stock option activity for the nine months ended November 30, 2009
is summarized as follows:
                                                                Weighted average
                                            Weighted average      remaining In
                              Number of      exercise Price       contractual
                               Options         per share        life (in years)
________________________________________________________________________________


Balance, February 29, 2008             -         $    -                  -
Granted                        8,000,000           1.41                  -
Exercised                              -              -                  -
Expired / cancelled           (1,800,000)          0.59

Balance, February 28, 2009     6,200,000           1.15               9.36
Granted                          800,000           1.50                  -
Exercised                              -              -                  -
Expired / cancelled                    -              -

Balance, November 30, 2009     7,000,000         $ 1.19               8.49


NOTE 7 - RELATED PARTY TRANSACTIONS
________________________________________________________________________________

The  Company  paid a total  of  $159,039  in  management  fees to  officers  and
directors of the Company for the period ended  November 30, 2009  (November  30,
2008 - $86,000).

Effective September 22, 2009, the Board of Directors authorized the execution of
a two-year  executive  service  agreement  with Michael J. Newport,  the current
President/Chief  Executive Officer and a director of the Company (the "Executive
Service  Agreement").  In  accordance  with  the  terms  and  provisions  of the
Executive Service Agreement: (i) the Company shall continue to pay Mr. Newport a
monthly  salary  of  $15,000;  (ii) the  Company  shall  grant an  aggregate  of
1,500,000  stock  options (the "Stock  Options") to Mr.  Newport  under its 2008
Stock Option Plan,  as amended (the "Stock  Option  Plan"),  with such terms and
provisions  of the grant,  including  exercise  price and  duration  of exercise
period,  to be  determined  at the time of grant as follows:  (a) 500,000  Stock
Options vesting when the Company has completed its listing and commences trading
of its shares of common stock with a  designated  trading  symbol (the  "Trading
Date")  with the NYSE  Amex  Equities,  formerly  known  as the  American  Stock
Exchange  ("NYSE Amex  Equities");  (b) 500,000 Stock Options vesting at the one
year anniversary date of the Trading Date, and (c) 500,000 Stock Options vesting
at the second year  anniversary  date of the Trading Date. The exercise price at
each vesting  date shall be the lesser of (a) the  thirty-day  weighted  average
price of the  Company's  shares of common stock prior to each of the  respective
vesting  dates and (b) the  issue  price of the  shares  of common  stock in the
equity  financings  above;  and (iii) Mr.  Newport  shall  continue  to  provide
services to the Company in the capacity as the President/Chief Executive Officer
and a director and further provide consulting advise on exploration  strategies,
management and operational service considerations.

Effective September 22, 2009, the Board of Directors authorized the execution of
a two-year  executive service  agreement with Mark Witt (the "Executive  Service
Agreement").  In  accordance  with the terms  and  provisions  of the  Executive
Service  Agreement:  (i) the  Company  shall pay Mr.  Witt a  monthly  salary of
$10,000;  (ii) the Company  shall grant an aggregate of 3,000,000  stock options
(the "Stock  Options") to Mr. Witt under its 2008 Stock Option Plan,  as amended
(the  "Stock  Option  Plan"),  with such  terms  and  provisions  of the  grant,
including  exercise price and duration of exercise  period,  to be determined at
the time of grant as follows:  (a)  1,500,000  Stock  Options  vesting  when the
Company has successfully  raised equity funding in the amount of $10,000,000 and
(b) 500,000 Stock Options vesting when the Company has completed its listing and
commences trading of its shares of common stock with a designated trading symbol
(the "Trading Date") with the NYSE Amex Equities, formerly known as the American
Stock Exchange ("NYSE Amex Equities");  (c) 500,000 Stock Options vesting at the
one year  anniversary  date of the Trading  Date,  and (d) 500,000 Stock Options
vesting at the second year  anniversary  date of the Trading Date.  The exercise
price at each  vesting date shall be the lesser of (a) the  thirty-day  weighted


                                       17


<PAGE>


                             MAINLAND RESOURCES INC.
                          (A Production Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                NOVEMBER 30, 2009
                                   (UNAUDITED)
________________________________________________________________________________


NOTE 7 - RELATED PARTY TRANSACTIONS (CONTINUED)
________________________________________________________________________________

average  price of the  Company's  shares  of common  stock  prior to each of the
respective  vesting  dates and (b) the issue price of the shares of common stock
in the equity  financings  above, and (c) Mr. Witt shall provide services to the
Company in the capacity as the Treasurer/Chief  Financial Officer and a director
and further provide consulting advise on exploration strategies,  management and
operational service considerations.


NOTE 8 - SUBSEQUENT EVENTS
________________________________________________________________________________

On December 21, 2009, the Company acquired,  under its agreement with Petrohawk,
an additional  159.3 net acres for $412,985 and on December 23, 2009 the Company
also acquired an additional  51.96 net acres in  conjunction  with Petrohawk for
$94,731 within the Cotton Valley/Haynesville trend in the State of Louisiana.

The Company has evaluated  subsequent  events through  January 14, 2010 the date
which the financial statement were available to be issued.


NOTE 9 -CONTINGENCIES
________________________________________________________________________________

During  August  2009,  the  Company was  included in a third party  lawsuit by a
former  director of the Company.  The former  Director  has made  certain  false
allegations  against the Company,  as specifically  described in the body of the
Company's  August 31, 2009 and November 30, 2009 filings on Form 10-Q.  Although
the Company refutes these  allegations and believes it should not be included in
this action and that the claims  contained within the lawsuit are without merit,
it is possible that the Company may be exposed to a loss  contingency.  However,
the amount of such loss, if any, cannot be reasonably estimated at this time and
accordingly, no amount has been recorded to date.


NOTE 10 -PRODUCTION STAGE
________________________________________________________________________________

The  company  was an  exploration  stage  company in the years prior to the year
ended February 28, 2009.  The Company  became a production  stage company during
the quarter ended November 30, 2009.


NOTE 11 -RECLASSIFICATION: STOCK SPLIT ADJUSTMENT
________________________________________________________________________________

Certain  reclassifications  have  been  made  in the  current  year's  financial
statements.

On February 25, 2008, the Company executed a forward stock split,  effected as a
stock dividend,  which was originally  recorded as a debit to Additional Paid-in
Capital and a  corresponding  credit to Common  Stock,  in the amount of $1,027.
During the six months ended August 31, 2009, the Company recorded an adjustment,
whereby  the  Company  recorded  a debit to  Retained  Earnings  and a credit to
Additional  Paid-in  Capital,  in the amount of $1,027.  This adjustment did not
change total stockholders equity. (See Note 6 for more information regarding the
stock split).


                                       18


<PAGE>


                           FORWARD LOOKING STATEMENTS

Statements  made in this Form 10-Q that are not  historical or current facts are
"forward-looking  statements"  made  pursuant to the safe harbor  provisions  of
Section  27A of the  Securities  Act of 1933 (the  "Act") and Section 21E of the
Securities Exchange Act of 1934. These statements often can be identified by the
use  of  terms  such  as  "may,"  "will,"  "expect,"  "believe,"   "anticipate,"
"estimate," "approximate" or "continue," or the negative thereof. We intend that
such  forward-looking  statements  be  subject  to the  safe  harbors  for  such
statements.  We wish to caution  readers not to place undue reliance on any such
forward-looking  statements,   which  speak  only  as  of  the  date  made.  Any
forward-looking  statements represent  management's best judgment as to what may
occur in the future. However,  forward-looking  statements are subject to risks,
uncertainties  and important  factors beyond our control that could cause actual
results and events to differ  materially from  historical  results of operations
and events  and those  presently  anticipated  or  projected.  We  disclaim  any
obligation  subsequently  to revise any  forward-looking  statements  to reflect
events or  circumstances  after the date of such  statement  or to  reflect  the
occurrence of anticipated or unanticipated events.

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

Mainland Resources,  Inc. was incorporated under the laws of the State of Nevada
on May 12, 2006 and has been engaged in the business of acquisition, exploration
and development of mineral  properties in the United States since its inception.
Our shares of common stock trade on the  Over-the-Counter  Bulletin  Board under
the symbol  "MNLU:OB."  We are a natural  resource  exploration  and  production
company currently engaged in the exploration, acquisition and development of oil
and gas  properties in the United States and within North  America.  Our primary
activity and focus is our lease in East Holly Field, De Soto Parish in northwest
Louisiana (the "De Soto Parish") as more fully described below. To date, we have
acquired  approximately  2,906 net acres  within the De Soto  Parish  within the
Cotton  Valley/Haynesville  trend  in the  State  of  Louisiana  as  more  fully
described below.

Please note that throughout this Quarterly  Report,  and unless otherwise noted,
the words "we," "our," "us," the "Company," or "Mainland  Resources,"  refers to
Mainland Resources, Inc.

RECENT DEVELOPMENTS

AUGUST 3, 2009 FORWARD STOCK SPLIT

On July 12,  2009,  our  Board of  Directors  pursuant  to a Board of  Directors
meeting  authorized  and  approved a forward  stock  split of two for one of our
total issued and outstanding shares of common stock (the "Forward Stock Split").

The Forward Stock Split was  effectuated  based on market  conditions and upon a
determination  by our Board of Directors that the Forward Stock Split was in our
best interests and of the shareholders. Certain factors were discussed among the


                                       19


<PAGE>


members of the Board of  Directors  concerning  the need for the  Forward  Stock
Split,  including  the  increased  potential  for  financing.  The intent of the
Forward Stock Split is to increase the marketability of our common stock.

The  Forward  Stock  Split was  effectuated  on June 16,  2009 upon  filing  the
appropriate  documentation  with NASDAQ.  The Forward Stock Split  increased our
total issued and outstanding  shares of common stock from  40,484,751  shares to
approximately  80,969,502 shares of common stock. The common stock will continue
to be $0.0001 par value.

Commensurate  with the Forward  Stock Split,  the  authorized  share capital was
increased  from  200,000,000  shares of common  stock to  400,000,000  shares of
common stock with a par value of $0.0001 per share. An amendment to our Articles
of  Incorporation  was filed with the Nevada Secretary of State on July 15, 2009
affecting the increase in our authorized share capital.

CURRENT BUSINESS OPERATIONS

We are a natural resource  exploration and production  company currently engaged
in the exploration, acquisition and development of oil and gas properties in the
United States and within North  America.  Our primary  activity and focus is our
lease in the De Soto Parish. To date, we have acquired  approximately  2,906 net
acres in De Soto Parish within the Cotton  Valley/Haynesville trend in the State
of Louisiana as more fully described below.

EAST HOLLY FIELD, DE SOTO PARISH, LOUISIANA

On  February  27,  2008,  we  entered  into an  option  agreement  (the  "Option
Agreement") with Kingsley  Resources,  Inc.,  Nevada  corporation  ("Kingsley"),
pursuant to which we acquired all the right,  title and interest Kingsley has in
and to certain  leasehold  estates (the "Leases") located in East Holly Field of
the De Soto  Parish.  The  Leases  create a  contiguous  block of acreage on the
southeast  flank of the East  Holly  Field.  The  Leases  were the  subject of a
certain purchase agreement dated December 11, 2007 and modified February 1, 2008
(collectively,  the "Leasehold Purchase Agreement") between Kingsley and Permian
Basin  Acquisition  Fund  ("Permian"),  pursuant to which Kingsley  acquired the
sub-surface rights provided for in the Leases.

In  accordance  with the terms  and  provisions  of the  Option  Agreement:  (i)
Kingsley granted to us all of its right, title and interest in and to the Leases
and we  assumed  all  rights,  duties  and  obligations  of  Kingsley  under the
Leasehold Purchase Agreement;  (ii) we agreed to pay to Kingsley $100,000, which
is payable as a reimbursement of a deposit paid by Kingsley to Permian under the
Leasehold  Purchase  Agreement;  and (iii) on or about  March 15, 2008 or at the
time we pay the $100,000 to Kingsley  under the Option  Agreement and such other
amounts  to  Permian  as  required  of  Kingsley  under the  Leasehold  Purchase
Agreement,  the right,  title and interest of Permian and Kingsley in the Leases
will be transferred and delivered to us, subject to residual royalty payment and
other rights  reserved  under the  Leasehold  Purchase  Agreement and the Option
Agreement by Permian and Kingsley.

On March 14, 2008,  we paid to Permian the aggregate  amount of $587,596,  which
amount did not include the $100,000  required to be paid by us to Kingsley under
the terms of the Option Agreement, the $100,000 was paid to Kingsley on April 2,


                                       20


<PAGE>


2008.  In  accordance  thereof,  the right,  title and  interest  of Permian and
Kingsley in the Leases were transferred to us effective March 14, 2008 by way of
assignment.  As of the date of this  Quarterly  Report,  we have  completed  the
Option  Agreement  and the  Leasehold  Purchase  Agreement  at a  total  cost of
$687,596 for approximately 2,551 net acres.

On December 21, 2009, we acquired  under our  agreement  with  Petrohawk  Energy
Corporation  ("Petrohawk")  an  additional  159.3  net acres  for  $412,985.  On
December 23, 2009,  we acquired a further  51.96 net acres in  conjunction  with
Petrohawk for $94,731 within the Cotton Valley/Haynesville trend.

COTTON VALLEY/HAYNESVILLE

As of the date of this Quarterly Report, we have leased various other properties
totaling  approximately  144 net acres  consisting of approximately 84 net acres
leased as of  February  29,  2008 and an  additional  60 net acres  leased as of
February  28, 2009 for payment of  additional  consideration  of $22,753.  These
additional  property  leases within the Cotton  Valley/Haynesville  trend in the
State of  Louisiana  are for a three-year  term  period.  We have a 100% working
interest  and a 75% net  revenue  interest in the leases  comprising  a total of
2,762 net acres.

DRILLING  INITIATIVES.  As of the date of this Quarterly  Report, in conjunction
with our joint venture partner, Petrohawk Energy Corporation ("Petrohawk"),  our
technical team (guided by management),  will determine our drilling initiatives.
These  initiatives are based on project  priority,  leasehold  requirements  and
availability  of resources,  access,  costs and a number of factors that go into
strategic planning.  With regards to the East Holly Field, management intends to
drill its initial well to a depth similar to that of other area  participants in
the  Cotton  Valley  and  Hosston  formations  and the  Haynesville  Shale.  The
technical team in conjunction  with our joint venture partner expects that other
wells drilled in this region will be based on the detailed  data gained  through
the initial well drilling process.

PETROHAWK AGREEMENT.  Effective on July 14, 2008, our Board of Directors entered
into a  binding  venture  agreement  (the  "Letter  Agreement")  with  Petrohawk
relating to the joint  development of acreage of the Company's  leases in DeSoto
Parish,  Louisiana.  In accordance  with the terms and  provisions of the Letter
Agreement:  (i)  Petrohawk  agreed  to pay  100%  of the  costs  of  development
associated  with the first  well  drilled  below the  Cotton  Valley  Formation,
including drilling,  completing and fracture stimulating, as well as costs up to
and  including  pipeline  connection;  (ii)  Petrohawk  agreed to pay 80% and we
agreed to pay 20% of all costs of the second well drilled  below the base of the
Cotton Valley Formation;  and (iii) Petrohawk agreed to pay 60% and we agreed to
pay 40% of all  costs of the third  well  drilled  below the base of the  Cotton
Valley  Formation.  In accordance  with the further terms and  provisions of the
Letter  Agreement,  we agreed to transfer 60% of our leases in the DeSoto Parish
to Petrohawk at closing, but only as such leases related to all depths below the
base of the Cotton Valley  Formation and  specifically  the  Haynesville  Shale.
Petrohawk further agreed to gather and market our production from above the base
of the Cotton Valley Formation pursuant to a mutually acceptable agreement.  The
Letter Agreement was subject to due diligence.


                                       21


<PAGE>


Effective  August 4, 2008, we entered into a definitive  binding  agreement with
Petrohawk   consummating   the  transaction   described  above  (the  "Petrohawk
Agreement"),  together with associated  assignment,  conveyance and bill of sale
(the  "Assignment").  In  accordance  with  the  terms  and  provisions  of  the
Assignment,  we have  effectively  transferred  and conveyed to Petrohawk  sixty
percent (60%) of our 100% right,  title and interest in and to the leases in the
DeSoto Parish.  Petrohawk has been designated as the operator on all development
relating to the leases.

GRIFFITHS  11-#1  WELL.  On October  20,  2008,  the  Griffith  Well No. 10H was
spudded.  The Griffiths  11-#1 well  commenced  production at the end of January
2009. We believe that the  recoverable  reserves for the Griffith 11-#1 well may
ultimately be from 7.5 BCF to 15.81 BCF. The 15.81 BCF rate was  determined by a
preliminary  reserve  report  prepared by T.W.  McQuire &  Associates,  Inc. The
ultimate recovery was determined by using a type curve that uses 80% decline for
the first year  followed by a 30% decline for the second  year,  15% decline for
the third year, and a 10% decline over the remaining expected life of the well.

STEPHENSON DOUGLAS LLC 16-#1. The second well under the Petrohawk Agreement, the
Stevenson  Douglas LLC 16-#1 well,  began drilling in April 2009. As of the date
of this Quarterly Report, the Stephenson Douglas LLC 16-#1 has been successfully
drilled to a depth of 10,700  feet and 7 5/8 inch  intermediate  casing has been
run on the well to this  depth.  The well has been  cemented  surface  casing at
about 1800 feet.  The rig has now been  released.  Management  believes that the
Stephenson Douglas LLC 16-#1 well shows similar potentially  productive sands in
the Hosston and Cotton Valley  formations  to those  discovered in the Griffiths
11-#1Well. We are awaiting the scheduled arrival of a larger rig capable of whip
stocking the well and drilling the lateral  portion of the  wellbore.  We expect
the well to be completed by the beginning of February 2010.

DEHAN 15 -#1-H.  The third  well  under the  Petrohawk  Agreement,  the Dehan 15
#1-well, began drilling in May 2009. The well commenced production in the middle
of August 2009.

MISSISSIPPI PROSPECT/WESTROCK LAND CORP.

Effective on September , 2008,  our Board of Directors  authorized the execution
of an option  agreement (the "2008 Option  Agreement")  with Westrock Land Corp.
("Westrock") to acquire 5,000 net acres in mineral oil and gas leases located in
the  State of  Mississippi  (the  "Leases").  In  accordance  with the terms and
provisions  of the 2008 Option  Agreement:  (i) we will  acquire a 100%  working
interest  and a 75% net revenue  interest in the Leases;  (ii) we have agreed to
pay  certain  acquisition  costs per net  mineral  acre and also paid a $500,000
deposit  to  secure  the  2008  Option  Agreement;  (iii)  the  balance  of  the
acquisition  costs will be due and payable upon completion of the due diligence,
which 2008  Option  Agreement  is  subject to the  completion  of  standard  due
diligence  review by us to be completed no later than October 15, 2008; and (iv)
upon closing scheduled no later than October 15, 2008,  Westrock shall assign to
us all of its right,  title and  interest in and to the Leases free and clear of
all  liens  and  encumbrances.  On  October  15,  2008,  November  30,  2008 and
subsequently  on April 16, 2009, and June 1, 2009 the 2008 Option  Agreement was
extended pursuant to which the option period is currently extended until January
20, 2010  Additional  deposits of  $250,000,  $100,000,  $250,000,  $100,000 and
$100,000 were paid on October 17, 2008,  December 1, 2008, December 29, 2008 and
April 27, 2009, May 6, 2009 and June 5, 2009  respectively,  for a total deposit
to date of $1,300,000 (August 31, 2009 - $1,300,000,  May 31, 2009 - $1,300,000,
February 28, 2009 - $1,100,000) in connection with these extensions.


                                       22


<PAGE>


MISSISSIPPI HAYNESVILLE/BOSSIER PROSPECT

On June 23,  2009,  we signed an Option  Agreement  with  Westrock  Land Corp to
acquire  approximately  8,000 net acres in mineral oil and gas leases located in
the State of  Mississippi.  In accordance  with the terms and  provisions of the
Option Agreement; (i ) we will acquire a 100% working interest and a minimum 75%
net  revenue  interest  in the  Leases;  (ii)  we  have  agreed  to pay  certain
acquisition  costs per net mineral acres by August 31, 2009. On August 28, 2009,
we amended the Option  Agreement to expand the acreage to include an  additional
225 acres thus aggregating 8,225 net acreage subject to the Option Agreement. We
further agreed to advance a payment of $300,000 towards the total purchase price
of the  acreage  under the Option  Agreement.  On October 13,  2009,  we paid an
additional  $900,000  towards the  purchase  price of the  property and paid the
final  installment  of $2,090,060 on November 3, 2009 for a total purchase price
of $3,290,060.

BUENA VISTA AREA

Effective on September 17, 2009, our Board of Directors authorized the execution
of a  letter  agreement  (the  "Letter  Agreement")  with  American  Exploration
Corporation,  a Nevada corporation  ("American  Exploration") to jointly develop
contiguous  acreage  known as the Buena Vista Area located in  Mississippi  (the
"Joint Development Project"). In accordance with the terms and provisions of the
Letter Agreement:  (i) American  Exploration has agreed to commit  approximately
5,000 net acres and we have  agreed to commit  approximately  8,225 net acres to
the  Joint  Development  Project;  (ii) we shall be the  operator  of the  Joint
Development  Project;  (iii)  we  have  agreed  to pay 80% of the  initial  well
drilling and completion costs to earn a 51% working interest in the well and the
total Joint Development  Project; and (iv) American Exploration has agreed to to
pay 20% of the initial well drilling and completion  costs to earn a 49% working
interest  in the  well and the  total  Joint  Development  Project.  In  further
accordance  with the terms and  provisions  of the  Joint  Development  Project,
future costs, including drilling and completions,  for oil and gas activities of
the net  acreage  in the Joint  Development  Project  will be split on a 51%/49%
basis between us and American Exploration, respectively.

We must acquire the acreage committed to the Joint  Development  Project from an
unrelated  third party on or before  October 15, 2009 when the Letter  Agreement
terminates  and is no  longer  in  force  and  effect.  As of the  date  of this
Quarterly Report, we have completed this transaction.

RESULTS OF OPERATION

We are a production  stage  company and although we have realized  revenues,  we
have  incurred  recurring  losses to date.  Our financial  statements  have been
prepared assuming that we will continue as a going concern and, accordingly,  do
not include adjustments relating to the recoverability and realization of assets
and classification of liabilities that might be necessary should we be unable to
continue in operation.  We expect we will require additional capital to meet our
long term operating requirements. We expect to raise additional capital through,
among other things, the sale of equity or debt securities.


                                       23


<PAGE>


The  summarized  financial data set forth in the table below is derived from and
should be read in conjunction  with our unaudited  financial  statements for the
nine month periods ended November 30, 2009 and November 30, 2008,  including the
notes to those financial statements which are included in this Quarterly Report.
The following  discussion contains  forward-looking  statements that reflect our
plans,  estimates and beliefs.  Our actual results could differ  materially from
those  discussed  in the  forward  looking  statements.  Our  audited  financial
statements  are stated in United  States  Dollars and are prepared in accordance
with United States Generally Accepted Accounting Principles.































                                       24


The following  table sets forth selected  financial  information for the periods
indicated.

RESULTS OF OPERATION

                                                   NINE MONTH PERIOD ENDED
                                                      NOVEMBER 30, 2009
                                                    AND NOVEMBER 30, 2008
                                               ________________________________
REVENUES

   Oil and gas revenue                         $  2,118,927                   -

GENERAL AND ADMINISTRATIVE EXPENSES

   Operating costs and taxes                        618,887                   -
   Depletion allowance                              170,937                   -
   Consulting fees                                  264,352             536,480
   Management fees - related party                  159,039              86,000
   Marketing expenses                                62,003             921,107
   Office and general                               124,447              67,848
   Professional fees                                202,219             179,029
   Salary expense                                 1,148,000          10,797,185
                                               ________________________________

Net operating loss                               (2,749,884)        (12,587,649)

Other items

   Gain on settlement of debt                             -              33,239
   Interest income                                      700               7,112
   Interest expense                                 (78,841)                  -
   Financing costs                                 (300,161)                  -
                                               ________________________________

Net loss                                         (1,009,259)        (12,547,298)
   Foreign currency translation adjustment                -                 422
                                               ________________________________

Comprehensive loss                             $ (1,009,259)       $(12,546,876)


We have incurred  recurring  losses to date. Our financial  statements have been
prepared assuming that we will continue as a going concern and, accordingly,  do
not include adjustments relating to the recoverability and realization of assets
and classification of liabilities that might be necessary should we be unable to
continue in operation.

We expect we will  require  additional  capital to meet our long term  operating
requirements. We expect to raise additional capital through, among other things,
the sale of equity or debt securities.


                                       25


<PAGE>



NINE MONTH  PERIOD ENDED  NOVEMBER 30, 2009  COMPARED TO NINE MONTH PERIOD ENDED
NOVEMBER 30, 2008.

Our  comprehensive  loss for the nine month period  ended  November 30, 2009 was
($1,009,259)  compared to a comprehensive loss of ($12,546,876)  during the nine
month  period  ended  November  30, 2008 (a decrease  in  comprehensive  loss of
$11,537,617). During the nine month period ended November 30, 2009, we generated
$2,118,927  in oil and gas revenue  compared to $-0-  generated  during the nine
month period ended November 30, 2008.

During the nine month period ended  November 30, 2009,  we incurred  general and
administrative  expenses of $2,749,884  compared to $12,587,649  incurred during
the nine month ended November 30, 2008 (a decrease of $9,837,765). These general
and administrative expenses incurred during the nine month period ended November
30, 2009 consisted of: (i) operating costs and taxes of $618,887  (2008:  $-0-);
(ii) depletion  allowance of $170,937  (2008:  $-0-);  (iii)  consulting fees of
$264,352 (2008: $536,480); (iv) management fees-related party of $159,039 (2008:
$86,000);  (v) marketing expenses of $62,003 (2008:  $921,107);  (vi) office and
general of $124,447 (2008: $67,848);  (vii) professional fees of $202,219 (2008:
$179,029); and (viii) salary expense of $1,148,000 (2008: $10,797,185).

Of the $2,749,884  incurred as general and  administrative  expenses  during the
nine month  period  ended  November 30,  2009,  we incurred  management  fees of
$159,039 payable to our officers and directors.

General and administrative  expenses incurred during the nine month period ended
November  30, 2009  compared to the nine month  period  ended  November 30, 2008
decreased  primarily due to the decrease in salary  expense to  $1,148,000  from
$10,797,185 during the nine month period ended November 30, 2008 relating to the
valuation  of stock  based  compensation,  the  decrease in  consulting  fees to
$264,352 from $536,480 during the nine month period ended November 30, 2008, and
the decrease in  marketing  expenses to $62,003  from  $921,107  during the nine
month  period  ended  November 30,  2008.  General and  administrative  expenses
generally include corporate  overhead,  financial and administrative  contracted
services, marketing, and consulting costs.

Our net operating  loss during the nine month period ended November 30, 2009 was
$1,009,259 compared to a net operating loss of $12,587,649 during the nine month
period ended November 30, 2008.

During the nine month period ended  November 30, 2009,  other income and loss in
the amount of $-0- (2008: $33,239) in gain on settlement of debt and $700 (2008:
$7,112)  in  interest  income,  interest  expense of  $78,841  (2008:  $-0-) and
financing  costs  of  $300,161  (2008:  $-0-).  This  resulted  in net  loss  of
($1,009,259) for the nine month period ended November 30, 2009 compared to a net
loss of ($12,547,298) for the nine month period ended November 30, 2008.

Our net loss of  ($1,009,259)  for the nine month period ended November 30, 2009
was offset for foreign currency translation adjustment of $-0- (2008: $422) This
resulted in  comprehensive  loss of ($1,009,259) for the nine month period ended
November 30, 2009 as compared to a comprehensive  loss of ($12,546,876)  for the
nine month period ended November 30, 2008. The weighted average number of shares
outstanding  was  80,438,015  for the nine month period ended  November 30, 2009
compared to 76,377,536 for the nine month period ended November 30, 2008.


                                       26


<PAGE>


THREE MONTH PERIOD ENDED  NOVEMBER 30, 2009 COMPARED TO THREE MONTH PERIOD ENDED
NOVEMBER 30, 2008.

Our  comprehensive  loss for the three month period ended  November 30, 2009 was
($173,171)  compared to a comprehensive  loss of  ($1,366,665)  during the three
month  period  ended  November  30, 2008 (a decrease  in  comprehensive  loss of
$1,193,494). During the three month period ended November 30, 2009, we generated
$634,574 in oil and gas  revenue  compared  to $-0-  generated  during the three
month period ended November 30, 2008.

During the three month period ended  November 30, 2009, we incurred  general and
administrative  expenses of $523,886 compared to $1,367,750  incurred during the
three month ended November 30, 2008 (a decrease of $843,864).  These general and
administrative  expenses  incurred  during the three month period ended November
30, 2009 consisted of: (i) operating costs and taxes of $208,278  (2008:  $-0-);
(ii)  depletion  allowance of $52,540 (2008:  $-0-);  (iii)  consulting  fees of
$60,371 (2008:  $44,123);  (iv) management  fees-related party of $74,667 (2008:
$30,000);  (v)  marketing  expenses  of $-0-  (2008:  $24,280);  (vi) office and
general of $35,512 (2008:  $20,514);  (vii)  professional fees of $92,518 (2008:
$66,333); and (viii) salary expense of $-0- (2008: $1,182,500).

General and administrative expenses incurred during the three month period ended
November 30, 2009  compared to the three month  period  ended  November 30, 2008
decreased  primarily  due to  the  decrease  in  salary  expense  to  $-0-  from
$1,182,500 during the three month period ended November 30, 2008 relating to the
valuation of stock based  compensation and the decrease in marketing expenses to
$-0- from $24,280 during the three month period ended November 30, 2008.

Our net operating gain during the three month period ended November 30, 2009 was
$110,668  compared to a net operating loss of $1,367,750  during the three month
period ended November 30, 2008.

During the three month period ended  November 30, 2009, we recorded  other items
in the amount of $232 (2008:  $1,085) in interest  income,  interest  expense of
$66,883 (2008: $-0-) and financing fees of $217,208 (2008:  $-0-). This resulted
in comprehensive  loss of $173,171 for the three month period ended November 30,
2009 compared to a  comprehensive  loss of $1,366,665 for the three month period
ended November 30, 2008.

The weighted  average number of shares  outstanding was 80,969,500 for the three
month period ended  November 30, 2009 compared to 79,230,000 for the three month
period ended November 30, 2008.


                                       27


<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

NINE MONTH PERIOD ENDED NOVEMBER 30, 2009

As at the nine month period ended  November  30, 2009,  our current  assets were
$3,351,089  and our current  liabilities  were  $6,948,682,  which resulted in a
working  capital  deficit  of  $3,597,593.  As at the nine  month  period  ended
November 30, 2009,  current assets were comprised of: (i) $482,104 in cash; (ii)
$500,985 in accounts receivable;  (iii) $1,300,000 in deposit on properties; and
(iv)  $1,068,000 in  unamortized  financing  costs.  As at the nine month period
ended  November 30, 2009,  current  liabilities  were comprised of $1,148,682 in
accounts payable and accrued liabilities and $5,800,000 in a promissory note.

As at the nine month  period  ended  November  30,  2009,  our total assets were
$10,584,650  comprised of: (i) current assets in the amount of $3,351,089;  (ii)
valuation  of proved oil and gas  properties,  net of  accumulated  depletion of
$3,295,448  ; and  (iii)  valuation  of  unproved  oil  and  gas  properties  of
$3,938,113.  The  increase in total  assets  during the nine month  period ended
November 30, 2009 from fiscal year ended  February 29, 2009 was primarily due to
the  increase in cash and the  valuation  of the proved and unproved oil and gas
properties of $7,233,561.

As at the nine month period ended November 30, 2009, our total  liabilities were
$6,948,682   comprised  entirely  of  current   liabilities.   The  increase  in
liabilities  during the nine month  period  ended  November 30, 2009 from fiscal
year ended  February 29, 2009 was primarily due to us entering into a promissory
note of $5,800,000. See " Material Commitments".

Stockholders'  equity  increased from  $2,328,102 for fiscal year ended February
29, 2009 to $3,635,968 for the nine month period ended November 30, 2009.

CASH FLOWS FROM OPERATING ACTIVITIES

We have  generated  positive  cash flows from  operating  activities  during the
period.  For the nine month period ended  November 30, 2009, net cash flows from
operating   activities  was  $501,726  consisting   primarily  of  net  loss  of
($1,009,259).  Net cash flows from operating activities was adjusted by $170,937
for  depletion,  $1,148,000  in stock  based  compensation,  $16,125 in non-cash
consulting fees and $300,161 in amortized  financing  costs. Net cash flows from
operating  activities  was  further  changed by $3,702 in  accounts  payable and
accrued liabilities and $127,940 in accounts receivable.

For the nine  month  period  ended  November  30,  2008,  net cash flows used in
operating  activities  was  ($1,729,234)  consisting  primarily of a net loss of
($12,547,298).  Net cash flows used in  operating  activities  was  adjusted  by
$10,797,185  in stock based  compensation  and  ($33,239)  in  non-cash  mineral
property  recoveries.  Net cash flows used in operating  activities  was further
changed by $60,256 in accounts  payable and accrued  liabilities and ($6,138) in
accounts payable - related parties.


                                       28


<PAGE>


CASH FLOWS FROM INVESTING ACTIVITIES

For the nine  month  period  ended  November  30,  2009,  net cash flows used in
investing  activities was  ($6,720,298)  consisting of investment in oil and gas
property of ($6,520,298) and deposit on properties of ($200,000) compared to net
cash flows used in  investing  activities  during  the nine month  period  ended
November  30,  2008 of  ($1,846,775)  consisting  of  investment  in oil and gas
property.

CASH FLOWS FROM FINANCING ACTIVITIES

We have  financed  our  operations  primarily  from either  advancements  or the
issuance  of  equity  and debt  instruments.  For the nine  month  period  ended
November  30,  2009,  net cash flows  provided  from  financing  activities  was
$6,550,400  compared to $3,950,000  for the nine month period ended November 30,
2008.  Cash flows from  financing  activities  for the nine month  period  ended
November  30, 2009  consisted  of  $1,153,000  in proceeds  from the exercise of
warrants and  $5,800,000  from a promissory  note.  Net cash flow  provided from
financing  activities was further  changed by ($402,600) in payment of financing
costs.  Cash flows from  financing  activities  for the nine month  period ended
November 30, 2008 consisted of $3,950,000 in proceeds on sale of common stock.

We expect that working capital requirements will continue to be funded through a
combination  of our  existing  funds,  cash flow,  debt  financing  and  further
issuances  of  securities.  Our working  capital  requirements  are  expected to
increase in line with the growth of our business.

PLAN OF OPERATION AND FUNDING

Existing working capital, further advances and debt instruments, and anticipated
cash flow are expected to be adequate to fund our  operations  over the next six
months.  Generally,  we have financed operations to date through the proceeds of
the private  placement of equity and debt  instruments.  In connection  with our
business plan, management anticipates additional increases in operating expenses
and capital expenditures relating to: (i) oil and gas operating properties; (ii)
possible drilling  initiatives on current properties and future properties;  and
(iii) future  property  acquisitions.  We intend to finance these  expenses with
further  issuances of securities and debt  issuances.  Thereafter,  we expect we
will need to raise  additional  capital and generate  revenues to meet long-term
operating  requirements.  Additional  issuances  of equity or  convertible  debt
securities will result in dilution to our current  shareholders.  Further,  such
securities  might have rights,  preferences  or privileges  senior to our common
stock.  Additional  financing may not be available upon acceptable  terms, or at
all. If adequate  funds are not  available or are not  available  on  acceptable
terms,  we may not be  able  to  take  advantage  of  prospective  new  business
endeavors or opportunities,  which could  significantly and materially  restrict
our business operations.

During  fiscal year ended  February  28,  2009,  we engaged in the 2008  Private
Placement  Offering pursuant to which we raised $4,000,000 under Regulation S of
the Securities Act.


                                       29


<PAGE>


MATERIAL COMMITMENTS

As of the date of this  Quarterly  Report,  and in addition  to our  obligations
under  the  Option  Agreement  as  incurred,  we  have  the  following  material
commitments:

PROMISSORY NOTE

Effective  July 21, 2009,  our Board of Directors  authorized the execution of a
$3,500,000  senior secured bridge loan (the "Loan  Agreement")  with  Guggenheim
Corporate Funding LLC ("Guggenheim").  As of August 10, 2009, we closed the Loan
Agreement  with a maturity  date of  December  1, 2009.  As of August 31,  2009,
$2,000,000 had been advanced to us with the remaining  $1,500,000 to be advanced
after certain  conditions are met. The term financing also proposes  non-binding
conditions  for a  $10,000,000  senior  secured  advancing  line of credit to be
negotiated between us and Guggenheim.

We secured the bridge loan financing based upon our  participation  as a working
interest  partner in the drilling and  completion  of the Griffith No. 1 well in
our East Holly project located in DeSoto Parish,  Louisana. The proceeds will be
generally used to fund near-term  drilling and completion  capital  requirements
associated  with the two  additional  Haynesville  shale wells in our East Holly
project area and to acquire oil and gas leases related to our recently announced
Mississippi prospect.

The first  advance to be made by  Guggenheim  to the Company under the terms and
provisions of the Loan  Agreement is in the amount of  $2,500,000  (the "Initial
Advance"), of which we have received $2,000,000, to: (i) fund cash calls related
for our Dehan  15-1 well in an amount not to exceed  $1,500,000;  (ii) fund cash
calls related to the Stevenson-Douglas  16-1 well and general and administrative
expenses in an aggregate amount not to exceed $900,000; and (iii) pay our out of
pocket legal  expenses and closing fees related to the bridge loan  financing in
an amount not to exceed  $100,000.  The second  advance shall be made subject to
certain  conditions in the amount of $1,000,000 to fund expenses  related to the
acquisition of acreage in the Buena Vista Prospect. In the event we determine to
pursue  the  $10,000,000  line of credit  facility,  Guggenheim  shall  have the
opportunity to participate in the  Mississippi  project with up to a 10% working
interest.

The  bridge  loan  bears  interest  at the higher of 12% or bank prime rate plus
7.00%  calculated and paid on a monthly basis, of which $78,841 was paid through
November  30,  2009.  The bridge  loan is  secured  by way of a charge  over our
interest in the East Holly Prospect in the State of Louisiana. We paid financing
fees in connection with the Loan Agreement of $415,600.  In addition,  we agreed
to assign 15% of our  interest in an  overriding  royalty in Section  15,  T23N,
R14W,  Desoto Parish,  Louisiana  (includes the Dehan 15- #1H well).  The bridge
loan  was  paid  out  from the  Line of  Credit  obtained  by the  Company  from
Guggenheim on October 16, 2009.

LINE OF CREDIT

Effective on October 16, 2009,  our Board of Directors  authorized the execution
of a senior secured  advancing line of credit  agreement with a maturity date of
October 16, 2011 (the "Line of Credit Agreement").  The Line of Credit Agreement
represents a  $40,000,000  line of credit  facility  with  Guggenheim  Corporate
Funding LLC ("Guggenheim") and certain lenders (collectively, the "Lenders").


                                       30


<PAGE>


Previously,  we had entered into that certain Loan Agreement with Guggenheim and
the Lenders  pursuant  to which the  Lenders  agreed to make loans to and extend
credit on our  behalf.  We had  requested  Guggenheim  and the Lenders to extend
credit in an amount not to exceed  singularly or cumulatively  $40,000,000 to be
used in part to refinance the Loan  Agreement,  fund cash calls  associated with
our  Stevenson-Douglass  16-1 well,  and acquire and develop  properties  in our
Buena Vista Prospect.

As discussed  above, as of October 16, 2009, we closed the  $40,000,000  Line of
Credit  Agreement.  In  conjunction  therewith,  we issued a promissory  note to
Guggenheim in the principal  amount of $40,000,000 and executed a deed of trust,
security  agreement,  financing  statement and  assignment  of  production  (the
"Security  Agreement") as security for our indebtedness under the Line of Credit
Agreement.  Additionally,  we  agreed  to  assign  15%  of  our  interest  in an
overriding royalty in Section 15, T23N, R14W, Desoto Parish, Louisiana (includes
the Dehan 15-#1 well) as well as an overriding  royalty  interest  equal to 2.5%
(proportionately  reduced to our working  interest)  on any acreage now owned or
hereafter  acquired.  Additionally,   Guggenheim  will  participate  through  an
associated  company  as a 10%  working  interest  partner  in the  drilling  and
development of our Mississippi project.

As indicated above, initial advances will be used to retire the outstanding debt
on the  $3,500,000  bridge  loan  with  Guggenehim  as well as fund our share of
completion costs for its Stephenson  Douglas 16-1 well in the Haynesville  Shale
area being developed jointly with its partner, Petrohawk Energy Corporation.  In
addition,  the  credit  facility  will be used to pay fees  associated  with the
financing and fund other general corporate expenses.

We paid financing fees in connection with the Loan Agreement of $415,600,  which
are being  amortized  over the life of the loan, of which $249,276 was amortized
through  October 16, 2009. The then  unamortized  balance of $166,324 along with
$952,561 of  additional  costs  incurred in  connection  with the Line of Credit
Agreement  will be amortized  over the life of the line of credit to October 16,
2011. A total of $50,885 of this balance was amortized through November 30, 2009
leaving an unamortized balance of $1,068,000.

MANAGEMENT CONTRACTS

Effective September 22, 2009, our Board of Directors authorized the execution of
a two-year  executive  service  agreement  with Michael J. Newport,  the current
President/Chief  Executive  Officer and a director of the Company (the  "Newport
Executive  Service  Agreement").  In accordance with the terms and provisions of
the Newport Executive Service Agreement,  we shall continue to pay Mr. Newport a
monthly salary of $15,000. See "Item 5. Other Information"

Effective September 22, 2009, our Board of Directors authorized the execution of
a two-year  executive  service  agreement  with Mark Witt (the  "Witt  Executive
Service  Agreement").  In accordance  with the terms and  provisions of the Witt
Executive Service Agreement,  we shall pay Mr. Witt a monthly salary of $10,000.
See "Item 5. Other Information".


                                       31


<PAGE>


PURCHASE OF SIGNIFICANT EQUIPMENT

We do not intend to purchase any  significant  equipment  during the next twelve
months.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date of this Quarterly  Report,  we do not have any off-balance  sheet
arrangements  that have or are  reasonably  likely  to have a current  or future
effect on our financial condition,  changes in financial condition,  revenues or
expenses,  results of operations,  liquidity,  capital  expenditures  or capital
resources that are material to investors.

GOING CONCERN

The independent auditors' report accompanying our February 28, 2009 and February
29, 2008  financial  statements  contains an  explanatory  paragraph  expressing
substantial  doubt  about  our  ability  to  continue  as a going  concern.  The
financial  statements  have been prepared  "assuming  that we will continue as a
going concern," which  contemplates  that we will realize our assets and satisfy
our liabilities and commitments in the ordinary course of business.

ITEM III. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market risk represents the risk of loss that may impact our financial  position,
results of  operations or cash flows due to adverse  change in foreign  currency
and interest rates.

EXCHANGE RATE

Our reporting currency is United States Dollars ("USD"). In the event we acquire
any properties  outside of the United States,  the fluctuation of exchange rates
may have  positive or negative  impacts on our results of  operations.  However,
since all of our properties are currently located within the United States,  any
potential revenue and expenses will be denominated in U.S. Dollars,  and the net
income effect of appreciation  and devaluation of the currency  against the U.S.
Dollar would be limited to our costs of the acquisition of property.

INTEREST RATE

Interest  rates in the United  States are  generally  controlled.  Any potential
future loans will relate mainly to  acquisition of properties and will be mainly
short-term.  However our debt may be likely to rise in connection with expansion
and if  interest  rates  were  to rise  at the  same  time,  this  could  have a
significant  impact  on our  operating  and  financing  activities.  We have not
entered  into  derivative  contracts  to hedge  existing  risks for  speculative
purposes.


                                       32


<PAGE>


ITEM IV. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We have performed an evaluation under the supervision and with the participation
of our  management,  including our Chief  Executive  Officer and Chief Financial
Officer,  of the  effectiveness of our disclosure  controls and procedures,  (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).  Based on that
evaluation,  our  management,  including our Chief  Executive  Officer and Chief
Financial  Officer,  concluded that our disclosure  controls and procedures were
effective  as  of  November  30,  2009  to  provide  reasonable  assurance  that
information  required to be disclosed by us in the reports filed or submitted by
us under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms.

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal
control  over  financial  reporting  (as  defined  in Rule  13a-15(f)  under the
Exchange  Act).  Under  the  supervision  and  with  the  participation  of  our
management,  including the chief executive officer and chief financial  officer,
we evaluated the effectiveness of our internal control over financial  reporting
as of November 30, 2009. In making this assessment, management used the criteria
set  forth  by  the  Committee  of  Sponsoring  Organizations  of  the  Treadway
Commission ("COSO") in Internal Control-Integrated Framework.

This Quarterly  Report does not include an attestation  report of our registered
public  accounting  firm De Joya  Griffith &  Company,  LLC.,  Certified  Public
Accountants  regarding internal control over financial  reporting.  Management's
report was not subject to attestation by our registered  public  accounting firm
pursuant  to  temporary  rules  of  the  SEC  that  permit  us to  provide  only
management's report in this Quarterly Report on Form 10-Q.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

We believe that a control  system,  no matter how well  designed  and  operated,
cannot provide absolute assurance that the objectives of the controls system are
met, and no  evaluation  of controls  can provide  absolute  assurance  that all
control  issues  and  instances  of fraud,  if any,  within a company  have been
detected.  Our  disclosure  controls  and  procedures  are  designed  to provide
reasonable  assurance of achieving  their  objectives,  and our Chief  Executive
Officer and our Chief  Financial  Officer have concluded that these controls and
procedures are effective at the "reasonable assurance" level.

CHANGES IN INTERNAL CONTROLS

No significant  changes were implemented in our internal controls over financial
reporting  during  the  period  covered  by this  report  that  have  materially
affected,  or are reasonably likely to materially  affect,  our internal control
over financial reporting.


                                       33


<PAGE>


AUDIT COMMITTEE REPORT

The Board of Directors has  established an audit  committee.  The members of the
audit committee are Mr. William Thomas, Mr. Johnathan More and Mr. Angelo Viard.
All of the members of the audit committee are  "independent"  within the meaning
of Rule 10A-3 under the Exchange Act. The current audit  committee was organized
on February 4, 2009 and operates under a written charter adopted by our Board of
Directors.

The audit  committee has received and reviewed the written  disclosures  and the
letter  from De Joya  Griffith & Company,  LLC.,  Certified  Public  Accountants
required  by  Independence   Standards   Board  Standard  No.  1,   Independence
Discussions with Audit Committees, as amended.

Based on the reviews and discussions  referred to above, the audit committee has
recommended to the Board of Directors that the financial  statements referred to
above be included in our Quarterly Report on Form 10-Q for the nine month period
ended November 30, 2009 filed with the Securities and Exchange Commission.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

During  August 2009,  we were included in a third party lawsuit filed by Abigail
Investments  LLC against David Urquhart in the United States  District Court for
the State of Nevada,  Case No. 09-CV-1174.  The lawsuit includes a counter-claim
by David Urquhart against us and others.  Our management is of the position that
the former director has made certain false allegations against us including, but
not  limited  to,  issuance  of  shares of our  common  stock and grant of stock
options.

Although we refute these  allegations and believe that we should not be included
in this action and that the claims  contained  within the  complaint are without
merit, it is possible that we may be exposed to a loss contingency. However, the
amount of such loss,  if any,  cannot be  reasonably  estimated at this time and
accordingly, no amount has been recorded to date.

As of the date of this Quarterly Report, the former director has filed an answer
to the complaint with counter-claims. The Company's attorneys are in the process
of filing motions to dismiss Mr. Urquhart's claims against the Company.

ITEM 1A. RISK FACTORS

No report required.


                                       34


<PAGE>


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


CONSULTING AGREEMENTS

Effective on March 17, 2009,  we issued  5,000 shares of our  restricted  common
stock at a per share price of $1.78 in accordance  with the terms and provisions
of a consulting  services  agreement.  The shares of common stock were issued in
reliance on Regulation S  promulgated  under the  Securities  Act. The per share
price of the shares  were  valued at the fair  market  value of our stock at the
date of issuance. See "Item 5. Other Information."

Effective on June 15, 2009,  we issued  5,000  shares of our  restricted  common
stock at a per share price of $1.45 in accordance  with the terms and provisions
of a consulting  services  agreement.  The shares of common stock were issued in
reliance on Regulation S  promulgated  under the  Securities  Act. The per share
price of the shares  were  valued at the fair  market  value of our stock at the
date of issuance. See "Item 5. Other Information."

JULY 2008 PRIVATE PLACEMENT OFFERING

Effective May 2008 and July 22, 2008, we completed a private placement  offering
(the  "2008  Private   Placement")  with  certain  non-United  States  residents
(collectively,  the "Investors"). In accordance with the terms and provisions of
the  2008  Private  Placement,  we  issued  to the  Investors  an  aggregate  of
12,000,000  units at a per unit price of $0.33 (the  "Unit") in our  capital for
aggregate proceeds of $4,000,000. Of the amount of $4,000,000 received,  $50,000
was as  settlement of debt and the  remaining  $3,950,000  was received in cash.
Each Unit was  comprised  of one share of  restricted  common stock and one-half
non-transferable  warrant (the "Warrant").  Each Warrant is exercisable at $0.67
per share for a period  of one year from the date of  issuance  ending on May 1,
2009 (the "Exercise Period").

On  April  29,  2009,  our  Board  of  Directors  pursuant  to  written  consent
resolutions  approved a thirty-day  extension to the Exercise  Period to June 1,
2009  based on  current  market  conditions.  As of the  date of this  Quarterly
Report,  an aggregate of 1,729,500  Warrants  were  exercised at $0.67 per share
with net proceeds of  $1,153,000.  Therefore,  we issued an aggregate of 432,375
shares of our restricted common stock. The remaining  4,270,500 Warrants expired
unexercised.

STOCK OPTION PLAN

Effective  September 22, 2009, our Board of Directors approved and authorized an
amendment  to our 2008 Stock  Option Plan  increasing  the number of  authorized
shares underlying the stock options to an aggregate of 12,000,000 shares.

Effective August 14, 2009, we granted a total of 800,000 Stock Options to two of
our directors at $1.50 per share for an exercise term of ten years. On September
22,  2009,  we granted an  aggregate  of  3,000,000  Stock  Options to our Chief
Financial  Officer and an aggregate of 1,500,000 Stock Options to our President.
See "Item 5. Other Information."


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<PAGE>


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

No report required.

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

No report required.

ITEM 5. OTHER INFORMATION

DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT
OF PRINCIPAL  OFFICERS  DECEMBER 3, 2009  APPOINTMENTS/RESIGNATION

Effective on December 3, 2009,  our Board of Directors  accepted the  respective
consents of Peter G. Wilson as the Vice President of Business  Development and a
member of the Board of Directors  and Johnathan A. More as a member of the Board
of Directors.

The Board of Directors  also  accepted the  resignations  of Michael J. Newport,
Mark Witt,  Charles  Morrison and Jack Cox as members of the Board of Directors.
The  resignations  as members of the Board of Directors were tendered by Messrs.
Newport,  Witt,  Morrison and Cox as a result of prior diligent  analysis by the
Board of Directors  regarding  creation of an  independent  board of  directors,
which  would be in our  best  interests  and our  shareholders.  Therefore,  the
resulting resignations and reduction in the total number of members of the Board
of Directors results in a more independent board of directors  commensurate with
our size.  Messrs.  Newport and Witt will continue to provide  their  invaluable
services to us in their  respective  executive roles. Mr. Newport will remain as
our   President/Chief   Executive   Officer   and  Mr.   Witt   remains  as  our
Secretary/Treasurer  and Chief Financial Officer.  And Messrs.  Morrison and Cox
will continue to provide  their  invaluable  services to us in their  respective
roles as advisors.

Therefore,  as of the date of this Quarterly  Report,  our Board of Directors is
comprised  of the  following  individuals:  Simeon King  Horton,  Angelo  Viard,
William Thomas,  Peter Wilson,  and Jonathan More.

BIOGRAPHIES

PETER G. WILSON. Mr. Wilson is the Vice President of Business  Development and a
member of the Board of Directors  effective  as of December 4, 2009.  During the
past eighteen years,  Mr. Wilson has been involved in senior level management of
public companies through his private investment company.  His experience spans a
wide range of project finance,  development and contract negotiations within the
mining,  energy and real estate  industries.  Mr. Wilson's  business  experience
includes  international  assignments in the United Kingdom,  Canada,  the United
States,  Switzerland and Norway. Mr. Wilson has worked extensively with overseas
investor  groups and within the E & P market in  Louisiana,  Texas and Oklahoma.
From approximately  October 2008 to present, Mr. Wilson has lead the finance and


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<PAGE>


exploration team as the president/chief executive officer of Morgan Creek Energy
Corp., a publicly listed company on the  Over-the-Counter  Bulletin Board, which
is planning new drilling initiatives in Oklahoma and New Mexico in late 2009 and
2010. During April 2007 through October 2009, Mr. Wilson was the president and a
director  of Hana Mining  Ltd.,  a publicly  TSX-V  listed  exploration  company
seeking to develop a major  copper-silver  resource in Botswana,  Africa. As the
lead financier,  Mr. Wilson raised more than CDN  $12,000,000  which lead to the
current  discovery of more than 3 billion pounds of copper and 52 million ounces
of silver.  Additionally,  during 2005 and 2006,  he served as the president and
chief  executive  officer of Sun Oil and Gas Corp.,  and from 1997 to 2005,  Mr.
Wilson was a director and vice  president of  Petroreal  Oil Corp.,  a small oil
producer engaged in energy asset purchases  aggregating more than  $130,000,000.
From  1993 to  1999,  Mr.  Wilson  was  the  vice  president  of  Samoth  Equity
Corporation  (now Sterling  Center Corp.),  a  $150,000,000  real estate lender,
where he began his involvement with capital markets and finance.

JOHNATHAN  MORE. Mr. More is a member of the Board of Directors  effective as of
December 4, 2009.  Mr.  More has been in the  investment  business  for the past
twelve years.  During that time, he was an investment advisor with the brokerage
firms Goepel McDermid Securities,  Dundee Securities and most notably, Canaccord
Capital  Corporation  in Vancouver,  Canada.  Mr. More was a top producer in his
four-year  tenure with Canaccord and was awarded a vice president  position.  He
elected to retire  from  Canaccord  in August  2008 in order to pursue  personal
financial  opportunities.  In  February  2009,  Mr. More  founded an  investment
banking  company,  JM Finance  Ltd.,  which he oversees as  president  and chief
executive  officer.  He has been applying his history of  achievements  from the
brokerage sector to projects in North American and European Capital markets with
a focus on natural  resource  industries.  He currently  serves as president and
chief  executive  officer of Aldrin Resource Corp, a publicly listed TSX Venture
Canadian-based  mining company and as president and chief  executive  officer of
Mira Resources  Corp, a TSX NEX exchange  company seeking to acquire oil and gas
assets in Ghana, Africa.

SEPTEMBER 22, 2009 RESIGNATION/APPOINTMENT

Effective on September 22, 2009, our Board of Directors accepted the resignation
of  William   Thomas  as  our   Treasurer/Chief   Financial   Officer/Secretary.
Subsequently, on September 22, 2009, our Board of Directors accepted the consent
of Mark Witt as our Treasurer/Chief  Financial  Officer/Secretary and a director
and the  consent of  William  Thomas as a member of our Board of  Directors.  In
accordance  with the unanimous vote of all the members of the Board of Directors
at the Special  Meeting,  Mr.  Witt was duly  appointed  as our  Treasurer/Chief
Financial  Officer  and a member of our Board of  Directors  and Mr.  Thomas was
appointed as a member of our Board of Directors.

BIOGRAPHY

WILLIAM  THOMAS.  Mr.  Thomas has over thirty years of experience in the finance
and accounting areas for the natural resource sector.  Currently,  Mr. Thomas is
the chief financial officer of Hana Mining Ltd. a Canadian public company listed
on the Toronto Venture Exchange,  Morgan Creek Energy,  Nevada  corporation that
trades  on  the  OTC  Bulletin,   and  Uranium  International  Corp.,  a  Nevada
corporation  that trades on the OTC Bulletin Board,  Mr. Thomas has held various


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<PAGE>


successive  management  positions with Kerr McGee Corporation's China operations
based in Beijing,  China,  ending in 2004 with his final position as director of
business services. For a brief period after leaving Kerr McGee, Mr. Thomas acted
as a  self-practitioner  in the accounting  and finance field.  In July 2007, he
took on the role of chief financial  officer for two public resource  companies;
Hana Mining Inc. and NWT Uranium  Corp.  Mr.  Thomas  resigned  from NWT Uranium
Corp. in July, 2008. Mr. Thomas was previously general manager (1999-2002),  and
finance and administration manager (1996-1999) of Kerr McGee's China operations.
While in China, Mr. Thomas was responsible for finance including  Sarbanes Oxley
reporting, budgeting, treasury, procurement,  taxation, marketing, insurance and
business  development,   including  commercial  negotiations  with  the  Chinese
partner,  China  National  Offshore  Oil Co (CNOOC) and other  Chinese and joint
venture  partners.  Mr. Thomas  focused  heavily on supporting  exploration  and
development  operations  for  three  operated  blocks in Bohai  Bay,  as well as
evaluation and negotiation of new venture blocks in East China Sea and the South
China Sea. He was also  responsible for the liaison with CNOOC and other Chinese
oil companies,  Kerr McGee US management and joint venture  partners,  where his
main  focus was to ensure  cost  effective  and  timely  achievement  of various
approved work programs and budgets.  He was also Chief  Representative  for Kerr
McGee on the Joint Management  Committee (JMC). Mr. Thomas  previously worked as
manager of fixed asset  accounting  for Kerr McGee  Corporation's  US operations
(1996),   as  finance   director  of  Kerr  McGee's  UK   operations   based  in
London/Aberdeen  (1992-1996),  and Kerr McGee's Canadian  operations in Calgary,
Alberta,  Canada (1984-1992),  including the predecessor  company,  Maxus Canada
Ltd, which was acquired by Kerr McGee Ltd. Over the course of his career, he has
been involved in all aspects of managing accounting, budgeting, human resources,
administration,   insurance,   taxation  and  other  business   support  aspects
surrounding gas properties for Kerr McGee.  Mr. Thomas was responsible to ensure
compliance with COPAS, SEC, FASB and international  accounting  regulations.  He
participated on a team that developed the Oracle accounting  system  application
to the Kerr McGee's  worldwide  operations.  He was most notably involved in the
company's  initial  entry  into  both  China and the UK North Sea - start ups of
local and expatriate  personnel that eventually  developed into core areas (over
$1 Billion in value) for Kerr McGee,  including  the  company's  first  operated
offshore oil fields in China (CFD 1-1) and the UK (Gryphon).

In his early  career Mr.  Thomas also held senior  management  positions  in the
finance divisions of Norcen Energy Ltd of Calgary, Alberta (1981-1984),  Denison
Mines Ltd of Ontario Canada  (1978-1981)  and Algoma Steel  Corporation of Sault
Ste  Marie,  Ontario,  Canada  (1977).  He was  also a  Senior  Auditor  for the
accounting firm, Coopers & Lybrand in Toronto, Canada (1975-1977).

Mr. Thomas attained his Chartered  Accountant (CA) designation from the Canadian
Institute  of  Chartered  Accountants  in 1977.  He holds an Honors  Bachelor of
Commerce and Finance from the University of Toronto, Ontario, Canada.

MARK WITT. During the past twenty-seven years, Mr. Witt has worked in the energy
industry  including  management  positions  with major energy  companies and has
served as CFO for three public energy companies.  From approximately  March 2003
to the present,  Mr. Witt has been the president of Commercial  Energy  Services
LLC,  which is an energy and  financial  consulting  firm  founded by Mr.  Witt.
During this time, from  approximately May 2005 to February 2007, Mr. Witt served
as CFO for GFI Oil & Gas Corporation, an internationally focused exploration and
production company which was listed on the TSX Venture Exchange.


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<PAGE>


From  approximately  February  2002  through  March 2003,  Mr. Witt was the vice
president of energy  commodities risk management with Goldman Sachs & Company in
New York City.  Mr. Witt  originated  risk  management  products and  structured
solutions for power and natural gas companies  including power purchase and sale
agreements and financial hedges, swaps and options.

From approximately June 1999 through February 2002, Mr. Witt was the senior vice
president for GDF Suez (Tractebel)  Energy Marketing,  Inc. where he founded and
managed the North  American  power and gas  origination  business which included
executing power and natural gas purchase and sale  contracts,  and marketing LNG
imports.  From  approximately  November 1997 through June 1999, Mr. Witt was the
director of Northeast  origination  with Enron  Capital & Trade  Resources  Inc.
where he worked  closely  with  trading  desks to price  various  components  of
complex financing and structured derivative transactions.

From approximately June 1994 through November 1997, Mr. Witt was a director, CFO
and vice president of Virginia Gas Company where he was  responsible for raising
capital  through  initial and  secondary  public  offerings  on the NASDAQ stock
exchange  and  management  of natural  gas  pipeline  and  storage,  and propane
operations.  From  approximately  November 1984 through June 1994,  Mr. Witt was
employed with British Petroleum Company PLC in Houston and London, where he held
progressively  responsible  financial positions in various businesses  including
crude and products trading,  drilling, and natural gas development and strategic
planning.

Mr. Witt earned a BBA in accounting from the University of Texas at Austin.

WITT EXECUTIVE SERVICE AGREEMENT

Effective September 22, 2009, our Board of Directors authorized the execution of
a two-year  executive  service  agreement  with Mark Witt (the  "Witt  Executive
Service  Agreement").  In accordance  with the terms and  provisions of the Witt
Executive  Service  Agreement:  (i) we shall pay Mr.  Witt a  monthly  salary of
$10,000;  and (ii) we shall grant an aggregate of 3,000,000  stock  options (the
"Stock  Options") to Mr. Witt under its 2008 Stock Option Plan,  as amended (the
"Stock  Option  Plan").  The Stock  Options shall expire ten (10) years from the
Effective Date and shall vest in incremental  periods as reflected  below (each,
hereinafter the "Vesting  Date").  The exercise price at each Vesting Date shall
be the lesser of: (a) the  thirty-day  weighted  average  price of our shares of
common stock prior to each of the  respective  Vesting  Date;  or (ii) the issue
price as  established by the Board of Directors of our shares of common stock at
each of the equity  fundings  referenced  below in (i).  The Vesting Date of the
Stock Options is as follows:  (i) 1,500,000 Stock Options shall vest on the date
we close equity funding(s) aggregating  $10,000,000;  (ii) 500,000 Stock Options
shall vest when we have successfully completed its listing and commences trading
of its shares of common stock with a  designated  trading  symbol (the  "Trading
Date")  with the NYSE  Amex  Equities,  formerly  known  as the  American  Stock
Exchange  ("NYSE Amex  Equities") or comparable  major  exchange;  (iii) 500,000
Stock  Options shall vest at the one year  anniversary  date of the Trading Date
(the "First  Trading  Anniversary  Date");  and (iv) 500,000 Stock Options shall
vest at the one year anniversary date of the First Trading Anniversary Date (the
"Second Trading Anniversary Date").


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<PAGE>


NEWPORT EXECUTIVE SERVICE AGREEMENT

Effective September 22, 2009, our Board of Directors authorized the execution of
a two-year  executive  service  agreement  with Michael J. Newport,  our current
President/Chief Executive Officer and a director (the "Newport Executive Service
Agreement").  In  accordance  with  the  terms  and  provisions  of the  Newport
Executive Service Agreement:  (i) we shall continue to pay Mr. Newport a monthly
salary of $15,000;  (ii) we shall grant an aggregate of 1,500,000  stock options
(the "Stock  Options")  to Mr.  Newport  under our 2008 Stock  Option  Plan,  as
amended (the "Stock Option Plan"). The Stock Options shall expire ten (10) years
from the Effective Date and shall vest in incremental periods as reflected below
(each  hereinafter the "Vesting Date").  The exercise price at each Vesting Date
shall be the lesser of: (a) the thirty day weighted  average price of our shares
of common stock prior to each of the  respective  Vesting Date; or (b) the issue
price as  established by the Board of Directors of our shares of common stock at
each of the equity  fundings  referenced  below in (i).  The Vesting Date of the
Stock Options is as follows:  (a) 500,000  Stock Options when we have  completed
our  listing  and  commences  trading  of our  shares  of  common  stock  with a
designated  trading  symbol (the  "Trading  Date") with the NYSE Amex  Equities,
formerly  known  as the  American  Stock  Exchange  ("NYSE  Amex  Equities")  or
comparable exchange;  (b) 500,000 Stock Options at the one year anniversary date
of the Trading  Date (the "First  Trading  Anniversary  Date");  and (c) 500,000
Stock  Options at the second  year  anniversary  date of the  Trading  Date (the
"Second  Trading  Anniversary  Date");  and (iii) Mr.  Newport shall continue to
provide services to us in the capacity as our President/Chief  Executive Officer
and a director and further provide consulting advise on exploration  strategies,
management and operational service considerations.

ITEM 6. EXHIBITS

Exhibits:

  10.1     Senior Secured Advancing Line of Credit Agreement dated October 16,
           2009 by and among Mainland Resources Inc., Guggenheim Corporate
           Funding LLC, and the financial institutions from time to time party
           thereto. (1)

  10.2     Promissory Note dated October 16, 2009 between Mainland Resources
           Inc. and Guggenheim Corporate Funding LLC. (1)

  10.3     Deed of Trust, Security Agreement, Financing Statement and Assignment
           of Production between Mainland Resources Inc. and Guggenheim
           Corporate Funding LLC dated October 13, 2009. (1)

  10.4     Executive Service Agreement between Mainland Resources Inc. and
           Michael J. Newport dated September 22, 2009. (5)

  10.5     Executive Service Agreement between Mainland Resources Inc. and Mark
           Witt dated September 22, 2009. (6)


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<PAGE>


  31.1     Certification of the registrant's  Principal Executive Officer under
           the Exchange Act Rules, 12a-14(a) or 15d-14(a),  as adopted pursuant
           to Section 302 of the Sarbanes-Oxley Act 2002.

  31.2     Certification of the registrant's  Principal Financial Officer under
           the Exchange Act Rules, 12a-14(a) or 15d-14(a), as adopted  pursuant
           to Section 302 of the Sarbanes-Oxley Act 2002.

  32.1     Certifications of the registrant's Principal Executive Officer and
           Principal Financial Officer under 18 U.S.C.  Section 1350, as adopted
           pursuant to Section 906 of the  Sarbanes-Oxley  Act of 2002.

(1)  Incorporated  herein by reference  to the Current  Report on Form 8-K filed
     with the Securities and Exchange Commission on October 23, 2009.

(2)  Incorporated  herein by reference  to the Current  Report on Form 8-K filed
     with the Securities and Exchange Commission on October 2, 2009.

(3)  Incorporated  herein by reference  to the Current  Report on Form 8-K filed
     with the Securities and Exchange Commission on October 2, 2009.


                                   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.


                            MAINLAND RESOURCES, INC.

Dated: January 14, 2010

                            By: /s/ MICHAEL J. NEWPORT
                                _________________________________________
                                    Michael J. Newport
                                    President and Chief Executive Officer


Dated: January 14, 2010

                            By: /s/ MARK WITT
                                _________________________________________
                                    Mark Witt
                                    Chief Financial Officer


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