UNITED STATES


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 quarterly period ended April 30, 2011





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





For the transition period from ________________ to _______________





333-147501


(Commission file number)





HOMELAND RESOURCES LTD.


(Exact name of registrant as specified in its charter)





Nevada

(State or other jurisdiction

Of incorporation or organization)

26-0841675

(IRS Employer

Identification No.)





6801 Los Trechos NE, Albuquerque New Mexico            87109


(Address of principal executive offices)                               (Zip Code)





(505) 264-0600


(Registrant’s telephone number, including area code)





Not applicable


(Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


[x] Yes                      [  ] No





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


[  ] Yes                      [  ] No (Not Required)





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer [  ]
Accelerated filer [  ]Non-accelerated filer [  ]
Smaller reporting company [x]





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


[  ] Yes   [ x ] No





Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 60,300,000 shares of Common Stock, $0.0001 par value,June 12, 2011








HOMELAND RESOURCES LTD.





PagePART I.
UNAUDITED FINANCIAL INFORMATIONItem 1.
Interim Financial StatementsBalance Sheets April 30, 2011 (unaudited) and July 31, 2010
3Statements of Operations (unaudited)

Three and Nine Months Ended April 30, 2011 and 2010
4Statements of Cash Flows (unaudited)

Nine Months Ended April 30, 2011 and 2010
5Notes to Financial Statements (unaudited)
6Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
11Item 3.
Quantitative and Qualitative Disclosures About Market Risk
13Item 4.
Controls and Procedures
13PART II.
OTHER INFORMATIONItem 1.
Legal Proceedings
14Item 1A.
Risk Factors
14Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
14Item 3.
Defaults Upon Senior Securities
14Item 4.
(Removed and Reserved)
14Item 5.
Other Information
14Item 6.
Exhibit Index
14Signatures

15


2


HOMELAND RESOURCES LTD.


BALANCE SHEETS











April 30,

2011


July 31,

2010(Unaudited)ASSETSCurrent AssetsCash and cash equivalents

$
47,442


$
2,491Accounts receivable


74,000



-Prepaid expenses


2,515



-Total Current Assets


123,957



2,491Deferred financing costs, net


24,944



4,375Oil and gas properties at cost – full cost method


703,021



293,696Total Assets

$
851,922


$
300,562LIABILITIES AND STOCKHOLDERS’ (DEFICIT)Current LiabilitiesAccounts payable and accrued liabilities

$
135,422


$
81,388Accounts payable – related party


150,891



106,055Notes payable – current portion


105,000



105,000Total Current Liabilities


391,313



292,443Long Term LiabilitiesNotes payable


544,709



115,000Asset retirement obligation


3,292



1,171Total Liabilities


939,314



408,614Stockholders’(Deficit)Preferred stock - $0.0001 par value; authorized – 250,000,000

shares Issued and outstanding – nil


-



-Common stock - $0.0001 par value; authorized – 500,000,000

shares Issued and outstanding – 60,250,000 shares at April 30, 2011

and 60,050,000 shares at July 31, 2010


6,025



6,005Paid in capital


54,975



28,495Accumulated Deficit


(148,392
)


(142,552
)Total Stockholders’ (Deficit)


(87,392
)


(108,052
)Total Liabilities and Stockholders’ (Deficit)

$
851,922


$
300,562








3


HOMELAND RESOURCES LTD.


STATEMENTS OF OPERATIONS (UNAUDITED)


Three Months Ended April 30, 2011


Three Months Ended April 30, 2010


Nine Months Ended April 30, 2011


Nine Months Ended April 30, 2010REVENUESOil and gas revenue

$
101,628


$
-


$
170,488


$
-Total Revenues


101,628



-



170,488



-COSTS AND EXPENSESLease operating expenses


6,207



-



8,487



-Depreciation, depletion, accretion and amortization


21,284



-



21,328



-General and administrative


25,210



9,254



72,689



25,342Consulting fees – related party


7,500



-



37,500



7,500Mineral exploration costs


-



-



-



1,000TOTAL OPERATING EXPENSES


60,201



9,254



140,004



33,842INCOME (LOSS) FROM OPERATIONS


41,427



(9,254
)


30,484



(33,842
)OTHER EXPENSESInterest expense


11,626



-



30,393



-Amortization of deferred financing costs


2,583



-



5,931



-TOTAL OTHER EXPENSES


14,209



-



36,324



-Net Income (Loss)

$
27,218


$
(9,254
)

$
(5,840
)

$
(33,842
)Net Income (Loss) Per Common Share

Basic and Diluted

$
0.000


$
(0.000
)

$
(0.000
)

$
(0.001
)Weighted average number of common shares outstanding Basic and Diluted


60,250,000



60,000,000



60,200,916



60,000,000



















4


HOMELAND RESOURCES LTD.


STATEMENTS OF CASH FLOWS (UNAUDITED)





Nine Months

Ended

April 30,

2011


Nine Months

Ended

April 30,

2010OPERATING ACTIVITIESNet (loss)

$
(5,840
)

$
(33,842
)Adjustments to reconcile net (loss) to net cash (used in) operating activities:Depreciation, depletion, and accretion


21,328Amortization of deferred financing costs


5,931



-Change in non-cash working capital items:(Increase) in accounts receivable


(74,000
)


-Increase (decrease) in accounts payable and accrued  liabilities


(52,380
)


20,686Increase in accounts payable and accrued expenses – related party


37,500



7,500Increase in other current assets


(2,515
)


-Net cash (used in) operating activities


(69,976
)


(5,656
)INVESTING ACTIVITIESPurchase of interests in oil and gas properties


(314,782
)


(46,250
)Net cash (used in) investing activities


(314,782
)


(46,250
)FINANCING ACTIVITIESProceeds from notes payable


429,709



55,000Net cash provided by financing activities


429,709



55,000Net increase in cash and cash equivalents


44,951



3,094Cash and cash equivalents, beginning of period


2,491



89Cash and cash equivalents, end of period

$
47,442


$
3,183SUPPLEMENTAL CASH FLOW DISCLOSURESCash paid for interest

$
-


$
-Cash paid for income taxes

$
-


$
-NON-CASH INVESTING AND FINANCING ACTIVITIESCommon shares issued in connection with borrowings as deferred financing costs

$
26,500


$
-









5


HOMELAND RESOURCES, LTD.
 NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
 April 30, 2011





NOTE 1 - BASIS OF PRESENTATION




The interim financial statements of Homeland Resources Ltd. (“we,” “us,” “our,” “Homeland” or the “Company”) are unaudited and contain all adjustments (consisting primarily of normal recurring accruals) necessary for a fair statement of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for a full year or for previously reported periods due in part, but not limited to, interest rates, drilling risks, geological risks, the timing of acquisitions, and our ability to obtain additional capital. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in Homeland’s Annual Report on Form 10-K for the year ended July 31, 2010, as filed with the Securities and Exchange Commission (“SEC”) on October 29, 2010. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.





NOTE 2 - DEVELOPMENT STAGE





Through the quarter ended January 31, 2011 we considered ourselves to be a development stage enterprise as defined by in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915 "Development Stage Entities”.  We recorded revenues of $68,860 during the three month period ended January 31, 2011. During the three months ended April 30, 2011 we have recorded revenues of $101,628.  As of April 30, 2011 we have invested approximately $703,021 in oil and gas properties, and continue to participate in drilling and seismic programs. As a result of our recording revenue and continued participation in the exploration and development of oil and gas properties and seismic programs we no longer consider ourselves a development stage enterprise as of April 30, 2011.





NOTE 3 – GOING CONCERN





As of April 30, 2011, our current liabilities exceeded our current assets by $267,356 and for the nine months ended April 30, 2011, our cash used in operating activities amounted to $69,976.  We estimate our minimum investment needs during the remainder of the fiscal year to be $45,000 related to participation in drilling and seismic programs.  Our results of operations resulted in an accumulated deficit of $148,392 as of April 30, 2011.  We have participated in the drilling of test wells on undeveloped properties.  We plan further potential participation in drilling and seismic operations for the remainder of 2011 and future periods.  During the nine months ended April 30, 2011, the Company borrowed $429,709 (Note 8). We will need to raise equity or borrow additional capital to finance our operating deficit and our continued participation in planned activities. If additional financing is not available, we will be compelled to reduce the scope of our business activities.  If we are unable to fund our operating cash flow needs and planned capital investments, it may be necessary to sell all or a portion of our interest in our oil and gas properties.





NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Accounts Receivable –Consists of amounts receivable from oil sold from our well interests. As of April 30, 2011, our accounts receivable amounted to $74,000, all of which is due from one party, the operator of our oil and gas properties.  Management believes this amount to be fully collectible; we will continue to monitor amounts receivable for collectibility on a periodic basis.





Asset Retirement Obligation –Asset retirement obligations associated with tangible long-lived assets are accounted for in accordance with ASC 410, “Accounting for Asset Retirement Obligations”. The estimated fair value of the future costs associated with dismantlement, abandonment and restoration of oil and gas properties is recorded generally upon the completion of a well. The net estimated costs are discounted to present values using a risk adjusted rate over the estimated economic life of the oil and gas properties. Such costs are capitalized as part of the related asset. The asset is depleted on the units-of-production method on a field-by-field basis. The liability is periodically adjusted to reflect: (1) new liabilities incurred; (2) liabilities settled during the period; (3) accretion expense; and (4) revisions to estimated future cash flow requirements. The accretion expense is recorded as a component of depreciation, depletion, accretion and amortization expense in the accompanying statements of operations.







6
 
 HOMELAND RESOURCES, LTD.
 NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
 April 30, 2011


Revenue Recognition –The Company recognizes oil and gas revenue when production is sold at a fixed or determinable price, persuasive evidence of an arrangement exists, delivery has occurred and title has transferred, and collectibility is reasonably assured.





Estimates-The preparation of  financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates under different assumptions or conditions.





NOTE 5 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS





Accounting standards-setting organizations frequently issue new or revised accounting rules. We regularly review all new pronouncements that have been issued since the filing of our Form 10K for the year ended July 31, 2010 to determine their impact, if any, on our financial statements.





Accounting Standards Update (“ASU”) 2010-21, “Accounting for Technical Amendments to Various SEC Rules and Schedules—Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies.” The ASU reflects changes made by the Securities and Exchange Commission (“SEC”) in Final Rulemaking Release No. 33-9026, which was issued in April 2009 and amended SEC requirements in Regulation S-X (17 CFR 210.1-01 et seq.) and Regulation S-K (17 CFR 229.10 et seq.) and made changes to financial reporting requirements in response to the FASB's issuance of SFAS No. 141(R), “Business Combinations” (ASC 805), and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (FASB ASC 810). The provisions of ASU 2010-21 did not have a material impact on the financial statements.





ASU 2010-6 amends existing disclosure requirements about fair value measurements by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. The adoption of this standard did not have a material impact on our financial statements.





ASU No. 2010-13 clarified the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades.  The Company adopted this ASU effective January 1, 2011.  The adoption of this ASU did not have a material impact on our results of operations or cash flows.





There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's  financial position, results of operations or cash flows.





NOTE 6 – EARNINGS PER SHARE





Basic income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period.  Diluted income (loss) per share is calculated by dividing net loss by the weighted average number of common shares and dilutive common stock equivalents outstanding.  During the periods presented, there were no common stock equivalents outstanding.








7


HOMELAND RESOURCES, LTD.
 NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
 April 30, 2011





NOTE 7 – OIL AND GAS PROPERTIES




The Company holds the following oil and gas interests:





April 30, 2011


July 31, 2010Oil and Gas PropertiesWashita Bend 3D Exploration Project

$
473,846


$
203,1092010-1 Drilling Program


39,164



89,416Total Oil and Gas Properties - unproved


513,010



292,525Oil and Gas Properties - proved


208,047



-Asset Retirement Cost


3,191



1,171Less: accumulated depletion and impairment


(21,227
)


-Total

$
703,021


$
293,696




Washita Bend 3D Exploration Project





In April 2010, we acquired a 5% working interest in the Washita Bend 3D Exploration Project for a total buy-in cost of $46,250.  The project provides for the acquisition of approximately 135 miles of 3D seismic data to identify drillable prospects in a study area comprising 119,680 acres in Oklahoma.  The Washita prospect area is located in Cleveland, Garvin, McCain and Pottawatomie Counties, Oklahoma.  As of April 30, 2011 approximately 65% of data has been recorded, 70 miles of seismic data is in processing, 20 seismic miles of the aforementioned 70 seismic miles is in final processing, and data interpretation has begun. In connection with the participation in the seismic and lease acquisition agreement, the Company will be carried, by the seller, in a 10% working interest to casing point in the first eight wells in the Washita Bend prospect area.





2010–1 Drilling Program




In April 2010, we acquired a 5% working interest in a in a drilling program located in Garvin County, Oklahoma for a total buy in cost of $39,163. The Company agreed to participate in the drilling operations to casing point in the initial test well of each prospect.  The BCP Interest shall be 6.25% and the ACP interest shall be 5.00%.




As of April 30, 2011 we have participated in the drilling of four test wells.  Of the four wells one was abandoned in October 2010 and three have been placed into production. The costs associated the abandoned well of $38,986 have been moved to the proved properties.




The costs associated with the three wells that have been placed into production have been transferred to proved properties, and we have estimated depletion expense related to the wells production amounting to $21,227 for the three and nine months ended April 30, 2011.  When adequate data exists so as to properly quantify proved reserves, we will begin to calculate depletion using a units of production methodology.  We will re-evaluate this estimate as of the end of the current fiscal year.





Impairment





Under the full cost method, the Company is subject to a ceiling test.  This ceiling test determines whether there is any impairment to the proved properties.  The impairment amount represents the excess of capitalized costs over the present value, discounted at 10%, of the estimated future net cash flows from the proven oil and gas reserves plus the cost, or estimated fair market value.  There was no impairment cost for the nine and three month periods ended April 30, 2011 and 2010, respectively.




8


HOMELAND RESOURCES, LTD.
 NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
 April 30, 2011


Depletion





Under the full cost method, depletion is computed on the units of production method based on proved reserves, or upon reasonable estimates where proved reserves have not yet been established due to the recent commencement of production.  Depletion expense recognized was $21,227 and $nil for the three and nine months periods ended April 30, 2011 and 2010, respectively.




NOTE 8 – NOTES PAYABLE





The Company has recorded the following notes payable:





April 30, 2011


July 31, 2010Radium Ventures 6.5%

$
55,000


$
55,000Radium Ventures 6.5%


50,000



50,000Radium Ventures 7.5%


544,709



115,000Total

$
649,709


$
220,000





Interest expense incurred during the three and nine months ended April 30, 2011 amounted to $11,626 and $30,393, respectively. Accrued interest expense related to these notes amounted to $32,934 at April 30, 2011 and has been included in accrued liabilities on the Company’s balance sheet.





In August, September and October 2010, the Company borrowed $160,000, $30,000 and $130,000 under the terms of our $1,000,000 loan facility with Radium Ventures Corp. (“Radium”). These advances bear interest at 7.5% and are payable within 36 months. The Company has agreed to issue the lender 50,000 restricted shares of common stock for every $100,000 borrowed under the loan facility. In connection with these advances, the Company has issued the lender 150,000 shares of its common stock (Note 10).





In November and December 2010, the Company borrowed $34,979 and $74,730 under the terms of our $1,000,000 loan facility with Radium. These advances bear interest at 7.5% and are payable within 36 months.  In connection with these advances, the Company has issued the lender 50,000 shares of its common stock (Note 10).





In May 2011, the Company borrowed $60,000 under the terms of our $1,000,000 loan facility with Radium.  This advance bears interest at 7.5% and is payable within 36 months. In connection with this advance, the Company was issued the lender 50,000 shares of its common stock (Note 14).





NOTE 9 – DEFERRED FINANCING COSTS





As of April 30, 2011, we have recorded $31,000 in deferred financing costs in connection with the cumulative issuance of 250,000 shares of our common stock in connection with our $1,000,000 loan facility (Note 10). We considered ASC 835-30,“Interest – Imputation of Interest”in recording these amounts.The Company recognizes debt issue costs on the balance sheet as deferred charges, and amortizes the balance over the term of the related debt. The Company amortized $5,931 of deferred financing costs for the nine month period ended April 30, 2011.





NOTE 10 – STOCKHOLDERS’ (DEFICIT)





As of April 30, 2011, we had 250,000,000 and 500,000,000 shares of preferred stock and common stock authorized, respectively.  10,000,000 shares of preferred stock will be designated as Series A Preferred Stock, with a par value of $0.0001 per share.  As of April 30, 2011, there were nil and 60,250,000 shares of preferred stock and common stock outstanding, respectively.






9
 
 HOMELAND RESOURCES, LTD.
 NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
 April 30, 2011


Common Stock – Activity related to our common stock for the nine months ended April 30, 2011 was as follows:





On August 16, 2010, the Company issued 50,000 shares of common stock at $0.09 per share.





On September 22, 2010, the Company issued 50,000 shares of common stock at $0.09 per share.





On October 7, 2010, the Company issued 50,000 shares of common stock at $0.09 per share.





On December 9, 2010, the Company issued 50,000 shares of common stock at $0.26 per share.





NOTE 11 – COMMITMENTS AND CONTINGENCIES




Although not completely estimable as of April 30, 2011, based on the terms of the Company’s original agreements with the operator, the Company anticipates additional expenditures related to its share of the drilling program may exceed $45,000 for the remainder of the fiscal year, and that additional expenditures related to its seismic program may approach $45,000 for the remainder of the fiscal year.  In addition, should the Company choose to terminate its involvement in the seismic program, the Company may incur significant additional liabilities per the terms of its initial agreement with the operator.





NOTE 12 – RECLASSIFICATIONS





Certain prior period amounts have been reclassified in the unaudited financial statements to conform to current period presentation. Such reclassifications have had no effect on the net income (loss).





NOTE 13 – RELATED PARTY TRANSACTIONS





As of April 30, 2011, the Company owed $150,891 to a related party. As of April 30, 2011, amounts payable to the related party included $52,500 in connection with consulting services provided to the Company, while remaining amounts owed are related to expenses paid on behalf of the Company. During the three and nine months ended April 30, 2011, the Company incurred $7,500 and $37,500, respectively, in consulting expense with the related party.  The Company made no cash payments to related parties during the three months and nine months ended April 30, 2011.





NOTE 14 – SUBSEQUENT EVENTS





The Company has evaluated all transactions through the date of issuance of these financial statements, and noted that except as follows, there are no subsequent events that would require disclosure:





In May 2011, the Company borrowed $60,000 under the terms of our $1,000,000 loan facility with Radium.  This advance bears interest at 7.5% and is payable within 36 months. In connection with this advance, the Company issued 50,000 shares of its common stock. (Note 8)








10


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





General





Our original business plan was to proceed with the exploration of the Home Ranch Prospect to determine whether there were commercially exploitable reserves of minerals located on the property comprising such mineral claims.  In fiscal 2010, we determined that our ability to explore for minerals on these claims had become economically non-feasible and we therefore suspended our activities on the Home Ranch Prospect indefinitely in order to focus on our oil and gas interests.  We did not conduct any operations or exploration activities on the Home Ranch Prospect during the period ended April 30, 2011.  At the time of this report, we do not know when or if we will proceed with the Home Ranch Prospect.





In April 2010, we acquired working interests in a seismic exploration program as well as a drilling program in an oil and gas property in Oklahoma, as further described below.  Our present plan of operation is to continue to invest in oil and gas properties.





Oil and Gas Properties





Washita Bend 3D Exploration Project





In April 2010, we acquired a 5% working interest in the Washita Bend 3D Exploration Project for a total buy-in cost of $46,250.  The project provides for the acquisition of approximately 135 miles of 3D seismic data to identify drillable prospects in a study area comprising 119,680 acres in Oklahoma.  The Washita prospect area is located in Cleveland, Garvin, McCain and Pottawatomie Counties, Oklahoma.  As of April 30, 2011 approximately 65% of data has been recorded, 70 miles of seismic data is in processing, 20 seismic miles of the aforementioned 70 seismic miles is in final processing, and data interpretation has begun. In connection with the participation in the seismic and lease acquisition agreement, the Company will be carried, by the seller, in a 10% working interest to casing point in the first eight wells in the Washita Bend prospect area.





2010–1 Drilling Program





As of April 30, 2011, we own a 5% working interest in a Drilling Program located in Garvin County, Oklahoma. As of April 30, 2011, we had participated in the drilling of four exploratory wells on the prospect acreage. Of the four wells that we had participated in as of April 30, 2011, three were in production.





Loans





From February through April 2011, the Company did not borrow any funds under the terms of our $1,000,000 loan facility with Radium. As such, the Company did not issue any shares of its common stock in connection with this loan.





In May 2011, the Company borrowed $60,000 under the terms of our $1,000,000 loan facility with Radium.  This advance bears interest at 7.5% and is payable within 36 months.  In connection with this advance, the Company issued 50,000 shares of its common stock.





Results of Operations





Three months ended April 30, 2011 compared to the three months ended April 30, 2010.





Revenues - We recognized $101,628 in revenues during the three months ended April 30, 2011, compared with $nil for the three months ended April 30, 2010.  The increase results from the recognition of production revenue related to three of our recently completed wells placed into service during the quarter ended January 31, 2011.





Expenses - During the three months ended April 30, 2011, we incurred operating expenses of $60,201 as compared to $9,254 during the three months ended April 30, 2010, an increase of $50,947.  The increase in directs costs is primarily attributable to increased lease operating expenses of $6,207 as compared to $nil in the corresponding prior period, DDA expense of $21,284 as compared to $nil in the corresponding prior period resulting primarily from our recording of depletion expense related to our wells recently placed into production and accretion of our asset retirement





11





obligations, as well as increases in general and administrative expenses of $25,210 as compared to $9,254 in the corresponding prior period in particular our accounting and audit, legal, related party consulting, website development expenses, and marketing costs.





Other expenses – We incurred $14,209 in other expenses during the three months ended April 30, 2011 as compared to $nil during the three months ended April 30, 2010.  The increase in other expenses is attributable to interest expense related to our loans and the amortization of deferred financing costs. Our borrowings increased to approximately $650,000 as of April 30, 2011 as compared to $55,000 at April 30, 2010.





Nine months ended April 30, 2011 compared to the nine months ended April 30, 2010.





Revenues - We recognized $170,488 in revenues during the nine months ended April 30, 2011, compared with $nil for the three months ended April 30, 2010.  The increase results from the recognition of production revenue related to three of our recently completed wells placed into service during the quarter ended January 31, 2011.





Expenses - During the nine months ended April 30, 2011, we incurred operating expenses of $140,004 compared to  $33,842 during the nine months ended April 30, 2010, an increase of $106,162.  The increase in directs costs is primarily  attributable to increased lease operating expenses of $8,487 as compared to $nil in the corresponding prior period, DDA expense of $21,328 as compared to $nil in the corresponding prior period resulting primarily from our recording of depletion expense related to our wells placed into production and accretion of asset retirement obligations, as well as increases in general and administrative expenses of $72,689 as compared to $25,342 in the corresponding prior period in particular our accounting and audit, legal, related party consulting, website development expenses, and marketing costs.





Other expenses – We incurred $36,324 in other expenses during the nine months ended April 30, 2011 as compared to $nil during the nine months ended April 30, 2010.  The increase in other expenses is attributable to interest expense related to our loans and the amortization of deferred financing costs. Our borrowings increased to approximately $650,000 as of April 30, 2011 as compared to $55,000 at April 30, 2010.





Liquidity and Capital Resources





As of April 30, 2011, we had cash and cash equivalents of $47,442, compared to cash and cash equivalents of $2,491 as of July 31, 2010.  Our working capital deficit at April 30, 2011 was $267,356, compared to $289,952 as of July 31, 2010.   Overall, for the nine month period ended April 30, 2011, we increased our notes payable as our seismic and drilling programs continue to progress.  Accordingly, the statement of cash flows reflects cash of $314,782 used for the purchase of oil and gas properties, and a total of $429,709 of cash provided by loans from Radium.  Our loan facility from Radium allows us to borrow up to $1,000,000 through December 31, 2011, which date may be extended for an additional twelve months.  Amounts loaned under the facility are to be repaid within 36 months and accrue interest at 7.5% per annum.  The loan facility is unsecured.




Off-Balance Sheet Arrangements





We did not have any off-balance sheet arrangements as of April 30, 2011.





Going Concern





In its report prepared in connection with our fiscal year 2010 financial statements, our independent registered public accounting firm included an explanatory paragraph stating that, because we had an accumulated deficit of $142,552 and a working capital deficit of $289,952 at July 31, 2010, there was substantial doubt about our ability to continue as a going concern.  At April 30, 2011 our accumulated deficit was $148,392.  Our continued existence will depend in large part upon our ability to raise sufficient capital through debt and or equity offerings.  Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.





Forward Looking Statements





Certain statements in this Quarterly Report on Form 10-Q, as well as statements made by us in periodic press








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releases and oral statements made by our officials to analysts and shareholders in the course of presentations about the Company, constitute “forward-looking statements”.   Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements.  Such factors include, among other things: (1) general economic and business conditions; (2) interest rate changes; (3) the relative stability of the debt and equity markets; (4) government regulations particularly those related to the natural resources industries; (5) required accounting changes; (6) disputes or claims regarding our property interests; and (7) other factors over which we have little or no control.




Item 3.      Quantitative and Qualitative Disclosures About Market Risk





Not required for smaller reporting companies.





Item 4.      Controls and Procedures





Evaluation of Disclosure Controls and Procedures





Disclosure controls and procedures, as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our sole officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  Rule 15d-15 under the Exchange Act, requires us to carry out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2011, being the date of our most recently completed fiscal period covered by this report.  This evaluation was implemented under the supervision and with the participation of our sole officer, Armando Garcia.  Based on this evaluation, Mr. Garcia concluded that the design and operation of our disclosure controls and procedures were not effective since the following material weaknesses existed:





·
We relied on external consultants for the preparation of our financial statements and reports.  As a result, our sole officer may not be able to identify errors and irregularities in the financial statements and reports.





·
We had a sole officer who was one of two directors.  Therefore, there was an inherent lack of segregation of duties and a limited independent governing board.





·
We relied on an external consultant for administration functions, some of which did not have standard procedures in place for formal review by our sole officer.





As of November 1, 2010, we elected another director to our board of directors and believe that having two directors may address some of the weaknesses noted above.





Changes in Internal Controls Over Financial Reporting





In connection with the evaluation of our internal controls during our last fiscal quarter, our sole officer has concluded that there were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended April 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





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PART II - OTHER INFORMATION





Item 1.       Legal Proceedings





None.





Item 1A.    Risk Factors





Not required for smaller reporting companies.





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





During the quarter ended April 30, 2011, the registrant issued no shares of the Company’s common stock.





Item 3.       Defaults Upon Senior Securities





None.





Item 4.       (Removed and Reserved)





Not applicable.





Item 5.       Other Information





Not applicable





Item 6.       Exhibits





Regulation

S-K Number
Exhibit3.1
Articles of Incorporation (1)3.2
Amendment to Articles of Incorporation (1)3.3
Certificate of Change Pursuant to NRS 78.209 (2)3.4
Bylaws (1)10.1
Notice of Mining Claims HR #1-6, recorded by Luna County, New Mexico, on March 24, 2004 (1)10.2
Confirmation of Agreement with Leroy Halterman dated August 1, 2007 (1)10.3
Loan Commitment Letter from Wellington Financial Corporation dated August 1, 2007 (1)10.4
Notice of Intent to Hold the HR #1-6 Lode Mining Claims, filed with the Bureau of Land Management on August 15, 2007 (1)10.5
Notice of Intent to Hold the HR #1-6 Lode Mining Claims recorded by Luna County, New Mexico, on August 17, 2007 (1)10.6
Loan Commitment dated April 19, 2010 from Radium Ventures Corp. (3)10.6
Loan Commitment dated May 11, 2010 from Radium Ventures Corp. (3)10.6
Loan Agreement dated May 15, 2010 from Radium Ventures Corp. (3)31.1
Rule 15d-14(a) Certification of Armando Garcia32.1
Certification of Armando Garcia Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002







(1)
Incorporated by reference to the exhibits to the registrant’s registration statement on Form SB-1 filed November 19, 2007, file number 333-147501.


(2)
Incorporated by reference to the exhibits to the registrant’s current report on Form 8-K filed June 29, 2009, file number 333-147501.


(3)
Incorporated by reference to the exhibits to the registrant’s current report on Form 8-K filed April 19, 2010, file number 333-147501





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SIGNATURES








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





HOMELAND RESOURCES LTD.Date: June 14, 2011
By:
/s/ Armando GarciaArmando GarciaPresident, Secretary, Treasurer(principal executive and financial officer)