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

Mark One

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

                   For the fiscal year ended February 29, 2008

[ ] 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 of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                       17314 State Highway 249, Suite 306
                              Houston, Texas 77064
                    ________________________________________
                    (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, $0.001
          ___________________________________________________________
                                (Title of Class)

Check whether the issuer is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

Check  whether the issuer (i) 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 (ii) has been
subject to such filing requirements for the past 90 days.

                                 Yes [X] No [ ]


<PAGE>


Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

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

State issuers revenues for its most recent fiscal year $ -0-.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified date within the past 60 days. May 19, 2008: $104,895,000.

     ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

                                       N/A

Check  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

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable date (The outstanding  shares reflect the
forward splits that occurred on March 11, 2008 and May 29, 2008)

Class                                            Outstanding as of  May 29, 2008
Common Stock, $0.001                             39,615,000

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,  briefly describe them
and  identify  the part of the Form 10-KSB  (e.g.,  Part I, Part II,  etc.) into
which the document is incorporated:  (i) any annual report to security  holders;
(ii) any proxy or information statement; and (iii) any prospectus filed pursuant
to Rule 424(b) or (c) of the Securities Act of 1933 (the "Securities  Act"). The
listed documents should be clearly described for  identification  purposes (e.g.
annual reports to security holders for fiscal year ended December 24, 1990).

                                       N/A

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]


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<PAGE>

                            MAINLAND RESOURCES, INC.

                                   Form 10-KSB



                                    Part I.

Item 1.   Description of Business                                              4

Item 2.   Description of Property                                             26

Item 3.   Legal Proceedings                                                   26

Item 4.   Submission of Matters to a Vote of Security Holders                 26

                           Part II.

Item 5.   Market for Common Equity and Related Stockholder Matters and Small
          Business Issuer Purchases of Equity Securities                      26

Item 6.   Management's Discussion and Analysis and Plan of Operation          31

Item 7.   Financial Statements                                                38

Item 8.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure                                                54

Item 8A.  Controls and Procedures                                             54

Item 8A(T)Controls and Procedures                                             55

Item 8B.  Other Information                                                   55

                           Part III

Item 9.   Directors, Executive Officers, Promoters, Control Persons and
          Corporate Governance; Compliance With Section 16(a) of the Exchange
          Act                                                                 56

Item 10.  Executive Compensation                                              59

Item 11.  Security Ownership of Certain Beneficial Owners and Management and
          Related Stockholder Matters                                         61

Item 12.  Certain Relationships and Related Transactions and Director
          Independence                                                        63

Item 13.  Exhibits                                                            63

Item 14.  Principal Accountant Fees and Services                              64

Signatures                                                                    65


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Statements made in this Form 10-KSB 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.

Available Information

Mainland  Resources,  Inc.  files  annual,  quarterly,  current  reports,  proxy
statements,  and other  information with the Securities and Exchange  Commission
(the  "Commission").  You may read and copy documents referred to in this Annual
Report  on  Form  10-KSB  that  have  been  filed  with  the  Commission  at the
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You
may obtain  information on the operation of the Public Reference Room by calling
the Commission at  1-800-SEC-0330.  You can also obtain copies of our Commission
filings by going to the Commission's website at http://www.sec.gov.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

BUSINESS DEVELOPMENT

Mainland Resources,  Inc. was incorporated under the laws of the State of Nevada
on May 12, 2006 and had been engaged in the business of acquisition, exploration
and development of mineral  properties in the United States since its inception.
As of the date of this Annual Report,  our main focus is now the  identification
of oil and gas properties  that contain  economically  recoverable  reserves for
potential development,  which has resulted in the acquisition of our interest in
the property  discussed  below.  After the  effective  date of our  registration
statement filed with the Securities and Exchange  Commission  (August 24, 2007),
we commenced  trading on the  Over-the-Counter  Bulletin  Board under the symbol
"MNLU:OB".

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

February 2008 Forward Stock Split

On February 25,  2008,  our Board of  Directors,  pursuant to minutes of written
consent in lieu of a special  meeting,  authorized  and approved a forward stock
split of twenty for one (20:1) of our total  issued  and  outstanding  shares of


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<PAGE>

common stock (the "February 2008 Forward Stock Split"). Each of our shareholders
holding one share of common stock was entitled to receive an  additional  twenty
shares of our restricted common stock. The additional shares of our common stock
to be issued to the  shareholders  in accordance  with the February 2008 Forward
Stock Split were mailed on  approximately  March 15, 2008  without any action on
the part of the shareholders.

The February 2008 Forward Stock Split was effectuated based on market conditions
and upon a  determination  by our  Board of  Directors  that the  February  2008
Forward Stock Split was in our best  interests and of the  shareholders.  In our
judgment,  the February 2008 Forward Stock Split  resulted in an increase in our
trading  float of  shares  of  common  stock  available  for sale  resulting  in
facilitation of investor  liquidity and trading volume potential.  The intent of
the February 2008 Forward Stock Split was to increase the  marketability  of our
common stock.

The February  2008  Forward  Stock Split was  effectuated  with a record date of
March 11,  2008 upon  filing the  appropriate  documentation  with  NASDAQ.  The
February 2008 Forward Stock Split  increased  issued and  outstanding  shares of
common stock from 1,120,500 to approximately  22,410,000 shares of common stock.
The current  authorized  share  capital  continued to be  200,000,000  shares of
common stock with a par value of $0.001 per share.  See "Part II. Item 5. Market
for Common  Equity and Related  Stockholder  Matters and Small  Business  Issuer
Purchases of Equity Securities."

May 2008 Forward Stock Split

On May 12, 2008 our Board of Directors,  pursuant to minutes of written  consent
in lieu of a special  meeting,  authorized and approved a forward stock split of
1.5 for one (1.5:1) of our total issued and  outstanding  shares of common stock
(the "May 2008 Forward Stock Split").

The May 2008 Forward Stock Split was effectuated  based on market conditions and
upon a  determination  by our Board of Directors that the May 2008 Forward Stock
Split was in our best interests and of the  shareholders.  In our judgment,  the
May 2008 Forward  Stock Split will further  result in an increase in our trading
float of shares of common stock  available for sale resulting in facilitation of
investor  liquidity  and trading  volume  potential.  The intent of the May 2008
Forward  Stock  Split is to further  increase  the  marketability  of our common
stock.

The May 2008 Forward Stock Split was  effectuated  with a record date of May 29,
2008 upon filing the appropriate documentation with NASDAQ. The May 2008 Forward
Stock Split  increased  our issued and  outstanding  shares of common stock from
26,410,000 to approximately  39,615,000 shares of common stock. The total number
of shares of common stock issued and  outstanding had previously been 22,410,000
since March 11, 2008 pursuant to a forward stock split  effectuated  pursuant to
the February 2008 Forward Stock Split. We subsequently  issued  4,000,000 shares
in accordance with the terms and provisions of a private placement offering thus
bringing  the total number of issued and  outstanding  shares of common stock to
26,410,000 as of May 29, 2008. The current authorized share capital continued to
be 200,000,000  shares of common stock with a par value of $0.001 per share. See
"Part II. Item 5. Market for Common Equity and Related  Stockholder  Matters and
Small Business Issuer Purchases of Equity Securities."


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<PAGE>


Transfer Agent

Our transfer  agent is Empire Stock  Transfer,  Inc.,  2470 Saint Rose  Parkway,
Suite 304, Henderson, Nevada 89074.

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 East Holly Field,  De Soto Parish in northwest  Louisiana (the "De Soto
Parish"). To date, we have acquired  approximately 2,695 net acres within the De
Soto Parish.

Oil and Gas Properties

The acreage and location of our oil and gas property is summarized as follows:

                                                        Net Acres
Louisiana                                                 2,695
Total:                                                    2,695

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  estate (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,
2008.  In  accordance  thereof,  the right,  title and  interest  of Permian and


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<PAGE>


Kingsley in the Leases was  transferred to us effective March 14, 2008 by way of
assignment.  As of the date of this Annual 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.

            Natural Gas - Louisiana

We have assembled a development  block on the south side of the East Holly Field
(currently includes almost six contiguous sections of mineral rights).  Based on
well bore petrophysical  analysis,  actual production tests, mud logging records
and electric log analysis from wells located all around our Leases in the Cotton
Valley and Hosston  formations  and  Haynesville  Shale located in  northwestern
Louisiana,  management  believes  that any tests drilled on the East Holly Field
should be productive. Historically,  recoverable gas volumes range from 2 Bcf to
a high of 32 Bcf per section.  The initial  wells  drilled in the De Soto Parish
field were all  completed as Hosston gas wells.  It was not until the late 1990s
that  operations  started to test the nearby Cotton Valley.  Whereas the Hosston
zone is comprised of almost  continuous  sand packages  totaling  1,500 to 2,000
feet that can be difficult to connect on a well-to-well basis, the Cotton Valley
zone is comprised of three distinct sections and can be mapped individually from
well to well.

Management selected acquisition of the Leases based on several large discoveries
of a  significant  natural  gas  structure  in the  Cotton  Valley  and  Hosston
formations  and the  Haynesville  Shale.  Management is  developing  the initial
natural gas  prospect  located in the East Holly Field based upon  discovery  of
these   unconventional   gas  structures,   geoscientific,   petrophysical   and
engineering  research  conducted  during the past two years,  and the results of
three previously drilled horizontal and four vertical wells. Management selected
the East Holly Field natural gas prospect  based on the  economics,  low-risk to
development and the potential for future revenues.

In addition to the Cotton Valley and Hosston  formation,  our  geological  staff
believes that the East Holly Field holds significant  potential for tight gas in
the now emerging Haynesville Shale area. This area has been overwhelmed by major
oil and gas  companies,  who have recently  announced  large  discoveries in the
Haynesville Shale that shares characteristics with the East Holly Field.

            Drilling Initiatives

Effective on May 1, 2008, our Board of Directors,  pursuant to unanimous written
consent  in lieu of a  meeting,  authorized  and  approved  the  execution  of a
one-year  master   operating   agreement  dated  May  1,  2008  (the  "Operating
Agreement") with OPS Group Limited, a Texas corporation ("OPS"). Pursuant to the
terms and provisions of the Operating  Agreement,  OPS shall act as the operator
for the  planned  drilling  program  on the East  Holly  Field  leases.  See " -
Material Agreements."

As of the date of this Annual  Report,  OPS and 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
Hosson  formations and the  Haynesville  Shale.  The technical team expects that
other wells  drilled in this region  will be based on the  detailed  data gained


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<PAGE>


through the initial well  drilling  process.  See " - Proposed  Future  Business
Operations."

Similkameen Mining Division

We previously held title to two mining claims,  the Southwest and Sedona claims,
located in the Similkameen  Mining Division in the Province of British Columbia,
Canada (the  "Similkameen  Mining  Division").  The mining claims were without a
known  body of  commercial  ore.  We  intended  to  engage  in gold  and  copper
exploration on the Similkameen Mining Division. However, we subsequently changed
our  focus  to oil and gas  exploration  and  decided  not to  proceed  with the
development  of these mineral  properties.  Thus, on April 28, 2008, we sold our
interest in the two mining claims in the  Similkameen  Mining Division to one of
our former  shareholders in exchange for a settlement of a debt in the amount of
$33,238 due and owing by us to the former  shareholder.  See "Part III. Item 12.
Certain Relationships and Related Transactions and Director Independence."

PROPOSED FUTURE BUSINESS OPERATIONS

Our current  strategy is to complete  further  acquisition of additional oil and
gas opportunities which fall within the criteria of providing a geological basis
for  development  of drilling  initiatives  that can provide  near term  revenue
potential and fast drilling capital  repatriation  from production cash flows to
create expanding  reserves.  We anticipate that our ongoing efforts,  subject to
adequate  funding being  available,  will continue to be focused on successfully
concluding  negotiations  for additional  tracts of prime acreage in the oil and
gas  producing  domains,  and to implement  the drilling of new wells to develop
reserves and to provide  revenues.  We plan to build a strategic  base of proven
reserves and production.

Our ability to continue to complete  planned  exploration  activities and expand
land  acquisitions and explore  drilling  opportunities is dependent on adequate
capital  resources  being available and further sources of debt and equity being
obtained.  The  two  following  alternatives  provide  the  basis  for  business
development options:

Development of Current Lease

The requirement to raise further funding for oil and gas exploration beyond that
obtained  for the next six month  period  continues  to depend on the outcome of
geological and engineering testing occurring over this interval.  Based upon the
completion  of current  property  evaluations  on the East Holly  Field,  and if
results  provide  the  basis to  continue  development  and  geological  studies
indicate high probabilities of sufficient production quantities, we will attempt
to  raise   capital  to  further  our   drilling   program,   build   production
infrastructure  and  pipeline,  and raise  additional  capital for further  land
acquisitions. This includes the following activity:

     o    Site preparation for entry into current  wellbores  including  roadway
          upgrade and operations  site,  design,  review,  and finalize  testing
          procedures,  book zone fracture and testing  consultants,  and arrange
          equipment required.


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<PAGE>


     o    Pull old well  tubing,  run test tools in  wellbore,  cut well casing,
          test target gas zones with acid and water.

     o    If gas content  conducive to  production,  complete  well by inserting
          downhole pump and rods, set pumping unit, wellhead, and gas line.

     o    Complete pipeline.

     o    Create well  development  model and  investment  documents  to develop
          wells on subject leases including funding plan.

     o    Create investor communications materials, corporate identity.

     o    Raise funding for well development.

     o    Drill,  complete, and produce from well drilling program and selective
          re-entry programs.

     o    Target  further  leases for  exploration  potential and obtain further
          funding to acquire new development targets.

New Lease Acquisition and Development

If gas  quality  and  quantities  are  not  deemed  sufficient  from  work to be
conducted  on our East  Holly  Field  lease  during  the  first  six  months  of
operation, additional land acquisitions will be assessed and obtained subject to
adequate  capital  resources  being  available  and further  sources of debt and
equity being obtained. The following outlines anticipated activities pursuant to
this business option.

     o    Site preparation for entry into current  wellbores  including  roadway
          upgrade and operations  site,  design,  review,  and finalize  testing
          procedures,  book  zone  fracture  and  testing  consultants,  arrange
          equipment required.

     o    Pull old well  tubing,  run test tools in  wellbore,  cut well casing,
          test target gas zones with acid and water,

     o    If gas content not deemed  conducive  to  production,  target  further
          leases for exploration potential and obtain further funding to acquire
          new development targets.

We will require  additional  funding to implement our proposed  future  business
activities.  See  "Item 6.  Management's  Discussion  and  Analysis  and Plan of
Operation."

We do not expect to purchase any significant equipment or increase significantly
the number of our employees during the next twelve months.  Our current business
strategy is to obtain resources under contract where possible because management
believes that this strategy,  at its current level of development,  provides the
best services available in the circumstances,  leads to lower overall costs, and
provides the best flexibility for our business operations.


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<PAGE>


MATERIAL AGREEMENTS

OPS Group Limited

Effective on May 1, 2008, our Board of Directors,  pursuant to unanimous written
consent in lieu of a meeting,  authorized  and  approved  the  execution  of the
Operating  Agreement  with OPS. OPS  provides a  cost-effective  outsourcing  of
engineering,  regulatory  and  accounting  services  as  an  operating  package.
Pursuant to the terms and provisions of the Operating  Agreement,  OPS shall act
as the operator for the planned  drilling  program on our East Holly Field Lease
in DeSoto Parish, Louisiana.

In accordance with the further terms and provisions of the Operating  Agreement:
(i) upon written  request from us for  services,  OPS may perform such  services
related to general  operations,  including  drilling  and  production  duties on
certain oil and gas wells and hydrocarbon production facilitites  (collectively,
the "Oil and Gas  Projects");  (ii) in the event OPS  accepts  such  request for
services to be rendered for the Oil and Gas  Projects,  OPS shall  undertake the
performance  of such  services  until such  services  are 100%  funded by way of
advance  payments by us to OPS under the  Operating  Agreement;  (iii) OPS shall
furnish  authority  for  expenditures  to us not to exceed  $25,000 and we shall
provide to OPS written  authorization to commence  purchases or operations to be
performned by OPS for the Oil and Gas Projects; and (iv) we shall compensate OPS
for services  rendered  based upon an operating  overhead fee schedule.  Further
terms and provisions of the Operating  Agreement  provide for automatic  renewal
for consecutive one year terms after expiration of the initial one-year term.

PMB+Helin Donovan

Effective  May 16, 2008,  our Board of Directors  authorized  the  engagement of
PMB+Helin  Donovan  (""PMBHD") in accordance  with the terms and  provisions set
forth in that certain letter agreement dated May 16, 2008 (the "Agreement").  We
engaged  PMBHD to render  services and related  reports to us in order to ensure
compliance  with Section 404 of the  Sarbanes-Oxley  Act of 2002.  In accordance
with the terms and  provisions of the  Agreement,  PMBHD shall  perform  certain
services  including,  but not  limited  to, the  following::  (i) conduct a full
review of our  management  governance  process;  (ii) assemble a project team to
conduct an  evaluation  of the project;  (iii)  document  and evaluate  internal
control;  (iv) assist  management in the development of policies and procedures;
(v) document and evaluate  procedures and processes at the transactional  level;
(vi) develop independent  testing procedures;  and (vii) establish a remediation
plan and coordinate implementation.  We shall pay for such services on an hourly
basis.

COMPETITION

We operate in a highly  competitive  industry,  competing with major oil and gas
companies,  independent  producers and institutional  and individual  investors,
which are actively seeking oil and gas properties  throughout the world together
with the equipment, labor and materials required to operate properties.  Most of
our competitors  have financial  resources,  staff and facilities  substantially
greater than ours.  The principal  area of  competition  is  encountered  in the
financial  ability to acquire good acreage  positions and drill wells to explore
for oil and  gas,  then,  if  warranted,  drill  production  wells  and  install


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<PAGE>


production  equipment.  Competition  for the acquisition of oil and gas wells is
intense with many oil and gas properties and/or leases or concessions  available
in a competitive bidding process in which we may lack technological  information
or expertise available to other bidders.  Therefore, we may not be successful in
acquiring and developing  profitable properties in the face of this competition.
No assurance can be given that a sufficient number of suitable oil and gas wells
will be available for acquisition and development.

GOVERNMENT REGULATION

The production and sale of oil and gas are subject to various federal, state and
local  governmental  regulations,  which  may be  changed  from  time to time in
response to economic or political  conditions and can have a significant  impact
upon overall operations. Matters subject to regulation include discharge permits
for drilling  operations,  drilling bonds,  reports concerning  operations,  the
spacing of wells, unitization and pooling of properties,  taxation,  abandonment
and restoration  and  environmental  protection.  These laws and regulations are
under constant review for amendment or expansion.  From time to time, regulatory
agencies  have  imposed  price   controls  and   limitations  on  production  by
restricting  the  rate of flow of oil and  gas  wells  below  actual  production
capacity  in  order  to  conserve  supplies  of oil and  gas.  Changes  in these
regulations could require us to expend significant  resources to comply with new
laws or regulations or changes to current requirements and could have a material
adverse effect on our business operations.

Regulation of Oil and Natural Gas Production

Our oil and natural gas  exploration,  production  and  related  operations  are
subject to extensive  rules and  regulations  promulgated by federal,  state and
local  authorities  and  agencies.   Failure  to  comply  with  such  rules  and
regulations can result in substantial  penalties.  The regulatory  burden on the
oil and natural gas industry  increases  our cost of doing  business and affects
our profitability. Although we believe we are in substantial compliance with all
applicable  laws  and  regulations,  because  such  rules  and  regulations  are
frequently amended or reinterpreted, we are unable to predict the future cost or
impact of complying with such laws.

Many states require permits for drilling operations,  drilling bonds and reports
concerning  operations and impose other requirements relating to the exploration
and  production  of oil and  natural  gas.  Such  states  also have  statutes or
regulations  addressing  conservation  matters,  including  provisions  for  the
unitization or pooling of oil and natural gas properties,  the  establishment of
maximum rates of production from wells, and the regulation of spacing,  plugging
and abandonment of such wells.

Federal Regulation of Natural Gas

The Federal Energy Regulatory  Commission ("FERC") regulates  interstate natural
gas transportation  rates and service conditions,  which affect the marketing of
natural gas produced by us, as well as the revenues  received by us for sales of
such production.  Since the mid-1980's,  FERC has issued a series of orders that
have  significantly  altered the  marketing and  transportation  of natural gas.
These orders mandate a fundamental  restructuring  of interstate  pipeline sales
and transportation service,  including the unbundling by interstate pipelines of


                                       11


<PAGE>


the sale,  transportation,  storage and other  components of the city-gate sales
services such pipelines previously performed.  One of FERC's purposes in issuing
the orders was to  increase  competition  within all phases of the  natural  gas
industry. Certain aspects of these orders may be modified as a result of various
appeals and related  proceedings  and it is  difficult  to predict the  ultimate
impact of the  orders on us and  others.  Generally,  the  orders  eliminate  or
substantially reduce the interstate  pipelines'  traditional role as wholesalers
of natural gas in favor of providing  only storage and  transportation  service,
and have  substantially  increased  competition  and  volatility  in natural gas
markets.

The price,  which we may receive  for the sale of oil and  natural gas  liquids,
would be affected  by the cost of  transporting  products  to markets.  FERC has
implemented regulations establishing an indexing system for transportation rates
for oil  pipelines,  which,  generally,  would  index such  rates to  inflation,
subject to certain  conditions and limitations.  We are not able to predict with
certainty the effect,  if any, of these  regulations  on any future  operations.
However,  the regulations may increase  transportation  costs or reduce wellhead
prices for oil and natural gas liquids.

Environmental Matters

Our operations and properties will be subject to extensive and changing federal,
state and local  laws and  regulations  relating  to  environmental  protection,
including  the  generation,  storage,  handling,  emission,  transportation  and
discharge of materials into the environment,  and relating to safety and health.
The recent trend in environmental legislation and regulation generally is toward
stricter  standards,  and  this  trend  will  likely  continue.  These  laws and
regulations may (i) require the  acquisition of a permit or other  authorization
before construction or drilling commences and for certain other activities; (ii)
limit or prohibit  construction,  drilling and other activities on certain lands
lying within wilderness and other protected areas; and (iii) impose  substantial
liabilities for pollution  resulting from our operations.  The permits  required
for  several of our  operations  are  subject to  revocation,  modification  and
renewal  by  issuing  authorities.  Governmental  authorities  have the power to
enforce their  regulations,  and violations are subject to fines or injunctions,
or both. In the opinion of  management,  we are in substantial  compliance  with
current applicable  environmental laws and regulations,  and we have no material
commitments  for  capital  expenditures  to comply with  existing  environmental
requirements.   Nevertheless,   changes  in  existing   environmental  laws  and
regulations or in interpretations thereof could have a significant impact on our
business operations, as well as the oil and natural gas industry in general.

The  Comprehensive  Environmental,  Response,  Compensation,  and  Liability Act
("CERCL ") and  comparable  state  statutes  impose  strict,  joint and  several
liability  on owners and  operators  of sites and on persons who  disposed of or
arranged for the disposal of "hazardous  substances"  found at such sites. It is
not  uncommon for the  neighboring  landowners  and other third  parties to file
claims for personal injury and property damage allegedly caused by the hazardous
substances released into the environment.  The Federal Resource Conservation and
Recovery Act  ("RCRA")  and  comparable  state  statutes  govern the disposal of
"solid waste" and "hazardous  waste" and authorize the imposition of substantial
fines and  penalties  for  noncompliance.  Although  CERCLA  currently  excludes
petroleum from its definition of "hazardous substance," state laws affecting our
operations impose clean-up liability relating to petroleum and petroleum related
products.  In addition,  although  RCRA  classifies  certain oil field wastes as
"non-hazardous," such exploration and production wastes could be reclassified as


                                       12


<PAGE>


A  hazardous  wastes,  thereby  making  such  wastes  subject to more  stringent
handling and disposal requirements.

We intend to acquire leasehold  interests in properties that for many years have
produced oil and natural gas.  Although the previous  owners of these  interests
may have  used  operating  and  disposal  practices  that were  standard  in the
industry at the time,  hydrocarbons or other wastes may have been disposed of or
released on or under the properties.  In addition, some of our properties may be
operated  in the  future  by  third  parties  over  which  we have  no  control.
Notwithstanding  our lack of control  over  properties  operated by others,  the
failure of the operator to comply with applicable environmental regulations may,
in certain circumstances, adversely impact our business operations.

The  National  Environmental  Policy Act ("NEPA") is  applicable  to many of our
planned  activities and operations.  NEPA is a broad procedural statute intended
to ensure that  federal  agencies  consider  the  environmental  impact of their
actions by requiring such agencies to prepare  environmental  impact  statements
("EIS") in connection with all federal activities that significantly  affect the
environment.  Although  NEPA is a  procedural  statute  only  applicable  to the
federal  government,  a portion  of our  properties  may be  acreage  located on
federal land. The Bureau of Land  Management's  issuance of drilling permits and
the  Secretary  of the  Interior's  approval  of plans of  operation  and  lease
agreements all constitute federal action within the scope of NEPA. Consequently,
unless the responsible  agency determines that our drilling  activities will not
materially  impact the environment,  the responsible  agency will be required to
prepare an EIS in conjunction with the issuance of any permit or approval.

The  Endangered  Species Act  ("ESA")  seeks to ensure  that  activities  do not
jeopardize endangered or threatened animals, fish and plant species, nor destroy
or modify the  critical  habitat of such  species.  Under ESA,  exploration  and
production  operation,   as  well  as  actions  by  federal  agencies,  may  not
significantly  impair or jeopardize the species or their  habitat.  ESA provides
for criminal  penalties for willful  violations of the Act.  Other statutes that
provide  protection  to  animal  and  plant  species  and that may  apply to our
operations  include,  but are not necessarily  limited to, the Fish and Wildlife
Coordination  Act, the Fishery  Conservation  and Management  Act, the Migratory
Bird Treaty Act and the National Historic  Preservation Act. Although we believe
that our operations are in substantial compliance with such statutes, any change
in these  statutes  or any  reclassification  of a species as  endangered  could
subject us to  significant  expense to modify our  operations  or could force to
discontinue certain operations altogether.

Management  believes  that  we  are  in  substantial   compliance  with  current
applicable environmental laws and regulations.

RESEARCH AND DEVELOPMENT ACTIVITIES

No research  and  development  expenditures  have been  incurred,  either on our
account or sponsored by customers, to the date of our inception.


                                       13


<PAGE>


EMPLOYEES

We do not employ any persons on a full-time or on a part-time basis.  Michael J.
Newport is our President and Chief Executive  Officer and Robert D. Fedun is our
Chief  Financial   Officer  and  Treasurer.   These  individuals  are  primarily
responsible for all of our day-to-day operations. Other services are provided by
outsourcing and consultant and special purpose contracts.

RISK FACTORS

An investment in our common stock involves a number of very  significant  risks.
You should carefully  consider the following risks and uncertainties in addition
to  other  information  in  evaluating  our  company  and  its  business  before
purchasing  shares of our common  stock.  Our  business,  operating  results and
financial condition could be seriously harmed due to any of the following risks.
The risks  described  below are all of the material  risks that we are currently
aware of that are facing our company. Additional risks not presently known to us
may also  impair  our  business  operations.  You could lose all or part of your
investment due to any of these risks.

Risks Related to Our Business

     We will need to raise additional financing to complete further exploration.

We will  require  significant  additional  financing  in order to  continue  our
exploration activities and our assessment of the commercial viability of our oil
and gas properties.  Furthermore, if the cost of our planned exploration program
is greater than anticipated, we may have to seek additional funds through public
or private share offerings or arrangements with corporate partners. There can be
no assurance  that we will be  successful  in our efforts to raise these require
funds, or on terms satisfactory to us. The continued  exploration of our oil and
gas properties and the  development of our business will depend upon our ability
to  establish  the  commercial  viability of our oil and gas  properties  and to
ultimately develop cash flow from operations and reach profitable operations. We
currently are in the  exploration  stage and we have no revenue from  operations
and we are experiencing  significant negative cash flow.  Accordingly,  the only
other sources of funds presently available to us are through the sale of equity.
We presently believe that debt financing will not be an alternative to us as all
of our properties are in the exploration  stage.  Alternatively,  we may finance
our business by offering an interest in our oil and gas  properties to be earned
by another party or parties  carrying out further  exploration  and  development
thereof or to obtain project or operating financing from financial institutions,
neither  of which  is  presently  intended.  If we are  unable  to  obtain  this
additional financing, we will not be able to continue our exploration activities
and our  assessment of the commercial  viability of our oil and gas  properties.
Further,  if we are  able  to  establish  that  development  of our  oil and gas
properties is commercially  viable, our inability to raise additional  financing
at this stage would result in our inability to place our oil and gas  properties
into production and recover our investment.

As our oil and gas  properties do not contain any reserves,  we may not discover
commercially  exploitable  quantities of oil or gas on our properties that would
enable us to enter into commercial production,  achieve revenues and recover the
money we spend on exploration.


                                       14


<PAGE>


Our  property  does not contain  reserves  in  accordance  with the  definitions
adopted by the SEC and there is no assurance that any  exploration  program that
we  carry  out  will  establish  reserves.  Our oil and gas  property  is in the
exploration  stage as opposed to the development stage and have no known body of
reserves.  The known  reserve at this project has not yet been  determined to be
economic, and may never be determined to be economic. We plan to conduct further
exploration activities on our oil and gas property, which future exploration may
include the  completion of  feasibility  studies  necessary to evaluate  whether
commercial  reserves exist on our mineral property.  There is a substantial risk
that these exploration activities will not result in discoveries of commercially
recoverable reserves of oil or gas. Any determination that our property contains
commercially  recoverable quantities of oil or gas may not be reached until such
time  that  final   comprehensive   feasibility   studies  have  been  concluded
establishing  that a  potential  reserve  is likely to be  economic.  There is a
substantial risk that any preliminary or final  feasibility  studies carried out
by us will not result in a positive  determination that our oil and gas property
can be commercially developed.

    Our  exploration  activities  on  our  oil  and  gas  property  may  not be
    commercially successful, which could lead us to abandon our plans to develop
    the property and our investments in exploration.

Our  long-term  success  depends  on  our  ability  to  establish   commercially
recoverable quantities of oil and natural gas on our properties that can then be
developed into commercially viable operations. Oil and gas exploration is highly
speculative  in nature,  involves many risks and is  frequently  non-productive.
These risks include unusual or unexpected geologic formations, and the inability
to obtain suitable or adequate machinery, equipment or labor. The success of oil
and gas exploration is determined in part by the following factors:

     o    identification  of  potential  oil and natural gas  reserves  based on
          superficial analysis;

     o    availability of government-granted exploration permits;

     o    the quality of management and geological and technical expertise; and

     o    the capital available for exploration.

Substantial  expenditures are required to establish proven and probable reserves
through drilling and analysis,  to develop processes to extract oil and gas, and
to develop the drilling and  processing  facilities  and  infrastructure  at any
chosen site. Whether an oil and gas reserve will be commercially  viable depends
on a number of  factors,  which  include,  without  limitation,  the  particular
attributes of the reserve;  oil and natural gas prices,  which fluctuate widely;
and government regulations,  including, without limitation, regulations relating
to prices, taxes,  royalties,  land tenure, land use, importing and exporting of
oil and gas and environmental  protection. We may invest significant capital and
resources  in  exploration  activities  and abandon such  investments  if we are
unable to identify commercially  exploitable reserves. The decision to abandon a
project may reduce the trading  price of our common stock and impair our ability
to raise future financing.  We cannot provide any assurance to investors that we
will discover or acquire any oil or gas reserves in sufficient quantities on any
of our property to justify commercial  operations.  Further, we will not be able


                                       15


<PAGE>


to  recover  the  funds  that we  spend  on  exploration  if we are not  able to
establish  commercially  recoverable  reserves  of  oil  or  natural  gas on our
property.

     Our business is difficult to evaluate because we have a limited operating
     history.

In considering  whether to invest in our common stock,  you should consider that
there is only limited historical financial and operating  information  available
on which to base your evaluation of our  performance.  Our inception was May 12,
2006 and, as a result, we have a limited operating history.

     We have a history of operating losses and there can be no assurance we will
     be profitable in the future.

We have a history of operating losses,  expect to continue to incur losses,  and
may never be  profitable,  and we must be  considered  to be in the  exploration
stage.  Further,  we have been  dependent on sales of our equity  securities and
debt financing to meet our cash  requirements.  We have incurred losses totaling
approximately  ($156,000)  from May 12, 2006  (inception)  to February 29, 2008.
Further,  we do not expect  positive cash flow from operations in the near term.
There  is no  assurance  that  actual  cash  requirements  will not  exceed  our
estimates. In particular,  additional capital may be required in the event that:
(i)  the  costs  to  acquire  additional  leases  are  more  than  we  currently
anticipate;  (ii) drilling and completion  costs for  additional  wells increase
beyond our  expectations;  or (iii) we encounter  greater costs  associated with
general and administrative expenses or offering costs.

Our  development  of and  participation  in what could evolve into an increasing
number of oil and gas prospects may require  substantial  capital  expenditures.
The  uncertainty  and factors  described  throughout this section may impede our
ability to economically find, develop,  produce, and acquire natural gas and oil
reserves. As a result, we may not be able to achieve or sustain profitability or
positive cash flows from operating activities in the future.

     We have received a going  concern  opinion from our  independent  auditors'
     report  accompanying  our February 29, 2008 and February 28, 2007 financial
     statements.

The  independent  auditor's  reports  accompanying  our  February  29,  2008 and
February 28, 2007 audited financial statements contains an explanatory paragraph
expressing  substantial  doubt about our ability to continue as a going concern.
The  consolidated  financial  statements  have been prepared  "assuming that the
Company will  continue as a going  concern."  Our ability to continue as a going
concern is dependent on raising  additional  capital to fund our  operations and
ultimately on generating future profitable operations. There can be no assurance
that we will be able to raise sufficient  additional  capital or eventually have
positive cash flow from  operations to address all of our cash flow needs. If we
are not able to find alternative  sources of cash or generate positive cash flow
from operations,  our business and shareholders will be materially and adversely
affected.


                                       16


<PAGE>


     We will require additional funding in the future.

Based upon our historical  losses from  operations,  we will require  additional
funding  in the  future.  If we cannot  obtain  capital  through  financings  or
otherwise,  our ability to execute our development plans and achieve  production
levels will be greatly limited. Our current development plans require us to make
capital  expenditures for the exploration and development of our oil and natural
gas properties. Historically, we have funded our operations through the issuance
of equity. We may not be able to obtain additional financing on favorable terms,
if at all.  Our future  cash flows and the  availability  of  financing  will be
subject to a number of variables,  including potential production and the market
prices of oil and natural gas. Further, debt financing, if utilized,  could lead
to a diversion  of cash flow to satisfy  debt-servicing  obligations  and create
restrictions on business operations. If we are unable to raise additional funds,
it would have a material adverse effect upon our operations.

     As part of our growth strategy, we intend to acquire additional oil and gas
     properties.

As part of our  growth  strategy,  we intend to acquire  additional  oil and gas
production properties.  Current and subsequent acquisitions may pose substantial
risks to our  business,  financial  condition,  and  results of  operations.  In
pursuing acquisitions,  we will compete with other companies, many of which have
greater financial and other resources to acquire attractive properties.  Even if
we are successful in acquiring additional properties, some of the properties may
not produce  revenues at  anticipated  levels or failure to conduct  drilling on
prospects within specified time periods may cause the forfeiture of the lease in
that prospect.  There can be no assurance  that we will be able to  successfully
integrate  acquired  properties,  which could  result in  substantial  costs and
delays  or  other  operational,   technical,  or  financial  problems.  Further,
acquisitions could disrupt ongoing business  operations.  If any of these events
occur,  it would have a material  adverse effect upon our operations and results
from operations.

     We are a new  entrant  into  the oil and gas  exploration  and  development
     industry without profitable operating history.

Since  inception,  our activities have been limited to  organizational  efforts,
obtaining  working capital and acquiring and developing a very limited number of
mineral properties.  Subsequently, we changed our business strategy from mineral
exploration  to  oil  and  gas  exploration.  As  a  result,  there  is  limited
information  regarding  oil and gas  property  related  production  potential or
revenue  generation  potential.  Further,  our East  Holly  Field  lease  has no
probable,  proved or  developed  producing  reserves.  As a result,  our  future
revenues may be limited or non-existent.

The business of oil and gas exploration and development is subject to many risks
and if oil and  natural  gas is found in  economic  production  quantities,  the
potential  profitability  of future  possible oil and gas ventures  depends upon
factors beyond our control.  The potential  profitability of oil and natural gas
properties if economic  quantities  are found is dependent upon many factors and
risks  beyond our  control,  including,  but not limited  to: (i)  unanticipated
ground conditions; (ii) geological problems; (iii) drilling and other processing
problems;  (iv) the  occurrence of unusual  weather or operating  conditions and
other force majeure events;  (v) lower than expected  reserve  quantities;  (vi)
accidents;  (vii)  delays in the  receipt of or  failure  to  receive  necessary
government permits;  (viii) delays in transportation;  (ix) labor disputes;  (x)


                                       17


<PAGE>


government permit restrictions and regulation restrictions;  (xi) unavailability
of materials  and  equipment;  and (xii) the failure of equipment or drilling to
operate in accordance with specifications or expectations.

     Our drilling operations may not be successful.

We intend to test certain zones on the East Holly Field lease and if results are
positive and capital is available,  drill wells and begin production operations.
There can be no assurance  that our current  well  re-completion  activities  or
future drilling  activities  will be successful,  and we cannot be sure that our
overall drilling success rate or our production  operations  within a particular
area will ever come to fruition,  and if it does, will not decline over time. We
may not recover all or any portion of our capital investment in the wells or the
underlying  leaseholds.  Unsuccessful  drilling activities would have a material
adverse effect upon our results of operations and financial condition.  The cost
of drilling, completing, and operating wells is often uncertain, and a number of
factors  can delay or prevent  drilling  operations  including:  (i)  unexpected
drilling conditions;  (ii) pressure or irregularities in geological  formations;
(iii) equipment failures or accidents; (iv) adverse weather conditions; and (iv)
shortages or delays in availability of drilling rigs and delivery of equipment.

     Our production initiatives may not prove successful.

The properties  from which we intend to produce  natural gas frequently  contain
water, which may hamper our ability to produce gas in commercial quantities. The
amount of natural gas that can be  commercially  produced  depends upon the coal
quality,  the original gas content of the coal seam,  the thickness of the seam,
the reservoir pressure, the rate at which gas is released from the coal, and the
existence of any natural  fractures  through  which the gas can flow to the well
bore. However,  coal beds frequently contain water that must be removed in order
for the gas to detach from the coal and flow to the well bore.  The average life
of a coal bed well is only five to six years.  Our ability to remove and dispose
of sufficient  quantities of water from the coal seam will determine  whether or
not we can produce coal bed methane in commercial quantities.

There is no guarantee that the potential  drilling  locations we have or acquire
in the future will ever produce  natural gas or oil, which could have a material
adverse effect upon our results of operations.

     Prospects  that we  decide to drill  may not  yield  natural  gas or oil in
     commercially viable quantities.

We describe our East Holly Field lease in this Annual Report. Our prospect is in
the stage of  preliminary  evaluation  and  assessment  and we have  decided  to
proceed  with  drilling  on the  property.  However,  the use of  seismic  data,
historical  drilling logs,  offsetting well information,  and other technologies
and the study of  producing  fields in the same area will not  enable us to know
conclusively  prior to drilling and testing  whether  natural gas or oil will be
present or, if present, whether natural gas or oil will be present in sufficient
quantities  or  quality  to  recover  drilling  or  completion  costs  or  to be
economically viable. In sum, the cost of drilling,  completing and operating any
wells is often uncertain and new wells may not be productive.


                                       18


<PAGE>


     We may be unable to identify  liabilities  associated  with the property or
     obtain protection from sellers against them.

One of our growth  strategies is to capitalize on opportunistic  acquisitions of
oil and  natural  gas  reserves.  However,  our review of our  current  acquired
property is inherently incomplete because it generally is not feasible to review
in depth every  individual  property  involved in each  acquisition.  A detailed
review  of  records  and  properties  may not  necessarily  reveal  existing  or
potential problems,  nor will it permit a buyer to become sufficiently  familiar
with the properties to assess fully their  deficiencies and potential.  Further,
environmental problems, such as ground water contamination,  are not necessarily
observable  even when an inspection is undertaken.  We may not be able to obtain
indemnification  or other  protections  from the sellers  against such potential
liabilities,  which  would have a material  adverse  effect  upon our results of
operations.

     The  potential  profitability  of oil and gas ventures  depends upon global
     political and market related factors beyond our control.

World  prices and markets for oil and gas are  unpredictable,  highly  volatile,
potentially  subject  to  governmental  fixing,   pegging,   controls,   or  any
combination  of these and other  factors,  and  respond to changes in  domestic,
international,  political, social, and economic environments.  Additionally, due
to  worldwide  economic  uncertainty,  the  availability  and cost of funds  for
production  and  other  expenses  have  become  increasingly  difficult,  if not
impossible, to project. These and other changes and events may materially affect
our financial performance. The potential profitability of oil and gas properties
is dependent on these and other factors beyond our control.

     Production  or oil and gas  resources  if found are  dependent  on numerous
     operational uncertainties specific to the area of the resource that affects
     its profitability.

Production area specifics affect  profitability.  Adverse weather conditions can
hinder drilling  operations and ongoing  production  work. A productive well may
become  uneconomic  in the  event  water or  other  deleterious  substances  are
encountered  which impair or prevent the  production  of oil and/or gas from the
well.  Production  and  treatments  on other wells in the area can have either a
positive or negative effect on our production and wells. In addition, production
from any well  may be  unmarketable  if it is  impregnated  with  water or other
deleterious  substances.  The content of  hydrocarbons is subject to change over
the life of producing wells. The  marketability of oil and gas from any specific
reserve which may be acquired or discovered will be affected by numerous factors
beyond our control. These factors include, but are not limited to, the proximity
and capacity of oil and gas pipelines,  availability of room in the pipelines to
accommodate additional production, processing and production equipment operating
costs and equipment  efficiency,  market  fluctuations of prices and oil and gas
marketing  relationships,  local  and  state  taxes,  mineral  owner  and  other
royalties,  land  tenure,  lease bonus costs and lease damage  costs,  allowable
production,  and  environmental  protection.  These factors cannot be accurately
predicted and the combination of these factors may result in us not receiving an
adequate return on our invested capital.

     If production results from operations, we are dependent upon transportation
     and storage services provided by third parties.


                                       19


<PAGE>


We will be  dependent  on the  transportation  and storage  services  offered by
various  interstate and intrastate  pipeline companies for the delivery and sale
of our gas supplies. Both the performance of transportation and storage services
by  interstate  pipelines and the rates charged for such services are subject to
the jurisdiction of the Federal Energy Regulatory Commission or state regulatory
agencies.  An  inability to obtain  transportation  and/or  storage  services at
competitive  rates could hinder our processing and marketing  operations  and/or
affect our sales margins.

     Our results of operations are dependent upon market prices for oil and gas,
     which fluctuate widely and are beyond our control.

If and when production from our East Holly Field lease is reached,  our revenue,
profitability,  and cash flow  depend  upon the  prices  and  demand for oil and
natural  gas.  The  markets for these  commodities  are very  volatile  and even
relatively modest drops in prices can significantly affect our financial results
and impede our  growth.  Prices  received  also will affect the amount of future
cash flow available for capital expenditures and may affect our ability to raise
additional  capital.  Lower prices may also affect the amount of natural gas and
oil that  can be  economically  produced  from  reserves  either  discovered  or
acquired.  Factors that can cause price fluctuations  include:  (i) the level of
consumer  product demand;  (ii) domestic and foreign  governmental  regulations;
(iii) the price and availability of alternative  fuels; (iv) technical  advances
affecting  energy  consumption;  (v)  proximity  and  capacity  of oil  and  gas
pipelines and other  transportation  facilities;  (vi)  political  conditions in
natural gas and oil producing regions;  (vii) the domestic and foreign supply of
natural gas and oil;  (viii) the ability of members of Organization of Petroleum
Exporting Countries to agree to and maintain oil price and production  controls;
(ix) the price of foreign imports;  and (x) overall domestic and global economic
conditions.

The  availability  of a ready market for our oil and gas depends  upon  numerous
factors  beyond our control,  including  the extent of domestic  production  and
importation   of  oil  and  gas,  the  relative   status  of  the  domestic  and
international  economies,  the  proximity  of our  properties  to gas  gathering
systems,  the capacity of those  systems,  the  marketing  of other  competitive
fuels,   fluctuations  in  seasonal  demand  and   governmental   regulation  of
production,  refining,  transportation and pricing of oil, natural gas and other
fuels.

     The oil and gas industry in which we operate involved many industry related
     operating  and  implementation  risks  that can cause  substantial  losses,
     including,  but not  limited to,  unproductive  wells,  natural  disasters,
     facility and equipment problems and environmental hazards.

Our drilling  activities  are subject to many risks,  including the risk that we
will not  discover  commercially  productive  reservoirs.  Drilling  for oil and
natural gas can be  unprofitable,  not only from dry holes,  but from productive
wells that do not produce  sufficient  revenues to return a profit. In addition,
our drilling and producing operations may be curtailed, delayed or canceled as a
result of other drilling and production, weather and natural disaster, equipment
and service  failure,  environmental  and regulatory,  and site specific related
factors,  including  but not  limited  to: (i)  fires;  (ii)  explosions;  (iii)
blow-outs  and  surface  cratering;  (iv)  uncontrollable  flows of  underground
natural gas, oil, or formation water; (v) natural  disasters;  (vi) facility and
equipment failures; (vii) title problems; (viii) shortages or delivery delays of
equipment and services; (ix) abnormal pressure formations; and (x) environmental


                                       20


<PAGE>


hazards such as natural gas leaks, oil spills,  pipeline ruptures and discharges
of toxic gases.

If any of these events occur, we could incur substantial  losses as a result of:
(i) injury or loss of life;  (ii) severe damage to and  destruction of property,
natural resources or equipment;  (iii) pollution and other environmental damage;
(iv) clean-up responsibilities; (v) regulatory investigation and penalties; (vi)
suspension of our operations; or (vii) repairs necessary to resume operations.

If we were to  experience  any of these  problems,  it could  affect well bores,
gathering  systems and processing  facilities,  any one of which could adversely
affect our  ability to conduct  operations.  We may be  affected by any of these
events more than larger companies, since we have limited working capital.

     The oil and gas  industry is highly  competitive  and there is no assurance
     that we will be successful in acquiring leases.

The oil and natural gas industry is intensely  competitive,  and we compete with
other  companies that have greater  resources.  Many of these companies not only
explore  for and  produce  oil and  natural  gas,  but also  carry  on  refining
operations and market  petroleum and other  products on a regional,  national or
worldwide basis.  These companies may be able to pay more for productive oil and
natural gas properties and exploratory  prospects or define,  evaluate,  bid for
and purchase a greater  number of properties and prospects than our financial or
human resources permit. In addition,  these companies may have a greater ability
to continue  exploration  activities  during  periods of low oil and natural gas
market  prices.  Our  larger  competitors  may be able to absorb  the  burden of
present and future federal,  state,  local and other laws and  regulations  more
easily than we can, which would adversely affect our competitive  position.  Our
ability to acquire additional  properties and to discover reserves in the future
will be dependent  upon our ability to evaluate and select  suitable  properties
and to consummate transactions in a highly competitive environment. In addition,
because we have fewer  financial and human  resources than many companies in our
industry,  we may be at a disadvantage in bidding for exploratory  prospects and
producing oil and natural gas properties.

     The marketability of natural resources will be affected by numerous factors
     beyond our control, which may result in us not receiving an adequate return
     on invested capital to be profitable or viable.

The marketability of natural resources which may be acquired or discovered by us
will be affected by numerous  factors beyond our control.  These factors include
market  fluctuations  in oil and gas  pricing  and  demand,  the  proximity  and
capacity of natural  resource  markets and  processing  equipment,  governmental
regulations,  land tenure,  land use,  regulation  concerning  the importing and
exporting of oil and gas and  environmental  protection  regulations.  The exact
effect of these factors cannot be accurately  predicted,  but the combination of
these  factors may result in us not  receiving  an  adequate  return on invested
capital to be profitable or viable.


                                       21


<PAGE>


     Oil and gas operations are subject to  comprehensive  regulation  which may
     cause  substantial  delays or  require  capital  outlays in excess of those
     anticipated causing an adverse effect on our business operations.

Oil and gas operations are subject to federal, state, and local laws relating to
the protection of the environment,  including laws regulating removal of natural
resources from the ground and the discharge of materials  into the  environment.
Oil and gas  operations are also subject to federal,  state,  and local laws and
regulations which seek to maintain health and safety standards by regulating the
design  and  use  of  drilling  methods  and  equipment.  Various  permits  from
government  bodies are required  for drilling  operations  to be  conducted;  no
assurance  can be  given  that  such  permits  will be  received.  Environmental
standards  imposed by federal,  provincial,  or local authorities may be changed
and any such  changes  may have  material  adverse  effects  on our  activities.
Moreover,  compliance  with such laws may cause  substantial  delays or  require
capital outlays in excess of those  anticipated,  thus causing an adverse effect
on us.  Additionally,  we may be subject to  liability  for  pollution  or other
environmental  damages  which  we  may  elect  not  to  insure  against  due  to
prohibitive  premium costs and other reasons.  To date we have not been required
to spend material amounts on compliance with environmental regulations. However,
we may be  required  to do so in the future  and this may affect our  ability to
expand or maintain our operations.

In general,  our  exploration  and production  activities are subject to certain
federal,  state and local laws and regulations relating to environmental quality
and pollution  control.  Such laws and  regulations  increase the costs of these
activities and may prevent or delay the  commencement  or continuance of a given
operation.  Compliance  with these laws and  regulations  has not had a material
effect on our operations or financial  condition to date.  Specifically,  we are
subject  to  legislation   regarding  emissions  into  the  environment,   water
discharges  and  storage and  disposition  of  hazardous  wastes.  In  addition,
legislation  has been  enacted  which  requires  well and  facility  sites to be
abandoned and reclaimed to the satisfaction of state authorities.  However, such
laws and  regulations  are  frequently  changed and we are unable to predict the
ultimate cost of compliance. Generally, environmental requirements do not appear
to affect us any  differently  or to any  greater  or lesser  extent  than other
companies in the industry.

We believe  that our  operations  comply,  in all  material  respects,  with all
applicable  environmental  regulations.  We need  insurance  to protect our self
against risks  associated with the leases  obtained.  The leases allow for entry
onto the properties for the purposes of oil and gas  exploration.  The insurance
we require  relates solely to developments on the properties for the purposes of
oil and gas exploration.

When and if we are  convinced  that  our  current  lease  or those  subsequently
acquired are capable of production and sales, and we plan to drill more than one
well, we intend to maintain a $2,000,000  per year limit policy on bodily injury
and general liability with regard to risks incurred for the drilling of up to 25
wells.  This will allow for our growth to contain non contract  labor that would
require us to carry such  additional  insurance for risks  pertaining to oil and
gas exploration  conducted  directly by us. Such a policy would include coverage
for numerous locations for pollution,  environmental damage, chemical spills and
commercial general liability,  fire, and personal injury. Such a policy will not
be  required  until  such  time  and  date as we  believe  that we will  begin a


                                       22


<PAGE>


sustained  drilling and operating  program,  and that at least one well has been
drilled and is producing to justify and warrant further drilling and a sustained
drilling and operating program.

     Any change to  government  regulation/administrative  practices  may have a
     negative impact on our ability to operate and our profitability.

The laws,  regulations,  policies  or current  administrative  practices  of any
government body,  organization or regulatory  agency in the United States or any
other  jurisdiction,  may be changed,  applied or  interpreted in a manner which
will fundamentally alter our ability to carry on business. The actions, policies
or regulations, or changes thereto, of any government body or regulatory agency,
or other special  interest groups,  may have a detrimental  effect on us. Any or
all of these  situations  may have a negative  impact on our  ability to operate
and/or our profitability.

     We may be  unable  to  retain  key  employees  or  consultants  or  recruit
     additional qualified personnel.

Our  extremely  limited  personnel  means  that we  would be  required  to spend
significant  sums of money to locate and train new employees in the event any of
our employees resign or terminate their  employment with us for any reason.  Due
to our  limited  operating  history and  financial  resources,  we are  entirely
dependent on the continued  service of Michael J. Newport,  our Chief  Executive
Officer,  and Robert D. Fedun, our Chief Financial Officer.  Further,  we do not
have key man life insurance on either of these individuals.  We may not have the
financial resources to hire a replacement if one or both of our officers were to
die.  The  loss  of  service  of  either  of  these  employees  could  therefore
significantly and adversely affect our operations.

     Our officers and directors may be subject to conflicts of interest.

Our officers and directors  serve only part time and are subject to conflicts of
interest.  Each devotes part of his working  time to other  business  endeavors,
including consulting relationships with other entities, and has responsibilities
to these other entities. Such conflicts include deciding how much time to devote
to our affairs,  as well as what business  opportunities  should be presented to
us. Because of these  relationships,  our officers and directors will be subject
to conflicts of interest.  Currently, we have no policy in place to address such
conflicts of interest.

     Nevada law and our articles of incorporation may protect our directors from
     certain types of lawsuits.

Nevada law provides that our officers and directors  will not be liable to us or
our  stockholders  for monetary  damages for all but certain types of conduct as
officers and directors. Our Bylaws permit us broad indemnification powers to all
persons  against all damages  incurred in  connection  with our  business to the
fullest extent provided or allowed by law. The  exculpation  provisions may have
the effect of  preventing  stockholders  from  recovering  damages  against  our
officers  and  directors  caused by their  negligence,  poor  judgment  or other
circumstances.  The indemnification provisions may require us to use our limited
assets to defend our officers and directors  against  claims,  including  claims
arising out of their negligence, poor judgment, or other circumstances.


                                       23


<PAGE>


Risks Related to Our Common Stock

     Sales of a substantial number of shares of our common stock into the public
     market by certain  stockholders may result in significant downward pressure
     on the price of our common  stock and could  affect your ability to realize
     the current trading price of our common stock.

Sales of a substantial number of shares of our common stock in the public market
by certain  stockholders  could  cause a  reduction  in the market  price of our
common stock. As of the date of this Annual Report, we have 39,615,000 shares of
common  stock  issued  and  outstanding.  Of the  total  number  of  issued  and
outstanding shares of common stock,  certain  stockholders are able to resell up
to 417,000  Pre-Forward  Stock Split shares of our common stock  pursuant to the
Registration  Statement declared effective on August 24, 2007 (12,000,000 shares
post-Forward Stock Splits).  As a further result of the Registration  Statement,
1,000,000 pre-Forward Stock Split shares of our common stock were issued and are
available for immediate  resale which could have an adverse  effect on the price
of our common stock (30,000,000 shares post-Forward Stock Splits).

As of the date of this Annual Report, there are 16,305,000 outstanding shares of
our common stock that are restricted  securities as that term is defined in Rule
144 under  the  Securities  Act of 1933,  as  amended  (the  "Securities  Act").
Although the Securities Act and Rule 144 place certain  prohibitions on the sale
of  restricted  securities,  restricted  securities  may be sold into the public
market  under  certain  conditions.  See "Item 5.  Market for Common  Equity and
Related Stockholder Matters."

Any  significant  downward  pressure  on the  price of our  common  stock as the
selling stockholders sell their shares of our common stock could encourage short
sales by the selling  stockholders  or others.  Any such short sales could place
further downward pressure on the price of our common stock.

     The  trading  price of our  common  stock on the OTC  Bulletin  Board  will
     fluctuate  significantly  and  stockholders  may have difficulty  reselling
     their shares.

As of  the  date  of  this  Annual  Report,  our  common  stock  trades  on  the
Over-the-Counter  Bulletin Board. There is a volatility associated with Bulletin
Board  securities in general and the value of your investment  could decline due
to the  impact of any of the  following  factors  upon the  market  price of our
common  stock:  (i)  disappointing  results from our  discovery  or  development
efforts;  (ii) failure to meet our revenue or profit goals or operating  budget;
(iii)  decline  in demand for our  common  stock;  (iv)  downward  revisions  in
securities  analysts'  estimates or changes in general  market  conditions;  (v)
technological innovations by competitors or in competing technologies; (vi) lack
of funding generated for operations;  (vii) investor  perception of our industry
or our prospects; and (viii) general economic trends.

In addition,  stock markets have experienced  price and volume  fluctuations and
the market prices of securities have been highly  volatile.  These  fluctuations
are often unrelated to operating performance and may adversely affect the market
price of our common  stock.  As a result,  investors may be unable to sell their
shares at a fair price and you may lose all or part of your investment.


                                       24


<PAGE>


     Additional  issuance  of equity  securities  may result in  dilution to our
     existing stockholders.

Our Articles of  Incorporation  authorize the issuance of 200,000,000  shares of
common stock.  Common stock is our only authorized  class of stock. The board of
directors has the authority to issue  additional  shares of our capital stock to
provide  additional  financing in the future and the issuance of any such shares
may result in a reduction of the book value or market  price of the  outstanding
shares of our common  stock.  If we do issue any such  additional  shares,  such
issuance also will cause a reduction in the  proportionate  ownership and voting
power  of  all  other  stockholders.   As  a  result  of  such  dilution,   your
proportionate ownership interest and voting power will be decreased accordingly.
Further, any such issuance could result in a change of control.

     Our common  stock is  classified  as a "penny  stock" under SEC rules which
     limits the market for our common stock.

The SEC has adopted  rules that regulate  broker-dealer  practices in connection
with   transactions  in  "penny  stocks."  Penny  stocks  generally  are  equity
securities with a price of less than $5.00 (other than securities  registered on
certain national securities  exchanges or quoted on the NASDAQ system,  provided
that current price and volume  information  with respect to transactions in such
securities  is provided by the exchange or system).  Penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
those rules, to deliver a standardized risk disclosure  document prepared by the
SEC,  which  specifies  information  about  penny  stocks  and  the  nature  and
significance  of risks of the penny  stock  market.  A  broker-dealer  must also
provide the customer  with bid and offer  quotations  for the penny  stock,  the
compensation  of the  broker-dealer,  and sales person in the  transaction,  and
monthly account statements  indicating the market value of each penny stock held
in the  customer's  account.  In addition,  the penny stock rules  require that,
prior to a transaction  in a penny stock not otherwise  exempt from those rules,
the broker-dealer must make a special written determination that the penny stock
is a suitable  investment for the purchaser and receive the purchaser's  written
agreement to the transaction.  These disclosure requirements may have the effect
of reducing the trading  activity in the secondary market for stock that becomes
subject to those penny stock  rules.  If a trading  market for our common  stock
develops,  our common  stock will  probably  become  subject to the penny  stock
rules, and shareholders may have difficulty in selling their shares.

     A majority of our  directors  and officers  are outside the United  States,
     with the result that it may be difficult  for  investors to enforce  within
     the United States any judgments obtained against us or any of our directors
     or officers.

A majority of our  directors  and officers  are  nationals  and/or  residents of
countries other than the United States, and all or a substantial portion of such
persons'  assets are located outside the United States.  As a result,  it may be
difficult  for  investors  to effect  service  of process  on our  directors  or
officers,  or enforce within the United States or Canada any judgments  obtained
against us or our officers or directors, including judgments predicated upon the
civil  liability  provisions of the securities  laws of the United States or any
state  thereof.  Consequently,  you may be  effectively  prevented from pursuing
remedies under U.S. federal securities laws against them. In addition, investors


                                       25


<PAGE>


may not be able to commence an action in a Canadian  court  predicated  upon the
civil liability provisions of the securities laws of the United States.

ITEM 2. DESCRIPTION OF PROPERTIES

We lease our principal  office space  located at 17314 State Highway 249,  Suite
306,  Houston,  Texas 77064.  The office space is for corporate  identification,
mailing,  and courier purposes only and costs us  approximately  $1,500 monthly.
The office and  services  related  thereto may be  cancelled  at any time with a
thirty day notice.

ITEM 3. LEGAL PROCEEDINGS

Management  is  not  aware  of  any  legal   proceedings   contemplated  by  any
governmental authority or any other party involving us or our properties.  As of
the date of this Annual Report, no director, officer or affiliate is (i) a party
adverse to us in any legal proceeding,  or (ii) has an adverse interest to us in
any legal  proceedings.  Management is not aware of any other legal  proceedings
pending or that have been threatened against us or our properties.

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

During  fiscal year ended  February 29, 2008,  no matters were  submitted to our
stockholders for approval.


                                     PART II

ITEM 5.  MARKET FOR COMMON  EQUITY AND  RELATED  STOCKHOLDER  MATTERS  AND SMALL
         BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR COMMON EQUITY

Shares of our common stock commenced trading on the OTC Bulletin Board under the
symbol "MNLU:OB" on approximately  May 24, 2006. The market for our common stock
is limited, and can be volatile. The following table sets forth the high and low
bid prices  relating to our common  stock on a  quarterly  basis for the periods
indicated  as  quoted by the  NASDAQ  stock  market.  These  quotations  reflect
inter-dealer prices without retail mark-up,  mark-down, or commissions,  and may
not reflect actual transactions.

        Month Ended                      High Bid                   Low Bid

     February 29, 2008                     $1.750                    $1.690
     November 30, 2007                     $0.009                    $0.009
      August 31, 2007                      $0.009                    $0.009
       May 31, 2007                        $0.009                    $0.009

As of May 29, 2008,  we had 37  shareholders  of record,  which does not include
shareholders whose shares are held in street or nominee names.


                                       26


<PAGE>


DIVIDEND POLICY

No  dividends  have ever been  declared by the Board of  Directors on our common
stock.  Our  losses  do not  currently  indicate  the  ability  to pay any  cash
dividends,  and we do not indicate the intention of paying cash dividends either
on our common stock in the foreseeable future.

FORWARD STOCK SPLITS

February 2008 Forward Stock Split

On February  25,  2008,  our Board of  Directors  pursuant to minutes of written
consent in lieu of a special  meeting,  authorized  and approved a forward stock
split of twenty for one (20:1) of our total  issued  and  outstanding  shares of
common stock (the "February 2008 Forward Stock Split"). Each of our shareholders
holding one share of common stock was entitled to receive an  additional  twenty
shares of our restricted common stock. The additional shares of our common stock
to be issued to the  shareholders  in accordance  with the February 2008 Forward
Stock Split were mailed on  approximately  March 15, 2008  without any action on
the part of the shareholders.

The February 2008 Forward Stock Split was effectuated based on market conditions
and upon a  determination  by our  Board of  Directors  that the  February  2008
Forward Stock Split was in our best  interests and of the  shareholders.  In our
judgment,  the February 2008 Forward Stock Split  resulted in an increase in our
trading  float of  shares  of  common  stock  available  for sale  resulting  in
facilitation of investor  liquidity and trading volume potential.  The intent of
the February 2008 Forward Stock Split was to increase the  marketability  of our
common stock.

The February  2008  Forward  Stock Split was  effectuated  with a record date of
March 11,  2008 upon  filing the  appropriate  documentation  with  NASDAQ.  The
February 2008 Forward Stock Split increased our issued and outstanding shares of
common stock from 1,120,500 to approximately  22,410,000 shares of common stock.
The current  authorized  share  capital  continued to be  200,000,000  shares of
common stock with a par value of $0.001 per share.

May 2008 Forward Stock Split

On April 30, 2008, our Board of Directors pursuant to minutes of written consent
in lieu of a special  meeting,  authorized and approved a forward stock split of
1.5 for one (1.5:1) of our total issued and  outstanding  shares of common stock
(the "May 2008 Forward Stock Split").

The May 2008 Forward Stock Split was effectuated  based on market conditions and
upon a  determination  by our Board of Directors that the May 2008 Forward Stock
Split was in our best interests and of the  shareholders.  In our judgment,  the
May 2008 Forward  Stock Split will further  result in an increase in our trading
float of shares of common stock  available for sale resulting in facilitation of
investor  liquidity  and trading  volume  potential.  The intent of the May 2008
Forward  Stock  Split is to further  increase  the  marketability  of our common
stock.


                                       27


<PAGE>


The May 2008 Forward Stock Split was  effectuated  with a record date of May 29,
2008 upon filing the appropriate documentation with NASDAQ. The May 2008 Forward
Stock Split  increased  our issued and  outstanding  shares of common stock from
26,410,000 to approximately 39,615,000 shares of common stock. (The total number
of shares of common stock issued and  outstanding had previously been 22,410,000
since March 11, 2008 pursuant to a forward stock split  effectuated  pursuant to
the February 2008 Forward Stock Split). We subsequently  issued 4,000,000 shares
in accordance with the terms and provisions of a private placement offering thus
bringing  the total number of issued and  outstanding  shares of common stock to
26,410,000 as of May 29, 2008. The current authorized share capital continued to
be 200,000,000 shares of common stock with a par value of $0.001 per share.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS

We have one equity  compensation  plan,  the Mainland  Resources Inc. 2008 Stock
Option Plan (the "2008 Plan").  The table set forth below  presents  information
relating to our equity compensation plans as of the date of this Annual Report:

<TABLE>
<CAPTION>


                                 Number of Securities to be                                     Number of Securities
                                  Issued Upon Exercise of      Weighted-Average Exercise      Remaining Available for
                                    Outstanding Options,          Price of Outstanding         Future Issuance Under
                                    Warrants and Rights       Options, Warrants and Rights   Equity Compensation Plans
        Plan Category                       (a)                           (b)                  (excluding column (a))
______________________________________________________________________________________________________________________
<C>                                       <C>                              <C>                        <C>

Equity Compensation Plans
Approved by Security Holders                     -0-                       -0-                               -0-

Equity Compensation Plans Not
Approved by Security Holders

2008 Stock Option Plan                    2,100,000                        $1.17                      1,200,000

</TABLE>


2008 Stock Option Plan

On April 7, 2008, our Board of Directors authorized and approved the adoption of
the 2008 Plan effective April 7, 2008,  under which an aggregate of 3,300,000 of
our shares may be issued.

The purpose of the 2008 Plan is to enhance our  long-term  stockholder  value by
offering  opportunities  to our  directors,  officers,  employees  and  eligible
consultants  to acquire  and  maintain  stock  ownership  in order to give these
persons  the  opportunity  to  participate  in our  growth and  success,  and to
encourage them to remain in our service.


                                       28


<PAGE>


The 2008 Plan is to be  administered  by our Board of  Directors  or a committee
appointed by and  consisting  of one or more members of the Board of  Directors,
which shall determine (i) the persons to be granted Stock Options under the 2008
Plan;  (ii) the number of shares  subject to each option,  the exercise price of
each Stock Option;  and (iii) whether the Stock Option shall be  exercisable  at
any time  during  the option  period up to ten (10)  years or whether  the Stock
Option shall be  exercisable in  installments  or by vesting only. The 2008 Plan
provides  authorization  to the Board of  Directors  to grant  Stock  Options to
purchase a total number of shares of Common Stock of the Company,  not to exceed
3,300,00 shares as at the date of adoption by the Board of Directors of the 2008
Plan (as increased in accordance with the May 2008 Forward Stock Split).  At the
time a Stock Option is granted under the 2008 Plan, the Board of Directors shall
fix and determine the exercise  price at which shares of our common stock may be
acquired.

In the event an optionee  ceases to be employed by or to provide  services to us
for reasons other than cause, retirement,  disability or death, any Stock Option
that is vested and held by such optionee  generally may be exercisable within up
to ninety (90) calendar days after the effective date that his position  ceases,
and after such 90-day period any unexercised  Stock Option shall expire.  In the
event an  optionee  ceases to be  employed  by or to provide  services to us for
reasons of retirement,  disability or death, any Stock Option that is vested and
held by such optionee  generally may be exercisable  within up to one-year after
the effective date that his position ceases,  and after such one-year period any
unexercised Stock Option shall expire.

No Stock Options granted under the Stock Option Plan will be transferable by the
optionee,  and each Stock Option will be exercisable  during the lifetime of the
optionee  subject  to the  option  period  up to ten (10)  years or  limitations
described  above.  Any Stock Option held by an optionee at the time of his death
may be exercised  by his estate  within one (1) year of his death or such longer
period as the Board of Directors may determine.

The exercise price of a Stock Option granted  pursuant to the 2008 Plan shall be
paid in full to us by  delivery  of  consideration  equal to the  product of the
Stock Option in accordance with the requirements of the Nevada Revised Statutes.
Any Stock Option settlement, including payment deferrals or payments deemed made
by way of  settlement  of  pre-existing  indebtedness  may be  subject  to  such
conditions, restrictions and contingencies as may be determined.

Incentive Stock Options

The 2008 Plan further  provides  that,  subject to the  provisions  of the Stock
Option Plan and prior shareholder approval,  the Board of Directors may grant to
any key individuals who are our employees  eligible to receive  options,  one or
more  incentive  stock  options to purchase the number of shares of common stock
allotted by the Board of Directors (the "Incentive Stock  Options").  The option
price per share of common  stock  deliverable  upon the exercise of an Incentive
Stock  Option  shall be at least  100% of the fair  market  value of the  common
shares of the Company,  and in the case of an Incentive  Stock Option granted to
an optionee  who owns more than 10% of the total  combined  voting  power of all
classes of our stock,  shall not be less than 100% of the fair  market  value of
our common  shares.  The option term of each  Incentive  Stock  Option  shall be
determined by the Board of Directors,  which shall not commence sooner than from


                                       29


<PAGE>


the date of grant and shall terminate no later than ten (10) years from the date
of grant of the Incentive Stock Option, subject to possible early termination as
described above.

As of the date of this Annual Report, no Stock Options have been exercised.

RECENT SALES OF UNREGISTERED SECURITIES

As of the date of this Annual Report and during  fiscal year ended  February 29,
2008, to provide capital, we sold stock in private placement  offerings,  issued
stock in exchange  for our debts or pursuant to  contractual  agreements  as set
forth below.

October 2007 Issuance

Effective on October 15, 2007,  we completed a private  placement  offering (the
"2007  Private  Placement")  with certain  United States and  non-United  States
residents  (collectively,  the  "Investors").  In accordance  with the terms and
provisions  of the  2007  Private  Placement,  we  issued  to the  Investors  an
aggregate of pre-Forward  Stock Split (February 2008),  400,000 shares of common
stock for aggregate  proceeds of $20,452  (12,000,000  post-Forward Stock Split,
February and May 2008).

The shares of common  stock under the 2007  Private  Placement  were sold to the
Investors  in reliance  on  Regulation  S  promulgated  under the United  States
Securities  Act of 1933,  as amended (the  "Securities  Act").  The 2007 Private
Placement has not been  registered  under the  Securities Act or under any state
securities  laws and may not be offered or sold  without  registration  with the
United States Securities and Exchange Commission or an applicable exemption from
the  registration  requirements.  The per share  price of the  common  stock was
arbitrarily  determined by our Board of Directors based upon analysis of certain
factors  including,  but not limited to, stage of development and exploration of
properties, industry status, investment climate, perceived investment risks, our
assets and net estimated worth. The Investors executed  subscription  agreements
and acknowledged that the securities to be issued have not been registered under
the Securities  Act, that they  understood the economic risk of an investment in
the  securities,  and that  they had the  opportunity  to ask  questions  of and
receive  answers from our management  concerning any and all matters  related to
acquisition of the securities.

May 2008 Private Placement Offering

Effective on May 7, 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  pre-Forward  Stock Split
(May 2008)  4,000,000  units at a per unit  price of $1.00  (the  "Unit") in our
capital for aggregate proceeds of $4,000,000 (of which $50,000 was settlement of
debt).  Each Unit was comprised of one share of restricted  common stock and one
full  non-transferable  warrant (the "Warrant").  Each Warrant is exercisable at
$2.00  per share for a period of one  year.  See  "Part  III.  Item 12.  Certain
Relationships and Related Transactions and Director Independence."


                                       30


<PAGE>


The Units under the 2008 Private  Placement were sold to approximately  nineteen
non-United  States  Investors in reliance on Regulation S promulgated  under the
United States  Securities Act of 1933, as amended (the  "Securities  Act").  The
2008 Private Placement has not been registered under the Securities Act or under
any state  securities  laws and may not be offered or sold without  registration
with the United  States  Securities  and Exchange  Commission  or an  applicable
exemption from the registration  requirements.  The per share price of the Units
was  arbitrarily  determined  by our Board of Directors  based upon  analysis of
certain  factors  including,  but not  limited  to,  stage  of  development  and
exploration  of  properties,  industry  status,  investment  climate,  perceived
investment  risks, our assets and net estimated  worth.  The Investors  executed
subscription  agreements and acknowledged  that the securities to be issued have
not been registered  under the Securities Act, that they understood the economic
risk of an investment in the  securities,  and that they had the  opportunity to
ask questions of and receive answers from our management  concerning any and all
matters related to acquisition of the securities.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The  summarized  financial data set forth in the table below is derived from and
should be read in  conjunction  with our audited  financial  statements  for the
period from inception (May 12, 2006) to year ended February 29, 2008,  including
the notes to those  financial  statements  which  are  included  in this  Annual
Report. The following  discussion should be read in conjunction with our audited
financial  statements and the related notes that appear elsewhere in this Annual
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.  Factors that
could cause or contribute to such  differences  include,  but are not limited to
those discussed  below and elsewhere in this Annual Report,  particularly in the
section entitled "Risk Factors".  Our audited financial statements are stated in
United  States  Dollars  and are  prepared  in  accordance  with  United  States
Generally Accepted Accounting Principles.

We are an exploration  stage company and have not generated any revenue to date.
The following  table sets forth selected  financial  information for the periods
indicated.


                                       31


<PAGE>

<TABLE>
<CAPTION>


RESULTS OF OPERATION

                                                                                        For the period
                              Fiscal Year                   Fiscal Year                 from inception
                                 Ended                         Ended                   (May 12, 2006) to
                           February 29, 2008             February 28, 2007             February 29, 2008
<S>                            <C>                            <C>                          <C>

General and                     $144,523                      $ 11,256                      $155,779
Administrative
Expenses
    Office and                  $ 58,657                      $    592                      $ 59,249
    General
    Mineral Property              10,070                         4,440                        14,510
    Costs
    Professional Fees             67,169                           431                        67,600
    Management and                 8,627                         5,793                        14,420
    rent fees -
    related party
                                ________                     _________                     _________
Net Loss                       ($144,523)                    ($ 11,256)                    ($155,779)
Foreign currency                    (617)                          195                          (422)
translation adjustment
                                ________                     _________                     _________
Comprehensive Loss             ($145,140)                     ($11,061)                    ($156,201)
                               =========                     =========                     =========

</TABLE>

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.

Fiscal Year Ended  February 29, 2008 Compared to Fiscal Year Ended  February 28,
2007.

Our  comprehensive  loss for fiscal year ended  February 29, 2008 was ($145,140)
compared to a comprehensive  loss of ($11,061) during fiscal year ended February
28, 2007 (an increase of $134,079).  During fiscal years ended February 29, 2008
and 2007, we did not generate any revenue.


                                       32


<PAGE>


During  fiscal  year  ended   February  29,  2008,   we  incurred   general  and
administrative  expenses of $144,523  compared to $11,256 incurred during fiscal
year ended  February  28, 2007 (an  increase  of  $133,267).  These  general and
administrative  expenses  incurred  during  fiscal year ended  February 29, 2008
consisted  of: (i) office and  general of $58,657  (2007:  $592);  (ii)  mineral
property costs of $10,070 (2007:  $4,440);  (iii)  professional  fees of $67,169
(2007: $431); and (iv) management and rent fees - related party of $8,627 (2007:
$5,793).

General and  administrative  expenses incurred during fiscal year ended February
29, 2008 compared to fiscal year ended February 28, 2007 increased primarily due
to the  increased  scale  and  scope  of  business  operations  relating  to the
acquisition  of  our  interest  in the  East  Holly  Field  lease.  General  and
administrative  expenses  generally  include corporate  overhead,  financial and
administrative contracted services, marketing, and consulting costs.

Our net loss during fiscal year ended February 29, 2008 was ($144,523)  compared
to a net loss of ($11,256)  during fiscal year ended  February 28, 2007.  During
fiscal year ended February 29, 2008, we recorded a foreign currency  translation
adjustment  of ($617)  compared to $195 during  fiscal year ended  February  28,
2007.  Our  comprehensive  loss during  fiscal year ended  February 29, 2008 was
($145,140) or ($0.01) per share compared to a comprehensive loss of ($11,061) or
($0.00) per share  during  fiscal year ended  February  28,  2007.  The weighted
average  number of shares  outstanding  was  26,106,803  for  fiscal  year ended
February  29, 2008 (as  increased in  accordance  with the February and May 2008
Forward Stock Split)  compared to 12,180,570  for fiscal year ended February 28,
2007.

LIQUIDITY AND CAPITAL RESOURCES

Fiscal Year Ended February 29, 2008

As at fiscal year ended  February 29, 2008,  our current assets were $19,495 and
our current  liabilities  were  $127,496,  which  resulted in a working  capital
deficiency of  ($108,001).  As at fiscal year ended  February 29, 2008,  current
assets were  comprised of $19,495 in cash. At the fiscal year ended February 28,
2007,  current  liabilities  were comprised of (i) $Nil in accounts  payable and
accrued  liabilities  (ii) $Nil due to related parties and (iii) $Nil in related
party advance" since there were no liabilities at February 28, 2007.

As at fiscal  year ended  February  29,  2008,  our total  assets  were  $28,671
comprised of: (i) $19,495 in current assets; and (ii) $9,176 in unproven oil and
gas  properties.  The increase in total assets during fiscal year ended February
29, 2008 from  fiscal year ended  February  28,  2007 was  primarily  due to the
purchase of the unproved oil and gas properties.

As at fiscal year ended February 29, 2008, our total  liabilities  were $127,496
comprised  entirely of current  liabilities.  The increase in liabilities during
fiscal year ended February 29, 2008 from fiscal year ended February 28, 2007 was
primarily due to the increase in accounts  payable and accrued  liabilities  and
related party advance. See " - Material Commitments."

Stockholders'  equity  (deficit)  decreased  from  $17,236 for fiscal year ended
February 28, 2007 to ($98,825) for fiscal year ended February 29, 2008.


                                       33


<PAGE>


Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities.  For fiscal
year ended  February 29, 2008,  net cash flows used in operating  activities was
($88,639) consisting primarily of a net loss of ($144,523).  Net cash flows used
in  operating  activities  was  adjusted  by $8,627  for  donated  services  and
expenses.  Net cash flows used in operating  activities  was further  changed by
$38,120 in increase of accounts payable and accrued  liabilities,  $6,138 due to
related  parties,  and $3,000 in decrease  in prepaid  expenses  and other.  For
fiscal year ended February 28, 2007, net cash flows used in operating activities
was ($4,023)  consisting  primarily of a net loss of ($11,256),  and adjusted by
$4,440 in non-cash mineral property  expenditures and $5,793 in donated services
and expenses. Net cash flows used in operating activities was further changed by
increase of $3,000 in prepaid expenses and other.

Cash Flows from Investing Activities

For fiscal  year  ended  February  29,  2008,  net cash flows used in  investing
activities  was ($9,176)  consisting of oil and gas property  expenditures.  For
fiscal year ended February 28, 2007, net cash flows used in investing activities
was $-0-.

Cash Flows from Financing Activities

We have  financed  our  operations  primarily  from either  advancements  or the
issuance  of equity and debt  instruments.  For fiscal year ended  February  29,
2008, net cash flows provided from financing activities was $103,691 compared to
$18,064 for fiscal  year ended  February  28,  2007.  Cash flows from  financing
activities  for fiscal year ended  February  29,  2008  consisted  primarily  of
$83,239 in  advances  from  related  parties  and $20,452 in proceeds on sale of
common stock  compared to $18,064 in proceeds on sale of common stock for fiscal
year ended November 28, 2007.

We expect that working capital requirements will continue to be funded through a
combination  of our  existing  funds 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.  We have no  lines  of  credit  or other  bank  financing  arrangements.
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


                                       34


<PAGE>


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  29,  2008,  we engaged in the 2007  Private
Placement  Offering  pursuant to which we raised  $20,452.  Subsequent to fiscal
year ended February 29, 2008, we engaged in the 2008 Private Placement  Offering
under  Regulation S of the  Securities  Act pursuant to which we received  gross
proceeds of $4,000,000.

MATERIAL COMMITMENTS

As of the date of this Annual Report,  and other than our obligations  under the
Operating Agreement as incurred, we do not have any material commitments.

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  Annual  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'  reports  accompanying  our  February  29,  2008 and
February  28,  2007  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.

RECENT ACCOUNTING PRONOUNCEMENTS

In March  2008,  the FASB  issued SFAS No.  161,  Disclosures  about  Derivative
Instruments and Hedging Activities ("SFAS 161"). SFAS 161 is intended to improve
financial  reporting  about  derivative  instruments  and hedging  activities by
requiring  enhanced  disclosures to enable investors to better  understand their
effects on an  entity's  financial  position,  financial  performance,  and cash
flows. SFAS 161 achieves these improvements by requiring  disclosure of the fair
values of derivative instruments and their gains and losses in a tabular format.
It also  provides  more  information  about an entity's  liquidity  by requiring
disclosure of  derivative  features that are credit  risk-related.  Finally,  it
requires  cross-referencing within footnotes to enable financial statement users
to locate important information about derivative  instruments.  SFAS 161 will be
effective for financial  statements  issued for fiscal years and interim periods
beginning  after November 15, 2008 and will be adopted by the Company  beginning


                                       35


<PAGE>


in the first  quarter  of 2009.  The  Company  does not  expect  there to be any
significant  impact of adopting SFAS 161 on its financial  position,  cash flows
and results of operations.

In December  2007,  the FASB issued  SFAS No.  160,  Noncontrolling  Interest in
Consolidated Financial Statements,  an amendment of ARB No. 51 ("SFAS No. 160"),
which will change the  accounting  and reporting for minority  interests,  which
will  be  recharacterized  as  noncontrolling  interests  and  classified  as  a
component of equity  within the  consolidated  balance  sheets.  SFAS No. 160 is
effective as of the beginning of an entity's  first fiscal year  beginning on or
after  December 15, 2008.  Earlier  adoption is  prohibited.  Management has not
determined the effect that adopting this  statement  would have on our financial
position or results of operations.

In  December  2007,  the FASB  issued  SFAS No.  141  (Revised  2007),  Business
Combinations  ("SFAS No.  141R").  SFAS No. 141R will change the  accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the  acquisition-date  fair value with  limited  exceptions.  SFAS No. 141R will
change the accounting  treatment and disclosure for certain  specific items in a
business   combination.   SFAS  No.  141R  applies   prospectively  to  business
combinations  for which the acquisition date is on or after the beginning of the
entity's first annual  reporting period beginning on or after December 15, 2008.
Accordingly,  any business combinations completed by us prior to January 1, 2009
will be recorded and  disclosed  following  existing  GAAP.  Management  has not
determined the effect that adopting this  statement  would have on our financial
position or results of operations.

In February 2007, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No. 159, The Fair Value  Option for  Financial
Assets and Financial  Liabilities - Including an amendment of FASB Statement No.
115 ("SFAS No. 159").  This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve  financial  reporting  by providing  entities  with the  opportunity  to
mitigate  volatility in reported earnings caused by measuring related assets and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions.  This  Statement  is  expected  to  expand  the  use of  fair  value
measurement,   which  is  consistent  with  the  Board's  long-term  measurement
objectives for accounting for financial instruments. This statement is effective
as of the  beginning  of our first  fiscal year that begins  after  November 15,
2007,  although earlier adoption is permitted.  As of February 29, 2008, we have
not adopted this  statement and  management  has not  determined the effect that
adopting  this  statement  would have on the  Company's  financial  position  or
results of operations.

In  September  2006,  FASB issued SFAS No. 157,  Fair Value  Measure  ("SFAS No.
157"). This Statement defines fair value,  establishes a framework for measuring
fair  value  in  generally  accepted  accounting   principles  (GAAP),   expands
disclosures  about fair value  measurements,  and applies under other accounting
pronouncements that require or permit fair value measurements. SFAS No. 157 does
not require any new fair value measurements.  However, the FASB anticipates that
for some entities, the application of SFAS No. 157 will change current practice.
SFAS No. 157 is  effective  for  financial  statements  issued for fiscal  years
beginning  after  November 15, 2007,  which for us is the fiscal year  beginning


                                       36


<PAGE>


March 1, 2008. We are currently  evaluating  the impact of adopting SFAS No. 157
but do not  expect  that it will  have a  significant  effect  on its  financial
position or results of operations.

In  September  2006,  the FASB issued SFAS No. 158,  Employers'  Accounting  for
Defined  Benefit  Pension and Other  Postretirement  Plans "SFAS No. 158".  This
Statement  requires  an employer to  recognize  the over funded or under  funded
status of a defined  benefit post  retirement  plan (other than a  multiemployer
plan) as an asset or liability in its  statement of financial  position,  and to
recognize  changes in that funded  status in the year in which the changes occur
through  comprehensive income. SFAS No. 158 is effective for fiscal years ending
after December 15, 2006.  The Company has  determined  that the adoption of this
standard  did not have any  impact on the  Company's  results of  operations  or
financial position.

In June 2006, FASB issued  Interpretation  No. 48, Accounting for Uncertainty in
Income  Taxes-an  Interpretation  of FASB  Statement  No. 109 ("FIN  48").  This
Interpretation   clarifies  the  accounting  for  uncertainty  in  income  taxes
recognized in an enterprise's  financial  statements in accordance with FASB No.
109, "Accounting for Income Taxes." This Interpretation prescribes a recognition
threshold and measurement  attribute for the financial statement recognition and
measurement  of a tax  position  taken or  expected to be taken in a tax return.
This  Interpretation  also provides guidance on  derecognition,  classification,
interest  and  penalties,   accounting  in  interim   periods,   disclosure  and
transition.  This  Interpretation  is effective for fiscal years beginning after
December 15, 2006. We have  determined  that the adoption of FIN 48 did not have
any material impact on our results of operations or financial position.












                                       37


<PAGE>


ITEM 7. FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm Dated May 27, 2008.

Balance Sheets as at February 29, 2008 and February 28, 2007.

Statements of Operations  For Fiscal Years Ended  February 29, 2008 and February
28, 2007 and for the Period From May 12, 2006 (Inception) to February 29, 2008.

Statement of  Stockholders'  Equity for the Period From May 12, 2006 (Inception)
to February 29, 2008.

Statements  of Cash Flows for the  Fiscal  Years  Ended  February  29,  2008 and
February 28, 2007 and for the Period From May 12, 2006  (Inception)  to February
29, 2008.

Notes to Financial Statements.



















                                       38


<PAGE>











                             MAINLAND RESOURCES INC.

                         (An Exploration Stage Company)

                              FINANCIAL STATEMENTS

                                FEBRUARY 29, 2008

                                 (U.S. DOLLARS)























                                       39


<PAGE>

<TABLE>
<CAPTION>


DALE MATHESON
CARR-HILTON LABONTE LLP
__________________________
DMCL CHARTERED ACCOUNTANTS

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

VANCOUVER        Robert J. Burkart, Inc.    James F. Carr-Hilton Ltd.   Kenneth P. Chong Inc.
                 Alvin F. Dale Ltd.         Barry S. Hartley, Inc.      Reginald J. LaBonte Ltd.
                 Robert J. Matheson, Inc.   Rakesh I. Patel Inc.

SOUTH SURREY     Michael K. Braun Inc.      Peter J. Donaldson, Inc.

PORT COQUITLAM   Wilfred A. Jacobson Inc.   Fraser G. Ross, Ltd.        Brian A. Shaw Inc.
_______________________________________________________________________________________________

</TABLE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Stockholders and Board of Directors of Mainland Resources Inc.

We have audited the  accompanying  balance sheet of Mainland  Resources Inc. (an
exploration  stage  company)  as of  February  28,  2007  and the  statement  of
operations, cash flows and stockholders' equity for the period from May 12, 2006
(date of inception)  through February 28, 2007.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  an audit to obtain  reasonable  assurance  whether  the  financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a  test  basis,  evidence  supporting  the  amounts  and  disclosures  in the
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audit provides a
reasonable basis for our opinion.

In our opinion,  these  financial  statements  present  fairly,  in all material
respects,  the financial  position of Mainland Resources Inc. as of February 28,
2007 and the  results of its  operations  and its cash flows and the  changes in
stockholders'  equity  for the  period  from May 12,  2006  (date of  inception)
through  February 28, 2007 in accordance  with accounting  principles  generally
accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has not generated  revenues since inception,
has  incurred  losses  in  developing  its  business,  and  further  losses  are
anticipated.  The Company requires  additional funds to meet its obligations and
the costs of its  operations.  These factors raise  substantial  doubt about the
Company's  ability to continue as a going  concern.  Management's  plans in this
regard are  described  in Note 1. The  financial  statements  do not include any
adjustments that might result from the outcome of this uncertainty.


                                                                          "DMCL"

                                           DALE MATHESON CARR-HILTON LABONTE LLP
                                                    "DMCL" CHARTERED ACCOUNTANTS
Vancouver, Canada
April 5, 2007

VANCOUVER        Suite 1500 - 1140 West Pender Street, Vancouver, B.C., Canada
                 V6E 4G1, Tel = 604 687 4747 o Fax: 604 689 2778-Main Reception

SOUTH SURREY     Suite 301 - 1656 Martin Drive, White Rock, B.C., Canada V4A 6E7
                 Tel: 604 531 1154 o Fax: 604 538 2613

PORT COQUITLAM   Suite 700 - 2755 Lougheed Highway, Port Coquitlam, B.C., Canada
                 V3B 5V9, Tel: 604 941 8266 o Fax: 604 941 0971


                                       40


<PAGE>


                                {LOGO GOES HERE]

                        DE JOYA GRIFFITH & COMPANY, LLC
                        _______________________________
                  CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Mainland Resources, Inc
Houston, TX

We have audited the accompanying  balance sheet of Mainland Resources,  Inc. (An
Exploration Stage Company) as of February 29, 2008, and the related statement of
operations,  stockholders'  deficit and comprehensive  loss, and cash flows from
inception (May 12, 2006) through February 29, 2008.  These financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial  statements based on our audit. We did not
audit the financial  statements of Mainland  Resources,  Inc. for the year ended
February 28, 2007.  Those statements were audited by other auditors whose report
has been furnished to us and our opinion, in so far as it relates to the amounts
included in the year ended  February 28, 2007,  is based solely on the report of
the other auditors.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  based on our audit, the financial  statements referred to above
present fairly,  in all material  respects,  the financial  position of Mainland
Resources,  Inc. as of February 29, 2008,  and the results of its operations and
cash flows from inception (May 12, 2006) through February 29, 2008 in conformity
with accounting principles generally accepted in the United States of America.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 1 to the  financial
statements,  the Company has suffered recurring losses from operations,  current
liabilities  exceed current assets,  and accumulated  deficit is $155,779 all of
which raise  substantial doubt about its ability to continue as a going concern.
Management's  plans in regard to these matters are also described in Note 1. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.




De Joya Griffith & Company, LLC

/s/ De Joya Griffith & Company, LLC
Henderson, NV
May 27, 2008


________________________________________________________________________________
                 2580 Anthem Village Drive, Henderson, NV 89052
               Telephone (702) 588-5960 ? Facsimile (702) 588-5979

<PAGE>


                                       41

<TABLE>
<CAPTION>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                                 BALANCE SHEETS
                                 (U.S. Dollars)

                                                                          February 29,       February 28,
                                                                              2008               2007
_________________________________________________________________________________________________________
                                                                           (Audited)           (Audited)
<S>                                                                       <C>                 <C>

                                     ASSETS

CURRENT ASSETS
   Cash                                                                   $  19,495           $ 14,236
   Prepaid expenses and other                                                     -              3,000
_________________________________________________________________________________________________________

TOTAL CURRENT ASSETS                                                         19,495             17,236

OIL AND GAS PROPERTIES, unproven (Note 4)                                     9,176                  -
_________________________________________________________________________________________________________

TOTAL ASSETS                                                              $  28,671           $ 17,236
=========================================================================================================

              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
   Accounts payable and accrued liabilities                               $  38,120           $      -
   Accounts payable -  related parties  (Note 7)                              6,138                  -
   Related party advance (Note 7)                                            83,239                  -
_________________________________________________________________________________________________________

TOTAL CURRENT LIABILITIES                                                   127,496                  -
_________________________________________________________________________________________________________

STOCKHOLDERS' EQUITY (DEFICIT) (Note 5)
Common stock, 200,000,000 shares authorized with $0.0001 par value
Issued and outstanding - 33,615,000 common shares                             3,362              2,162
   (February 28, 2007 - 21,615,000)
Additional paid-in-capital                                                   54,014             26,135
Deficit accumulated during exploration stage                               (155,779)           (11,256)
_________________________________________________________________________________________________________
                                                                            (98,403)            17,041
Other comprehensive income:
   Foreign currency gain (loss)                                                (422)               195
_________________________________________________________________________________________________________

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                        (98,825)            17,236
_________________________________________________________________________________________________________

TOTAL LIABILITIES & STOCK HOLDERS' EQUITY (DEFICIT)                       $  28,671           $ 17,236
=========================================================================================================


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

</TABLE>


                                       42


<PAGE>

<TABLE>
<CAPTION>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                            STATEMENTS OF OPERATIONS
                                 (U.S. Dollars)

                                                                                                  May 12, 2006
                                                           Year ended          Year ended        (inception) to
                                                          February 29,        February 28,        February 29,
                                                              2008                2007                2008
_______________________________________________________________________________________________________________
                                                            (Audited)           (Audited)           (Audited)
<S>                                                       <C>                 <C>                  <C>

GENERAL AND ADMINISTRATIVE EXPENSES

   Office and general                                     $     58,657        $        592         $   59,249
   Mineral property costs                                       10,070               4,440             14,510
   Management and rent fees - related party (Note 7)             8,627               5,793             14,420
   Professional fees                                            67,169                 431             67,600
_______________________________________________________________________________________________________________

NET LOSS                                                      (144,523)            (11,256)          (155,779)
_______________________________________________________________________________________________________________

Comprehensive income (loss):
   Foreign currency translation adjustment                        (617)                195               (422)
_______________________________________________________________________________________________________________

COMPREHENSIVE LOSS                                        $   (145,140)            (11,061)        $ (156,201)
===============================================================================================================


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

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING-BASIC                                    26,106,803          12,180,570
==========================================================================================


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

</TABLE>


                                       43


<PAGE>

<TABLE>
<CAPTION>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                       STATEMENT OF STOCKHOLDERS' DEFICIT

        FOR THE PERIOD FROM MAY 12, 2006 (INCEPTION) TO FEBRUARY 29, 2008
                                    (AUDITED)
                                 (U.S. Dollars)

                                                                                          Deficit
                                                     Common Stock                       accumulated        Other
                                                 _____________________    Additional      during        Accumulated
                                                 Number of                 Paid in      exploration    Comprehensive   Stockholders'
                                                  Shares       Amount      Capital         stage           Income         Equity
____________________________________________________________________________________________________________________________________
<S>                                              <C>           <C>         <C>          <C>               <C>           <C>

Balance, May 12, 2006                                     -    $     -     $      -     $         -       $    -        $       -

Common stock issued for cash at $0.00003
   per  share
   - June 15, 2006                                6,000,000        600         (428)              -            -              172

Commons stock  issued for mineral properties
   at $0.0014 per share - July 1, 2006            3,105,000        311        4,129               -            -            4,440

Common stock issued for cash at $0.0014
   per share
   - October 6, 2006                             12,510,000      1,251       16,641               -            -           17,892

Donated Services and rent                                 -          -        5,793               -            -            5,793

Foreign currency translation adjustment                   -          -            -               -          195              195

Net loss for the year                                     -          -            -         (11,256)           -          (11,256)
____________________________________________________________________________________________________________________________________

Balance, February 28, 2007                       21,615,000      2,162       26,135         (11,256)         195           17,236

Common stock issued for cash at $0.0017
   per share
   - October 15, 2007                            12,000,000      1,200       19,252               -            -           20,452

Donated services and rent                                 -          -        8,627               -            -            8,627

Foreign currency translation adjustment                   -          -            -               -         (617)            (617)

Net loss for the year                                     -          -            -        (144,523)           -         (144,523)
____________________________________________________________________________________________________________________________________

Balance, February 29, 2008                       33,615,000    $ 3,362     $ 54,014     $  (155,779)      $ (422)       $ (98,825)
====================================================================================================================================


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

</TABLE>


                                       44


<PAGE>

<TABLE>
<CAPTION>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                            STATEMENTS OF CASH FLOWS
                                    (AUDITED)
                                 (U.S. Dollars)

                                                                                                            May 12, 2006
                                                                              Year ended                   (inception) to
                                                                             February 29,                   February 29,
                                                                        2008               2007                 2008
_________________________________________________________________________________________________________________________
<S>                                                                  <C>                <C>                  <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss for the period                                            $ (144,523)        $  (11,256)          $ (155,779)
  Adjustments to reconcile net loss to net cash used in
  operating activities:
     - Non-cash mineral property expenditures                                 -              4,440                4,440
     - Donated services and expenses                                      8,627              5,793               14,420
CHANGES IN OPERATING ASSETS AND LIABILITIES
     - Decrease (increase) in prepaid expenses and other                  3,000             (3,000)                   -
     - Increase in accounts payable - related parties                     6,138                  -                6,138
     - Increase in accounts payable and accrued liabilities              38,120                  -               38,120
_________________________________________________________________________________________________________________________

NET CASH USED IN OPERATING ACTIVITIES                                   (88,639)            (4,023)             (92,662)
_________________________________________________________________________________________________________________________

CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in Oil and gas property                                     (9,176)                 -               (9,176)
_________________________________________________________________________________________________________________________

NET CASH FLOWS USED IN INVESTING ACTIVITIES                              (9,176)                 -              (9,176)
_________________________________________________________________________________________________________________________

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds on sale of common stock                                     20,452             18,064               38,516
    Advances from related party                                          83,239                  -               83,239
_________________________________________________________________________________________________________________________

NET CASH PROVIDED BY FINANCING ACTIVITIES                               103,691             18,064              121,755
_________________________________________________________________________________________________________________________

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                    (617)               195                 (422)
_________________________________________________________________________________________________________________________

INCREASE  IN CASH                                                         5,259             14,236               19,495

CASH, BEGINNING OF PERIOD                                                14,236                  -                    -
_________________________________________________________________________________________________________________________

CASH, END OF PERIOD                                                  $   19,495         $   14,236           $   19,495
=========================================================================================================================

SUPPLEMENTAL CASH FLOW INFORMATION AND
  NONCASH INVESTING AND FINANCING ACTIVITIES:
     Cash paid for interest                                          $        -         $        -           $        -
     Cash paid for income taxes                                      $        -         $        -           $        -
     Common stock issued for acquisition of mineral property         $        -         $    4,440           $    4,440
     Donated services and expenses                                   $    8,627         $    5,793           $   14,420


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

</TABLE>


                                       45

<PAGE>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 29, 2008
________________________________________________________________________________


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 and
Note 4). The Company now intends to locate, explore, acquire and develop oil and
gas properties in the United  States.  The Company plans to drill its first well
before the end of the summer of 2008.

GOING CONCERN

The  Company  commenced  operations  on May 12,  2006 and has not  realized  any
revenues since inception. As of February 29, 2008 the Company has an accumulated
deficit of $155,779 and a working capital deficiency of $108,001. 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.  To date the Company has
funded its initial  operations by way of private  placements of common stock and
advances from related parties.  Subsequent to the period, the Company has raised
$4,000,000  by way of unit private  placements  at $0.67 per unit with each unit
consisting  of one common share of the  Company's  stock and one full warrant at
$1.33 per share exercisable for a period of one year from issuance.

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 29.

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.

FOREIGN CURRENCY TRANSLATION

As of February  29, 2008,  the  Company's  functional  currency was the Canadian
dollar with the financial  statements of the Company being  translated to United
States dollar  equivalents under the current rate method in accordance with SFAS
No.  52,  "FOREIGN  CURRENCY   TRANSLATION".   Under  this  method,  assets  and
liabilities  are  translated  into United States dollar  equivalents at rates of
exchange in effect at the balance  sheet date and average rates for the year are
used to translate revenues and expenses.  The cumulative  translation adjustment
is reported as a component of accumulated other comprehensive income.

Subsequent  to February  29,  2008,  as a result of a change in the location and
focus of the Company's primary business activities,  the Company determined that
its functional and reporting  currency is the United States dollar with monetary
assets and liabilities  denominated in foreign  currencies  being  translated in
accordance with SFAS No. 52 "Foreign Currency  Translation",  using the exchange
rate  prevailing  at the  balance  sheet  date.  Gains  and  losses  arising  on
settlement of foreign currency denominated transactions or balances are included
in the  determination  of  income.  The  Company  has not,  to the date of these
financials statements,  entered into derivative instruments to offset the impact
of foreign currency fluctuations.

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
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.


                                       46


<PAGE>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 29, 2008
________________________________________________________________________________


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

OIL AND GAS PROPERTIES (CONTINUED)

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.

MINERAL PROPERTY COSTS

The Company has been engaged in the acquisition,  exploration and development of
mineral  properties.  Mineral  property  acquisition  costs are  capitalized  in
accordance  with EITF 04-2 when  management has determined  that probable future
benefits  consisting  of a  contribution  to  future  cash  inflows,  have  been
identified and adequate financial  resources are available or are expected to be
available  as required to meet the terms of property  acquisition  and  budgeted
exploration and development expenditures. Mineral property acquisition costs are
expensed as incurred if the  criteria  for  capitalization  is not met.  Mineral
property exploration costs are expensed as incurred. When it has been determined
that  a  mineral  property  can  be  economically   developed  as  a  result  of
establishing  proven and probable  reserves,  the costs incurred to develop such
property are  capitalized.  As of the date of these  financial  statements,  the
Company has incurred  only  acquisition  and  exploration  costs which have been
expensed.  To date the  Company  has not  established  any  proven  or  probable
reserves on its mineral properties.

ASSET RETIREMENT OBLIGATIONS

The Company has adopted the  provisions of SFAS No. 143,  "Accounting  for Asset
Retirement Obligations." SFAS No. 143 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 February 29, 2008, 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 and  financial  instruments.  Other areas
requiring estimates include deferred tax balances and asset impairment tests.

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.


                                       47


<PAGE>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 29, 2008
________________________________________________________________________________


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

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 reflects
the  potential  dilution of  securities  that could share in the earnings of the
Company.  Dilutive  earnings (loss) per share is equal to that of basic earnings
(loss) per share as the effects of stock options and warrants have been excluded
as they are anti-dilutive.

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 February 29, 2008,  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 SFAS No. 123(R),  "SHARE-BASED  PAYMENT," 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. As at February 28, 2008, the Company
has not  adopted a stock  option  plan and has not  granted  any stock  options.
Accordingly, no stock-based compensation has been recorded to date.

The Company accounts for equity  instruments  issued in exchange for the receipt
of goods or  services  from other than  employees  in  accordance  with SFAS No.
123(R) and the conclusions reached by the Emerging Issues Task Force ("EITF") in
Issue No. 96-18.  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 EITF 96-18.

RECENT ACCOUNTING PRONOUNCEMENTS

In March  2008,  the FASB  issued SFAS No.  161,  DISCLOSURES  ABOUT  DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS 161"). SFAS 161 is intended to improve
financial  reporting  about  derivative  instruments  and hedging  activities by
requiring  enhanced  disclosures to enable investors to better  understand their
effects on an  entity's  financial  position,  financial  performance,  and cash
flows. SFAS 161 achieves these improvements by requiring  disclosure of the fair
values of derivative instruments and their gains and losses in a tabular format.
It also  provides  more  information  about an entity's  liquidity  by requiring
disclosure of  derivative  features that are credit  risk-related.  Finally,  it
requires  cross-referencing within footnotes to enable financial statement users
to locate important information about derivative  instruments.  SFAS 161 will be
effective for financial  statements  issued for fiscal years and interim periods
beginning  after November 15, 2008 and will be adopted by the Company  beginning
in the first  quarter  of 2009.  The  Company  does not  expect  there to be any
significant  impact of adopting SFAS 161 on its financial  position,  cash flows
and results of operations.

In December  2007,  the FASB issued  SFAS No.  160,  NONCONTROLLING  INTEREST IN
CONSOLIDATED FINANCIAL STATEMENTS,  AN AMENDMENT OF ARB NO. 51 ("SFAS No. 160"),
which will change the  accounting  and reporting for minority  interests,  which
will  be  recharacterized  as  noncontrolling  interests  and  classified  as  a
component of equity  within the  consolidated  balance  sheets.  SFAS No. 160 is
effective as of the beginning of an entity's  first fiscal year  beginning on or
after  December 15, 2008.  Earlier  adoption is  prohibited.  Management has not
determined the effect that adopting this  statement  would have on the Company's
financial position or results of operations.


                                       48


<PAGE>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 29, 2008
________________________________________________________________________________


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


RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In  December  2007,  the FASB  issued  SFAS No.  141  (Revised  2007),  BUSINESS
COMBINATIONS  ("SFAS No.  141R").  SFAS No. 141R will change the  accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the  acquisition-date  fair value with  limited  exceptions.  SFAS No. 141R will
change the accounting  treatment and disclosure for certain  specific items in a
business   combination.   SFAS  No.  141R  applies   prospectively  to  business
combinations  for which the acquisition date is on or after the beginning of the
entity's first annual  reporting period beginning on or after December 15, 2008.
Accordingly,  any business combinations  completed by the Company prior to March
1, 2009 will be recorded and disclosed  following existing GAAP.  Management has
not  determined  the  effect  that  adopting  this  statement  would have on the
Company's financial position or results of operations.

In February 2007, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No. 159, THE FAIR VALUE  OPTION FOR  FINANCIAL
ASSETS AND FINANCIAL  LIABILITIES - INCLUDING AN AMENDMENT OF FASB STATEMENT NO.
115 ("SFAS No. 159").  This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve  financial  reporting  by providing  entities  with the  opportunity  to
mitigate  volatility in reported earnings caused by measuring related assets and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions.  This  Statement  is  expected  to  expand  the  use of  fair  value
measurement,   which  is  consistent  with  the  Board's  long-term  measurement
objectives for accounting for financial instruments. This statement is effective
as of the  beginning  of the  Company's  first  fiscal  year that  begins  after
November 15, 2007,  although earlier  adoption is permitted.  As of February 29,
2008,  the  Company  has not  adopted  this  statement  and  management  has not
determined the effect that adopting this  statement  would have on the Company's
financial position or results of operations.

In September 2006, FASB issued SFAS No. 157, FAIR VALUE MEASUREMENTS" ("SFAS No.
157"). This Statement defines fair value,  establishes a framework for measuring
fair  value  in  generally  accepted  accounting   principles  (GAAP),   expands
disclosures  about fair value  measurements,  and applies under other accounting
pronouncements that require or permit fair value measurements. SFAS No. 157 does
not require any new fair value measurements.  However, the FASB anticipates that
for some entities, the application of SFAS No. 157 will change current practice.
SFAS No. 157 is  effective  for  financial  statements  issued for fiscal  years
beginning  after  November  15,  2007,  which for the Company is the fiscal year
beginning  March 1, 2008.  The  Company is  currently  evaluating  the impact of
adopting SFAS No. 157 but does not expect that it will have a significant effect
on its financial position or results of operations.

In June 2006, FASB issued  Interpretation  No. 48, ACCOUNTING FOR UNCERTAINTY IN
INCOME  TAXES-AN  INTERPRETATION  OF FASB  STATEMENT  NO. 109 ("FIN  48").  This
Interpretation   clarifies  the  accounting  for  uncertainty  in  income  taxes
recognized in an enterprise's  financial  statements in accordance with FASB No.
109, "ACCOUNTING FOR INCOME TAXES." This Interpretation prescribes a recognition
threshold and measurement  attribute for the financial statement recognition and
measurement  of a tax  position  taken or  expected to be taken in a tax return.
This  Interpretation  also provides guidance on de-recognition,  classification,
interest  and  penalties,   accounting  in  interim   periods,   disclosure  and
transition.  This  Interpretation  is effective for fiscal years beginning after
December 15, 2006. The Company has determined that the adoption of Statement No.
158 during the year did not have any material impact on the Company's results of
operations or financial position.

NOTE 3 - MINERAL PROPERTIES
________________________________________________________________________________

SOUTHWEST AND SEDONA MINING CLAIM

The Company's two mining claims are located in the  Similkameen  Mining Division
of British  Columbia,  Canada.  As  described  in Notes 1 and 4, the Company has
changed its focus to oil and gas exploration and has decided not to proceed with
the development of these mineral properties.

Subsequent to the year end, on April 28, 2008,  the Company sold its interest in
these two mining claims to a former  shareholder  of the Company in exchange for
the $33,239 owing by the Company to the former shareholder (refer Note 7).


                                       49


<PAGE>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 29, 2008
________________________________________________________________________________


NOTE 4 - OIL AND GAS PROPERTIES
________________________________________________________________________________

EAST HOLLY PROSPECT

On February 27, 2008, Mainland Resources,  Inc. 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 to Kingsley  and assume all of  Kingsley'  obligations
under the Leasehold Purchase Agreement. Subsequent to the year end, on March 14,
2008,  the Company  completed the Option  agreement  and the Leasehold  Purchase
Agreement at a total cost of $687,596 for approximately 2,551 net acres.

Also to  date,  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 60 net  acres  subsequent  to the year  end.  These
additional properties leases, within the Cotton  Valley/Haynesville trend in the
state of Louisiana,  are for three year terms for  additional  consideration  of
$22,753,  consisting of $9,176 as of February 29, 2008 and $13,577.  The Company
has a 100%  Working  Interest  and a 75%  N.R.I.  in the leases  (refer  Note 9)
comprising a total of 2,695 net acres.

NOTE 5 - STOCKHOLDERS' EQUITY (DEFICIT)
________________________________________________________________________________

(a)      SHARE CAPITAL

The Company's  capitalization  is 200,000,000  common shares with a par value of
$0.001 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 and 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 a basis of 1.5 new shares
for 1 old share and was effective March 29, 2008.

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 and the 1.5:1 forward stock split on
May 29, 2008 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  6,000,000  shares of  common  stock at
$0.00003 per share for proceeds of $172.

On October 6, 2006,  the Company issued  12,510,000  shares of common stock at a
price of $0.0014 per share for proceeds of $17,892.

On October 15, 2007, the Company issued  12,510,000  shares of common stock at a
price of $0.0014 per share for proceeds of $17,892.

Subsequent  to the  period,  on May 1, 2008,  the  Company  completed  a private
placement of 6,000,000  units at $0.67 per unit for  proceeds of  $4,000,000  of
which $50,000 was settlement of debt. Each unit consists of one common share and
one-half    non-transferable    share   purchase    warrant;    one-half   whole
non-transferable purchase warrant exercisable at $1.33 per share for a period of
one year from the date of issuance ending on May 1, 2009.

(c)      OTHER ISSUANCES

On July 1, 2006, the Company issued  3,105,000 shares of common stock at a price
of $0.0014 per share on settlement of $4,440 for mineral property acquisition.


                                       50


<PAGE>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 29, 2008
________________________________________________________________________________


NOTE 6 - STOCK OPTION PLAN
________________________________________________________________________________

Subsequent  to the year end,  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 2,200,000  options to acquire common shares with
terms of up to 10 years. 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 maybe  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.

As approved by the Board of  directors,  on April 7, 2008,  the Company  granted
2,100,000  stock options to certain  officers,  directors and  management of the
Company at $1.17 per share for terms of ten years.

NOTE 7 - RELATED PARTY TRANSACTIONS
________________________________________________________________________________

During the year ended February 29, 2008, a shareholder  of the Company  advanced
$50,000 to the Company.  Subsequent to year end, the advance was converted  into
50,000 private  placement  units of the Company at a price of $0.67 as described
in Note 5 (b).

During the year ended February 29, 2008,  the Company  arranged a short term non
interest bearing advance for $33,239 from an existing shareholder. Subsequent to
the period,  the Company  exchanged  its  interest in the  Southwest  and Sedona
mineral claims located in the province of British  Columbia for the amount owing
on this loan payable (refer Note 4).

During the year ended  February  29,  2008,  the Company  recognized  $8,627 for
donated  services  related to donate rent by the Company's  pervious  president,
which has been recorded in office and general expenses. In addition, the Company
owed $6,138 in  accounts  payable to the  current  president  of the company for
expenses incurred on behalf of the Company (the amount was subsequently paid).

NOTE 8 - INCOME TAXES
________________________________________________________________________________

The Company has adopted the FASB No. 109 for reporting purposes.  As of February
29,  2008 and  February  28,  2007,  the Company  had net  operating  loss carry
forwards of approximately $136,919 and $5,463 respectively that may be available
to reduce future years' taxable  income through 2028.  Future tax benefits which
may  arise  as a result  of these  losses  have  not  been  recognized  in these
financial statements, as their realization is determined not likely to occur and
accordingly, the Company has recorded a valuation allowance for the deferred tax
asset relating to these tax loss carryforwards.

The applicable  federal and state  statutory tax rates used in  determining  the
Company's income tax provisions deferred tax asset are as follows:

                                                       2008                 2007
________________________________________________________________________________
Federal income tax provision at statutory rate        35.0%                35.0%
States income tax provision at statutory rates,
   net of federal income tax effect                    0.0%                 0.0%
________________________________________________________________________________
Total income tax provision                            35.0%                35.0%
================================================================================


                                       51


<PAGE>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 29, 2008
________________________________________________________________________________


The actual income tax provisions differ from the expected amounts  calculated by
applying  the  combined  federal  and state  corporate  income  tax rates to the
Company's loss before income taxes.  The components of these  differences are as
follows:

                                                        2008             2007
________________________________________________________________________________

Federal net operating loss                            $ 136,919        $  5,463
Corporate tax rate                                         35.0%           35.0%
________________________________________________________________________________

Expected tax recovery (expense)                          47,922           1,912

Less:
   Valuation allowance                                  (47,922)         (1,912)
________________________________________________________________________________

Future income tax provision                           $       -        $      -
================================================================================

The Company's deferred tax assets are as follows:

                                                        2008             2007

Deferred tax assets
   Net operating loss carry forwards                  $  47,922        $  1,912
________________________________________________________________________________

Total deferred tax assets                                47,922           1,912
Valuation allowance                                     (47,922)         (1,912)
________________________________________________________________________________

Net deferred tax assets                               $       -        $      -
================================================================================

The  valuation  allowance  for  deferred  tax assets as of February 29, 2008 and
February  28,  2007 was  $47,922  and $1,912,  respectively.  In  assessing  the
recovery of the deferred  tax assets,  management  considers  whether it is more
likely than not that some  portion or all of the deferred tax assets will not be
realized.  The ultimate realization of deferred tax assets is dependent upon the
generation  of future  taxable  income in the periods in which  those  temporary
differences become deductible.  Management  considers the scheduled reversals of
future deferred tax assets,  projected  future taxable income,  and tax planning
strategies in making this assessment.  As a result, management determined it was
more likely than not the  deferred  tax assets  would be realized as of February
29, 2008 and February 28, 2007.

NOTE 9 - SUBSEQUENT EVENTS
________________________________________________________________________________

(a) In accordance  with  documentation  filed with the NASDAQ Stock Market,  the
Company  effectuated  (i) a forward stock split of its shares of common stock as
of open of market,  March 11,  2008 on a basis of twenty  new common  shares for
every one common  share and (ii) a forward  stock  split of its shares of common
stock as of open  market,  May 29, 2008 on a basis of 1.5 new common  shares for
every one common  share.  The total  number of shares of common stock issued and
outstanding after the forward stock splits was 33,615,000.

(b)  Subsequent to the year end 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 2,200,000  options to acquire common shares with
terms of up to 10 years.

As approved by the Board of  directors,  on April 7, 2008,  the Company  granted
2,100,000  stock options to certain  officers,  directors and  management of the
Company at $1.17 per share for terms of ten years.

(c)  Subsequent  to the period on May 1, 2008,  the Company  completed a private
placement of 6,000,000  units at $0.67 per unit for  proceeds of  $4,000,000  of
which $50,000 was in settlement of debt.  Each unit consists of one common share
and one  non-transferable  share purchase warrant exercisable at $1.33 per share
for a period of one year from the date of issuance ending on May 1, 2009.


                                       52


<PAGE>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 29, 2008
________________________________________________________________________________


(d) Subsequent to the year end, on April 28, 2008, the Company sold its interest
in these two mining  claims to a former  shareholder  of the Company in exchange
for the $33,239 owed by the Company to the former shareholder (refer Note 3)

(e)  Subsequent  to the year end, on March 14, 2008,  the Company  completed the
acquisition of East Holly from Kingsley  Resources  Inc.,  related to the Option
agreement and the Leasehold  Purchase  Agreement at a total cost of $687,596 for
approximately 2,551 net acres. (refer Note 3).

























                                       53


<PAGE>


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

Effective  February 20, 2008,  we engaged De Joya  Griffith & Company,  LLC ("De
Joya")  as  our  principal   independent   registered  public  accounting  firm.
Concurrent with this  appointment,  we accepted the resignation of Dale Matheson
Carr-Hilton LaBonte LLP, Chartered Accountants ("DMCL"),  effective February 20,
2008.  The  decision  to change  our  principal  independent  registered  public
accounting firm was approved by our Board of Directors.

The report of DMCL on our financial  statements  for fiscal year ended  February
28,  2007 (which  included  the  balance  sheet as of February  28, 2007 and the
statement of operations, cash flows and stockholders' equity for the period from
May 12, 2006 (inception)  through February 28, 2007), did not contain an adverse
opinion or disclaimer of opinion,  nor was it modified as to uncertainty,  audit
scope or accounting  principles,  other than to state that there is  substantial
doubt as to our ability to continue as a going concern. During fiscal year ended
February 28, 2007, and during the  subsequent  period through the date of DMCL's
resignation,  there were no  disagreements  between us and DMCL,  whether or not
resolved,  on any  matter  of  accounting  principles  or  practices,  financial
statement disclosure, or auditing scope or procedure,  which, if not resolved to
the  satisfaction of DMCL,  would have caused DMCL to make reference  thereto in
its report on our audited financial statements.

We provided DMCL with a copy of a Current  Report on Form 8-K and requested that
DMCL  furnish  us  with a  letter  addressed  to  the  Securities  and  Exchange
Commission  stating  whether or not DMCL agrees with the statements  made in the
Current Report on Form 8-K with respect to DMCL and, if not, stating the aspects
with which they do not agree. We received the requested letter from DMCL wherein
they have  confirmed  their  agreement to our  disclosures in the Current Report
with  respect  to DMCL.  A copy of DMCL's  letter was filed as an exhibit to the
Current Report.

In  connection  with  our  appointment  of De Joya as our  principal  registered
accounting  firm,  we did not  consult  De Joya on any  matter  relating  to the
application of accounting principles to a specific transaction, either completed
or  contemplated,  or the type of audit  opinion  that might be  rendered on our
financial statements.

ITEM 8A. CONTROLS AND PROCEDURES

FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES

An evaluation was conducted under the supervision and with the  participation of
our  management,  including  Michael J.  Newport,  our Chief  Executive  Officer
("CEO")  and  Robert D.  Fedun,  our Chief  Financial  Officer  ("CFO"),  of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures as of February 29, 2008.  Based on that evaluation,  Messrs.  Newport
and Fedun  concluded that our disclosure  controls and procedures were effective
as of such date to ensure  that  information  required  to be  disclosed  in the
reports that we file or submit under the Exchange  Act, is recorded,  processed,
summarized  and  reported  within the time  periods  specified  in SEC rules and
forms.  Such  officers  also  confirm  that there was no change in our  internal
control over  financial  reporting  during the year ended February 29, 2008 that
has  materially  affected,  or is reasonably  likely to materially  affect,  our
internal control over financial reporting.


                                       54


<PAGE>


We maintain  "disclosure  controls and  procedures,"  as such term is defined in
Rule 13a-15(e) under the Securities  Exchange Act of 1934 (the "Exchange  Act"),
that are  designed to ensure that  information  required to be  disclosed in our
Exchange Act reports is recorded, processed,  summarized and reported within the
time periods  specified in the  Securities  and  Exchange  Commission  rules and
forms,  and  that  such  information  is  accumulated  and  communicated  to our
management,  including our Chief Executive Officer and Chief Financial  Officer,
as appropriate,  to allow timely decisions  regarding  required  disclosure.  We
conducted an evaluation (the  "Evaluation"),  under the supervision and with the
participation of our Chief Executive  Officer and Chief Financial Officer of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures  ("Disclosure  Controls") as of the end of the period covered by this
report  pursuant to Rule  13a-15 of the  Exchange  Act.  The  evaluation  of our
disclosure controls and procedures included a review of the disclosure controls'
and  procedures'  objectives,  design,  implementation  and  the  effect  of the
controls and procedures on the information  generated for use in this report. In
the  course of our  evaluation,  we  sought to  identify  data  errors,  control
problems or acts of fraud and to confirm the appropriate  corrective actions, if
any, including process improvements,  were being undertaken. Our Chief Executive
Officer and our Chief  Financial  Officer  concluded  that, as of the end of the
period  covered by this report,  our  disclosure  controls and  procedures  were
effective and were operating at the reasonable assurance level.

This  annual  report  does not include an  attestation  report of the  Company's
registered  public  accounting firm regarding  internal  controls over financial
reporting.  Management's  report was not subject to attestation by the Company's
registered  public  accounting  firm  pursuant  to the  temporary  rules  of the
Securities  and  Exchange  Commission  that permit the  Company to provide  only
management's report in this annual report.

Audit Committee

Our Board of Directors has not  established an audit  committee.  The respective
role of an audit committee has been conducted by our Board of Directors.  We are
contemplating  establishment of an audit committee during fiscal year 2008. When
established,  the audit  committee's  primary function will be to provide advice
with  respect to our  financial  matters and to assist our Board of Directors in
fulfilling its oversight  responsibilities  regarding finance,  accounting,  and
legal compliance. The audit committee's primary duties and responsibilities will
be to: (i) serve as an independent  and objective party to monitor our financial
reporting  process and  internal  control  system;  (ii) review and appraise the
audit  efforts of our  independent  accountants;  (iii)  evaluate our  quarterly
financial performance as well as its compliance with laws and regulations;  (iv)
oversee  management's  establishment  and enforcement of financial  policies and
business  practices;  and (v) provide an open avenue of communication  among the
independent accountants, management and our Board of Directors.

ITEM 8A(T)

Not applicable.

ITEM 8B. OTHER INFORMATION

Not applicable.


                                       55


<PAGE>


                                    PART III

ITEM 9. DIRECTORS,  EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
        GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

All of our directors  hold office until the next annual  general  meeting of the
shareholders or until their  successors are elected and qualified.  Our officers
are  appointed  by our board of directors  and hold office  until their  earlier
death, retirement, resignation or removal.

Our directors and executive officers, their ages, positions held are as follows:


Name                      Age       Position with the Company

Michael J. Newport         53       President/Chief Executive Officer and a
                                    Director

Robert D. Fedun            64       Secretary/Treasurer,  Chief Financial
                                    Officer and a Director

David Urquhart             64       Director

Business Experience

The following is a brief  account of the  education  and business  experience of
each director,  executive officer and key employee during at least the past five
years,  indicating each person's principal occupation during the period, and the
name and principal business of the organization by which he or she was employed,
and including other directorships held in reporting companies.

MICHAEL J. NEWPORT.  Mr. Newport has been our President/Chief  Executive Officer
and a director since  February 28, 2008. Mr. Newport has been actively  involved
in land  management for nearly thirty years. He started his career with Amoco in
their New Orleans  office in May 1979 where he spent two years.  Mr. Newport was
actively involved in supervising brokers and writing all forms of land contracts
for North and South Louisiana,  Mississippi, Alabama and Florida. He then became
a district  landman for Harkins & Company in their Jackson,  Mississippi  office
where he spent four years assembling  drilling prospects and all land activities
associated with operations in Mississippi,  Alabama,  Florida and Louisiana. The
next four years were spent in Harkin's  Oklahoma  City  office  where he had the
same responsibilities for Oklahoma and Arkansas as well as Mississippi, Alabama,
Florida and Louisiana.  Mr. Newport then joined  Greenhill  Petroleum in 1989 in
Houston,  Texas,  where he was the land  manager for six years in their  Permian
Basin  Region.  In  addition  to land  management  activities,  Mr.  Newport was
responsible for  acquisitions and  divestitures.  After leaving  Greenhill,  Mr.
Newport has spent the last thirteen years managing brokers for West Texas, South


                                       56


<PAGE>


Texas,  East Texas,  Oklahoma  and North  Louisiana  as well as  performing  all
landman  management  activities  for various  operators  actively  drilling  and
completing  wells in  these  areas.  Mr.  Newport  has  nearly  thirty  years of
experience  in all  phases  of oil and gas land  management  with  expertise  in
acquisitions, operations, divestitures, agreement preparation, negotiations, CAD
mapping and broker supervision.

Mr.  Newport  received a BBA in Finance in June of 1977, an MBA degree in August
of 1978 and also completed hours for a Petroleum Land  Management  degree in May
of 1979, all from the University of Oklahoma.

ROBERT D. FEDUN. Mr. Fedun has been our  Secretary/Treasurer and Chief Financial
Officer and a director  since  February  28, 2008.  Mr. Fedun has been  actively
involved  in the oil and gas  industry  for the past forty  years.  From 1994 to
present,  Mr. Fedun is the president,  director and chief  financial  officer of
Dynamic  Resources Corp., a corporation  organized in 1994 under the laws of the
Province of Alberta,  Canada,  engaged in oil and gas  exploration  primarily in
North Louisiana and Texas.  Mr. Fedun is directly  responsible for management of
the business  operations and affairs.  From 1985 through 1991, Mr. Fedun was the
vice  president  of  sales,  engineering  and  manufacturing  for  PAMCO  (Power
Application and Manufacturing Company). From 1975 to 1985, Mr. Fedun was a sales
representative  for Gardner  Denver  Corporation  where he was  responsible  for
selling oil field equipment, mainly gas compressors, high pressure plunger pumps
and high volume  industrial air  compressors.  From 1965 through 1975, Mr. Fedun
worked in the oil field as an engineering  technician for Pan American Peotrleum
(now Amco  Petroleum)  and Home Oil  Corporation.  He was also employed by Shell
Canada and Alberta Oil and Gas Conservation Board.

Mr. Fedun earned a degree in gas technology  from Nothern  Alberta  Institute of
Technology in 1965.

DAVID URQUHART, PENG. Mr. Urquhart has been a director since March 19, 2008. Mr.
Urguhart has  thirty-five  years of  operational,  engineering,  management  and
executive experience in all facets of the equipment  fabrication and hydrocarbon
industries.  Mr. Urquhart's experience involves production operations,  drilling
and completion operations,  exploration and exploitation  operations,  plant and
facility  design  and  construction,   process  equipment  fabrication,  product
marketing, project economics,  preparation of operating budgets and acquisitions
and  divestitures.  Mr. Urquhart has designed and applied  programmable  systems
technology  for  business  analysis  and  reporting  outcomes  for IMB  Systems,
Microsoft  Word,  Microsoft  Excel,  Visio  and  Lotus  Notes.  He has  also had
extensive national and international exposure in business development,  facility
construction and project  management,  including  marketing and sales in Eastern
Europe, the Middle East, the Orient and Africa.

From 1991 to present,  Mr.  Urquhart is the founder and principal of Westhampton
Ltd., a company  specializing in project management and market development.  Mr.
Urquhart provides contract operations  expertise and project management services
to various  companies  and  organizations  seeking to  establish  themselves  in
unfamiliar  or offshore  environments.  These  assignments  often  included  the
delivery of new  technologies  directed  at solving  modern day  production  and
process  problems.  Some  of the  projects  undertaken  were  delivered  through
contracts  with  Cal-Bow  Industries,  an  offshore  associate  company  focused


                                       57


<PAGE>


primarily  on the oil and gas industry  markets of Russia,  North Africa and the
Middle East. Mr. Urquhart is also an officer and director of Morgan Creek Energy
Corp., a publicly traded company.

From 2007 through 2008, Mr.  Urquhart  contracted  with Geneva  Resources,  Inc.
pursuant to which he was  responsible  for due  diligence  investigation  on the
potential  associated with two large lease blocks  controlled by Allied Minerals
Ltd. in Plateau State,  Nigeria. From 2005 through 2007, Mr. Urquhart contracted
with Mart Resources,  Inc.  ("Mart") to provide design and procurement  services
for  production  facilities  and pipelines in the three  Nigerian  joint venture
projects being undertaken by Mart. His responsibilities also included overseeing
the  day-to-day  operations  of the  company  in  Nigeria.  He was  subsequently
appointed  chief  operating  officer  and elected to the board of  directors  of
Allied  Minerals Ltd. From 2003 through 2005, Mr.  Urquhart  contracted  with KC
Wellsite Services as the engineering  director.  He provided drilling  programs,
casing design, well license applications,  rig selection  recommendations,  site
construction  advice,  third party services  selection,  cement design, well log
interpretation and operations  management to company clients.  Mr. Urquhart also
developed a joint  design  initiative  for an Internet  site that would  provide
historical  well  drilling  graphs and drilling  program  design  formats to the
independent oil and gas operators in Western Canada. From 2002 through 2003, Mr.
Urquhart contracted with TESCO Corporation to develop a deep-well water drilling
joint  venture  initiative  for TESCO in the Sahara  Desert  Region of  Algeria,
Tunisia and Libya  utilizing the company's  unique casing  drilling  technology.
During the same period,  he also acted as an advisor to Mohamed Djoua,  Director
of Drilling for Sanatrach  SpA,  Algeria's  national oil company,  in the use of
horizontal  drilling  techniques  suited to the  optimization  of deep sandstone
formations.

Prior to founding his own company, Mr. Urquhart served as Vice President, Energy
Group for Finex Capital  Corporation  of Calgary,  Alberta.  Finex was a Calgary
based merchant  banking  entity owned by First City Trust,  and charged with the
management of an extensive  investment  portfolio in both energy and  commercial
real estate assets. He also served as the senior officer in the establishment of
all Finex owned and  operated  oil and gas service  companies,  as well as being
responsible  for  providing  operational  management  to all  Finex  oil and gas
production related subsidiary operations.

From the 1960s until 1983, Mr.  Urquhart was employed in a variety of successive
senior  management  positions,  primarily in charge of drilling  and  production
operations for established petroleum  development and production companies.  The
list of firms includes Petroleum Technologies of Wichita,  Kansas (1983 - 1987),
Hexagon  Gas  Limited  of  Calgary,  Alberta  (1977 - 1983) and Suncor  Inc.  of
Calgary, Alberta (1968 - 1977).

Mr. Urguhart graduated from Dalhousie  University in Haifax,  Nova Scotia with a
Bachelor of Science majoring in mathematics and minoring in engineering. He also
earned a  Bachelor  of  Engineering  from Nova  Scotia  Technical  College.  Mr.
Urguhart  is  affiliated  with  the   Association  of  Professional   Engineers,
Geologists and  Geophysicists of Alberta,  the Canadian  Institute of Mining and
Metallurgy - Petroleum Society, the American Society of Petroleum Engineers, and
the Association of Drilling Engineers.

FAMILY RELATIONSHIPS

There are no family relationships among our directors or officers.


                                       58


<PAGE>


INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

During the past five years, none of our directors, executive officers or persons
that may be deemed  promoters is or have been  involved in any legal  proceeding
concerning:  (i) any  bankruptcy  petition  filed by or against any  business of
which such person was a general partner or executive  officer either at the time
of the bankruptcy or within two years prior to that time; (ii) any conviction in
a  criminal  proceeding  or  being  subject  to a  pending  criminal  proceeding
(excluding traffic violations and other minor offenses);  (iii) being subject to
any order, judgment or decree, not subsequently reversed,  suspended or vacated,
of any court of competent  jurisdiction  permanently or  temporarily  enjoining,
barring,  suspending or otherwise limiting  involvement in any type of business,
securities or banking  activity;  or (iv) being found by a court, the Securities
and Exchange  Commission or the  Commodity  Futures  Trading  Commission to have
violated a federal or state  securities or commodities law (and the judgment has
not been reversed, suspended or vacated).

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires our  directors and officers,  and the
persons who  beneficially own more than ten percent of our common stock, to file
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission.  Copies of all filed  reports  are  required to be  furnished  to us
pursuant to Rule 16a-3  promulgated  under the Exchange Act. Based solely on the
reports received by us and on the  representations of the reporting persons,  we
believe that these persons have complied with all applicable filing requirements
during the fiscal year ended December 31, 2007.

ITEM 10. EXECUTIVE COMPENSATION

The  following  table sets forth the  compensation  paid to our Chief  Executive
Officer and those  executive  officers that earned in excess of $100,000  during
fiscal year ended February 29, 2008 (the "Named Executive Officer"). Our current
officers/directors  are not  included  in the Summary  Compensation  Table since
their respective  appointment dates occurred  simultaneous with or subsequent to
fiscal year ended February 29, 2008.

<TABLE>
<CAPTION>


SUMMARY COMPENSATION TABLE

__________________________________________________________________________________________________________________________

                                                                                  Non-Qualified
                                                                  Non-Equity        Deferred
Name and                                      Stock    Option   Incentive Plan    Compensation     All Other
Principal                   Salary    Bonus   Awards   Awards    Compensation       Earnings       Compensation     Total
Position          Year      ($) (1)    ($)     ($)      ($)          ($)               ($)         ($)             ($) (2)
<S>             <C>         <C>       <C>     <C>      <C>      <C>               <C>              <C>              <C>

Rahim Javraj,
President,
CEO and CFO     2007/2008     -0-      -0-      -0-      -0-         ---              ---             ---           -0-
__________________________________________________________________________________________________________________________

</TABLE>


                                       59


<PAGE>


STOCK OPTIONS/SAW GRANTS IN FISCAL YEAR ENDED FEBRUARY 29, 2008

The following  table sets forth  information as at February 29, 2008 relating to
options that have been granted to the Named Executive Officer:

<TABLE>
<CAPTION>


                  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

                                 OPTION AWARDS                                                      STOCK AWARDS
                                                                                                                 Equity
                                                                                                                 Incentive
                                                                                                    Equity       Plan
                                                                                                    Incentive    Awards:
                                           Equity                                                   Plan         Market or
                                           Incentive                                                Awards:      Payout
                                           Plan                                           Market    Number of    Value of
                                           Awards:                                        Value of  Unearned     Unearned
               Number of    Number of      Number of                          Number of   Shares    Shares,      Shares,
               Securities   Securities     Securities                         Shares or   or Units  Units or     Units or
               Underlying   Underlying     Underlying                         Units of    of Stock  Other        Other
               Unexercised  Unexercised    Unexercised  Option                Stock That  That      Rights That  Rights That
               Options      Options        Unearned     Exercise  Option      Have Not    Have Not  Have Not     Have Not
               Exercisable  Unexercisable  Options      Price     Expiration  Vested      Vested    Vested       Vested
Name               (#)          (#)            (#)        ($)     Date        (#)         ($)       (#)          (#)
____________________________________________________________________________________________________________________________
<S>                 <C>         <C>            <C>         <C>                   <C>         <C>        <C>        <C>

Rahim Javraj
President/CEO
and CFO            -0-         -0-            -0-         -0-        n/a        -0-         -0-        -0-        -0-
____________________________________________________________________________________________________________________________

</TABLE>


The following table sets forth information  relating to compensation paid to our
directors during fiscal year ended February 29, 2008:

<TABLE>
<CAPTION>

DIRECTOR COMPENSATION TABLE
                                                                        Change in
                                                                        Pension
                                                                        Value and
               Fees                                 Non-Equity          Nonqualified
               Earned or                            Incentive           Deferred                All
               Paid in       Stock      Option      Plan                Compensation           Other
               Cash          Awards     Awards      Compensation        Earnings            Compensation        Total
Name             ($)          ($)         ($)             ($)               ($)                  ($)              ($)
_____________________________________________________________________________________________________________________
<S>    <C>        <C>          <C>          <C>          <C>                <C>                 <C>               <C>

Rahim Javraj
  2007/2008      -0-          -0-          -0-          -0-                -0-                 -0-               -0-
_____________________________________________________________________________________________________________________


</TABLE>


                                       60


<PAGE>


EMPLOYMENT AND CONSULTING AGREEMENTS

As of the date of this Annual Report,  we have not entered into any  contractual
agreements with our executive officers or directors.

ITEM 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

As of the date of this Annual  Report,  the  following  table sets forth certain
information with respect to the beneficial ownership of our common stock by each
stockholder known by us to be the beneficial owner of more than 5% of our common
stock and by each of our current directors and executive  officers.  Each person
has sole voting and investment power with respect to the shares of common stock,
except  as  otherwise  indicated.  Beneficial  ownership  consists  of a  direct
interest in the shares of common stock, except as otherwise indicated. As of the
date of this Annual Report,  there are 39,615,000  shares of common stock issued
and outstanding.

<TABLE>
<CAPTION>

                                                       Amount and Nature of         Percentage of Beneficial
Name and Address of Beneficial Owner(1)               Beneficial Ownership(1)               Ownership
Directors and Officers:
____________________________________________________________________________________________________________
<S>                                                         <C>                                <C>

Robert D. Fedun                                             644,995(2)                         1.63%
17314 State Highway 249
Suite 306
Houston, Texas 77064

Michael J. Newport                                          1,244,995(3)                       3.14%
17314 State Highway 249
Suite 306
Houston, Texas 77064
Parklane Investments Inc.                                    8,235,000                        20.79 %
1 Alexander Road
Kintersville, PA 18930

David Urquhart
17314 State Highway 249                                      1,650,000(4)                      4.17%
Suite 306
Houston, Texas 77064

All executive officers and directors as a group            3,539,990(5)                        8.94%
(3 persons)

*    Less than one percent.


                                       61


<PAGE>


<FN>

(1)  Under Rule 13d-3, a beneficial owner of a security includes any person who,
     directly or indirectly, through any contract,  arrangement,  understanding,
     relationship,  or otherwise has or shares: (i) voting power, which includes
     the power to vote, or to direct the voting of shares;  and (ii)  investment
     power,  which  includes the power to dispose or direct the  disposition  of
     shares.  Certain shares may be deemed to be beneficially owned by more than
     one person (if, for example,  persons  share the power to vote or the power
     to  dispose  of  the  shares).  In  addition,   shares  are  deemed  to  be
     beneficially  owned by a person if the person has the right to acquire  the
     shares (for example, upon exercise of an option) within 60 days of the date
     as of which the  information  is  provided.  In  computing  the  percentage
     ownership  of any  person,  the amount of shares  outstanding  is deemed to
     include  the amount of shares  beneficially  owned by such person (and only
     such  person)  by  reason of these  acquisition  rights.  As a result,  the
     percentage of outstanding  shares of any person as shown in this table does
     not necessarily  reflect the person's actual ownership or voting power with
     respect to the number of shares of common stock actually  outstanding as of
     the date of this Annual Report. As of the date of this Annual Report, there
     are 39,615,000 shares issued and outstanding.  Beneficial ownership amounts
     reflect the forward stock splits effective February 2008 and May 2008.

(2)  This figure includes:  (i) 344,995 shares of common stock; and (ii) 300,000
     stock options to purchase 300,000 shares of our common stock at an exercise
     price of $1.75 per share expiring on April 7, 2018.

(3)  This figure includes:  (i) 344,995 shares of common stock; and (ii) 900,000
     stock options to purchase 900,000 shares of our common stock at an exercise
     price of $1.75 per share expiring on April 7, 2018.

(4)  This figure includes:  (i) 750,000 shares of common stock; and (ii) 900,000
     stock options to purchase 900,000 shares of our common stock at an exercise
     price of $1.75 per share expiring on April 7, 2018.

(5)  This  figure  includes:  (i)  1,439,990  shares of common  stock;  and (ii)
     2,100,000 stock options to purchase 2,100,000 shares of our common stock at
     an exercise price of $1.75 per share expiring on April 7, 2018.

</FN>
</TABLE>


                                       62


<PAGE>


CHANGES IN CONTROL

We are unaware of any contract, or other arrangement or provision, the operation
of which may at a subsequent date result in a change of control of our company.

ITEM  12.  CERTAIN   RELATIONSHIPS   AND  RELATED   TRANSACTIONS   AND  DIRECTOR
           INDEPENDENCE

During fiscal year ended  February 29, 2008,  one of our  shareholders  advanced
$50,000 to us.  Subsequent  to February 29, 2008,  we settled the amount due and
owing to the shareholder  pursuant to conversion into 50,000  pre-Forward  Stock
Split shares of our  restricted  common  stock at $1.00 per share in  accordance
with the 2008 Private Placement (1,500,000 shares post-Forward Stock Splits).

During  fiscal  year ended  February  29,  2008,  we  arranged  for a short term
non-interest  bearing advance in the aggregate amount of $33,239 from one of our
shareholders.  Subsequent to fiscal year ended February 29, 2008, we settled the
amount due and owing to the shareholder  pursuant to an exchange of our interest
in the Southwest and Sedona mineral claims.

Except for the transactions described below, none of our directors,  officers or
principal  stockholders,  nor any associate or affiliate of the foregoing,  have
any  interest,  direct  or  indirect,  in any  transaction  or in  any  proposed
transactions,  which has materially affected or will materially affect us during
fiscal year ended February 29, 2008.


ITEM 13. EXHIBITS

The following exhibits are filed as part of this Annual Report.

Exhibit No.            Document

3.1           Articles of Incorporation (1)

3.2           Bylaws (1)

10.1          Property Agreement between Mainland Resources
              Inc. and Vijesh Harakh dated July 1, 2006 (1)

10.2          Trust Agreement between Mainland Resources Inc.
              and Vijesh Harakh dated July 1, 2006. (1)

10.3          Option Agreement between Kingsley Resources Inc.
              And Mainland Resources Inc. dated February 27,
              2008 (2)

10.4          Master Operating Agreement between Mainland
              Resources Inc. and OPS Group Limited dated May
              1, 2008 (3)


                                       63


<PAGE>


16            Letter of Dale Matheson Carr-Hilton LaBonte LLP
              Chartered Accountants (4)

31.1          Certification of Chief Executive Officer
              Pursuant to Rule 13a-14(a) or 15d-14(a) of
              the Securities Exchange Act.

31.2          Certification of Chief Financial Officer
              Pursuant to Rule 13a-14(a) or 15d-14(a) of
              the Securities Exchange Act.

32.1          Certification of Chief Executive Officer and
              Chief Financial Officer Under Section 1350
              as Adopted Pursuant to Section 906 of the
              Sarbanes-Oxley Act.

(1)  Incorporated by reference from Form SB-2 filed with the Commission on April
     11, 2007.

(2)  Incorporated  by  reference  from Form 8-K  filed  with the  Commission  on
     February 27, 2008.

(3)  Incorporated by reference from Form 8-K filed with the Commission on May 1,
     2008.

(4)  Incorporated  by  reference  from Form 8-K  filed  with the  Commission  on
     February 21, 2008.

ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES

During fiscal year ended February 29, 2008, we incurred approximately $13,500 in
fees  to  our  principal  independent   accountants  ($1,500  to  Dale  Matheson
Carr-Hilton  Labonte  LLP and  $12,000  to De  Joya  Griffth)  for  professional
services  rendered in connection with the audit of our financial  statements for
fiscal  year  ended  February  29,  2008  and for the  review  of our  financial
statements for the quarters ended May 31, 2007, August 31, 2007 and November 30,
2007.

During fiscal year ended February 28, 2007, we incurred approximately $15,000 in
fees to our principal independent  accountant for professional services rendered
in connection  with the audit of our financial  statements for fiscal year ended
February 28, 2007 and for the review of our financial statements since inception
of May 12, 2006.

During fiscal year ended  February 29, 2008, we did not incur any other fees for
professional services rendered by our principal  independent  accountant for all
other non-audit  services which may include,  but is not limited to, tax-related
services, actuarial services or valuation services.


                                       64


<PAGE>


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: June 3, 2008                       By: /s/ MICHAEL J. NEWPORT
                                              __________________________________
                                                  Michael J. Newport, President/
                                                  Chief Executive Officer


Dated: June 3, 2008                       By: /s/ ROBERT D. FEDUN
                                              __________________________________
                                                  Robert D. Fedun, Treasurer/
                                                  Chief Financial Officer



















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