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

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 28, 2009

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

     For the transition period from ______ to _______

                          COMMISSION FILE NO. 000-52782

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

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

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

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

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

Securities registered pursuant to Section 12(g) of the Act:
                 COMMON STOCK, $0.001
                 ____________________
                   (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-K 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-K or any
amendment to this Form 10-K. [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 $516,579.

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 12, 2009: $118,845,000

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.

Class                                           Outstanding as of May 17, 2009
Common Stock,  $0.001                           39,805,001*

*Increased from 1,120,500 shares of common stock to 22,410,000  shares of common
stock based upon the February 2008 Forward Stock Split and further  increased to
26,410,000 based upon the May 2008 Forward Stock Split.

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,  briefly describe them
and identify the part of the Form 10-K (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]

                                       2
<PAGE>

                             MAINLAND RESOUCES, INC.
                                    FORM 10-K

INDEX

Item      1. Business                                                          4

Item      1A. Risk Factors                                                    17

Item      1B. Unresolved Staff Comments                                       29

Item      2. Properties                                                       29

Item      3. Legal Proceedings                                                29

Item      4. Submission of Matters to a Vote of Security Holders              29

Item      5. Market for Registrant's Common Equity,  Related
             Stockholder Matters and Issuer Purchases of Equity Securities    29

Item      6. Selected Financial Data                                          34

Item      7. Management's Discussion and Analysis of Financial Condition
             and Results of Operation                                         36

Item      7A. Quantity and Qualitative Disclosure About Market Risks

Item      8. Financial Statements and Supplemental Data                       41

Item      9. Changes in and Disagreements With Accountants on Accounting
             and Financial Disclosure                                         58

Item      9A. Controls and Procedures                                         59

Item      9B. Other Information                                               60

Item      10. Directors, Executive Officers and Corporate Governance          60

Item      11. Executive Compensation                                          68

Item      12. Security Ownership of Certain Beneficial Owners and
              Management and Related Stockholder Matters                      71

Item      13. Certain Relationships and Related Transactions and
              Director Independence                                           74

Item      14. Principal Accountant Fees and Services                          75

Item      15. Exhibits and Financial Statement Schedules                      75



                                       3
<PAGE>

Statements  made in this Form 10-K 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-K 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. 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.
We are a natural resource  exploration and production  company currently engaged
in the exploration, acquisition and development of oil and gas properties in the
United States and within North  America.  Our primary  activity and focus is our
lease in East Holly Field,  De Soto Parish in northwest  Louisiana (the "De Soto
Parish") as more fully described below. To date, we have acquired  approximately
2,551 net acres within the De Soto  Parish.  We have also leased  various  other
properties   totaling   approximately   144  net   acres   within   the   Cotton
Valley/Haynesville  trend in the  State of  Louisiana  as more  fully  described
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.

                                       4
<PAGE>

RECENT DEVELOPMENTS

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  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 $0.0001 per share.

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

                                       5
<PAGE>

be 200,000,000 shares of common stock with a par value of $0.0001 per share. See
"Item 5. Market for Registrant's Common Equity,  Related Stockholder Matters and
Issuer Purchases of Equity Securities."

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 the De Soto Parish. To date, we have acquired  approximately  2,551 net
acres within the De Soto Parish.  We have also leased  various other  properties
totaling approximately 144 net acres within the Cotton  Valley/Haynesville trend
in the State of Louisiana as more fully described below.

OIL AND GAS PROPERTIES

EAST HOLLY FIELD, DE SOTO PARISH, LOUISIANA

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

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

On March 14, 2008,  we paid to Permian the aggregate  amount of $587,596,  which
amount did not include the $100,000  required to be paid by us to Kingsley under
the terms of the Option Agreement, the $100,000 was paid to Kingsley on April 2,
2008.  In  accordance  thereof,  the right,  title and  interest  of Permian and
Kingsley in the Leases were transferred to us effective March 14, 2008 by way of
assignment.  As of the date of this Annual Report,  we have completed the Option
Agreement  and the  Leasehold  Purchase  Agreement  at a total cost of  $687,596
(which  included the $100,000  previously  paid to Kingsley)  for  approximately
2,551 net acres.

                                       6
<PAGE>


COTTON VALLEY/HAYNESVILLE

As of the date of this Annual Report,  we have leased  various other  properties
totaling  approximately  144 net acres  consisting of approximately 84 net acres
leased as of February 29, 2008 and an  additional 60 net acres leased during the
nine  month   period  ended   November  30,  2008  for  payment  of   additional
consideration  of $22,753.  These  additional  property leases within the Cotton
Valley/Haynesville  trend in the State of Louisiana  are for a  three-year  term
period.  We have a 100% working  interest and a 75% net revenue  interest in the
leases.

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

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

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

                                       7
<PAGE>


GRIFFITHS  11-#1  WELL.  On October  20,  2008,  the  Griffith  Well No. 10H was
spudded.  The Griffiths  11-#1 well  commenced  production at the end of January
2009. The  approximate  reading for total gas produced from the Griffiths  11-#1
well and shipped to market through March 10, 2009 was reported at 568,856 MCF or
..568 BCF. We believe that the  recoverable  reserves for the Griffith 11-#1 well
may  ultimately be from 7.5 BCF to 15.81 BCF. The 15.81 BCF rate was  determined
by a reserve  report  prepared by T.W.  McQuire & Associates,  Inc. The ultimate
recovery  was  determined  by suing a type curve that uses 80%  decline  for the
first year  followed by a 30% decline for the second  year,  15% decline for the
third year, and a 10% decline over the remaining expected life of the well.

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

MISSISSIPPI PROSPECT/WESTROCK LAND CORP.

Effective on September 4, 2008, our Board of Directors  authorized the execution
of an option  agreement  (the  "Option  Agreement")  with  Westrock  Land  Corp.
("Westrock") to acquire 5,000 net acres in mineral oil and gas leases located in
the  State of  Mississippi  (the  "Leases").  In  accordance  with the terms and
provisions of the Option Agreement:  (i) we will acquire a 100% working interest
and a 75% net revenue interest in the Leases; (ii) we have agreed to pay certain
acquisition  costs per net  mineral  acre and also paid a  $500,000  deposit  to
secure the Option Agreement;  (iii) the balance of the acquisition costs will be
due and payable upon completion of the due diligence,  which Option Agreement is
subject to the completion of standard due diligence review by us to be completed
no later than  October 15, 2008;  and (iv) upon closing  scheduled no later than
October  15,  2008,  Westrock  shall  assign to us all of its  right,  title and
interest in and to the Leases free and clear of all liens and  encumbrances.  On
October 15, 2008,  November  30, 2008 and  subsequently  on April 16, 2009,  the
Option  Agreement was extended  pursuant to which the option period is currently
extended until June 1, 2009. Additional deposits of $250,000, $100,000, $250,000
and $100,000 were paid on October 17, 2008,  December 1, 2008, December 29, 2008
and April 27, 2009,  respectively,  in connection  with these  extensions  for a
total deposit of $1,200,000.



                                       8
<PAGE>

DRILLING ACTIVITY

As of the date of this Annual Report, the following table sets forth the results
of our gas drilling activity:





                GROSS WELLS                         NET WELLS


    Total       Producing        Dry       Total      Producing      Dry

     2              1             -         .80          .40          -

PRODUCTION INFORMATION

During fiscal year ended  February 29, 2008 and previous,  we had no oil and gas
production.

NET PRODUCTION, AVERAGE SALES PRICE AND AVERAGE PRODUCTION COSTS

The table  below sets forth the net  quantities  of gas  production  (net of all
royalties, overriding royalties and production due to others) attributable to us
for fiscal year ended February 28, 2009,  and the average sales prices,  average
production costs and direct lifting costs per unit of production.


                           FOR FISCAL YEAR ENDED FEBRUARY 28, 2009

Net production (Mcf)                                               131,442

Average Sales price (per Mcf)*                                      $ 3.93

Average Production Cost (per Mcf)**                                 $ 1.14

* If applicable,  would include deductions for transportation,  marketing costs,
compressor  surcharge and BTU factor.

**If  applicable,  would includes  direct lifting costs,  which are comprised of
labor,  repairs  and  maintenance,   materials  and  supplies,  workover  costs,
insurance and property, gathering, compression, marketing and severance taxes



                                       9
<PAGE>

GROSS AND NET PRODUCTIVE GAS WELLS, DEVELOPED ACREAGE

PRODUCTIVE WELLS AND DEVELOPED ACRES

As of the date of this Annual  Report,  the tables below set forth our leasehold
interest in productive and shut-in gas wells, and in developed acres:


PROSPECT                                       GROSS (1)            NET (2)


East Holly - Haynesville                           1                  .40
Total                                              1                  .40

(1) A gross well is a well in which a working  interest is owned.  The number of
gross wells is the total number of wells in which a working interest is owned.

(2) A net well is deemed to exist when the sum of fractional  ownership  working
interest  in gross wells  equals one.  The number of net wells is the sum of the
fractional working interests owned in gross wells expressed as whole numbers and
fractions thereof.


                        DEVELOPED ACREAGE TABLE(1)

PROSPECT                            GROSS (2)              NET (3)

East Holly -Haynesville              640                   256

Total                                640                   256

(1) Consists of acres spaced or assignable to productive wells.

(2) A gross acre is an acre in which a working  interest is owned. The number of
gross acres is the total number of acres in which a working interest is owned.

(3) A net acre is deemed to exist when the sum of fractional  ownership  working
interests  in gross acres  equals one. The number of net acres is the sum of the
fractional working interests owned in gross acres expressed as whole numbers and
fractions thereof.

UNDEVELOPED ACREAGE

As of the date of this Annual  Report,  the table below sets forth our leasehold
interest in  undeveloped  acreage,  the chart below  reflects  the Gross and Net
undeveloped acreage for the zones the Company may develop in the future :



                                       10
<PAGE>


PROSPECT                                  GROSS                  NET*

East Holly -Haynesville                   2,055                   822

East Holly- Cotton Valley                 2,695                 2,021

GAS DELIVERY COMMITMENTS

We have no gas delivery commitments.

HAYNESVILLE SHALE AREA

Our oil and gas  properties  are  located in the Gulf  Coast  Salt Basin  trend,
outside  of the  core  area  initially  exploited  for  the  Haynesville  Shale.
Management  believes  that  over-thickened  Haynesville  Shale  deposits  can be
isolated which are rich in organic carbon,  possess superior rock properties and
are  gas-charged.  A deep  well  drilled  on the  leases in 1981  confirmed  the
presence of highly pressured  natural gas within an  over-thickened  Haynesville
shale  section.  The well was drilled to a depth of 22,000 feet,  reaching total
depth while still within the Haynesville  shale. A poor  understanding  of shale
gas 28 years ago combined with a casing problem in the wellbore,  encouraged the
operator to plug and abandon the well.  We have been able to secure a full suite
of data from that  well/project  area which included:  all geophysical log data,
drill  cuttings,   seismic  data,   drilling  reports,   and  related  technical
information. This information was critical in determining the quality of the gas
within the reservoir,  the propensity of the Haynesville Shale to produce gas on
the leases, as well as the gas in place per section.

A  geophysical  assessment  of the  property  was  commissioned.  Seismic  lines
crossing the property were reprocessed and a detailed interpretation was made by
a geophysicist  with strong  knowledge of the play. A  well-defined  dome-shaped
structure was mapped and the leased  acreage of which sits squarely on the crest
is ideally positioned for gas accumulation. A series of maps were produced which
image the reservoir surface as well as other potentially prospective horizons on
the property. These maps also assist in better evaluating surrounding acreage.

Rock  data  (cuttings  samples)  were  viewed  and  sampled  and  sent to a rock
evaluation lab for testing.  Parameters such as mineralogy and geochemistry were
measured using x-ray  diffraction  and rock evaluation  pyrolysis.  Thin section
(microscope slide) work was also conducted to better evaluate rock type, mineral
characteristics  and porosity  styles.  This data was then provided to a leading
petrophysical  group who has experience with the Haynesville Shale to complete a
petrophysical  analysis (log analysis) of the entire prospective section,  which
included all of the penetrated Haynesville Formation.

The results of these  extensive  studies  suggested  that the leases of interest
contain  significant  hydrocarbons.  In that the Haynesville is so thick in this
locale,  vertical wells can be used to develop the property,  reducing costs and
many of the drilling challenges associated with horizontal  wellbores.  Drilling
costs were estimated by an engineering  company experienced in the project area,

                                       11
<PAGE>

at between $6-7 million per well,  in order to reach a total depth of 22,000 ft.
Based on  observed  production  rates  within the  Haynesville  Formation  of NW
Louisiana  and  other  Bossier   Formation  wells  in  East  Texas,  the  highly
over-pressured  Haynesville observed within the lease of interest may produce at
very high rates.  Economic  analyses  conducted  suggest that rates in excess of
5mmcf/day  will  generally  be  economic,  if gas prices are stable in excess of
$4mcf. As of May 13, 2009, contract natural gas prices were $4.33/mcf.

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 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,  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.

     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.


                                       12
<PAGE>


     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

Additional land  acquisitions  may 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    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.  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.

MATERIAL AGREEMENTS

VIARD CONSULTING SERVICES
Effective  October 2, 2008, our Board of Directors  authorized the engagement of
Viard  Consulting  Services,  now  known as VCS  Group  Inc.  ("VCS  Group")  in
accordance  with the  terms and  provisions  set  forth in that  certain  letter
agreement  dated  February 11, 2009 (the  "Agreement").  We engaged VCS Group to
render  services and related  reports to use 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, VCS Group shall perform certain services including,
but not limited to, the  following:  (i)  re-assess  our  existing  controls and
business cycles and conduct a risk assessment on each cycle for fiscal year 2009
for audit attestation;  (ii) conduct a full review of the management  governance
process;  (iii)  assemble a project  team to conduct  evaluations;  (iv)  define
significant processes, materiality and fraud; (v) document and evaluate internal
controls at the  entity-wide  level;  (vi) assist  management in  development of
policies and procedures; (vii) identify deficiencies; (viii) develop and execute
independent  testing  procedures and (ix) summarize findings and report to Board
of Directors and  management.  In furtherance of the terms and provisions of the
Agreement,  we agreed to pay VCS Group an hourly rate of $155. As of the date of
this Annual  Report,  we have paid VCS Group an  aggregate  $56,724 for fees and
associated  expenses.  One of our directors,  Angelo Viard, is the sole officer,
director  and  shareholder  of VCS Group and  receives  compensation  indirectly
through VCS Group. See "Item 13. Certain  Relationships and Related Transactions
and Director Independence."


                                       13
<PAGE>

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
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.


                                       14
<PAGE>

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
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.


                                       15
<PAGE>


The  Comprehensive  Environmental,  Response,  Compensation,  and  Liability Act
("CERCL ") and  comparable  state  statutes  impose  strict,  joint and  several
liabilities  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
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.


                                       16
<PAGE>

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.

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 William D. Thomas 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.

ITEM 1A. 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
     AND PRODUCTION ACTIVITIES.

We will  require  significant  additional  financing  in order to  continue  our
exploration  and  development  activities and our production  activities and our
assessment of the commercial viability of certain of our oil and gas properties.
Furthermore, if the cost of our planned exploration,  development and production
programs  are 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  required  funds,  or on terms  satisfactory  to us. The  continued
exploration and development and production 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 and production stage. Although we have revenues from operations,
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
certain 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

                                       17
<PAGE>

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.

Our  properties  do not contain  reserves  in  accordance  with the  definitions
adopted  by  the  SEC  and  there  is no  assurance  that  any  exploration  and
development  program that we carry out will establish  reserves.  Certain of our
oil  and  gas  properties  are  in  the  exploration  stage  as  opposed  to the
development  stage and have no known body of  reserves.  The known  reserves  at
these  projects have 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  AND  DEVELOPMENT  ACTIVITIES ON OUR OIL AND GAS PROPERTIES
     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


                                       18
<PAGE>

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 properties to justify commercial operations. Further, we will not be able
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
($13,731,959) from May 12, 2006 (inception) to February 28, 2009. 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 28, 2009 AND FEBRUARY 29, 2008 FINANCIAL
     STATEMENTS.

The independent auditor's report accompanying our February 28, 2009 and February
29,  2008  audited  financial  statements  contains  an  explanatory   paragraph
expressing  substantial  doubt about our ability to continue as a going concern.


                                       19
<PAGE>

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.

     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

                                       20
<PAGE>

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)
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.

There can be no assurance  that our current  well  re-completion  activities  or
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 a successful  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 and our Cotton Valley  prospects in this Annual
Report. Our prospects were in the stage of preliminary evaluation and assessment
and we have decided to drill 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

                                       21
<PAGE>

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.

     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.


                                       22
<PAGE>


     IF PRODUCTION RESULTS FROM OPERATIONS, WE ARE DEPENDENT UPON TRANSPORTATION
     AND STORAGE SERVICES PROVIDED BY THIRD PARTIES.

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.

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)


                                       23
<PAGE>

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
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.


                                       24
<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
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.


                                       25
<PAGE>


     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 William D. Thomas, 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 a 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.

                                       26
<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-February  2008 Forward  Stock Split and May 2008  Forward  Stock
Split shares of our common stock pursuant to the Registration Statement declared
effective on August 24, 2007 (12,510,000 shares post-February 2008 Forward Stock
Split and May 2008 Forward Stock Split). As a further result of the Registration
Statement,  1,000,000 Pre-February 2008 Forward Stock Split and May 2008 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  February  2008 Forward Stock Split and May 2008
Forward Stock Split).

As of the date of this Annual Report, there are 15,780,001 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.

                                       27
<PAGE>


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.

     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


                                       28
<PAGE>

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
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 1B. UNRESOLVED STAFF COMMENTS

No report is required.

ITEM 2. DESCRIPTION OF PROPERTIES

We lease our principal  office space  located at 20333 State Highway 249,  Suite
200,  Houston,  Texas 77070.  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 28, 2009,  no matters were  submitted to our
stockholders for approval.

ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
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.

                                       29
<PAGE>


            QUARTER ENDED               HIGH BID           LOW BID

          February 28, 2009               $4.10             $4.00
          November 30, 2008               $4.76             $4.65
           August 31, 2008                $6.30             $6.20
            May 31, 2008                  $6.00             $4.40
          February 29, 2008               $1.75             $1.75
          November 30, 2007               $0.009            $0.009
           August 31, 2007                $0.009            $0.009
            May 31, 2007                  $0.009            $0.009

As of May 22, 2009,  we had 51  shareholders  of record,  which does not include
shareholders whose shares are held in street or nominee names.

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 SPLIT

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 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 $0.0001 per share.

                                       30
<PAGE>


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 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 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 $0.0001 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))
_______________________________________________________________________________________________________________________
<S>                                       <C>                              <C>                         <C>
Equity Compensation Plans
Approved by Security Holders                    -0-                          -0-                             -0-

Equity Compensation Plans Not
Approved by Security Holders
Warrants                                  3,000,000                        $1.33                             -0-

2008 Stock Option                         1,200,000*                        1.17                             -0-

Plan                                      1,900,000                         3.00                        200,000

Total                                     6,100,000                         2.82                        200,000

</TABLE>


                                       31
<PAGE>

*We originally granted an aggregate of 2,100,000 Stock Options to certain of our
officers,  directors and management at an exercise price of $1.17 per share.  Of
these Stock  Options,  an  aggregate  900,000  previously  granted to one of our
directors were cancelled.

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 3,800,000 (as
increased in accordance with the May 2008 Forward Stock Split) 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.

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
3,800,00 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.


                                       32
<PAGE>

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
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 28,
2009, 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.

JULY 2008 PRIVATE PLACEMENT OFFERING
Effective May 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 6,000,000  units at a per
unit price of $0.67 (the  "Unit")  in our  capital  for  aggregate  proceeds  of
$4,000,000.  Of the amount of $4,000,000 received,  $50,000 was as settlement of
debt and the remaining  $3,950,000 was received in cash. Each Unit was comprised
of one share of restricted  common stock and one-half  non-transferable  warrant
(the "Warrant").  Each Warrant is exercisable at $1.33 per share for a period of
one  year  from  the date of  issuance  ending  on May 1,  2009  (the  "Exercise


                                       33
<PAGE>

Period").  On April 29, 2009, our Board of Directors pursuant to written consent
resolutions  approved a thirty-day  extension to the Exercise  Period to June 1,
2009 based on current market conditions.

The Units  under the 2008  Private  Placement  were  sold to  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.

CONSULTING AGREEMENT

Effective on March 17, 2009,  we issued  2,500 shares of our  restricted  common
stock at a per share price of $3.55 in accordance  with the terms and provisions
of a consulting  services  agreement.  The shares of common stock were issued in
reliance on Regulation S  promulgated  under the  Securities  Act. The per share
price of the 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.

ITEM 6. SELECTED FINANCIAL DATA

The following selected  financial  information is qualified by reference to, and
should  be read in  conjunction  with our  financial  statements  and the  notes
thereto,  and "Management's  Discussion and Analysis of Financial  Condition and
Results of Operation"  contained elsewhere herein. The selected income statement
data for fiscal  years ended  February  28, 2009 and  February  29, 2008 and the
selected  balance  sheet data as of February  28, 2009 and February 29, 2008 are
derived from our audited  consolidated  financial  statements which are included
elsewhere herein.


                                       34
<PAGE>


                                FISCAL YEARS ENDED       FOR THE PERIOD FROM
                                FEBRUARY 28,  2009      MAY 12, 2006 (INCEPTION)
                              AND FEBRUARY 29, 2008       TO FEBRUARY 28, 2009
                           ____________________________ ________________________

STATEMENT OF OPERATIONS
DATA
REVENUES
   Oil and gas revenue         $516,579            -0-            $516,579
GENERAL AND
ADMINISTRATIVE EXPENSES
    Operating costs and        $149,323            -0-            $149,323
    taxes
    Depletion Allowance          12,000            -0-              12,000
    Consulting fees             595,374            -0-             595,374
    Management and rent         126,400          8,627             140,820
    fees - related party
    Marketing expenses          921,107            -0-             921,107
    Mineral property                -0-         10,070              14,510
    costs
    Office and general           82,798         58,657             142,047
    Professional fees           243,710         67,169             311,310
    Salary expense           12,002,685            -0-          12,002,685
NET OPERATING LOSS          (13,616,818)      (144,523)        (13,772,597)
OTHER INCOME
    Gain on settlement           33,239            -0-              33,239
    of debt
    Interest income               7,399            -0-               7,399
NET LOSS                   ($13,576,180)     ($144,523)       ($13,731,959)

     Foreign currency               422           (617)                 -0-
     translation
     adjustment
COMPREHENSIVE LOSS         ($13,575,758)     ($145,140)       ($13,731,939)
BALANCE SHEET DATA
TOTAL ASSETS                 $2,398,332        $28,671
TOTAL LIABILITIES                70,230        127,496
STOCKHOLDERS EQUITY
(DEFICIT)                    $2,328,102       ($98,825)



                                       35
<PAGE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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 fiscal year ended  February 28, 2009,
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 generated limited revenue to date.
The above  table sets  forth  selected  financial  information  for the  periods
indicated.  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.




                                       36
<PAGE>

RESULTS OF OPERATION

FISCAL YEAR ENDED  FEBRUARY 28, 2009 COMPARED TO FISCAL YEAR ENDED  FEBRUARY 29,
2008.

Our comprehensive loss for fiscal year ended February 28, 2009 was ($13,575,758)
compared to a comprehensive loss of ($145,140) during fiscal year ended February
29, 2008 (an increase of  $13,430,618).  During  fiscal year ended  February 28,
2009, we generated  $516,579 in oil and gas revenue  compared to $-0-  generated
during fiscal year ended February 29, 2008.

During  fiscal  year  ended   February  28,  2009,   we  incurred   general  and
administrative  expenses of  $14,133,397  compared to $144,523  incurred  during
fiscal year ended February 29, 2008 (an increase of $13,988,874).  These general
and administrative  expenses incurred during fiscal year ended February 28, 2009
consisted  of: (i)  operating  costs and taxes of $149,323  (2008:  $-0-);  (ii)
depletion  allowance of $12,000 (2008:  $-0-); (iii) consulting fees of $595,374
(2008:  $-0-);  (iv) management and rent  fees-related  party of $126,400 (2008:
$8,627);  (v) marketing expenses of $921,107 (2008: $-0-); (vi) mineral property
costs of $-0-  (2008:  $10,070);  (vii)  office and  general  of $82,798  (2008:
$58,657);  (viii) professional fees of $243,710 (2008: $67,169); and (ix) salary
expense of $12,002,685 (2008: $-0-).

Of the $14,133,397 incurred as general and administrative expenses during fiscal
year ended February 28, 2009, we incurred management fees of $126,400 payable to
our officers and directors. See "Item 11. Executive Compensation".

General and  administrative  expenses incurred during fiscal year ended February
28, 2009 compared to fiscal year ended February 29, 2008 increased primarily due
to the increase in salary  expense of  $12,002,685  relating to the valuation of
stock based  compensation,  and the  increase in  consulting  fees of  $595,374,
marketing expenses of $921,107 and professional fees of $243,710 relating to the
increased scale and scope of our business operations. General and administrative
expenses  generally include  corporate  overhead,  financial and  administrative
contracted services, marketing, and consulting costs.

Our  net  operating  loss  during  fiscal  year  ended  February  28,  2009  was
($13,616,818)  compared to a net operating loss of ($144,523) during fiscal year
ended February 29, 2008 (an increase of $13,472,295).

During  fiscal year ended  February  28, 2009,  we recorded  other income in the
amount of $33,239  (2008:  $-0-) in gain on settlement of debt and $7,399 (2008:
$-0-) in  interest  income.  This  resulted in a net loss of  ($13,576,180)  for
fiscal year ended  February 28, 2009  compared to a net loss of  ($144,523)  for
fiscal year ended February 29, 2008.

Our net loss of (13,576,180)  for fiscal year ended February 28, 2009 was offset
for foreign currency translation adjustment of $422 (2008: ($617). This resulted
in a comprehensive loss of ($13,575,758) for fiscal year ended February 28, 2009
as compared to a comprehensive loss of ($145,140) for fiscal year ended February
29, 2008. The weighted  average number of shares  outstanding was 38,527,911 for
fiscal  year ended  February  28,  2009 (as  increased  in  accordance  with the
February 2008 Forward Stock Split and the May 2008 Forward Stock Split) compared
to 26,106,803 for fiscal year ended February 29, 2008.


                                       37
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

FISCAL YEAR ENDED FEBRUARY 28, 2009

As at fiscal year ended February 28, 2009,  our current  assets were  $1,623,321
and our current  liabilities  were $70,230,  which resulted in a working capital
surplus of $1,553,091. As at fiscal year ended February 28, 2009, current assets
were comprised of: (i) $150,276 in cash;  (ii) $373,045 in accounts  receivable;
and (iii) $1,100,000 in deposit on properties.  As at fiscal year ended February
28, 2009, current  liabilities were comprised of $70,230 in accounts payable and
accrued liabilities.

As at fiscal year ended  February  28, 2009,  our total  assets were  $2,398,332
comprised of current  assets in the amount of $1,623,321 and valuation of proved
oil and gas properties,  net of accumulated depletion of $775,011.  The increase
in total  assets  during  fiscal year ended  February  28, 2009 from fiscal year
ended February 29, 2008 was primarily due to the substantial increase in current
assets,  including the $1,100,000  deposit,  and the valuation of the proved oil
and gas properties of $775,011.

As at fiscal year ended  February 28, 2009, our total  liabilities  were $70,230
comprised  entirely of current  liabilities.  The decrease in liabilities during
fiscal year ended February 28, 2008 from fiscal year ended February 29, 2008 was
primarily due to the decrease in accounts  payable and accrued  liabilities  and
related  party advance by way of settlement of debt by issuance of shares of our
common stock in the 2008 Private Placement Offering.

Stockholders'  equity  (deficit)  increased from ($98,825) for fiscal year ended
February 29, 2008 to $2,328,102 for fiscal year ended February 28, 2009.

CASH FLOWS FROM OPERATING ACTIVITIES

We have not generated positive cash flows from operating activities.  For fiscal
year ended  February 28, 2009,  net cash flows used in operating  activities was
($1,941,806) consisting primarily of a net loss of ($13,576,180). Net cash flows
used in  operating  activities  was  adjusted  by  $12,002,685  in  stock  based
compensation,  $12,000 in depletion and ($33,239) in non-cash  mineral  property
expenditures  (recoveries).  Net cash flows  used in  operating  activities  was
further  changed  by  $32,111  in  accounts  payable  and  accrued  liabilities,
($373,045) in accounts  receivable,  and ($6,138) in accounts  payable - related
parties.

For fiscal  year  ended  February  29,  2008,  net cash flows used in  operating
activities  was  ($88,639).  Net cash flows  used in  operating  activities  was
adjusted  by $8,627 in donated  services  and  expenses.  Net cash flows used in
operating  activities  was  further  changed by $3,000 in prepaid  expenses  and
other,  $6,138 in  accounts  payable - related  parties  and $38,119 in accounts
payable and accrued liabilities.


                                       38
<PAGE>


CASH FLOWS FROM INVESTING ACTIVITIES

For fiscal  year  ended  February  28,  2009,  net cash flows used in  investing
activities  was  ($1,877,835)  consisting  of investment in oil and gas property
compared to net cash flows used in investing activities during fiscal year ended
February 29, 2008 of ($9,176) consisting of investment in oil and gas property.

CASH FLOWS FROM FINANCING ACTIVITIES

We have  financed  our  operations  primarily  from either  advancements  or the
issuance  of equity and debt  instruments.  For fiscal year ended  February  28,
2009, net cash flows provided from financing  activities was $3,950,000 compared
to $103,691 for fiscal year ended  February 29, 2008.  Cash flows from financing
activities  for fiscal year ended  February  28,  2009  consisted  primarily  of
$3,950,000  in  proceeds  on sale of common  stock.  Cash flows  from  financing
activities  for fiscal  year ended  February  29, 2008  consisted  of $20,452 in
proceeds on sale of common stock and $83,239 in advances from related parties.

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
stock.  Additional  financing may not be available upon acceptable  terms, or at
all. If adequate  funds are not  available or are not  available  on  acceptable
terms,  we may not be  able  to  take  advantage  of  prospective  new  business
endeavors or opportunities,  which could  significantly and materially  restrict
our business operations.

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

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.

                                       39
<PAGE>


PURCHASE OF SIGNIFICANT EQUIPMENT

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

OFF-BALANCE SHEET ARRANGEMENTS

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

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2008, the Financial  Accounting  Standards Board ("FASB") issued SFAS No.
163,  ACCOUNTING FOR FINANCIAL GUARANTEE INSURANCE CONTRACTS - AN INTERPRETATION
OF FASB  STATEMENT  NO.  60.  SFAS 163  requires  that an  insurance  enterprise
recognize a claim  liability prior to an event of default when there is evidence
that credit  deterioration has occurred in an insured financial  obligation.  It
also  clarifies  how  Statement  60 applies  to  financial  guarantee  insurance
contracts,  including the  recognition and measurement to be used to account for
premium revenue and claim liabilities,  and requires expanded  disclosures about
financial  guarantee  insurance   contracts.   It  is  effective  for  financial
statements issued for fiscal years beginning after December 15, 2008, except for
some disclosures about the insurance  enterprise's  risk-management  activities.
SFAS 163 requires that disclosures about the  risk-management  activities of the
insurance enterprise be effective for the first period beginning after issuance.
Except for those disclosures,  earlier  application is not permitted.  We do not
expect  the  adoption  of this  standard  to have a  significant  impact  on our
financial position, cash flows or results of operations

In March  2008,  the FASB issued SFAS No.  161,  "DISCLOSURES  ABOUT  DERIVATIVE
INSTRUMENTS AND HEDGING  ACTIVITIES".  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, will be adopted by us beginning in the first quarter of
fiscal  2010.  We do not expect there to be any  significant  impact of adopting
SFAS 161 on our financial position, cash flows and results of operations.


                                       40
<PAGE>


In December  2007,  the FASB issued  SFAS No. 160,  "NONCONTROLLING  INTEREST IN
CONSOLIDATED FINANCIAL STATEMENTS, AN AMENDMENT OF ARB NO. 51" 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.  We do not expect  there to be any
significant impact of adopting SFAS 160 on its financial position, cash flows or
results of operations.

In  December  2007,  the FASB  issued  SFAS No. 141  (Revised  2007),  "BUSINESS
COMBINATIONS".   SFAS  No.  141(R)  will  change  the  accounting  for  business
combinations.  Under SFAS No.  141(R),  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. 141(R) will
change the accounting  treatment and disclosure for certain  specific items in a
business  combination.   SFAS  No.  141(R)  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 June 1, 2009
will be recorded and disclosed  following  existing GAAP. We do not expect there
to be any  significant  impact of adopting SFAS 141 on our  financial  position,
cash flows 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.  We have  determined  that the
adoption of this  standard did not have a  significant  impact on our  financial
position, cash flows 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 us is the fiscal year  beginning
March 1, 2008.  We have  determined  that the adoption of this  standard did not
have a significant  impact on our financial  position,  cash flows or results of
operations.


                                       41
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM DATED MAY 12, 2009.

BALANCE SHEETS AS AT FEBRUARY 28, 2009 AND FEBRUARY 29, 2008.

STATEMENTS OF OPERATIONS  FOR FISCAL YEARS ENDED  FEBRUARY 28, 2009 AND FEBRUARY
29, 2008 AND FOR THE PERIOD FROM INCEPTION (MAY 12, 2006) TO FEBRUARY 28, 2009.

STATEMENT OF  STOCKHOLDERS'  EQUITY (DEFICIT) FOR THE PERIOD FROM INCEPTION (MAY
12, 2006) TO FEBRUARY 28, 2009.

STATEMENTS  OF CASH FLOWS FOR THE  FISCAL  YEARS  ENDED  FEBRUARY  28,  2009 AND
FEBRUARY 29, 2008 AND FOR THE PERIOD FROM  INCEPTION  (MAY 12, 2006) TO FEBRUARY
28, 2009.

NOTES TO FINANCIAL STATEMENTS.




                                       42
<PAGE>




                             MAINLAND RESOURCES INC.

                         (An Exploration Stage Company)

                              FINANCIAL STATEMENTS

                                FEBRUARY 28, 2009






                                       43

<PAGE>


                         DE JOYA GRIFFITH & COMPANY, LLC
                  ___________________________________________
                  CERTIFIED PUBLIC ACCOUNTANTS & CONSTULTANTS



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Stockholders
Mainland Resources, Inc.
Las Vegas, Nevada

We have audited the accompanying balance sheets of Mainland Resources,  Inc. (An
Exploration  Stage  Company) as of February  28, 2009 and 2008,  and the related
statements of operations,  stockholders'  deficit,  and cash flows for the years
then  ended and from  inception  (May 12,  2006) to  February  28,  2009.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility is to express an opinion on the financial statements based on our
audit.

We  conducted  our audit in  accordance  with  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,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Mainland Resources,  Inc. as of
February 28, 2009 and 2008, and the results of its operations and cash flows for
the years then ended and from  inception (May 12, 2006) to February 28, 2009, in
conformity with accounting principles generally accepted in the United States.

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,  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.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States), Mainland Resources,  Inc.'s internal
control over  financial  reporting  as of February  28, 2009,  based on criteria
established in Internal Control-Integrated  Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated May 12,
2009 expressed an unqualified opinion thereon.

De Joya Griffith & Company, LLC

/s/ De Joya Griffith & Company, LLC
Henderson, NV
May 12, 2009





________________________________________________________________________________

                 2580 Anthem Village Drive, Henderson, NV 89052
               Telephone (702) 563-1600 ? Facsimile (702) 920-8049


                                       44
<PAGE>


                         DE JOYA GRIFFITH & COMPANY, LLC
                  ___________________________________________
                  CERTIFIED PUBLIC ACCOUNTANTS & CONSTULTANTS


         REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ICOFR)

To The Board of Directors and Stockholders
Mainland Resources, Inc.
Las Vegas, Nevada

We have audited  Mainland  Resources,  Inc.'s  internal  control over  financial
reporting  as of February 28, 2009,  based on criteria  established  in Internal
Control--Integrated   Framework   issued   by  the   Committee   of   Sponsoring
Organizations  of  the  Treadway   Commission  (the  COSO  criteria).   Mainland
Resources,  Inc.'s management is responsible for maintaining  effective internal
control over financial reporting, and for its assessment of the effectiveness of
internal control over financial  reporting which is contained in Part I, Item 9A
of this  Annual  Report on Form 10-K under the heading  "Management's  Report on
Internal Control Over Financial Reporting".  Our responsibility is to express an
opinion on the Company's internal control over financial  reporting based on our
audit.

We  conducted  our audit in  accordance  with  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  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects.  An audit includes obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating  effectiveness of internal control based
on the assessed  risk,  and  performing  such other  procedures as we considered
necessary in the circumstances.  We believe that our audit provides a reasonable
basis for our opinion.

A company's  internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion,  Mainland Resources,  Inc. maintained, in all material respects,
effective  internal  control over  financial  reporting as of February 28, 2009,
based on the COSO criteria.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United  States),  the balance sheets as of February
28,  2009 and 2008,  and the related  statements  of  operations,  stockholders'
deficit,  and cash flows for the years then  ended and from  inception  (May 12,
2006) to February 28, 2009, of Mainland Resources, Inc. and our report dated May
12, 2009 expressed an unqualified opinion thereon.


De Joya Griffith & Company, LLC

/s/ De Joya Griffith & Company, LLC
Henderson, NV
May 12, 2009


________________________________________________________________________________

                 2580 Anthem Village Drive, Henderson, NV 89052
               Telephone (702) 563-1600 ? Facsimile (702) 920-8049


                                       45
<PAGE>

<TABLE>
<CAPTION>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                                 BALANCE SHEETS
                                 (U.S. Dollars)


                                                                                             February 28,       February 29,
                                                                                                 2009               2008
_________________________________________________________________________________________________________________________________

                                     ASSETS

<S>                                                                                            <C>                 <C>
   CURRENT ASSETS
      Cash                                                                                     $   150,276         $   19,495
      Accounts Receivable                                                                          373,045                  -
      Deposit on properties (Note 4)                                                             1,100,000                  -
_________________________________________________________________________________________________________________________________

     Total current assets                                                                        1,623,321             19,495

   OIL AND GAS PROPERTIES, (Note 4)
      Proved, net of accumulated depletion $12,000 (2008 - nil)                                    775,011              9,176
_________________________________________________________________________________________________________________________________

   TOTAL ASSETS                                                                                $ 2,398,332         $   28,671
=================================================================================================================================

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

   CURRENT LIABILITIES
      Accounts payable and accrued liabilities                                                 $    70,230         $   38,119
      Accounts payable -  related parties  (Note 7)                                                      -              6,138
      Related party advance (Note 7)                                                                     -             83,239
_________________________________________________________________________________________________________________________________

   TOTAL CURRENT LIABILITIES                                                                        70,230            127,496


   STOCKHOLDERS' EQUITY (DEFICIT) (Note 5)
   Common stock, 200,000,000 shares authorized with $0.0001 par value
   Issued and outstanding - 39,615,000 common shares                                                 3,962              3,362
        (February 29, 2008 - 33,615,000)
   Additional paid-in-capital                                                                   16,056,099             54,014
   Deficit accumulated during exploration stage                                                (13,731,959)          (155,779)
_________________________________________________________________________________________________________________________________

                                                                                                 2,328,102            (98,403)
   Other comprehensive income:
      Foreign currency loss                                                                              -               (422)
_________________________________________________________________________________________________________________________________

   TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                                                          2,328,102            (98,825)
_________________________________________________________________________________________________________________________________

   TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)                                          $ 2,398,332         $   28,671
=================================================================================================================================
</TABLE>



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


                                       46
<PAGE>
<TABLE>
<CAPTION>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                            STATEMENTS OF OPERATIONS


                                                                                                                  May 12, 2006
                                                                               Year Ended        Year Ended      (inception) to
                                                                              February 28,      February 29,      February 28,
                                                                                  2009              2008              2009
_________________________________________________________________________________________________________________________________

<S>                                                                           <C>                 <C>              <C>
REVENUES
     Oil and gas revenue                                                      $     516,579       $         -      $     516,579
_________________________________________________________________________________________________________________________________

GENERAL AND ADMINISTRATIVE EXPENSES
     Operating costs and taxes                                                      149,323                 -            149,323
     Depletion Allowance                                                             12,000                 -             12,000
     Consulting Fees                                                                595,374                 -            595,374
     Management and rent fees - related party (Note 7)                              126,400             8,627            140,820
     Marketing expenses                                                             921,107                 -            921,107
     Mineral property costs                                                               -            10,070             14,510
     Office and general                                                              82,798            58,657            142,047
     Professional fees                                                              243,710            67,169            311,310
     Salary expense (Note 6)                                                     12,002,685                 -         12,002,685
_________________________________________________________________________________________________________________________________

                                                                                 14,133,397           144,523         14,289,176
_________________________________________________________________________________________________________________________________

NET OPERATING LOSS                                                              (13,616,818)         (144,523)       (13,772,597)

OTHER INCOME
     Gain on settlement of debt                                                      33,239                 -             33,239
     Interest income                                                                  7,399                 -              7,399
_________________________________________________________________________________________________________________________________

NET LOSS                                                                        (13,576,180)         (144,523)       (13,731,959)
_________________________________________________________________________________________________________________________________

Comprehensive income (loss):
Foreign currency translation adjustment                                                 422              (617)                 -
_________________________________________________________________________________________________________________________________

COMPREHENSIVE LOSS                                                            $ (13,575,758)      $  (145,140)     $ (13,731,959)
=================================================================================================================================



BASIC LOSS PER COMMON SHARE                                                     $     (0.35)      $     (0.01)
=============================================================================================================

WEIGHTED AVERAGE NUMBER OF                                                       38,527,911        26,106,803
COMMON SHARES OUTSTANDING - BASIC
=============================================================================================================

</TABLE>

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



                                       47
<PAGE>
<TABLE>
<CAPTION>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                       STATEMENT OF STOCKHOLDERS' DEFICIT

        FOR THE PERIOD FROM MAY 12, 2006 (INCEPTION) TO FEBRUARY 28, 2009

                                                                                         Deficit
                                                                                        accumulated      Other
                                                     Common Stock         Additional      during      Accumulated
                                                Number of      Amount      Paid in      exploration  Comprehensive  Stockholders'
                                                  Shares                   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
Common stock  issued for mineral properties
     at $0.0014 per share - July 15, 2006        3,105,000         311         4,129              -               -        4,440
Common stock issued for cash
     at $0.0014 per sh8are - 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)

Common stock issued for cash at $0.67 per
share -                                                                                           -
May 1, 2008 to July 22, 2008                     6,000,000         600     3,999,400                              -    4,000,000

Stock based compensation                                 -           -    12,002,685              -               -   12,002,685

Foreign currency translation adjustment                  -           -             -              -             422          422

Net loss for the year                                    -           -             -    (13,576,180)              -  (13,576,180)
_________________________________________________________________________________________________________________________________

Balance, February 28, 2009                      39,615,000     $ 3,962   $16,056,099   $(13,731,959)      $       -   $2,328,102
=================================================================================================================================
</TABLE>


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

                                       48
<PAGE>
<TABLE>
<CAPTION>


                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                            STATEMENTS OF CASH FLOWS

                                                                                                                      May 12, 2006
                                                                                                                    (inception) to
                                                                                Year ended February 28,               February 28,
                                                                               2009                 2008                 2009
___________________________________________________________________________________________________________________________________

<S>                                                                         <C>                   <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                                  $ (13,576,180)        $   (144,523)      $ (13,731,959)
  Adjustments to reconcile net loss to net cash used in operating
activities:
     - Non-cash mineral property expenditures (recoveries)                        (33,239)                   -             (28,799)
     - Depletion                                                                   12,000                    -              12,000
     - Stock-based compensation (Note 6)                                       12,002,685                    -          12,002,685
     - Donated services and expenses                                                    -                8,627              14,420
CHANGES IN OPERATING ASSETS AND LIABILITIES
     - Accounts receivable                                                       (373,045)                   -            (373,045)
     - Prepaid expenses and other                                                       -                3,000                   -
     - Accounts payable - related parties                                          (6,138)               6,138                   -
     - Accounts payable and accrued liabilities                                     32,111              38,119              70,230
___________________________________________________________________________________________________________________________________

NET CASH USED IN OPERATING ACTIVITIES                                          (1,941,806)             (88,639)         (2,034,468)
___________________________________________________________________________________________________________________________________

CASH FLOWS FROM INVESTING ACTIVITIES
  Investment in oil and gas property                                             (777,835)              (9,176)           (787,011)
   Deposit on properties                                                       (1,100,000)                   -          (1,100,000)
___________________________________________________________________________________________________________________________________

NET CASH FLOWS USED IN INVESTING ACTIVITIES                                    (1,877,835)              (9,176)         (1,887,011)
___________________________________________________________________________________________________________________________________

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds on sale of common stock                                            3,950,000               20,452           3,988,516
    Advances from related party                                                         -               83,239              83,239
___________________________________________________________________________________________________________________________________

NET CASH PROVIDED BY FINANCING ACTIVITIES                                       3,950,000              103,691           4,071,755
___________________________________________________________________________________________________________________________________

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                               422                 (617)                  -
___________________________________________________________________________________________________________________________________

INCREASE IN CASH                                                                  130,781                5,259             150,276

CASH, BEGINNING OF PERIOD                                                          19,495               14,236                   -
___________________________________________________________________________________________________________________________________

CASH, END OF PERIOD                                                         $     150,276         $     19,495       $     150,276
===================================================================================================================================

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
     Common stock issued for satisfaction of liability                      $      50,000         $          -       $      50,000
     Donated services and rent                                              $           -         $      8,627       $      14,420

</TABLE>




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


                                       49
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


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 4). The
Company  now  intends  to  locate,  explore,  acquire  and  develop  oil and gas
properties in the United  States.  The Company began  drilling its first well in
October 2008.  The first well was completed at the end of January 2009 and is in
production.  The Company  began  drilling  its second well in April 2009.  It is
expected to be completed by the end of June 2009.

GOING CONCERN
The  Company  commenced  operations  on May 12,  2006 and has not  realized  any
revenues  since  inception.  As  of  February  28,  2009,  the  Company  has  an
accumulated deficit of $13,731,959.  The ability of the Company to continue as a
going  concern is dependent on raising  capital to fund ongoing  operations  and
carry out its business  plan and  ultimately  to attain  profitable  operations.
Accordingly,  these factors raise  substantial doubt as to the Company's ability
to continue as a going concern.  These financials do not include any adjustments
relating to the  recoverability  and classification of recorded asset amounts or
amounts  and   classification   of  liabilities  that  might  result  from  this
uncertainty.  To date,  the Company has funded its initial  operations by way of
private  placements  of common stock and advances from related  parties.  During
2009, the Company  completed a private placement of $4,000,000 at $0.67 per unit
with each unit  consisting of one common share and one half warrant at $1.33 per
share exercisable for a period of one year from issuance (refer to Note 5).

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
________________________________________________________________________________

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

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

OIL AND GAS PROPERTIES
The  Company  follows  the full cost  method of  accounting  for its oil and gas
operations  whereby all costs related to the acquisition of methane,  petroleum,
and natural gas interests are capitalized. Under this method, all productive and
non-productive  costs  incurred  in  connection  with  the  exploration  for and
development of oil and gas reserves are capitalized. Such costs include land and
lease acquisition  costs,  annual carrying charges of non-producing  properties,
geological and geophysical costs, costs of drilling and equipping productive and
non-productive  wells,  and direct  exploration  salaries and related  benefits.
Proceeds from the disposal of oil and gas properties are recorded as a reduction
of the related  capitalized  costs without  recognition of a gain or loss unless
the  disposal  would  result in a change of 20 percent or more in the  depletion
rate. The Company currently operates solely in the U.S.

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

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

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



                                       50
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


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

OIL AND GAS PROPERTIES (CONTINUED)
provision for depletion and depreciation and the actual restoration expenditures
are charged to the accumulated provision amounts as incurred.

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

ASSET RETIREMENT OBLIGATIONS
The Company has adopted the  provisions of 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 28, 2009, there has been no asset
retirement obligations rendered.

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

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

CONCENTRATIONS OF CREDIT RISK
Financial  instruments that potentially subject the Company to concentrations of
credit  risk  consist  principally  of cash  and  cash  equivalent  accounts  in
financial  institutions.  As of February 28, 2009,  the Company's  cash and cash
equivalents do not exceed federally insured limits.

EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per share includes no dilution and is computed by dividing
income available to common stockholders by the weighted average number of common
shares  outstanding for the period.  Dilutive  earnings (loss) per share reflect
the  potential  dilution of  securities  that could share in the earnings of the
Company.  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.

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

                                       51
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


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

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 28, 2009,  the Company had net operating
loss carryforwards,  however, due to the uncertainty of realization, the Company
has provided a full  valuation  allowance for the deferred tax assets  resulting
from these loss carryforwards.

STOCK-BASED COMPENSATION
The Company has adopted 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.

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 May 2008, the Financial  Accounting  Standards Board ("FASB") issued SFAS No.
163,  ACCOUNTING FOR FINANCIAL GUARANTEE INSURANCE CONTRACTS - AN INTERPRETATION
OF FASB  STATEMENT  NO.  60.  SFAS 163  requires  that an  insurance  enterprise
recognize a claim  liability prior to an event of default when there is evidence
that credit  deterioration has occurred in an insured financial  obligation.  It
also  clarifies  how  Statement  60 applies  to  financial  guarantee  insurance
contracts,  including the  recognition and measurement to be used to account for
premium revenue and claim liabilities,  and requires expanded  disclosures about
financial  guarantee  insurance   contracts.   It  is  effective  for  financial
statements issued for fiscal years beginning after December 15, 2008, except for
some disclosures about the insurance  enterprise's  risk-management  activities.
SFAS 163 requires that disclosures about the  risk-management  activities of the
insurance enterprise be effective for the first period beginning after issuance.
Except for those disclosures,  earlier application is not permitted. The Company
does not expect the adoption of this  standard to have a  significant  impact on
its financial position, cash flows or results of operations.

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 fiscal 2010. The Company does not expect the adoption of
this standard to have a significant impact on its financial position, cash flows
or 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.  The Company does not
expect  the  adoption  of this  standard  to have a  significant  impact  on its
financial position, cash flows or results of operations.


                                       52
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


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. The Company does
not expect the  adoption of this  standard to have a  significant  impact on its
financial position, cash flows 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.  The Company has
determined that the adoption of this standard did not have a significant  impact
on its financial position, cash flows 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 has  determined  that the adoption of this
standard did not have a significant impact on its financial position, cash flows
or results of operations.

NOTE 3 - MINERAL PROPERTIES
________________________________________________________________________________

SOUTHWEST AND SEDONA MINING CLAIM
The Company previously owned two mining claims 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.

On April 28, 2008, the Company exchanged its interest in these two mining claims
with a former  shareholder  of the Company in settlement of $33,239 owing by the
Company to the former shareholder (refer to Note 7). This amount was recorded as
a mineral  property  recovery  during the period and the  Company has no ongoing
obligations in connection with this property.

NOTE 4 - OIL AND GAS PROPERTIES
________________________________________________________________________________

EAST HOLLY PROSPECT
On February 27, 2008, the Company entered into an option  agreement (the "Option
Agreement") with Kingsley Resources,  Inc.  ("Kingsley"),  pursuant to which the
Company  acquired  all the  right,  title and  interest  Kingsley  has in and to
certain  leasehold  estates in the state of Louisiana  ("the Leases") which were
the subject of a purchase  agreement  dated  December  11,  2007,  and  modified
February 1, 2008  (collectively,  the "Leasehold  Purchase  Agreement")  between
Kingsley and Permian Basin Acquisition



                                       53
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


NOTE 4 - OIL AND GAS PROPERTIES (CONTINUED)
________________________________________________________________________________

EAST HOLLY PROSPECT (CONTINUED)
Fund  ("Permian"),  pursuant  to which  Kingsley  had the right to  acquire  the
sub-surface  rights  provided  for in the  Leases.  In  order  to  complete  the
acquisition  of the Leases the Company was  required to pay $100,000 on April 2,
2008 to Kingsley and assume all of  Kingsley's  obligations  under the Leasehold
Purchase  Agreement.  On March  14,  2008,  the  Company  completed  the  Option
agreement  and the  Leasehold  Purchase  Agreement  at a total cost of $687,596,
which  includes the $100,000 that was paid on April 2, 2008,  for  approximately
2,551 net acres.

COTTON VALLEY/ HAYNESVILLE
The Company has leased various other properties totalling  approximately 144 net
acres,  consisting of  approximately 84 net acres leased as of February 29, 2008
and added 60 net acres leased  during the nine month  period ended  November 30,
2008 for an  additional  consideration  of $22,753.  These  additional  property
leases,  within the Cotton  Valley/Haynesville  trend in the state of Louisiana,
are for three year  terms.  The Company has a 100%  Working  Interest  and a 75%
N.R.I. in the leases comprising a total of 2,695 net acres.

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

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

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

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

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

MISSISSIPPI PROSPECT
On September 3, 2008, the Company signed an Option  Agreement with Westrock Land
Corp to  acquire  5,000 net acres in mineral  oil and gas leases  located in the
State of Mississippi.  In accordance with the terms and provisions of the Option
Agreement;  (i ) the Company will acquire a 100% working  interest and a 75% net
revenue  interest  in the  Leases;  (ii) the  Company  has agreed to pay certain
acquisitions  costs per net  mineral  acres and also paid a $500,000  deposit on
September  3, 2008 to secure  the  Option  Agreement;  (iii) the  balance of the
acquisition  costs totalling  $2,275,000 will be due and payable upon completion
of the due  diligence,  to be completed by the Company no later than October 15,
2008.  The Option  Agreement  was  subsequently  extended on each of October 15,
2008,  November 30, 2008 and April 16, 2009  whereby the option  period has been
extended until June 1, 2009. Additional deposits of $250,000, $100,000, $250,000
and $100,000 were paid on October 17, 2008,  December 1, 2008, December 29, 2008
and April 27, 2009 for a total deposit to date of $1,200,000  (February 28, 2009
- $1,100,000).

                                       54
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


NOTE 4 - OIL AND GAS PROPERTIES (CONTINUED)
________________________________________________________________________________

<TABLE>
<CAPTION>

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

                                                                                           February 28,      February 29, 2009
                                                                                               2008
         ________________________________________________________________________________________________________________________

<S>                                                                                          <C>                 <C>
            Oil and Gas Properties:
                 Proved, subject to depletion                                                $   787,011          $         -
                 Unproved, not subject to depletion                                                    -                9,176
         ________________________________________________________________________________________________________________________
                                                                                                 787,011                9,176
                 Accumulated depletion                                                           (12,000)                   -
         ________________________________________________________________________________________________________________________

                                                                                             $   775,011          $     9,176
         ========================================================================================================================
</TABLE>

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

<TABLE>
<CAPTION>

                                                                        Acquisition          Development
                                                                           Costs                Costs               Total
                                                                    _____________________________________________________________

<S>                                                                         <C>                  <C>                 <C>
         Balance, February 28, 2007                                         $        -           $        -          $        -

         Incurred during the year                                                9,176                    -               9,176
                                                                    _____________________________________________________________

         Balance, February 29, 2008                                              9,176                    -               9,176

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

         Balance, February 28, 2009                                         $        -           $        -          $        -
                                                                    =============================================================
</TABLE>


Depletion of proved oil and gas  properties  during the year was computed on the
units-of-production  method  based upon  estimated  proved  reserves of 8.5 Bcf,
reserves  produced  during the year of 131,442 Mcf and  capitalized  costs to be
amortized  totaling  $775,011,  resulting in a depletion cost of $12,000 for the
year end February 28, 2009.


NOTE 5 - STOCKHOLDERS' EQUITY (DEFICIT)
________________________________________________________________________________

(A)      SHARE CAPITAL
The Company's  capitalization  is 200,000,000  common shares with a par value of
$0.0001 per share.

On February 25, 2008, the directors of the Company approved a special resolution
to undertake a forward split of the common stock of the Company on a basis of 20
new shares for 1 old share 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.


                                       55
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


NOTE 5 - STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
________________________________________________________________________________

(B)      PRIVATE PLACEMENTS
On June 15, 2006, the Company  issued  6,000,000  unregistered  shares of common
stock at $0.00003 per share for proceeds of $172.

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

On October 15, 2007, the Company issued 12,000,000 unregistered shares of common
stock at a price of $0.0017 per share for proceeds of $20,452.

Between May 1, 2008 and July 22, 2008, the Company completed a private placement
of 6,000,000 unregistered units at $0.67 per unit for proceeds of $4,000,000. Of
this  amount,  $50,000  was by way of a  settlement  of debt  and the  remaining
$3,950,000  was  received in cash.  Each unit  consists of one common  share and
one-half  non-transferable  share purchase warrant;  one whole  non-transferable
purchase warrant is exercisable at $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 15, 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.

Subsequent to the year end on March 17, 2009, the Company issued 2,500 shares of
common stock at an estimated fair value of $3.55 per share as per the terms of a
consulting agreement that became effective March 1, 2009.

(D)      SHARE PURCHASE WARRANTS
Subsequent to the year end, on April 29, 2009 the Company extended expiration of
the 3,000,000 warrants from May 1, 2009 to June 1, 2009.

Details of the Company's  share purchase  warrants  issued and outstanding as of
February 28, 2009 are as follows:

<TABLE>
<CAPTION>

  Exercise price     Weighted average price       Number of warrants to purchase shares                 Expiry Date
___________________________________________________________________________________________________________________
<S>   <C>                     <C>                               <C>                                         <C>
      $1.33                   $1.33                             3,000,000                               May 1, 2009

</TABLE>

The Company's share purchase warrants activity for the period ended February 28,
2009 is summarized as follows:

<TABLE>
<CAPTION>

                                                                 Weighted average exercise        Weighted average remaining
                                         Number of Warrants           Price per share           In contractual life (in years)
________________________________________________________________________________________________________________________________
<S>                                          <C>                              <C>                                   <C>
Balance, February 28, 2007
     and February 29, 2008                           -                        $      -                                 -
Issued                                       3,000,000                            1.33                                 -
Expired                                              -                               -                                 -
Exercised                                            -                               -                                 -
________________________________________________________________________________________________________________________________
Balance, February 28, 2009                   3,000,000                        $   1.33                              0.17
=============================================================================================================================
</TABLE>


NOTE 6 - STOCK OPTION PLAN
________________________________________________________________________________

On April 7, 2008, the Board of Directors of the Company  ratified,  approved and
adopted a Stock  Option  Plan for the  Company  allowing  for the grant of up to
2,200,000 options to acquire common shares with terms of up to 10 years. On July
9, 2008,  the Board of Directors of the Company  ratified,  approved and amended
the Stock  Option  Plan for the  Company  increasing  the  allowable  grant from
2,200,000  options to 3,800,000  options.  In the event an optionee ceases to be
employed by or to provide


                                       56
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


NOTE 6 - STOCK OPTION PLAN (CONTINUED)
________________________________________________________________________________
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  fully  vested  stock  options  to  certain  officers,  directors  and
management  of the Company at $1.17 per share for terms of ten years.  The total
fair value of these  options at the date of grant was estimated to be $2,457,000
and was determined using the Black-Scholes option pricing model with an expected
life of 5 years,  a risk free interest rate of 2.75%, a dividend yield of 0% and
expected  volatility  of 260% and was  recorded  as a stock  based  compensation
expense in 2009.

As approved by the Board of Directors, between July 9, 2008 and August 19, 2008,
the Company  granted a total of 1,350,000  fully vested stock options to certain
officers and directors of the Company at prices  ranging from $4.20 per share to
$6.35 per share for terms of ten years. The total fair value of these options at
the date of grant was estimated to be $7,157,685  and was  determined  using the
Black-Scholes  option  pricing  model with the following  assumptions;  expected
lives of 5 years, risk free interest rates ranging from 3.07% - 3.12%,  dividend
yields of 0% and  expected  volatility  of 260%.  This amount was  recorded as a
stock based compensation expense in 2009.

As approved by the Board of Directors, on November 18, 2008, the Company granted
a total of 250,000  fully vested  stock  options to a director of the Company at
$5.00 per share for terms of ten years. The total fair value of these options at
the date of grant was estimated to be $1,182,500  and was  determined  using the
Black-Scholes option pricing model with the following  assumptions;  an expected
life of 5 years,  a risk free interest rate of 2.22%, a dividend yield of 0% and
expected  volatility  of 260%.  This  amount has been  recorded as a stock based
compensation expense in 2009.

As approved by the Board of Directors,  on February 4, 2009, the Company granted
a total of 300,000 fully vested stock options to two directors of the Company at
$3.00 per share for terms of ten years. The total fair value of these options at
the  date of  grant  was  estimated  at  $1,197,000  and  determined  using  the
Black-Scholes option pricing model with the following  assumptions;  an expected
life of 5 years,  a risk free interest rate of 1.91%, a dividend yield of 0% and
expected  volatility  of 260%.  This  amount has been  recorded as a stock based
compensation expense in 2009.

Also  effective  February 4, 2009,  the  Company  cancelled  900,000  previously
granted  and fully  vested  options to a former  director at $1.17 per share and
repriced  to $3.00 per share,  1,600,000  previously  granted  and fully  vested
options with original  exercise prices ranging from $4.20 per share to $6.35 per
share with all other terms remaining unchanged from the original issuances.  The
estimated  incremental  fair  value  resulting  from the  modification  of these
options of $8,500 has been  recorded  as a stock based  compensation  expense in
2009.

The Company's  stock option  activity for the period ended  February 28, 2009 is
summarized as follows:

<TABLE>
<CAPTION>

                                                                 Weighted average exercise        Weighted average remaining
                                         Number of Options            Price per share           In contractual life (in years)
________________________________________________________________________________________________________________________________
<S>                                         <C>                               <C>                                   <C>
Balance, February 28, 2007
     and February 29, 2008                          -                         $     -                                  -
Granted                                     4,000,000                             2.82                                 -
Exercised                                           -                                -                                 -
Expired / cancelled                          (900,000)                            1.17
________________________________________________________________________________________________________________________________

Balance, February 28, 2009                  3,100,000                         $   2.29                              9.36
================================================================================================================================
</TABLE>


                                       57
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


NOTE 7 - RELATED PARTY TRANSACTIONS
________________________________________________________________________________

During 2008, a shareholder of the Company  advanced  $50,000 to the Company.  On
May 1, 2008, the advance was converted into 75,000  private  placement  units of
the Company at a price of $0.67 as described in Note 5 (b).

During 2008, the Company arranged a short-term  non-interest bearing advance for
$33,239 from an existing  shareholder.  During first quarter of fiscal 2009, 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 3).

The  Company  paid a total  of  $126,400  in  management  fees to  officers  and
directors  of the  Company in 2009 (2008 - $8,627).  During  2008,  the  Company
recognized  $4,245 for donated  services  and $2,122 for donated rent for office
premises, which was recorded in office and general expenses.


NOTE 8 - INCOME TAXES
________________________________________________________________________________

The Company has adopted the FASB No. 109 for reporting purposes.  As of February
28,  2009,  and  February  29,  2008 the Company  had net  operating  loss carry
forwards of  approximately  $1,710,000  and $137,000,  respectively  that may be
available to reduce  future  years'  taxable  income  through  2029.  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 provision for income taxes  consisted of the  following  components  for the
years ended February 28, 2009 and February 29, 2008:

                                         2009               2008
                                     ___________________________________
Current:
     Federal                                  35.0%
                                                                  35.0%
     State                                     0.0%
                                                                   0.0%
Deferred:                                        -                   -
                                     ___________________________________

Total income tax provision                    35.0%               35.0%
                                     ====================================

Components of net deferred tax assets,  including a valuation allowance,  are as
follows at December 31:

                                           2009                2008
                                     ______________________________________
Deferred tax assets:
Net operating loss carryforward          $  1,710,414        $   136,919
                                     ______________________________________

      Total deferred tax assets               598,645             47,922
Less: Valuation Allowance                    (598,645)           (47,922)
                                     ______________________________________

    Net Deferred Tax Assets               $         -        $         -
                                     ======================================

The  valuation  allowance  for  deferred  tax assets as of February 28, 2009 and
February  29, 2008 was  $598,645 and  $47,922,  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
28, 2009 and February 29, 2008.


                                       58
<PAGE>

                             MAINLAND RESOURCES INC.
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                                FEBRUARY 28, 2009
________________________________________________________________________________


NOTE 9 - SUBSEQUENT EVENTS
________________________________________________________________________________

On March 17,  2009,  the  Company  issued  2,500  shares  of common  stock at an
estimated  fair  value  of $3.55  per  share  as per the  terms of a  consulting
agreement that became effective March 1, 2009 (refer to Note 5).

The Option  Agreement  with  Westrock  Land Corp was  extended on April 16, 2009
whereby the option  period has been  extended  until June 1, 2009. An additional
deposit of $100,000 was paid on April 27, 2009 in connection with this extension
(refer to Note 4).

On April 29, 2009, the Company  extended the expiration  period on the 3,000,000
warrants from May 1, 2009 to June 1, 2009 (refer to Note 5).

On May 4, 2009, 187,500 warrants were exercised at $1.33333 per share, for total
net proceeds to the Company of $250,000.



                                       57
<PAGE>

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

Our principal  independent  accountant from February 20, 2008 to current date is
De Joya  Griffith  &  Company,  LLC ("De  Joya").  The  report of De Joya on our
financial  statements  for  fiscal  year  ended  February  28,  2009 and of Dale
Matheson Carr-Hilton LaBonte LLP, Chartered  Accountants,  for fiscal year ended
February 29, 2008 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, 2009,  there
were no disagreements  between us and De Joya,  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 De
Joya,  would have caused De Joya to make reference  thereto in its report on our
audited financial statements.

ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We have performed an evaluation under the supervision and with the participation
of our  management,  including our Chief  Executive  Officer and Chief Financial
Officer,  of the  effectiveness of our disclosure  controls and procedures,  (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).  Based on that
evaluation,  our  management,  including our Chief  Executive  Officer and Chief
Financial  Officer,  concluded that our disclosure  controls and procedures were
effective  as  of  February  28,  2009  to  provide  reasonable  assurance  that
information  required to be disclosed by us in the reports filed or submitted by
us under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms.

                                       58
<PAGE>


MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal
control  over  financial  reporting  (as  defined  in Rule  13a-15(f)  under the
Exchange  Act).  Under  the  supervision  and  with  the  participation  of  our
management,  including the chief executive officer and chief financial  officer,
we evaluated the effectiveness of our internal control over financial  reporting
as of February 28, 2009. In making this assessment, management used the criteria
set  forth  by  the  Committee  of  Sponsoring  Organizations  of  the  Treadway
Commission ("COSO") in Internal Control-Integrated Framework.

This Annual Report does include an attestation  report of our registered  public
accounting firm De Joya Griffith & Company,  LLC.,  Certified Public Accountants
regarding  internal control over financial  reporting.  Management's  report was
subject to attestation by our registered  public accounting firm pursuant to the
temporary rules of the SEC that permit us to provide only management's report in
this Annual Report on Form 10-K.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

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

CHANGES IN INTERNAL CONTROLS

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

AUDIT COMMITTEE REPORT

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

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


                                       59
<PAGE>


Based on the reviews and discussions  referred to above, the audit committee has
recommended to the Board of Directors that the financial  statements referred to
above be  included  in our  Annual  Report on Form 10-K for  fiscal  year  ended
February 28, 2009 filed with the Securities and Exchange Commission.

ITEM 9B. OTHER INFORMATION

Not applicable.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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 and  positions  held are as
follows:


NAME                         AGE      POSITION WITH THE COMPANY

Michael J. Newport            55      President/Chief Executive Officer and a
                                      Director

William D. Thomas             57      Secretary/Treasurer and Chief Financial
                                      Officer

Robert D. Fedun               65      Director,  Compensation  Committee member
                                      and Audit Committee member

Ernest G. Sorochan            64      Director, Audit Committee member

Simeon King Horton            57      Director

Angelo Viard                  36      Director,  Compensation  Committee member
                                      and Audit Committee member

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.

                                       60
<PAGE>


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
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.

WILLIAM  D.  THOMAS.  Mr.  Thomas  has  been our  Chief  Financial  Officer  and
Secretary/Treasurer  since August 18, 2008.  Mr. Thomas has over thirty years of
experience in the finance and accounting  areas for the natural resource sector.
Currently, Mr. Thomas is also the Chief Financial Officer of Mainland Resources,
Inc.,  and  Morgan  Creek  Energy,  Nevada  corporations  that  trade on the OTC
Bulletin Board as well as Mira  Resources,  a Canadian  public company traded on
the TSX Venture  Exchange.  Mr.  Thomas has held various  successive  management
positions  with Kerr McGee  Corporation's  China  operations  based in  Beijing,
China,  ending in 2004 with his final position as director of business services.
For  a  brief  period  after   leaving  Kerr  McGee,   Mr.  Thomas  acted  as  a
self-practitioner  in the accounting and finance field. In July 2007, he took on
the role of chief  financial  officer for two public  resource  companies;  Hana
Mining Inc. and NWT Uranium Corp. Mr. Thomas  resigned from NWT Uranium Corp. in
July,  2008  but  continues  to serve as CFO for Hana  Mining.  Mr.  Thomas  was
previously general manager (1999-2002),  and finance and administration  manager
(1996-1999)  of Kerr McGee's China  operations.  While in China,  Mr. Thomas was
responsible for finance including Sarbanes Oxley reporting, budgeting, treasury,
procurement,  taxation, marketing, insurance and business development, including
commercial negotiations with the Chinese partner, China National Offshore Oil Co
(CNOOC) and other Chinese and joint venture partners. Mr. Thomas focused heavily
on supporting  exploration and development  operations for three operated blocks
in Bohai Bay, as well as evaluation  and  negotiation  of new venture  blocks in
East China Sea and the South China Sea. He was also  responsible for the liaison
with CNOOC and other Chinese oil  companies,  Kerr McGee US management and joint
venture  partners,  where his main focus was to ensure cost effective and timely
achievement  of various  approved work  programs and budgets.  He was also Chief
Representative  for Kerr  McGee on the Joint  Management  Committee  (JMC).  Mr.


                                       61

<PAGE>

Thomas  previously  worked as manager of fixed asset  accounting  for Kerr McGee
Corporation's  US  operations  (1996),  as finance  director of Kerr  McGee's UK
operations  based in  London/Aberdeen  (1992-1996),  and Kerr  McGee's  Canadian
operations in Calgary,  Alberta,  Canada (1984-1992),  including the predecessor
company, Maxus Canada Ltd, which was acquired by Kerr McGee Ltd. Over the course
of his career,  he has been  involved  in all  aspects of  managing  accounting,
budgeting,  human  resources,  administration,  insurance,  taxation  and  other
business  support aspects  surrounding gas properties for Kerr McGee. Mr. Thomas
was  responsible to ensure  compliance with COPAS,  SEC, FASB and  international
accounting  regulations.  He  participated  on a team that  developed the Oracle
accounting system application to the Kerr McGee's worldwide  operations.  He was
most notably involved in the company's  initial entry into both China and the UK
North  Sea -  start  ups of  local  and  expatriate  personnel  that  eventually
developed  into core areas (over $1 Billion in value) for Kerr McGee,  including
the company's  first operated  offshore oil fields in China (CFD 1-1) and the UK
(Gryphon).

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

Mr. Thomas attained his Chartered  Accountant (CA) designation from the Canadian
Institute  of  Chartered  Accountants  in 1977.  He holds an Honors  Bachelor of
Commerce and Finance from the University of Toronto,  Ontario, Canada. ROBERT D.
FEDUN.  Mr. Fedun has been one of our directors  since February 28, 2008 and our
prior  Secretary/Treasurer  and Chief Financial Officer until his resignation on
August  18,  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 Petroleum (now Amoco 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 Northern  Alberta  Institute of
Technology in 1965.

ERNEST G.  SOROCHAN,  P. ENG. Mr.  Sorochan has been one of our directors  since
July 15,  2008.  Mr.  Sorochan  has had over forty  years of  experience  in the
petroleum  industry  where he has engaged in  International  Project  Management
operations  for oil  companies  in North  America,  South  America,  Africa  and
Australia.  He has  experience in economic  evaluations of oil and gas projects,
planning, coordinating and implementing multi-well drilling completion programs,
sales and marketing experience with international


                                       62
<PAGE>

service companies,  hands-on experience in cementing,  acidizing,  sand control,
hydraulic fracturing,  drill stem testing and service tools, field experience in
drilling,  completions  and  work-overs  of oil and gas wells,  and  operational
experience in high pressure sour gas fields and gas plant facilities.

From approximately April 2004 to present, Mr. Sorochan has been an area engineer
for Compton Petroleum  Corporation in Calgary,  Alberta. He provides engineering
support for the Dalmead,  Crossfied, Brant, Centron and Vulcan areas in Southern
Alberta.  Prior to 2004, he was Vice  President of Operations for Redwood Energy
Ltd., in Calgary,  Alberta,  Technical  Manager for Pan Ocean Oil Corporation in
Nigeria,  Business  Development  for  Redwood  Energy  Ltd.  in  Canada,  Senior
Production Engineer for Momentum  Enterprises Inc. in the Ukraine,  Drilling and
Completions   Superintendent   for  Alberta  Energy  Company   International  in
Argentina,  Production Engineering Consultant for E.G. Consulting Ltd., District
Manager for Dowell Schlumberger Corporation in Australia,  Nigeria and Argentina
and Technical  Sales  Representative  for Canadian  Fracmaster  Ltd. in Red Deer
Alberta.

Mr. Sorochan earned a B.Sc. Chemical  Engineering from the University of Alberta
and has a Diploma in Gas  Technology  from the  Northern  Alberta  Institute  of
Technology.  He is a member of Petroleum  Engineers  and of the  Association  of
Professional Engineers, Geologists and Geophysicists of Alberta.


SIMEON KING HORTON.  Ms. Horton has been one of our  directors  since August 18,
2008. Ms. Horton had  previously  been a member of the Board of Directors of the
Company and the Company's  Chief Geologist and provides  consulting  services to
the Company.  Ms. Horton has been actively involved as a petroleum geologist for
the past thirty  years.  From 1996 to present,  Ms. Horton has been a consulting
petroleum  geologist.  She has been  very  active in the  Hosston/Cotton  Valley
trends in North Louisiana and East Texas. She has generated  drilling  prospects
in the  area and has  successfully  been  responsible  for the  drilling  of the
Hosston/Cotton  Valley in an area where  there are  sixteen to twenty  wells per
section.  From  1989 to 1996,  Ms.  Horton  worked  with  Grigsby  Petroleum  in
Shreveport,  Louisiana,  which is  owned by Mr.  Jack  Grigsby,  an  independent
geologist.  Grigsby  Petroleum is very active in North Louisiana and East Texas,
with numerous  properties.  Included in these properties were Hosston and Cotton
Valley production.  Ms. Horton was responsible for all the producing properties,
the development of the properties,  and the drilling of new wells.  During 1986,
Ms. Horton moved to Shreveport,  Louisiana. From 1986-1989, she was a consultant
for various  oil and gas  investors.  Subsequently,  Ms.  Horton  worked for Mr.
Dudley Hughes, an independent geologist, in Jackson,  Mississippi,  from 1977 to
1986.  During that time,  her  experience  was in the  Mississippi/Alabama  Salt
Basin, Black Warrior Basin in North Mississippi and Northwest Alabama, and South
Florida. The main targets of exploration were the Smackover/Norphlet  Formations
(being located in the Salt Basin),  the  Paleozoics  (being located in the Black
Warrior Basin), and the Sunniland Lime (being located in South Florida). She was
also  exposed to the Perth  Basin,  located in  Australia.  During her time with
Dudley Hughes,  she was extensively  involved in the exploration and development
of a very aggressive drilling program and involved in all facets of the industry
where she was the district geologist.

Ms. Horton  received a Bachelor of Science  degree with a major in geology and a
minor in mathematics from the University of Southern  Mississippi,  Hattiesburg,
Mississippi  in 1977.  She  graduated  with honors and was selected  Outstanding
Graduating  Senior in Geology for the academic  year of  1976-1977.  Ms.  Horton


                                       63

<PAGE>

attended  geology  field  camp thru the Rolla  School  of Mines,  University  of
Missouri, which was conducted in the State of Utah. Ms. Horton is also an active
member of the American  Association  of Petroleum  Geologist and the  Shreveport
Geological Society, Shreveport, Louisiana.

ANGELO VIARD.  Mr. Viard has been one of our directors since September 29, 2008.
During the past ten years,  Mr. Viard has been  involved in providing  companies
with advisory services  including,  but not limited to,  managerial,  investment
strategy,  finance,  information technology,  compliance,  accounting,  business
development, mergers and acquisitions, and capital fund raising. In a wide range
of  industry  sectors  across the  United  States,  South  America  and  Europe.
Currently,  Mr. Viard is the  president of VCS Group,  Inc.,  which is currently
engaged by us as a  consultant.  From  approximately  June 2007 through  October
2008, Mr. Viard was the president/chief executive officer of VCS Group, Inc. Mr.
Viard's functions include full budgeting responsibilities, management of budgets
and planning,  creation of policies and administrative procedures to restructure
business processes,  authoring multi-company employee manuals, design work order
tracking and billing  interface  systems for accounting,  and updating  business
plans,  accounting  structures and  organizational  changes to maximize business
growth.  From approximately  August 2006 through June 2007, Mr. Viard was the IT
operations  manager for Bare Essentuals where he was responsible for developing,
coordinating  multiple related projects in alignment with strategic and tactical
company goals,  served as a primary customer  advocate,  planned and coordinated
long term  systems  strategy,  and managed the day to day  operations  of the IT
department,    including   LAN/WAN    architecture,    telecommunications    and
hardware/software  support.  From approximately August 2005 through August 2006,
Mr. Viard was a senior IT audit consultant for PriceWaterhouse Coopers LLP where
he was responsible for determining the audit  documentation,  strategy and plan.
From  approximately  December 2004 through  August 2005, Mr. Vaird was the chief
executive  officer and founder of Technology  Mondial Inc., which was a start-up
company   specializing  in  broadband  wireless  technology  in  Cost  Rica  and
management and  development of wireless  connection  planning for Latin America.
Mr. Viard was also previously  employed with OpenTV Inc, where he was manager of
information  system and  technology,  Thomas Weisel Partners LLC where he was an
information technology brokerage services manager, BancBoston Robertson Stephens
& Co.  where  he  was a  senior  system  engineer,  and  Environmental  Chemical
Corporation  where he was a technical  analyst.

Mr. Viard is also a Director of Morgan Creek Energy,  a Nevada  corporation that
trades on the OTC Bulletin Board. Mr. Viard holds a master in computer  science,
a BS in business management and administration,  and an A/A in computer business
administration and network.

FAMILY RELATIONSHIPS

There are no family relationships among our directors or officers.




                                       64
<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 February 28, 2009.

COMMITTEES OF THE BOARD OF DIRECTORS

AUDIT COMMITTEE

As of the date of this Annual  Report,  Messrs.  Fedun,  Viard and Sorochan have
been  appointed  as  members  to our Audit  Committee.  All of the  members  are
"independent" within the meaning of Rule 10A-3 under the Exchange Act and are in
addition financial  experts.  The Audit Committee operates under a written audit
committee charter adopted by the Board of Directors on February 4, 2009.

The Audit Committee's  primary function is to provide advice with respect to our
financial  matters  and to  assist  the 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 our  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 the Board of Directors.




                                       65
<PAGE>

COMPENSATION COMMITTEE

As of the  date of this  Annual  Report,  Messrs.  Fedun  and  Viard  have  been
appointed as members to our Compensation  Committee.  The Compensation Committee
operates under a written charter adopted by the Board of Directors pursuant to a
written consent  resolutions signed by all the members of the Board of Directors
on February 4, 2009.

     OVERVIEW OF COMPENSATION PROCESS

The Compensation  Committee of our Board of Directors is responsible for setting
the compensation of our executive officers, overseeing the Board's evaluation of
the performance of our executive  officers and  administering  our  equity-based
incentive plans, 401(k) plan and deferred compensation plan, among other things.
The  Compensation  Committee  undertakes  these  responsibilities  pursuant to a
written  charter  adopted  by  the  Compensation  Committee  and  the  Board  of
Directors,  which  will  be  reviewed  at  least  annually  by the  Compensation
Committee.   The   charter   may   be   viewed   in   full   on   our   website,
www.mainlandresources.com  under the "Corporate  Governance" tab on the Investor
Relations page.

The  Compensation  Committee is composed solely of  "non-employee  directors" as
defined in Rule 16b-3 of the rules  promulgated under the Exchange Act, "outside
directors" for purposes of regulations promulgated pursuant to Section 162(m) of
the Internal  Revenue Code ("IRC"),  and  "independent  directors" as defined in
Section  303A of the New  York  Stock  Exchange  ("NYSE")  corporate  governance
listing  standards,  in each case as determined  by the Board of Directors.  Our
Board of Directors  recommends  Compensation  Committee membership based on such
knowledge,  experience  and  skills  that  it  deems  appropriate  in  order  to
adequately perform the responsibilities of the Compensation  Committee.  Messrs.
Johnson, Horton and Viard serve as members of the Compensation Committee.

The  Compensation  Committee  annually  reviews  executive  compensation and our
compensation  policies to ensure that the Chief Executive  Officer and the other
executive officers are rewarded  appropriately for their contributions to us and
that the overall compensation strategy supports the objectives and values of our
organization,  as well as stockholder interests. The Compensation Committee will
conduct  this  review and  compensation  determination  through a  comprehensive
process involving a series of meetings typically  occurring in the first quarter
of each year.

     COMPENSATION PHILOSOPHY

The fundamental objective of our executive  compensation policies is to attract,
retain and motivate  executive  leadership for us that will execute our business
strategy,  uphold our values and  deliver  results  and  long-term  value to our
stockholders.   Accordingly,   the  Compensation   Committee  seeks  to  develop
compensation  strategies  and programs  that will  attract,  retain and motivate
highly qualified and high-performing executives through compensation that is:

         (i) PERFORMANCE BASED: a significant  component of compensation  should
be determined based on whether or not we meet certain performance  criteria that
in the view of our Board of Directors are indicative of our success;


                                       66
<PAGE>


         (ii) STOCKHOLDER  BASED:  equity incentives should be used to align the
interests of our executive officers with those of our stockholders;

         (iii) FAIR:  compensation  should take into account  compensation among
similarly  situated  companies,  our success  relative to peer companies and our
overall pay scale.

It is the Compensation  Committee's  goal to have a substantial  portion of each
executive  officer's  compensation  contingent upon our performance,  as well as
upon  his  or  her  individual   performance.   The   Compensation   Committee's
compensation  philosophy for an executive officer emphasizes an overall analysis
of  the   executive's   performance   for   the   year,   projected   role   and
responsibilities,  required  impact on execution of our  strategy,  external pay
practices,  total  cash and total  direct  compensation  positioning,  and other
factors  the  Compensation   Committee  deems   appropriate.   The  Compensation
Committee's  philosophy  also considers  employee  retention,  vulnerability  to
recruitment  by other  companies and the difficulty  and costs  associated  with
replacing executive talent. Based on these objectives, compensation programs for
similarly situated companies and the philosophies of the Compensation Committee,
the  Compensation  Committee has determined that we should provide our executive
officers  compensation  packages  composed of the following  elements:  (i) base
salary,  which reflects  individual  performance and is designed primarily to be
competitive with salary levels at comparably sized companies; and (ii) long-term
stock-based incentive awards which strengthen the mutuality of interests between
executive officers and our stockholders.

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 February 28, 2009.

ADDITIONAL CORPORATE GOVERNANCE POLICIES

Our  Board of  Directors  considered  additional  corporate  governance  issues,
structure,  policies and principles.  Therefore, pursuant to the written consent
resolutions  signed by all the members of the Board of  Directors on February 4,
2009,  our Board of Directors  adopted the  following  documents  as  additional
corporate   governance   documents   (collectively,   the  Corporate  Governance
Documents"):  (i) Mainland Resources, Inc. Corporate Governance Principles; (ii)
Mainland  Resources,  Inc.  Nominating  and  Governance  Committee  Charter  and
Responsibilities;  (iii) Mainland Resources,  Inc. Board Committees Policy; (iv)
Mainland  Resources,  Inc.  Code of Business  Conduct and Ethics;  (v)  Mainland
Resources,  Inc.  Code of  Conduct  for the Board of  Directors;  (vi)  Mainland
Resources,  Inc. Corporate Governance  Guideline;  (vii) Mainland Resources Inc.
Corporate  Governance  Policy;  (viii)  Mainland  Resources,  Inc.  Conflict  of
Interest  Policy;  (ix)  Mainland  Resources,   Inc.  Whistleblower  Policy  and
Procedures; and (x) Mainland Resources, Inc. Board Roles and Responsibilities.



                                       67
<PAGE>

The  Corporate  Governance  Documents  may be  viewed  in full  on our  website,
WWW.MAINLANDRESOURCES.COM  under the "Corporate  Governance" tab on the Investor
Relations page.

ITEM 11. 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 years ended  February 28, 2009 and February 29, 2008  (collectively,  the
"Named Executive Officers"):


<TABLE>
<CAPTION>

SUMMARY COMPENSATION TABLE

_______________________________________________________________________________________________________________________________
                                                                        NON-EQUITY      NON-QUALIFIED   ALL OTHER
                                                                      INCENTIVE PLAN      DEFERRED     COMPENSATION
NAME AND                                      STOCK                    COMPENSATION     COMPENSATION
PRINCIPAL                   SALARY   BONUS    AWARDS   OPTION AWARDS                      EARNINGS                    TOTAL
POSITION          YEAR     ($) (1)   ($)       ($)         ($)(2)           ($)             ($)           ($)           ($)
_______________________________________________________________________________________________________________________________
<S>               <C>     <C>         <C>    <C>         <C>                <C>            <C>           <C>          <C>
          (3)
Rahim Javraj,
prior
President,
CEO and CEO       2007    $ -0-        -0-    -0-         $ -0-              --             --           $ -0-         $-0-
_______________________________________________________________________________________________________________________________
          (4)
Michael J.
Newport,
current
President/CEO     2008    $95,000      -0-    -0-         $1,651,500         --             --              -0-      2,333,000
_______________________________________________________________________________________________________________________________

</TABLE>

(1)  This amount represents fees paid to the Named Executive Officers during the
     past year pursuant to consulting  services  provided in connection with his
     respective position as Chief Executive Officer.
(2)  This amount represents the fair value of these Stock Options at the date of
     grant which was estimated using the Black-Scholes option pricing model.
(3)  Rahim  Javraj  tendered  his  resignation  to  us  as  our  President/Chief
     Executive  Officer  on  February  28,  2008.  (4)  Michael J.  Newport  was
     appointed as our President/Chief Executive Officer on February 28, 2008.


                                       68
<PAGE>

STOCK OPTIONS/SAW GRANTS IN FISCAL YEAR ENDED FEBRUARY 28, 2009

The following  table sets forth  information as at February 28, 2009 relating to
Stock Options that have been granted to the Named Executive Officers.

<TABLE>
<CAPTION>

                  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
                                       OPTION AWARDS                                                        STOCK AWARDS
                                                                                                                         Equity
                                                                                                                         Incentive
                                                                                                             Equity      Plan
                                                                                                             Incentive   Awards:
                                                                                                             Plan        Market or
                                                                                                             Awards:     Payout
                                                 Equity                                            Market    Number of   Value of
                                                 Incentive Plan                                    Value of  Unearned    Unearned
                     Number of    Number of      Awards: Number                         Number of  Shares    Shares,     Shares,
                     Securities   Securities     of 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>         <C>
Michael J.
Newport                 900,000      -0-             -0-         $ 1.17       04/07/18     -0-        -0-        -0-         -0-
President/CEO           150,000      -0-             -0-           3.00       02/04/19     -0-        -0-        -0-         -0-

William Thomas,         750,000      -0-             -0-           3.00       07/09/18     -0-        -0-        -0-         -0-
Treasurer/CFO

Robert Fedun            300,000      -0-             -0-           1.17       04/07/18     -0-        -0-        -0-         -0-

Ernest Sorochan         200,000      -0-             -0-           3.00       07/15/18     -0-        -0-        -0-         -0-

Simeon King Horton      400,000      -0-             -0-           3.00       08/18/08     -0-        -0-        -0-         -0-
                        150,000      -0-             -0-           3.00       02/04/19     -0-        -0-        -0-         -0-

Angelo Viard            250,000      -0-             -0-           3.00       11/18/18     -0-        -0-        -0-         -0-

David Urquhart          900,000*     -0-             -0-           1.17       04/07/18     -0-        -0-        -0-         -0-
</TABLE>


*As of the date of this Annual  Report,  the 900,000  Stock  Options  granted to
David Urquhart have been cancelled.




                                      69
<PAGE>

The following table sets forth information  relating to compensation paid to our
directors during fiscal years ended February 28, 2009:

<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>
Michael J. Newport(1)   -0-       -0-          -0-         -0-                 -0-                -0-               -0-

Robert Fedun (2)        -0-       -0-         351,000      -0-                 -0-                -0-             351,000

Ernest Sorochan (3)     -0-       -0-       1,162,000      -0-                 -0-                -0-            1,162,000

Simeon King Horton(4)   -0-       -0-       3,194,500      -0-                 -0-                $58,840        3,253,340

Angelo Viard (5)        -0-       -0-       1,185,000      -0-                 -0-                $56,724        1,241,724

</TABLE>


                                       70
<PAGE>

(1) Mr. Newport was granted  900,000 Stock Options on April 7, 2008  exercisable
into  900,000  shares of common  stock at $1.17 per share  with a Black  Scholes
valuation of $1,053,000 and a further  150,000 Stock Options on February 4, 2009
exercisable  into  150,000  shares of our common stock at $3.00 per share with a
Black  Scholes  valuation  of $598,500.  However,  this  valuation  has not been
included  in the  Director  Compensation  Table  and has  been  included  in the
Executive  Compensation table above. See "Item 12. Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters."

(2) Mr. Fedun was granted  300,000  Stock  Options on April 7, 2008  exercisable
into  300,000  shares of common  stock at $1.17 per share  with a Black  Scholes
valuation of $351,000.  See "Item 12. Security  Ownership of Certain  Beneficial
Owners and Management and Related Stockholder Matters."

(3) Mr. Sorochan was granted 200,000 Stock Options on July 15, 2008  exercisable
into 200,000 shares of common stock at $3.00 per share  (re-priced) with a Black
Scholes valuation of $1,162,000.

(4) Ms.  King  Horton was  granted  400,000  Stock  Options  on August 18,  2008
exercisable  into 400,000 shares of common stock at $3.00 per share  (re-priced)
with a Black  Scholes  valuation  of  $2,596,000.  Ms. King Horton was granted a
further  150,000  Stock  Options on February 4, 2009  exercisable  into  150,000
shares of common  stock at $3.00 per share  with a Black  Scholes  valuation  of
$598,500.  We also paid to Ms. King Horton an aggregate of $58,840 for providing
geological  consulting services to the Company. See "Item 12. Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters."

(5) Mr. Viard was granted 250,000 Stock Options on November 18, 2008 exercisable
into 250,000 shares of common stock at $3.00 per share  (re-priced) with a Black
Schole valuation of $1,185,000.  We also paid to VCS an aggregate  $56,724 under
the  terms  of the  Agreement.  Mr.  Viard  is the sole  director,  officer  and
shareholder  of VCS.  See "Item 12.  Security  Ownership  of Certain  Beneficial
Owners and Management and Related Stockholder Matters."

EMPLOYMENT AND CONSULTING AGREEMENTS

As of the date of this Annual  Report,  we do not have any  written  contractual
arrangements with our executive  officers.  However,  we pay our President/Chief
Executive Officer,  Michael Newport, a month to month salary of $10,000.  We pay
our Treasurer/Chief  Financial Officer,  William Thomas, a month to month salary
of $2,600.

ITEM 12.  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,

                                       71
<PAGE>

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                                                    644,996(2)                         1.63%
20333 State Highway 249
Suite 200
Houston, Texas 77070

Michael J. Newport                                                 1,394,996(3)                       3.52%
20333 State Highway 249
Suite 200
Houston, Texas 77070

William D. Thomas                                                  780,000 (4)                        1.97%
20333 State Highway 249
Suite 200
Houston, Texas 77070

Ernest Sorochan                                                    200,000 (5)                         Nil
20333 State Highway 249
Suite 200
Houston, Texas 77070

Simeon King Horton                                                 550,000 (6)                        1.38%
20333 State Highway 249
Suite 200
Houston, Texas 77070

Angelo Viard                                                       250,000 (7)                         Nil
20333 State Highway 249
Suite 200
Houston, Texas 77070

All executive officers and directors as a group (6                 3,819,992 (8)                      9.64%
persons)

BENEFICIAL SHAREHOLDERS GREATER THAN 10%

Parklane Investments Inc.                                           8,235,000                        20.79 %
1 Alexander Road
Kintersville, PA 18930

</TABLE>


                                       72
<PAGE>

*    Less than one percent.

(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) 344,996 shares of common stock; and (ii) 300,000
     Stock Options to purchase 300,000 shares of our common stock at an exercise
     price of $1.17 per share expiring on April 7, 2018.

(3)  This figure  includes:  (i) 344,996  shares of common  stock;  (ii) 900,000
     Stock Options to purchase 900,000 shares of our common stock at an exercise
     price of $1.17 per share expiring on April 7, 2018; and (iii) 150,000 Stock
     Options to purchase 150,000 shares of our common stock at an exercise price
     of $3.00 per share expiring on February 4, 2019.

(4)  This figure  includes:  (i) 30,000 shares of common stock; and (ii) 750,000
     Stock Options to purchase 750,000 shares of our common stock at an exercise
     price of $3.00 per share expiring on July 9, 2018.

(5)  This figure  includes  200,000 Stock Options to purchase  200,000 shares of
     our common stock at an exercise  price of $3.00 per share  expiring on July
     15, 2018.

(6)  This figure includes:  (i) 400,000 Stock Options to purchase 400,000 shares
     of our common  stock at an  exercise  price of $3.00 per share  expiring on
     July 18, 2018; and (ii) 150,000 Stock Option to purchase  150,000 shares of
     our  common  stock at an  exercise  price of $3.00  per share  expiring  on
     February 4, 2019.

(7)  This figure  includes  250,000 Stock Options to purchase  250,000 shares of
     our common stock at an exercise price of $3.00 per share expiring  November
     18, 2018.

(8)  This  figure  includes:  (i)  719,992  shares  of  common  stock;  and (ii)
     3,100,000 Stock Options to purchase 3,100,000 shares of our common stock.


                                       73
<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  13.  CERTAIN   RELATIONSHIPS   AND  RELATED   TRANSACTIONS   AND  DIRECTOR
INDEPENDENCE

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 28, 2009.

VCS GROUP INC. AGREEMENT

Effective  October 2, 2008, our Board of Directors  authorized the engagement of
VCS Group Inc.  in  accordance  with the terms and  provisions  set forth in the
Agreement. We engaged VCS Group Inc. to rendered services and related reports to
use 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,  VCS Group
Inc.  shall  perform  certain  services  including,  but  not  limited  to,  the
following: (i) re-assess our existing controls and business cycles and conduct a
risk assessment on each cycle for fiscal year 2009 for audit  attestation;  (ii)
conduct a full review of the  management  governance  process;  (iii) assemble a
project  team  to  conduct  evaluations;   (iv)  define  significant  processes,
materiality  and fraud;  (v)  document  and  evaluate  internal  controls at the
entity-wide  level;  (vi) assist  management  in  development  of  policies  and
procedures; (vii) identify deficiencies;  (viii) develop and execute independent
testing  procedures and (ix) summarize findings and report to Board of Directors
and management.  In furtherance of the terms and provisions of the Agreement, we
agreed to pay VCS Group  Inc.  an  hourly  rate of $155.  As of the date of this
Annual  Report,  we have  paid  VCS  Group  an  aggregate  $56,724  for fees and
associated  expenses.  One of our directors,  Angelo Viard, is the sole officer,
director and shareholder of VCS Group Inc. and receives compensation  indirectly
through VCS Group Inc.

SHAREHOLDER LOAN

During fiscal year ended  February 29, 2008,  one of our  shareholders  advanced
$50,000 to us. During fiscal year ended February 28, 2009, we settled the amount
due and owing to the shareholder  pursuant to conversion  into 1,500,000  shares
(post-Forward Stock Splits) of our restricted common stock at $1.00 per share in
accordance with the 2008 Private Placement.

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.  During fiscal year ended February 28, 2009, 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 above, 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 28, 2009.


                                       74
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

During fiscal year ended February 28, 2009, we incurred approximately $45,500 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,  2009  and for the  review  of our  financial  statements  for the
quarters ended May 31, 2008, August 31, 2008 and November 30, 2008.

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)  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, 2009, 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.

ITEM 15. EXHIBITS AND FINANCIAL SCHEDULES

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           Letter Agreement dated July 14, 2008 between  Mainland  Resources
               Inc. and Petrohawk Energy Corporation (4)

10.5           Assignment,   Conveyance  and  Bill  of  Sale  between   Mainland
               Resources Inc. and Petrohawk Energy  Corporation  dated August 4,
               2008 (5)

10.7           Agreement  dated August 4, 2008 between  Mainland  Resources Inc.
               and Petrohawk Energy Corporation (6)

10.6           Option  Agreement  between  Mainland  Resources Inc. and Westrock
               Land Corp. dated September 4, 2008. (7)

16             Letter  of  Dale  Matheson   Carr-Hilton  LaBonte  LLP  Chartered
               Accountants (8)

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.


                                       75
<PAGE>

(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 July
18, 2008.

(5)  Incorporated by reference from Form 8-K filed with the Commission on August
8, 2008.

(6)  Incorporated by reference from Form 8-K filed with the Commission on August
26, 2008.

(7)  Incorporated  by  reference  from Form 8-K  filed  with the  Commission  on
September 10, 2008.

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







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: May 28, 2009                   By: /s/MICHAEL J. NEWPORT
                                          ______________________________________
                                             Michael J. Newport, President/Chief
                                             Executive Officer


Dated: May 28, 2009                   By: /s/ WILLIAM D. THOMAS
                                         _______________________________________
                                              William D. Thomas,
                                              Treasurer/Chief Financial
                                              Officer



                                       76