Royal Standard Minerals (RYSMF) 6-K Current report (foreign)

Exhibit 99.1

Royal Standard Minerals Inc.

(Expressed in United States Dollars)

Condensed Interim Consolidated Financial Statements

July 31, 2013

(Unaudited)

Notice to Reader

The accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared by and are the responsibility of management. The unaudited condensed interim consolidated financial statements have not been reviewed by the Company's auditors.

Royal Standard Minerals Inc.

Condensed Interim Consolidated Statements of Financial Position

(Expressed in United States Dollars)

(Unaudited)

		As at			As at
		July 31,			January 31,
		2013			2013
Assets
Current
Cash and cash equivalents	$	324,044		$	201,565
Marketable securities (Note 4)		1			30,000
Sundry receivables and prepaids (Note 5)		45,227			2,712,004
		369,272			2,943,569
Reclamation bonds (Note 6)		188,250			188,250
Equipment, net (Note 8)		20,158			23,716
	$	577,680		$	3,155,535
Liabilities
Current
Accounts payable and accrued liabilities (Note 9)	$	855,986		$	2,595,672
Other advances		-			600,000
		855,986			3,195,672
Asset retirement obligations (Note 10)		112,856			107,647
		968,842			3,303,319
Shareholders' Deficiency
Share capital (Note 11(b))		28,104,264			28,104,264
Reserves		11,008,833			11,010,304
Accumulated deficit		(39,504,259	)		(39,262,352	)
		(391,162	)		(147,784	)
	$	577,680		$	3,155,535

Going Concern(Note 1)
Contingencies(Note 15)
Subsequent events(Note 19)

Approved by the Board:
Paul G. Smith	James B. Clancy
Director	Director

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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Royal Standard Minerals Inc.

Condensed Interim Consolidated Statements of Operations

(Expressed in United States Dollars)

(Unaudited)

		Three Months Ended						Six Months Ended
		July 31,						July 31,
		2013			2012			2013			2012
Expenses
Exploration and evaluation expenditures (Note 7)	$	71,187		$	1,260,127		$	103,649		$	2,667,721
General and administrative (Note 16)		(56,511	)		1,555,326			85,553			2,257,405
		14,676			2,815,453			189,202			4,925,126
Loss before finance income (costs) andforeign currency translation adjustment		(14,676	)		(2,815,453	)		(189,202	)		(4,925,126	)
Finance income		-			511			9,343			1,123
Finance costs		-			(899,080	)		-			(1,001,108	)
Write-down of marketable securities		(29,999	)		-			(29,999	)		-
Foreign currency translation adjustment		(4,810	)		55,810			(32,049	)		34,793
Net loss for the period	$	(49,485	)	$	(3,658,212	)	$	(241,907	)	$	(5,890,318	)
Basic loss per share (Note 13)	$	(0.00	)	$	(0.04	)	$	(0.00	)	$	(0.07	)
Diluted loss per share (Note 13)	$	(0.00	)	$	(0.04	)	$	(0.00	)	$	(0.07	)

Condensed Interim Consolidated Statements of Comprehensive Income (Loss)

(Expressed in United States Dollars)

(Unaudited)

		Three Months Ended						Six Months Ended
		July 31,						July 31,
		2013			2012			2013			2012
Net loss for the period	$	(49,485	)	$	(3,658,212	)	$	(241,907	)	$	(5,890,318	)
Other comprehensive loss
Items that will be reclassified subsequently to income
Net unrealized loss on available-for-sale marketable securities		(14,000	)		(44,000	)		-			(76,000	)
Comprehensive loss for the period	$	(63,485	)	$	(3,702,212	)	$	(241,907	)	$	(5,966,318	)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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Royal Standard Minerals Inc.

Condensed Interim Consolidated Statements of Changes in Shareholders' Deficiency

(Expressed in United States Dollars)

(Unaudited)

									Accumulated
									Other
		Share				Accumulated			Comprehensive
		Capital		Reserves		Deficit			Income (Loss)			Total
Balance, January 31, 2012	$	28,098,264	$	10,580,808	$	(44,553,494	)	$	63,875		$	(5,810,547	)
Share-based payments		-		348,089		-			-			348,089
Net loss for the period		-		-		(5,890,318	)		-			(5,890,318	)
Net increase in unrealized loss on available-for-sale marketable securities		-		-		-			(76,000	)		(76,000	)
Balance, July 31, 2012	$	28,098,264	$	10,928,897	$	(50,443,812	)	$	(12,125	)	$	(11,428,776	)

										Accumulated
										Other
		Share					Accumulated			Comprehensive
		Capital		Reserves			Deficit			Income (Loss)		Total
Balance, January 31, 2013	$	28,104,264	$	11,010,304		$	(39,262,352	)	$	-	$	(147,784	)
Share-based payments		-		(1,471	)		-			-		(1,471	)
Net loss for the period		-		-			(241,907	)		-		(241,907	)
Balance, July 31, 2013	$	28,104,264	$	11,008,833		$	(39,504,259	)	$	-	$	(391,162	)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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Royal Standard Minerals Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in United States Dollars)

(Unaudited)

		Six Months Ended
		July 31,
		2013			2012
Operating activities
Net loss for the period	$	(241,907	)	$	(5,890,318	)
Operating items not involving cash:
Depreciation		3,558			64,075
Accretion in asset retirement obligations		5,209			14,229
Accretion expense		-			1,801,903
Share-based payments		(1,471	)		348,089
Embedded derivative on long-term debt		-			-
Write-down of marketable securities		29,999			-
Changes in non-cash working capital:
Sundry receivables and prepaids		2,666,777			(160,013	)
Accounts payable and accrued liabilities		(1,739,686	)		516,906
Due to related parties		-			(35,023	)
Cash provided by (used in) in operating activities		722,479			(3,340,152	)
Financing activities
Other advances		(600,000	)		-
Increase in long-term debt		-			5,766,880
Finance costs paid on long-term debt		-			(300,000	)
Cash (used in) provided by financing activities		(600,000	)		5,466,880
Investing activities
Increase in reclamation bonds		-			(1,090	)
Purchase of equipment		-			(2,591,300	)
Cash used in investing activities		-			(2,592,390	)
Change in cash and cash equivalents		122,479			(465,662	)
Cash and cash equivalents, beginning of period		201,565			629,553
Cash and cash equivalents, end of period	$	324,044		$	163,891

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

1.	The Company and Operations and Going Concern
	Royal Standard Minerals Inc. (the "Company") is a publicly held company, engaged in the acquisition, exploration and development of gold and precious metal properties in the United States of America. The Company is continued under the Canada Business Corporations Act and its common shares are traded in the United States of America on the Over-the-Counter ("OTC") Bulletin Board. Inception has been deemed to be June 26, 1996, the date on which the Company acquired all of the outstanding common shares of Southeastern Resources Inc. ("SRI"), which acquisition was accounted for as a reverse takeover of the Company by SRI. The Company's head office is located at 36 Toronto Street, Suite 1000, Toronto, Ontario, M5C 2C5.
	The unaudited condensed interim consolidated financial statements (the "Statements") were approved by the Board of Directors on September 23, 2013.
	These Statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management is aware, in making its assessment, of material uncertainties related to events or conditions that cast significant doubt upon the entity's ability to continue as a going concern. The Company has incurred a loss of $241,907 during the six months ended July 31, 2013 (six months ended July 31, 2012 - loss of $5,890,318), has an accumulated deficit of $39,504,259 (January 31, 2013 - $39,262,352). In addition, the Company has a working capital deficiency of $486,714 at July 31, 2013 (January 31, 2013 - $252,103).
	Management continued its process of raising funds through the sale of the Company's remaining property interests. The Company's remaining properties were disposed of subsequent to the end of the quarter, in August 2013, as disclosed under subsequent events (see note 19). There is significant doubt regarding the going concern assumption and, accordingly, the ultimate appropriateness of the use of accounting principles applicable to a going concern. With the disposal of its property interests in August 2013, the Company has no remaining property interests and no ability to raise funds to extinguish all of its existing liabilities. The Company will continue to fund ongoing operations as a reporting issuer and work on settling outstanding liabilities. If the Company is unable to extinguish all of its existing liabilities, the going concern assumption will not be valid and the Company will have to investigate alternatives. These unaudited condensed interim consolidated financial statements do not reflect the adjustments, to the carrying values or classifications of assets and liabilities or to the reported expenses that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations for the foreseeable future. These adjustments could be material.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

2.	Significant Accounting Policies
	Statement of compliance
	The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the IFRS Interpretations Committee (“IFRIC”). These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by IFRS as issued by IASB and interpretations issued by IFRIC.
	The policies applied in these Statements are based on IFRSs issued and outstanding as of September 23, 2013, the date the Board of Directors approved the Statements. The same accounting policies and methods of computation are followed in these Statements as compared with the most recent annual consolidated financial statements as at and for the year ended January 31, 2013, except as noted below. Any subsequent changes to IFRS that are given effect in the Company’s annual audited consolidated financial statements for the year ending January 31, 2014 could result in restatement of these Statements.
	Adoption of new accounting standards
	(i) IFRS 10 – Consolidated financial statements (“IFRS 10”) was issued by the IASB in May 2011. IFRS 10 is a new standard which identifies the concept of control as the determining factor in assessing whether an entity should be included in the consolidated financial statements of the parent company. Control is comprised of three elements: power over an investee; exposure to variable returns from an investee; and the ability to use power to affect the reporting entity’s returns. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company's unaudited condensed interim consolidated financial statements.
	(ii) IFRS 11 – Joint arrangements (“IFRS 11”) was issued by the IASB in May 2011. IFRS 11 is a new standard which focuses on classifying joint arrangements by their rights and obligations rather than their legal form. Entities are classified into two groups: parties having rights to the assets and obligations for the liabilities of an arrangement, and rights to the net assets of an arrangement. Entities in the former case account for assets, liabilities, revenues and expenses in accordance with the arrangement, whereas entities in the latter case account for the arrangement using the equity method. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company's unaudited condensed interim consolidated financial statements.
	(iii) IFRS 12 – Disclosure of interests in other entities (“IFRS 12”) was issued by the IASB in May 2011. IFRS 12 is a new standard which provides disclosure requirements for entities reporting interests in other entities, including joint arrangements, special purpose vehicles, and off balance sheet vehicles. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company's unaudited condensed interim consolidated financial statements.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

2.	Significant Accounting Policies (Continued)
	Adoption of new accounting standards (continued)
	(iv) IFRS 13 – Fair value measurement (“IFRS 13”) was issued by the IASB in May 2011. IFRS 13 is a new standard which provides a precise definition of fair value and a single source of fair value measurement considerations for use across IFRSs. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company's unaudited condensed interim consolidated financial statements given the existing asset and liability mix of the Company to which fair value accounting applies.
	(v) IAS 1 – Presentation of financial statements (“IAS 1”) was amended by the IASB in June 2011 in order to align the presentation of items in other comprehensive income with US GAAP standards. Items in other comprehensive income will be required to be presented in two categories: items that will be reclassified into profit or loss and those that will not be reclassified. The flexibility to present a statement of comprehensive income as one statement or two separate statements of profit and loss and other comprehensive income remains unchanged. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company's unaudited condensed interim consolidated financial statements.
	(vi) IAS 28 - Investments in Associates and Joint Ventures (“IAS 28”) was issued by the IASB in May 2011 and supersedes IAS 28 - Investments in Associates and prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. IAS 28 defines significant influence as the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. IAS 28 also provides guidance on how the equity method of accounting is to be applied and also prescribes how investments in associates and joint ventures should be tested for impairment. At February 1, 2013, the Company adopted this pronouncement and there was no material impact on the Company's unaudited condensed interim consolidated financial statements.
	New standards not yet adopted and interpretations issued but not yet effective
	There are no relevant changes in accounting standards applicable to future periods other than as disclosed in the most recent annual audited consolidated financial statements as at and for the year ended January 31, 2013.
3.	Capital Management
	The Company manages its capital with the following objectives:
		to ensure sufficient financial flexibility to achieve the ongoing business objectives including funding of future growth opportunities, and pursuit of accretive acquisitions; and
		to maximize shareholder return through enhancing the share value.
	The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. The capital structure is reviewed by Management and the Board of Directors on an ongoing basis.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

3.	Capital Management (Continued)
	The Company's equity comprises of share capital, reserves and accumulated deficit, which at July 31, 2013 was a deficiency of $391,162 (January 31, 2013 - deficiency of $147,784). Note that included in the unaudited condensed interim consolidated statements of financial position presented is a deficit of $39,504,259 as at July 31, 2013 (January 31, 2013 - $39,262,352).
	The Company manages capital through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures, and other investing and financing activities. The forecast is regularly updated based on activities related to its mineral properties. Selected information is provided to the Board of Directors of the Company. The Company’s capital management objectives, policies and processes have remained unchanged during the six months ended July 31, 2013. The Company is not subject to external capital requirements.
4.	Marketable Securities
	Marketable securities consist of 2,000,000 common shares of Sharpe. Sharpe is a publicly held Canadian company engaged in the exploration and development of coal properties in the United States. As a result of the Company's inability to obtain a replacement share certificate, the Company has taken a provision of loss of $29,999 and written down the investment to $1.
5.	Sundry Receivables and Prepaids

		As at		As at
		July 31,		January 31,
		2013		2013
Sales tax receivables	$	9,438	$	53,589
Other receivables		7,546		2,618,794
Prepaid expenses		28,243		39,621
	$	45,227	$	2,712,004

6.

Reclamation Bonds

The Company has posted reclamation bonds for its mining projects, as required by the States of Nevada and Kentucky, to secure clean-up costs if the projects are abandoned or closed. As at July 31, 2013, the balance of the reclamation bonds consists of $9,550 (January 31, 2013 - $9,550) pertaining to the Fondaway Canyon and Dixie-Comstock Projects, and $178,700 (January 31, 2013 - $178,700) to the Kentucky Project. As noted under notes 15(b) and 19(b), the reclamation bond pertaining to the Kentucky Project was relinquished subsequent to July 31, 2013. The Company is working with the Bureau of Land Management ("BLM") in Nevada, to obtain a refund of one or both of the reclamation bonds on the Fondaway Canyon and Dixie- Comstock Projects.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

7. Exploration and Evaluation Expenditures on Mineral Properties

(a)	Goldwedge & Piñon Projects
	On December 17, 2012, the Company sold its Goldwedge and Piñon property interests and related assets thereto to Scorpio Gold Corporation and its wholly-owned subsidiary Goldwedge LLC.
(b)	Fondaway Canyon and Dixie-Comstock Projects
	The Fondaway Canyon Project is located in Churchill County, Nevada.
	Also held under the same option agreement as was the Goldwedge Property is the Dixie-Comstock Mining Company option and other unpatented mining claims located in Churchill County, Nevada. In 2010, the Company exercised its option to purchase these unpatented and patented mining claim groups.
	Under the guidance of IAS 37, the Company has recorded an asset retirement obligation ("ARO") of $2,907 on the Dixie-Comstock and Fondaway Canyon Projects, representing the estimated costs, on a discounted basis, of the Company's obligation to restore the sites to their original condition.
	During the six months ended July 31, 2013, the Company incurred exploration and evaluation expenditures of $79,989 (six months ended July 31, 2012 - $35,000) on these projects.
	Subsequent to the end of the quarter, in August, the Company sold its interests in the Fondaway Canyon and Dixie-Comstock Projects as disclosed under subsequent events (see note 19(a)).
(c)	Kentucky Project
	On December 7, 2011, the Company exercised its option to acquire a 50% interest in certain coal projects in Eastern Kentucky. The option was originally acquired by the Company pursuant to an option and joint venture agreement entered into with Sharpe on November 21, 2008 and amended on September 11, 2009, to jointly pursue the exploration and development of approximately 1,000 acres in Wolfe County, Kentucky.
	During the year ended January 31, 2011, the Company wrote off a promissory note receivable from the optionor in the amount of $133,134. Further, the Company paid for a reclamation bond of $178,700, included in the condensed interim consolidated statements of financial position under reclamation bonds.
	Under the guidance of IAS 37, the Company has recorded an ARO on its Kentucky Project in the amount of $109,949, representing the estimated costs, on a discounted basis, of the Company's obligation to restore the property to its original condition.
	During the six months ended July 31, 2013, the Company incurred exploration and evaluation expenditures of $23,660 (six months ended July 31, 2012 - $9,118) on this project.
	Subsequent to July 31, 2013, in August 2013, the Company entered into a settlement and release agreement with Pick and Shovel Mining and Roger and Jacqueline Stacy as disclosed under subsequent events (see note 19(b)). As a result, this ARO will be fully adjusted subsequent to July 31, 2013.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

7.	Exploration and Evaluation Expenditures on Mineral Properties (Continued)
	During the three and six months ended July 31, 2013 and 2012, the Company's exploration and evaluation expenditures were as follows:

		Three Months Ended					Six Months Ended
		July 31,					July 31,
		2013		2012			2013		2012
Goldwedge Project
Property acquisition costs	$	-	$	-		$	-	$	4,500
Travel		-		12,759			-		26,654
Mine development costs		-		911,773			-		1,825,395
Drilling		-		27,330			-		61,732
Consulting, wages and salaries (Note 14)		-		301,630			-		600,371
Office and general		-		44,960			-		63,215
Supplies, equipment and transportation		-		25,953			-		27,571
Milling costs		-		76,996			-		131,500
Depreciation		-		30,131			-		59,459
Net proceeds from sale of exploration and development ore		-		(214,391	)		-		(214,391	)
	$	-	$	1,217,141		$	-	$	2,586,006
Piñon Project
Property acquisition costs	$	-	$	-		$	-	$	5,218
Consulting, wages and salaries		-		-			-		28,247
Office and general		-		4,132			-		4,132
	$	-	$	4,132		$	-	$	37,597
Fondaway Canyon and Dixie-Comstock Projects
Property acquisition costs	$	35,000	$	35,000		$	35,000	$	35,000
Consulting, wages and salaries		11,846		-			38,461		-
Travel		3,150		-			4,498		-
Office and general		1,084		-			2,030		-
	$	51,080	$	35,000		$	79,989	$	35,000
Kentucky Project
Office and general		18,328		1,655		$	20,102	$	4,720
Depreciation		1,779		2,199			3,558		4,398
	$	20,107	$	3,854		$	23,660	$	9,118
Total exploration activities	$	71,187	$	1,260,127		$	103,649	$	2,667,721

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

8. Equipment

		Construction			Exploration			Office
COST		in progress			equipment			equipment			Total
Balance, January 31, 2012	$	1,619,341		$	3,126,000		$	21,806		$	4,767,147
Additions		2,704,338			48,472			-			2,752,810
Sale of equipment		(4,323,679	)		(3,085,472	)		(21,806	)		(7,430,957	)
Balance, January 31, 2013		-			89,000			-			89,000
Balance, July 31, 2013	$	-		$	89,000		$	-		$	89,000

		Construction		Exploration			Office
ACCUMULATED DEPRECIATION		in progress		equipment			equipment			Total
Balance, January 31, 2012	$	-	$	2,661,758		$	21,053		$	2,682,811
Depreciation for the period		-		113,615			379			113,994
Sale of equipment		-		(2,710,089	)		(21,432	)		(2,731,521	)
Balance, January 31, 2013		-		65,284			-			65,284
Depreciation for the period		-		3,558			-			3,558
Balance, July 31, 2013	$	-	$	68,842		$	-		$	68,842

		Construction		Exploration		Office
CARRYING AMOUNT		in progress		equipment		equipment		Total
Balance, January 31, 2013	$	-	$	23,716	$	-	$	23,716
Balance, July 31, 2013	$	-	$	20,158	$	-	$	20,158

	Depreciation of exploration equipment is expensed to exploration and evaluation expenditures and depreciation of office equipment is expensed to general and administrative on the condensed interim consolidated statements of operations.
	As noted under subsequent events (see note 19(b)), the equipment was transferred as part of a settlement and release agreement on August 27, 2013.
9.	Accounts Payable and Accrued Liabilities

		As at		As at
		July 31,		January 31,
		2013		2013
Trade payables	$	747,623	$	2,145,407
Accrued liabilities		108,363		450,265
	$	855,986	$	2,595,672

Included in accrued liabilities is a deposit of $44,000 received on the sale to American Innovative Minerals LLC ("AIMLLC"), noted under subsequent events (see note 19(a)), less legal fees of $7,468.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

10.	Asset Retirement Obligations
	The Company is required to recognize a liability for a legal and constructive obligation to perform asset retirement activities, including decommissioning, reclamation and environmental monitoring activities once any of its projects are permanently closed. Although these activities are conditional upon future events, the Company is required to make a reasonable estimate of the fair value of the liability. Based on the existing level of terrestrial disturbance and water treatment and monitoring requirements, the discounted asset retirement obligations ("AROs") were estimated to be $112,856 as at July 31, 2013, assuming future payments of $188,250 being made over a ten year period from the date of initial assessment of the AROs and a discount rate of 10%.
	Determination of the undiscounted AROs and the timing of these obligations was based on internal estimates using information currently available, existing regulations, and estimates of closure costs.
	As noted under note 19(b), with the relinquishment of the reclamation bond for the Kentucky Project, the related ARO will be fully adjusted subsequent to July 31, 2013. The remaining AROs will be adjusted based on the refund of the related reclamation bonds, currently with the BLM.

		Six Months
		Ended		Year Ended
		July 31,		January 31,
		2013		2013
Balance, beginning of period	$	107,647	$	292,315
Accretion cost		5,209		29,226
Foreign exchange		-		(1,954	)
Sale of AROs		-		(211,940	)
Balance, end of period	$	112,856	$	107,647

11.	Share Capital
	(a)Authorized
	The authorized capital of the Company consists of an unlimited number of common shares without par value.
	(b)Issued

	Shares		Amount
Balance, January 31, 2012 and July 31, 2012	83,853,825	$	28,098,264
Shares issued for lawsuit settlement(i)	100,000		6,000
Balance, January 31, 2013 and July 31, 2013	83,953,825	$	28,104,264

⁽ⁱ⁾The Company settled a claim filed in the District Court, Nye County, Nevada through the issuance of 100,000 shares of the Company and a monetary settlement of $35,000. The monetary settlement was paid in full prior to January 31, 2013.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

12.	Stock Options
	Under the Company's stock option plan (the "Option Plan"), the directors of the Company can grant options to acquire common shares of the Company to directors, employees and others who provide ongoing services to the Company. Exercise prices cannot be less than the closing price of the Company's shares on the trading day preceding the grant date and the maximum term of any option cannot exceed ten years.
	The number of common shares under option at any time under the Option Plan or otherwise cannot exceed 5% of the then outstanding common shares of the Company for any optionee. In addition, options granted to insiders of the Company cannot exceed more than 10% of the then outstanding common shares of the Company. A portion of the stock options vest immediately on the grant date and the balance vest over a period of two years from the grant date.
	Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models do not necessarily provide a reliable measure of the fair value of the Company's share purchase options.
	The following table reflects the continuity of stock options for the six months ended July 31, 2013 and 2012:

	Number of			Weighted Average
	Stock Options			Exercise Price
Balance, January 31, 2012	12,060,191		$	0.17
Forfeited	(6,710,191	)	$	0.10
Balance, July 31, 2012	5,350,000		$	0.28

	Number of			Weighted Average
	Stock Options			Exercise Price
Balance, January 31, 2013	3,800,000		$	0.27
Forfeited	(750,000	)	$	0.10
Balance, July 31, 2013	3,050,000		$	0.26

The following table reflects the stock options outstanding and exercisable as at July 31, 2013:

	Exercise Price	Options	Options		Fair	Weighted average
Expiry Date	($)	Outstanding	Exercisable		Value	remaining years
June 26, 2014	0.10	650,000	650,000	$	353,480	0.90
January 20, 2017	0.30	2,400,000	1,900,000		681,600	3.48
		3,050,000	2,550,000	$	1,035,080	2.93

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

13.	Basic and Diluted Income (Loss) Per Share
	The following table sets forth the computation of basic and diluted income (loss) per share:

		Three Months Ended						Six Months Ended
		July 31,						July 31,
		2013			2012			2013			2012
Numerator:
Income (loss) for the period	$	(49,485	)	$	(3,658,212	)	$	(241,907	)	$	(5,890,318	)
Denominator:
Weighted average number of common shares outstanding for basic loss per share		83,953,825			83,853,825			83,953,825			83,853,825
Weighted average number of common shares outstanding for diluted loss per share		83,953,825			83,853,825			83,953,825			83,853,825
Basic income (loss) per share	$	(0.00	)	$	(0.04	)	$	(0.00	)	$	(0.07	)
Diluted income (loss) per share	$	(0.00	)	$	(0.04	)	$	(0.00	)	$	(0.07	)

	The stock options were not included in the computation of diluted loss per share on July 31, 2013 as their inclusion would be anti-dilutive.
14.	Related Party Transactions and Balances
	Remuneration of Directors and key management personnel of the Company was as follows:

		Three Months Ended				Six Months Ended
		July 31,				July 31,
		2013		2012		2013			2012
Salaries and benefits paid to directors and officers  (1)	$	62,308	$	90,317	$	134,014		$	192,806
Share-based payments	$	17,871	$	159,827	$	(1,471	)	$	316,148

⁽¹⁾Salaries and benefits include director fees. The Board of Directors do not have employment or service contracts with the Company, except for Ken Strobbe, a former director, who had a contract with the Company providing mine consulting services at the Goldwedge Project totaling $nil for the three and six months ended July 31, 2013 (three and six months ended July 31, 2012 - $29,407 and $64,407, respectively), included under consulting, wages and salaries for the Goldwedge Project. The contract terminated on September 14, 2012. And, the current Interim President and Chief Executive Officer whose services while a director were $45,149 and $90,034 for the three and six months ended July 31, 2013 (three and six months ended July 31, 2012 - $nil and $nil, respectively), included above. Directors are entitled to director fees and stock options for their services. In addition, James B. Clancy received an honorarium of $10,000 for the three and six months ended July 31, 2012, included above, for providing consulting services in connection with the Kentucky Project.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

14.	Related Party Transactions and Balances (Continued)
	Paul G. Smith, a director and Chairman of the Board, is the President and Chief Executive Officer of Equity Financial Holdings Inc. ("Equity"), a company that provided financial services to the Company until April 5, 2013. Services provided by Equity totaled $nil and $1,519 for the three and six months ended July 31, 2013 (three and six months ended July 31, 2012 - $5,551 and $7,090, respectively).
15.	Contingencies
	(a) The Company received documents filed in the District Court, Nye County, Nevada, whereby an optionor of mining claims in Nye County, Nevada acquired by the Company, is contending the surface rights acquired by the Company for a patented mining claim. In the opinion of management, the legal proceedings are without merit and the Company intends to vigorously defend itself against this claim.
	(b) The Company received an action against it whereby the Company was requested by a prior lease holder to take any and all steps necessary to ensure that the prior lease holders bear no responsibilities or liability for the Company’s failure to comply with the rules and regulations of the Kentucky Energy and Environment Cabinet, Division of Mine Enforcement and Reclamation (the “DMER”). Management has responded to the DMER and is working on resolving the issue. In the meantime, the DMER has issued penalties of approximately $145,000 and is seeking forfeiture of the Company's reclamation bond in the amount of $178,700. These penalties have been included in accounts payable and accrued liabilities.
	As disclosed under subsequent events, the Company settled this claim through a settlement and release agreement on August 27, 2013 (see note 19(b)).
	(c) On September 27, 2011 Hale Capital Management, LP and Hale Capital Partners, LP (together, “Hale Capital”) commenced an action in the New York Supreme Court alleging breach of contract in relation to a term sheet entered into between the Company and Hale Capital on December 11, 2010 (the “Term Sheet”), which set out preliminary terms for Hale to provide financing of up to $15 million for the Company’s Goldwedge Project (the “Hale Transaction”). Hale Capital is seeking the “right to participate” in financing the Company on no less favourable terms and conditions as was agreed upon between the Company and Waterton on June 29, 2011 or, in the alternative, damages for breach of the exclusivity provision contained in the Term Sheet. Hale is also seeking expense reimbursement for legal, travel and due diligence fees incurred by Hale Capital, which allegedly totaled $376,170 as of November 21, 2011. On November 23, 2011, Hale Capital amended their complaint to include the Company’s subsidiary Manhattan Mining Co. ("MMC") Management had estimated the expenses at $330,000 and had accrued this amount in the accounts during the year ended January 31, 2012. Subsequently, an additional amount of approximately $175,000 relating to additional legal expenses (including interest) incurred by Hale Capital had been accrued.
	As disclosed under subsequent events, the transaction announced in August 15, 2013, resulted in a full and final release and settlement relating to this legal action. This transaction, which closed on August 9, 2013, was the culmination of a binding term sheet between the parties, announced July 18, 2013. As a result, the previous outstanding and additional legal expenses (including interest) in the amount of $175,000, have been removed from accounts payable and accrued liabilities and professional fees (see note 19(a)).

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

16. General and Administrative

		Three Months Ended						Six Months Ended
		July 31,						July 31,
		2013			2012			2013			2012
Corporate development	$	8,965		$	72,362		$	9,748		$	134,818
Insurance		7,045			6,362			14,181			12,585
Office and general		(3,653	)		(8,859	)		21,455			23,959
Professional fees (Note 15)		(154,278	)		1,179,434			(105,885	)		1,501,060
Consulting, wages and salaries (Note 14)		62,308			91,839			134,014			197,705
Share-based payments (Note 14)		17,871			175,108			(1,471	)		348,089
Travel		5,231			38,972			13,511			38,972
Depreciation		-			108			-			217
	$	(56,511	)	$	1,555,326		$	85,553		$	2,257,405

17.	Segmented Information
	The Company has one reportable business segment consisting of the exploration and development of mining properties. Substantially all of the Company’s assets are located in the United States except for cash and cash equivalents totaling $315,823 at July 31, 2013 (January 31, 2013 - $193,135) held in Canadian banks. The Company’s operations in Canada consist of general and administrative expenses, totaling $(49,218) and $54,918 for the three and six months ended July 31, 2013 (three and six months ended July 31, 2012 - $1,367,746 and $2,047,158), including expenses necessary to maintain the Company’s public company status.
18.	Comparative Figures
	Certain comparative figures have been reclassified to conform with the current period's presentation.
19.	Subsequent Events
	(a) On August 15, 2013, the Company announced that it and its wholly-owned subsidiary Manhattan Mining Co. had completed the sale of its Fondaway Canyon and Dixie-Comstock Gold Properties (the “Assets”) to AIMLLC. The Assets were sold on an "as is, where is" basis for cash consideration of $144,000. In addition, as a condition to the closing of the transaction, Hale Capital delivered to the Company a full and final release and settlement agreement relating to the legal action commenced by Hale on September 27, 2011. A stipulation of dismissal with prejudice was filed with the Supreme Court of the State of New York dismissing all claims against the Company and MMC in connection with that litigation.

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Royal Standard Minerals Inc.

Notes to Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

July 31, 2013

(Unaudited)

19.	Subsequent Events (Continued)
	(b) On August 30, 2013, the Company announced that its wholly-owned subsidiary Kentucky Standard Energy Company, Inc. ("Kentucky") entered into a settlement and release agreement on August 27, 2013 with Pick & Shovel Mining ("Pick & Shovel") and Roger and Jacqueline Stacy pursuant to which in consideration of a cash settlement payment and transfer of certain equipment by Kentucky to Pick & Shovel, the parties resolved to waive and release any claims relating to a prior claim between the parties. In addition, Kentucky relinquished any interest in a bond posted on Permit No. 919-0066 and Pick & Shovel agreed to be solely responsible for such Permit and all related claims and issues asserted by the Kentucky Energy and Environment Cabinet.
	The cash settlement was $8,000 and certain equipment with a net book value of $20,158 as at July 31, 2013 was transferred.
	(c) On September 5, 2013, the Kentucky Secretary of State accepted the articles of dissolution for Kentucky and the company has been dissolved.

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