MineralRite (RITE) 10-Q 2009 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

  x  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2009

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

For the transition period from __________ to __________

Commission File Number: 000-27739

Royal Quantum Group, Inc.

 (Exact name of small business issuer as specified in its charter)

Nevada	90-0315909
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Suite #145, 251 MidPark Blvd S.E. Calgary, AB Canada T2X 1S3

(Address of principal executive offices)

(403) 288-4321

(Issuer’s Telephone Number)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                  x   Yes o No

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer  o     (Do not check if a smaller reporting company)	Smaller reporting company x

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

o Yes x No

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date.  As of October 23, 2009 there were 48,980,338 shares of the issuer's $.001 par value common stock issued and outstanding.

1

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

ROYAL QUANTUM GROUP, INC.
(A Development Stage Company)
BALANCE SHEETS
	(Unaudited)			(Audited)
	September 30,			December 31,
ASSETS	2009			2008
Current Assets:
Cash & Cash Equivalents	$	125,616		$	90,363
Accounts receivable		9,255			-
Total Current Assets		134,871			90,363
Fixed Assets:
Furniture & Fixtures		1,851			1,851
Less: Accumulated Depreciation		(1,203	)		(925	)
Total Fixed Assets		648			926
Other Assets:
Intangible Assets		-			1
Oil & Gas Properties,full cost method		167,260			-
Less: Accumulated Depletion		(5,387	)		-
Total Other Assets		161,873			1
Total Assets	$	297,392		$	91,290
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable	$	93,157		$	86,082
Notes Payable		294,166			235,755
Related Party Payables		146,323			98,262
Shareholder Loans		19,845			19,845
Total Current Liabilities		553,491			439,944
Total Liabilities		553,491			439,944
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 500,000,000 shares
Issued 48,980,338 shares at September 30,2009
and 48,020,338 shares at Dec 31, 2008		48,980			48,020
Paid-in Capital		4,824,482			4,480,442
Deficit Accumulated During the
Development Stage		(5,129,561	)		(4,877,116	)
Total Stockholders' Equity		(256,099	)		(348,654	)
Total Liabilities and Stockholders' Equity	$	297,392		$	91,290
The accompanying notes are an integral part of the financial statements

2

ROYAL QUANTUM GROUP, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
													Cumulative
												��	since
													August 23,
	For the three months						For the nine months						2002
	ended						ended						inception of
	September 30,						September 30,						development
	2009			2008			2009			2008			stage
Revenues	$	6,755		$	-		$	6,755		$	-		$	6,755
Cost of Goods Sold		(10,196	)		-			(10,196	)		-			(10,196	)
Gross Profit		(3,441	)		-			(3,441	)		-			(3,441	)
Expenses
Consulting Fees		58,174			35,130			153,595			185,938			1,201,108
Compensation Expense		-			-			-			-			273,790
Exploration Expense		-			-			-			-			475,949
General & Administrative		8,964			16,370			37,477			51,262			515,453
Loss from Operations		(70,579	)		(51,500	)		(194,513	)		(237,200	)		(2,469,741	)
Other Income (Expenses)
Write-down of Assets		-			-			-			-			(157,986	)
Foreign currency exchange gain (loss)		(20,563	)		10,599			(35,811	)		18,499			(18,678	)
Interest (Expense)		(7,600	)		(58,016	)		(22,121	)		(148,649	)		(695,900	)
Interest Income		-			-			-			-			263
Forgiveness of debt		-			-			-			17,500			46,520
Total Other Income (Expense)		(28,163	)		(47,417	)		(57,932	)		(112,650	)		(825,781	)
Net Loss from Continuing Operations	$	(98,742	)	$	(98,917	)	$	(252,445	)	$	(349,850	)	$	(3,295,522	)
Discontinued Operations
Loss from operation of discontinued component		-			-			-			-			(1,967,294	)
Gain pn disposal net of tax effect of $0		-			-			-			-			133,255
Net Income (Loss) from Discontinued Operations		-			-			-			-			(1,834,039	)
Net Loss	$	(98,742	)	$	(98,917	)	$	(252,445	)	$	(349,850	)	$	(5,129,561	)
Basic and Diluted Loss Per Share
Continuing Operations		0.00			0.00			(0.01	)		(0.01	)
Loss per share		0.00			0.00			(0.01	)		(0.01	)
Weighted Average Shares Outstanding		48,510,773			44,487,729			48,246,272			41,737,291
The accompanying notes are an integral part of the financial statements

3

ROYAL QUANTUM GROUP, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
							Cumulative
							since
							August 23,
	For the nine months						2002
	ended						inception of
	September 30,						development
	2009			2008			stage
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(252,445	)	$	(349,850	)	$	(5,129,561	)
Net Income/(Loss)from Discontinued Operations		-			-			1,578,681
Adjustments to reconcile net income (loss) to
net cash provided (used in) operating activities:
Depreciation		278			278			1,203
Depletion		5,387			-			5,387
Write-down of mineral property		-			-			475,949
Write-down of assets		1			-			10,001
Stock issued for interest		-			125,000			600,000
Stock issued for start up costs		-			-			12,600
Stock issued for services		12,500			-			656,890
Forgiveness of debt		-			(17,500	)		(46,520	)
Foreign currency exchange loss (gain)		35,811			(18,499	)		18,678
(Increase) decrease in accounts receivable		(9,255	)		-			(9,255	)
Increase (decrease) in interest on notes payable		22,121			23,649			89,214
Increase (decrease) in accounts payable		7,554			6,888			343,399
Increase (decrease) in related party accounts payable		63,061			(36,235	)		123,681
Net cash provided (used in) continuing activities		(114,987	)		(266,269	)		(1,269,653	)
Net cash provided (used in) discontinuing activities		-			-			386,515
Net cash provided by (used in) operating activities		(114,987	)		(266,269	)		(883,138	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Mineral Property		-			-			(10,000	)
Investment in Oil Property		(167,260	)		(418,727	)		(584,459	)
Purchase of fixed assets		-			-			(1,851	)
Net cash provided by (used in) investing activities		(167,260	)		(418,727	)		(596,310	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shareholder loans		-			-			136,027
Payment on shareholder loans		-			(6,000	)		(88,182	)
Proceeds from notes payable		-			500,000			685,795
Contributed capital		-			-			2,842
Stock issued in exchange for cash		317,500			352,000			868,582
Net cash provided by (used in) financing activities		317,500			846,000			1,605,064
Net (Decrease) increase in Cash and Cash Equivalents		35,253			161,004			125,616
Cash and Cash Equivalents at Beginning of Period		90,363			3,448			-
Cash and Cash Equivalents at End of Period	$	125,616		$	164,452		$	125,616
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	-		$	-		$	12
Income taxes	$	-		$	-		$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Stock issued in plan of reorganization	$	-		$	-		$	858
Stock issued in asset acquisition	$	-		$	-		$	2,243,000
Stock issued for services	$	12,500		$	-		$	606,890
Stock issued for investment in oil property	$	-		$	58,750		$	58,750
Stock issued for cancellation of debt	$	-		$	500,000		$	674,700
Related Party Payable converted to paid in capital	$	15,000			-		$	15,000
Shareholder loans converted to paid in capital	$	-		$	-		$	3,000
Stock issued for Accounts Payable	$	-		$	32,500		$	52,500
The accompanying notes are an integral part of the financial statements

4

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of accounting policies for Royal Quantum Group, Inc. (the “Company”) is presented to assist in understanding the Company's financial statements.  The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.

Interim Financial Statements

The unaudited financial statements as of September 30, 2009 and the three and nine months then ended, reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly state the financial position and results of the operations for the three and nine months then ended.  Operating results for interim periods are not necessarily indicative of the results which can be expected for full years.

Nature of Operations and Going Concern

The accompanying financial 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 at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations.

Several conditions and events cast doubt about the Company’s ability to continue as a “going concern”.  The Company has incurred net losses of approximately $5,100,000 for the period from August 23, 2002 (inception of development stage) to September 30, 2009 has a liquidity problem, and as of September 30, 2009 has minimal sources of revenue.  In the interim, shareholders of the Company have committed to meeting any shortfall of operational cash flow.  In addition the company may require increasing equity and debt financing in order to finance its business activities on an ongoing basis.

These financial statements do not reflect adjustments that would be necessary if the Company were unable to continue as a “going concern”.  While management believes that the actions already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the “going concern” assumption used in preparing these financial statements, there can be no assurance that these actions will be successful.

If the Company were unable to continue as a “going concern”, then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported expenses, and the balance sheet classifications used.

5

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Organization and Basis of Presentation

The Company was incorporated under the laws of the State of Nevada on October 22, 1996 under the name PSM Corp.  The Company ceased all operating activities during the period from October 22, 1996 to July 9, 1999 and was considered dormant. On July 9, 1999, the Company obtained a Certificate of renewal from the State of Nevada.

On October 3, 2002, the Company changed its name to Platinum SuperYachts, Inc. in anticipation of a merger with SuperYachts Holdings, Inc. (a Nevada Corporation that was incorporated on August 23, 2002).  On November 15, 2002, the shareholders of the Platinum SuperYachts, Inc. completed a stock exchange agreement with SuperYachts Holdings, Inc. dated August 8, 2002.  The merger was accounted for as a reverse merger, with SuperYachts Holdings being treated as the acquiring entity for financial reporting purposes.

For financial reporting purposes, Platinum SuperYachts, Inc. was considered a new reporting entity on November 15, 2002

On November 23, 2005 holders of a majority of the Company’s common stock approved an Amendment to change the name of the Company to Royal Quantum Group, Inc., to increase the number of shares of common stock the Company is authorized to issue to 500,000,000 and to authorize the Company to issue up to 10,000,000 shares of preferred stock.

As of September 30, 2009, the Company is in the development stage.

Nature of Business

Royal Quantum Group Inc. is a public company trading on the OTCBB market under the symbol RYQG.  Royal Quantum is focused on the acquisition, exploration and development of resource and mineral properties located within favorable geo-political climates.

6

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.

Depreciation and Amortization

Fixed assets are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets which range from three to five years.  Fixed assets consisted of the following at September 30, 2009 and December 31, 2008:

	September 30,			December 31,
	2009			2008
Furniture & Fixtures	$	1,851		$	1,851 -
Less accumulated depreciation		(1,203	)		(925	)
Total	$	648		$	926

Maintenance and repairs are charged to operations; betterments are capitalized.  The cost of property sold or otherwise disposed of and the accumulated depreciation thereon is eliminated from the property and related accumulated depreciation accounts, and any resulting gain or loss is credited or charged to income.

Total depreciation expense for the nine months ended September 30, 2009 and the year end December 31 2008 was $278 and $370 respectively.

7

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible Assets

The Company has adopted the Financial Accounting Standards Board SFAS No., 142, “Goodwill and Other Intangible Assets.”  SFAS 142 requires, among other things, that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually.  In addition, SFAS 142 requires that the Company identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life.  An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS 142.

Intangible Assets consisted of the following at September 30, 2009 and December 31, 2008:

	September 30		December 31,
Intangible Asset	2009		2008		Amortization Period
E-Learning System	$	-	$	1	Indefinite
Less accumulated amortization		-		-
Total	$	-	$	1

Total amortization expense for the nine months ended September 30, 2009 and December 31, 2008 was $0 and $0 respectively.  During the second quarter of 2009, the company determined not to pursue the E-learning system and expensed the impaired asset.

Pervasiveness of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Foreign Currency Translation

The Company's primary functional currency is the U.S. dollar.  However, the Company has a few transactions in Canada. Transaction gains and losses are included in income.

8

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentrations of Credit Risk

The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company had cash and cash equivalents in the amount of $125,616 and $90,363 as of September 30, 2009 and December 31, 2008.

Earnings (Loss) per Share

Basic loss per share has been computed by dividing the loss for the period applicable to the common stockholders by the weighted average number of common shares outstanding during the years.  Diluted loss per common share for the nine months ended September 30, 2009 and 2008 are not presented as it would be anti-dilutive.  At September 30, 2009 and 2008, the total number of potentially dilutive common stock equivalents was 1,820,000 and 0, respectively.

Stock Compensation for Non-Employees

Effective June 1, 2006, the company adopted the provisions of SFAS No. 123 (R) requiring employee equity awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award. Prior to June 1, 2006, the company accounted for awards granted to employees under its equity incentive plans under the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related interpretations, and provided the required pro forma disclosures prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123), as amended. No stock options were granted to employees during the years ended December 31, 2006, and 2005 and accordingly, no compensation expense was recognized under APB No. 25 for the years ended December 31, 2007, and 2006. In addition, no compensation expense is required to be recognized under provisions of SFAS No. 123 (R) with respect to employees.  Under the modified prospective method of adoption for SFAS No. 123 (R), the compensation cost recognized by the company beginning on June 1, 2006 includes (a) compensation cost for all equity incentive awards granted prior to, but not vested as of June 1, 2006, based on the grant-dated fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all equity incentive awards granted subsequent to June 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No, 123 (R). The company uses the straight-line attribution method to recognize share-based compensation costs over the service period of the award. Upon exercise, cancellation, forfeiture, or expiration of stock options, or upon vesting or forfeiture of restricted stock units, deferred tax assets for options and restricted stock units with multiple vesting dates are eliminated for each vesting

9

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Compensation for Non-Employees (Continued)

period on a first-in, first-out basis as if each vesting period was a separate award. To calculate the excess tax benefits available for use in offsetting future tax shortfalls as of the dated of implementation, the company followed the alternative transition method discussed in FASB Staff Position No. 123 (R)-3.  During the periods ended December 31, 2008 and 2007, no stock options were granted to non-employees. Accordingly, no stock-based compensation expense was recognized for new stock option grants in the Statement of Operations and Comprehensive Loss at December 31, 2008 and 2007.

Financial Instruments

The Company’s financial instruments, as defined under SFAS No. 107, Disclosure about Fair Value of Financial Instruments, include its cash and cash equivalents, accounts payable and accrued liabilities. Except as otherwise noted, it is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.  The fair value of these financial instruments approximates their carrying values due to the short-term maturities of these instruments.

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No.109, “Accounting for Income Taxes.”  SFAS No.109 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities.

Recent Accounting Standards

In February 2007, the FASB issued SFAS no, 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”).  SFAS 159 provides companies with an option to report selected financials assets and liabilities at fair value.  The objective of SFAS 159 is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently.  Generally accepted accounting principles have required different measurement attributes for different assets and liabilities that can create artificial volatility in earnings.  The FASB has indicated it believes that SFAS 159 helps to mitigate this type of accounting-induced volatility by enabling companies to report related assets and liabilities at fair value, which would likely reduce the need for companies to comply with detailed rules for hedge accounting.  SFAS 159 also establishes presentation and

10

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Standards (Continued)

 disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities.  SFAS 159 does not eliminate disclosure requirements included in other accounting standards, including requirements for disclosures about fair value measurements included in SFAS 157 and SFA No. 107, “Disclosures about Fair Value of Financial Instruments.” SFAS 159 is effective for the Company as of the beginning of fiscal year 2009.  The adoption of this pronouncement is not expected to have an impact on the Company’s financial position, results of operations or cash flows.

In December 2007, the FASB issued No. 160, “Noncontrolling Interests in Financial Statements, an amendment of ARB No. 51" (“SFAS 160").  SFAS 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  This Statement is effective for fiscal years beginning on or after December 15, 2008.  Early adoption is not permitted. Management is currently evaluating the effects of this statement, but it is not expected to have any impact on the Company’s financial statements.

In December 2007, the FASB issued No. 141(R),  “Business Combinations” (“SFAS 141(R)”.  SFAS 141(R) provides companies with principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree as well as the recognition and measurement of goodwill acquired in a business combination. SFAS 141(R) also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. SFAS 141(R) is effective for business combinations occurring in fiscal years beginning after December 15, 2008, which will require the Company to adopt these provisions for business combinations occurring in fiscal 2009 and thereafter. Early adoption of SFAS 141(R) is not permitted.  Management is currently evaluating the effects of this statement, but it is not expected to have any impact on the Company’s financial statements.

In March 2008, the FASB issued No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133.  (“SFAS 161").  SFAS 161 requires enhanced disclosures about an entity's derivative and hedging activities and thereby improves the transparency of financial reporting.  This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This Statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption.  Management is currently evaluating the effects of this statement, but it is not expected to have any impact on the Company’s financial statements.

11

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Oil and Gas Properties

The Company follows the full cost method of accounting for its oil and gas properties. Under this method, all costs associated with acquisition, exploration, and development of oil and gas properties 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, asset retirement costs, and direct exploration salaries and related benefits.  Capitalized costs are categorized as being subject to amortization or not subject to amortization.  The Company operates one cost center in the U.S.A.  To date the Company has established an estimated 10,950 Bbls of recoverable Oil from the Gleason #4-16 prospect and it is currently producing at approximately 6 Bbls per day.  As of the date of this report drilling of the Bond #1-18 well is underway.  The well is expected to be drilled to a total depth of 5450 ft.

The capitalized costs of oil and gas properties are amortized on the unit-of-production method using estimates of proved reserves as determined by independent engineers.  Investments in unproved properties are not amortized until proved reserves associated with projects can be determined or until impairment occurs.  If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.

Depletion Expense for the Gleason #4-16 well was $5,387 for the period ending September 30, 2009.  The company has not had an independent reserve evaluation done on the well as of this reporting period.  Since it has just recently gone into production, the lack of production history makes it difficult for a reserve evaluation to be completed.

The Company applies a ceiling test to capitalized costs to ensure that such costs do not exceed estimated future net revenues from production of proven reserves at year end 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.

Proceeds from the sale of oil and gas properties are recorded as a reduction of the related capitalized costs without recognition of a gain or loss unless such sales involve a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved properties, in which case a gain or loss is recognized. 

The Company is in the process of exploring its unproved oil and natural gas properties and has not yet determined whether these properties contain reserves that are economically recoverable. The recoverability of amounts shown for oil and natural gas properties is dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the underlying oil and gas leases, the ability of the Company to obtain necessary financing to complete their exploration and development and future profitable production or sufficient proceeds from the disposition thereof.

12

NOTE 2 - INCOME TAXES

	2008			2007
Net Operating Losses	$	4,250,000		$	3,963,988
Accrued Consulting Fees		33,000			39,251
Valuation Allowance		(4,283,000	)		(4,003,239	)
	$	-		$	-

As of December 31, 2008, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $12,510,000 that may be offset against future taxable income through 2025.  Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs.  Therefore, the amount available to offset future taxable income may be limited.  No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carry forwards will expire unused.  Accordingly, the potential tax benefits of the loss carried forwards are offset by a valuation allowance of the same amount.

The provision for income taxes differ from the amount computed using the federal US statutory income tax rate as follows:

	2008			2007
Provision (Benefit) at US Statutory Rate	$	(413,854	)	$	(141,145	)
Stock Compensation / Interest		127,500			-
Excess Capital Losses over Capital Gains		(3,400	)		-
Accrued Consulting Fees		7,421			-
Depreciation and other		2,572			(75	)
Increase (Decrease) in Valuation Allowance		279,761			141,220
	$	-		$	-

The Company evaluates its valuation allowance requirements based on projected future operations.  When circumstances change and causes a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation is reflected in current income.

NOTE 3 - DEVELOPMENT STAGE COMPANY/GOING CONCERN

The Company has not commenced its intended principal operations and as is common with a development stage company, the Company has had recurring losses.  Continuation of the Company as a going concern is dependent upon obtaining the additional working capital necessary to be successful in its planned activity, and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding and long term financing, which will enable the Company to operate for the coming year.

13

NOTE 4- INVESTMENT IN OIL & GAS PROPERTY

In January of 2008 the company acquired an option to purchase a 6,000 acre Oil & Gas property located in the state of Ohio.  The closing date of the transaction was extended to July 31, 2008 and was subject to financing.Pursuant to the agreement, the Company paid the seller $325,000 in cash and issued 125,000 shares of stock valued at $58,750 for the acquisition and extension of the agreement.  The Company had capitalized a total of $475,949 related to this property.

In October 2008, the company issued notice to the landowner of the Ohio Oil & Gas property of its intent to not pursue the acquisition of the project.  The company has also issued a demand letter to the land owner for the return of the $300,000 paid in June for the extension.  No response has been received from the land owner to date; the company will continue to pursue the return of the funds.  Since the entire amount is deemed abandoned on December 31, 2008, $475,949 has been written off as an exploration expense.

During the period ending June 30, 2009 the company acquired 36% in the drilling and development of the Gleason #4-16 well located in Oklahoma, USA. The company capitalized $135,785 for the drilling of the well during this period.  The well has now been completed and is on production.

During the period ending September 30, 2009 the company raised $137,500 for the drilling of its next well, the Bond.  The company will acquire a 25% interest in this well with 60% of the revenue received from this well being distributed proportionately to the investors.  The company issued 550,000 shares relating to this financing.  The company has also agreed to pay a 10% commission to a 3rd party on the portion of the funds raised by the 3rd party relating to the Bond well.  This commission totaled $12,500 which was in turn converted to an interest in the well.  The company elected to not dilute the investor’s portion of the interest in the well but to dilute the companies remaining interest in the well after paying the investors portion.  Thus the breakdown of the potential revenue from the company’s 25% interest in the Bond well will be as follows: 60% to the investors, 35% to the company and the remaining 5% will be allocated to the 3rd party as per the terms of the commission agreement.  As per the terms of the commission agreement the company also issued 50,000 shares valued at $12,500 to the 3rd party for consulting expenses related to the Bond financing.

NOTE 5 – INVESTMENT IN MINERAL PROPERTY

In May 2007, we entered into a Purchase Agreement (“Agreement”) with U3, LLC (“U3”) to acquire a 100% interest in 1,540 acres that consist of 77 claims of prospective uranium property located adjacent to the Sheep Mountain Mine in Fremont County, Central Wyoming, approximately 90 miles southwest of Casper, Wyoming.  We paid $10,000 to U3 when we executed the Agreement on May 28, 2007. However, we later agreed with U3 not to continue to acquire the claims, due to delays in receiving WMC numbers on the claims, and we have requested U3 return the $10,000 as per the agreement terms.  The company did not issue any shares pursuant to this agreement and as of the date of this report has not received the $10,000.  After numerous attempts to collect on the $10,000, the company has written the debt off as bad debt expense.

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NOTE 6 - LEASE AGREEMENT

The company has entered into a month-to-month lease agreement for an office in Calgary, Alberta, Canada.  This lease can be canceled on one month’s written notice. The current lease requires rental payments of approximately $450(Canadian Dollars per month plus applicable taxes after consolidating leased space.  The new monthly rate is effective as of May 1, 2009. Prior to October 1, 2007, the lease was approximately $4,854 per month plus applicable taxes. For the year ended December 31, 2008 and 2007 the Company had $3,000 and $14,879 respectively in rent expense.

During 2008, the Lessor wrote off the entire balance owed to them through March 31, 2008.  The company has recorded $29,025 in forgiveness of debt as of December 31, 2008.

NOTE 7 - UNCERTAIN TAX POSITIONS

Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The adoption of the provisions of FIN 48 did not have a material impact on the company’s condensed consolidated financial position and results of operations. At January 1, 2007, the company had no liability for unrecognized tax benefits and no accrual for the payment of related interest and penalties. The Company did not record a cumulative effect adjustment relating to the adoption of FIN 48.

Interest costs related to unrecognized tax benefits are classified as “Interest expense, net” in the accompanying condensed consolidated statements of operations. Penalties, if any, would be recognized as a component of “Selling, general and administrative expenses”. The Company recognized $0 of interest and penalties expense related to unrecognized tax benefits during 2007. In many cases the company’s uncertain tax positions are related to tax years that remain subject to examination by relevant tax authorities. With few exceptions, the company is generally no longer subject to U.S. federal, state, local or non-U.S. income tax examinations by tax authorities for years before 2004. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2007:

United States (a) 2004 - Present

(a) Includes federal as well as state or similar local jurisdictions, as applicable.

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NOTE 8 - RELATED PARTY TRANSACTIONS

As of September 30, 2009 and December 31, 2008, the Company owed Santeo Financial $135,906 and $89,353 respectfully for consulting services.  Ron Ruskowsky, President and CEO of the Company is an affiliate of Santeo Financial.  Currently the Company has an agreement with Santeo Financial whereby Santeo Financial provides consulting services in exchange the Company agrees to pay a consultant fee of $15,000 per month.  In April, Santeo Financial Corporation agreed to forgive $15,000 of debt owed by the Company in exchange for a 4% interest in the Company’s share of the net revenue received from the Gleason Well.  The $15,000 was written off of the payable and booked as additional paid in capital.

As of September 30, 2009 and December 31, 2008, the Company owed Phil Van Angeren, an officer and director of the Company, $9,072 and $7,564 respectfully for consulting services performed as the Exploration Manager.

As of September 30, 2009 and December 31, 2008 the Company owed Roger Janssen, an officer and director of the Company $1,345 for incurred expenses.

As of September 30, 2009 and December 31, 2008, shareholders have advanced the Company $19,845, payable on demand and do not carry an interest rate.  This transaction has been recorded in the accompanying financial statements as Shareholder loans.

NOTE 9 - COMMON STOCK AND WARRANTS

In September 2009 the company closed a unit funding at 55 units totaling $137,500.  The Company has a 25% participation in the Bond #1-18 well, with 60% of the company’s net revenue received being allocated proportionally to the unit holders.  The funds were raised via a unit private placement.  Each of the 55 units was priced at $2,500 per unit totaling $137,500  and consisted of 10,000 restricted common shares and 20,000 share purchase options at $0.25 per share with an expiration date of March 10, 2011. The Company issued a total of 550,000 shares and 1,100,000 options related to the private placement.  The unit holder also has the option to surrender their interest in the well back to the company in exchange for 10,000 restricted common shares per unit surrendered for a period of 36 months from the date of receipt of the first revenue cheque paid to the unit holders.  The company issued 50,000 shares valued at $12,500 for consulting expense, related to the Bond financing, to a 3rd party.  The $12,500 was converted to a 5% interest in the Bond #1-18 well.

In May 2009 the company closed its intended unit funding at 72 units totaling $180,000.  The Company has a 36% participation in the Gleason #4-16 well, with 67% of the company’s net revenue received being allocated proportionally to the unit holders.  The funds were raised via a unit private placement.  Each of the 72 units was priced at $2,500 per unit totaling $180,000 cash and consisted of 5,000 restricted common shares and 10,000 share purchase options at $0.25 per share with an expiration date of November 15, 2010. The Company issued a total of 360,000 shares and 720,000 options related to the private placement.  The unit holder also has the option to surrender their interest in the well back to the company in exchange for 5,000 restricted common shares per unit surrendered for a period of 36 months from the date of receipt of the first revenue cheque paid to the unit holders.

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NOTE 9 - COMMON STOCK AND WARRANTS (Continued)

In June 2008 the company received a loan of $500,000 from a private investor.  The loan carried an interest rate of 15% and was due and payable on or before July 31, 2008.  The terms of the note allow for a 1% per week penalty up to a maximum of 10%.  As part of the agreement, 6,250,000 shares were placed into escrow for security.  The Lender had the right at his sole discretion, to convert any unpaid debt, along with any interest due, into free-trading common stock of the Company at a conversion price of forth cents ($0.40) per share.  The funds from this loan were used for the Ohio Property Extension payment, payment for a third party engineering evaluation of the Ohio Property and working capital.  In September 2008 the company issued 6,250,000 shares held in escrow as satisfaction for the $500,000 note due plus interest of $75,000 and penalties of $50,000 to a private investor at a value of ten cents ($0.10) per share.  The market value of the shares was sixteen cents ($0.16) the date the loan was satisfied resulting in additional interest booked on the financial statements of $375,000 at December 31, 2008.

In May 2008, the Company issued 580,000 shares in a private placement for $0.25 per Unit.  Each Unit entitled the holder to acquire 1 common share of the company’s stock at $0.25 per share and one share purchase warrant, entitling the holder to purchase one share at a price of $0.40 for a period of 12 months from closing of the private placement, resulting in the Company receiving $145,000 in cash.  The shares were issued in a transaction which the Company believes satisfies the requirements of the Regulation S exemption from the registration and prospectus delivery requirements of the Securities Act of 1933. The Company used those funds for working capital.

In April of 2008 the Company issued 100,000 shares in a private placement for $.25 per share which resulted in the Company receiving $25,000 in cash.  The shares were issued in a transaction which the Company believes satisfies the requirements of the Regulation S exemption from the registration and prospectus delivery requirements of the Securities Act of 1933. The Company used those funds for working capital.

In April of 2008 the Company issued 125,000 shares of restricted stock recorded at $0.47 per share along with a $25,000 cash payment in consideration for an extension on the Anderson Oil & Gas property to May 30, 2008

In March of 2008 we issued 50,000 shares to M2 Law in settlement of outstanding legal invoices totaling $50,000. The shares were recorded at $0.65 per share for a value of $32,500 and the difference of $17,500 was booked as forgiveness of debt.

In March 2008, the Company issued 1,820,000 shares in a private placement for $0.10 per Unit.  Each Unit entitled the holder to acquire 1 common share of the company’s stock at $0.10 per share and one share purchase warrant, entitling the holder to purchase one share at a price of $0.15 for a period of 18 months from closing of the private placement, resulting in the company receiving $182,000 in cash.  The shares were issued in a transaction which the Company believes satisfies the requirements of the Regulation S exemption from the registration and prospectus delivery requirements of the Securities Act of 1933. The Company used those funds for working capital.

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NOTE 9 - COMMON STOCK AND WARRANTS (Continued)

On June 26, 2007 the Company issued 333,333 shares of common stock to Randall Lanham in total satisfaction of legal fees in the amount of $20,000.

On May 9, 2007 the company issued 500,000 shares to Phil van Angeren as compensation for his assuming the position of Exploration Manager of the Corporation. These shares have been valued at the market price of $0.29.  Compensation expense of $145,000 has been booked on the accompanying Statement of Operations.

In February 2007, the Company issued 2,653,640 shares in a private placement for $.05 per share which resulted in the Company receiving $132,682 in cash.  The shares were issued in a transaction which the Company believes satisfies the requirements of the Regulation S exemption from the registration and prospectus delivery requirements of the Securities Act of 1933. The Company is using those funds for working capital.

NOTE 10 – NOTES PAYABLE

The Company has a note payable with Integrated Business Concepts, Inc. that is due upon demand and carries and interest rate of 12%.  As of September 30, 2009 the amount owing on the notes is $294,166 which consists of principal in the amount of $199,469 and interest of $94,697.

NOTE 11 – SUBSEQUENT EVENTS

As of the date of this report drilling of the Bond #1-18 well is underway.  The well is expected to be drilled to a total depth of 5450 ft.

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Item 2.  Plan of Operation

This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”, “continue”, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

Critical Accounting Policy and Estimates. Our Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources.

These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in our Quarterly Report on Form 10-Q for the period ended September 30, 2009.

Overview .  Royal Quantum Group Inc. is a public company trading on the OTCBB market under the symbol RYQG.  Royal Quantum is focused on the acquisition, exploration and development of oil and gas and mineral properties located within favorable geo-political climates.

In February 2007 and in reliance on the exemption from registration under Regulation S, we sold 2,653,640 shares at $0.05 for a total of $132,682. We used those funds for working capital.

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On May 9, 2007 we issued 500,000 shares to Phil van Angeren as compensation for his assuming the position of Exploration Manager of the Corporation. These shares have been valued at the market price of $0.29.  Compensation expense of $145,000 has been booked on the accompanying Statement of Operations.

In May 2007, we entered into a Purchase Agreement (“Agreement”) with U3, LLC (“U3”) to acquire a 100% interest in 1,540 acres that consist of 77 claims of prospective uranium property located adjacent to the Sheep Mountain Mine in Fremont County, Central Wyoming, approximately 90 miles southwest of Casper, Wyoming.  We paid $10,000 to U3 when we executed the Agreement on May 28, 2007. However, we later agreed with U3 not to continue to acquire the claims, due to delays in receiving WMC numbers on the claims, and we have requested U3 return the $10,000 as per the agreement terms.  We did not issue any shares pursuant to this Agreement and as of the date of this report have also not received the $10,000.

On June 26, 2007, we issued 333,333 shares of common stock to Randall Lanham in total satisfaction of legal fees in the amount of $20,000.

In January of 2008 the company acquired an option to purchase a 6,000 acre Oil & Gas property located in the state of Ohio. The closing date of the transaction was extended to July 31, 2008 and was subject to financing.

In February of 2008 the company signed an agreement with First Diversified Financial Services (FDFS) and Launchpad Capital to assist the company in securing the necessary capital for the Anderson Oil and Gas project acquisition.  The agreement required payment of USD $100,000 to FDFS as well as 3% of any cash received and 2% of any debt financing completed as a result of FDFS’s efforts.  Launchpad Capital was to receive a fee of 3.5% of the debt and/or equity portion of the funding received by the company as a result of their efforts.

In March 2008, the Company issued 1,820,000 shares in a private placement for $0.10 per Unit.  Each Unit entitled the holder to acquire 1 common share of the company’s stock at $0.10 per share and one share purchase warrant, entitling the holder to purchase one share at a price of $0.15 for a period of 18 months from closing of the private placement, resulting in the Company receiving $182,000 in cash.  The shares were issued in a transaction which the Company believes satisfies the requirements of the Regulation S exemption from the registration and prospectus delivery requirements of the Securities Act of 1933. The Company used those funds for working capital.

In April of 2008 we issued 125,000 shares of restricted stock recorded at $0.47 per share along with a $25,000 cash payment in consideration for an extension on the Anderson Oil & Gas property to May 30, 2008.

In March of 2008 we issued 50,000 shares to M2 Law in settlement of outstanding legal invoices totaling $50,000. The shares were recorded at $0.65 per share for a value of $32,500 and the difference of $17,500 was booked as forgiveness of debt.

In April of 2008 the company issued 100,000 shares in a private placement for $.25 per share which resulted in the Company receiving $25,000 in cash.  The shares were issued in a transaction which the Company believes satisfies the requirements of the Regulation S exemption from the registration and prospectus delivery requirements of the Securities Act of 1933. The Company used those funds for working capital.

In May 2008, the Company issued 580,000 shares in a private placement for $0.25 per Unit.  Each Unit entitled the holder to acquire 1 common share of the company’s stock at $0.25 per share and one share purchase warrant, entitling the holder to purchase one share at a price of $0.40 for a period of 12 months from closing of the private placement, resulting in the Company receiving $145,000 in cash.  The shares were issued in a transaction which the Company believes satisfies the requirements of the Regulation S exemption from the registration and prospectus delivery requirements of the Securities Act of 1933. The Company used those funds for working capital.

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In June 2008 the company received a loan of $500,000 from a private investor.  The loan carried an interest rate of 15% and was due and payable on or before July 31, 2008.  The terms of the note allow for a 1% per week penalty up to a maximum of 10% at which time the note and all outstanding interest and penalties will be converted into 6,250,000 shares of the company’s stock. The Lender had the right at his sole discretion, to convert any unpaid debt, along with any interest due, into free-trading common stock of the Company at a conversion price of forty cents ($0.40) per share. The funds from this loan were used for the Ohio Property Extension payment, payment for a third party engineering evaluation of the Ohio Property and working capital.

In June 2008 we paid $300,000 in consideration for an extension on the Ohio Oil & Gas property to July 31, 2008.

In September 2008 the company issued 6,250,000 shares as settlement for a note ($500,000), interest ($75,000) and penalties ($50,000) totaling $625,000 from a private lender.

In October 2008, the company issued notice to the landowner on the Ohio Oil & Gas property of its intent to not pursue the acquisition of the project.  The company has also issued a demand letter to the land owner for the return of the $300,000 paid in June for the extension.  No response has been received from the land owner to date, the company will continue to pursue the return of the funds.  Since the entire amount is deemed abandoned on December 31, 2008, $475,949 has been written off as an exploration expense.

In April 2009, the company extended the expiration of its Series B warrants to May 8, 2010.

In April 2009, Santeo Financial Corporation agreed to forgive$15,000 of debt owed by the Company in exchange for a 4% interest in the Company’s share of the net revenue received from the Gleason #4-16 well.  The $15,000 was written off of the payable and booked as additional paid in capital.

During the period ending June 30, 2009 the company acquired 36% in the drilling and development of the Gleason #4-16 well located in Oklahoma, USA. The company capitalized $135,785 for the drilling of the well during this period.  The well has been completed and is on production.

In August 2009, the company extended the expiration of its Series A Warrants to September 25, 2010.

During the period ending September 30, 2009 the company raised $137,500 for the drilling of its next well, the Bond.  The company will acquire a 25% interest in this well with 60% of the revenue received from this well being distributed proportionately to the investors.  The company issued 550,000 shares relating to this financing.  The company has also agreed to pay a 10% commission to a 3rd party on the portion of the funds raised by the 3rd party relating to the Bond well.  This commission totaled $12,500 which was in turn converted to an interest in the well.  The company elected to not dilute the investor’s portion of the interest in the well but to dilute the companies remaining interest in the well after paying the investors portion.  Thus the breakdown of the potential revenue from the company’s 25% interest in the Bond well will be as follows: 60% to the investors, 35% to the company and the remaining 5% will be allocated to the 3rd party as per the terms of the commission agreement.  .

Liquidity and Capital Resources.   We had cash of $125,616 and accounts receivable of $9,255 as of September 30, 2009, all of which comprised our total current assets. As of the nine month period ended September 30, 2009, we also had fixed assets of $648 represented by furniture and fixtures of $1,851 less accumulated depreciation of $1,203. The decrease in total fixed assets is due solely to depreciation.  We also had $161,873 of Oil & Gas Property and Deferred Expenditures. Therefore, for the nine month period ended September 30, 2009, we had total assets of $297,392

For the nine month period ended September 30, 2009, we had $553,491 in total current liabilities, which was represented by $93,157 in accounts payable, $294,166 in notes payable, $146,323 in related party accounts payable and $19,845 in shareholder loans.  Therefore, for the nine months ended September 30, 2009 we had total liabilities of $553,491. We had no other long term liabilities, commitments or contingencies.  Other than anticipated explorations costs associated with the mineral and oil interests that we acquire and anticipated increases in the legal and accounting costs of being a public company, we are not aware of any other known trends, events or uncertainties which may affect our future liquidity.

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Results of Operations.

Revenues and Gross Profit (Loss).  We had revenue of $6,755 and associated costs of $10,196 for the nine month period ended September 30, 2009 as compared to no revenue and associated costs  for the nine month period ended September 30, 2008. Therefore, for the nine period ended September 30,2009, we had a loss before other expenses of $3,441.

Operating Expenses and Net Loss. We had a loss from operations of $194,513 for the nine month period ended September 30, 2009, as compared to a loss from operations of $237,200 for the nine month period ended September 30, 2008. For the nine month period ended September 30, 2009, our operating expenses were comprised of general and administrative expenses of $37,477 and consulting fees in the amount of $153,595. We also had $22,121 in interest expense and a $35,811 foreign currency exchange loss. Therefore, our net loss for the nine month period ending September 30, 2009 was $252,445 as compared to a net loss of $349,850 for the nine month period ended September 30, 2008.

Our Plan of Operation for the Next Twelve Months. Our focus is to acquire oil and gas, mineral and resource properties for exploration and development with the intent to bring the projects to feasibility at which time we will either contract out the operations or joint venture the project to qualified interested parties.

We had cash of $125,616 as of September 30, 2009. In the opinion of management, our available funds will not satisfy our working capital requirements for the next twelve months.

In September 2009 the company closed a unit funding at 55 units totaling $137,500.  The Company has a 25% participation in the Bond #1-18 well, with 60% of the company’s net revenue received being allocated proportionally to the unit holders.  The funds were raised via a unit private placement.  Each of the 55 units was priced at $2,500 per unit totaling $137,500 cash and consisted of 10,000 restricted common shares and 20,000 share purchase options at $0.25 per share with an expiration date of March 10, 2011. The Company issued a total of 550,000 shares and 1,100,000 options related to the private placement.  The unit holder also has the option to surrender their interest in the well back to the company in exchange for 10,000 restricted common shares per unit surrendered for a period of 36 months from the date of receipt of the first revenue cheque paid to the unit holders.  The company paid a commission of $12,500 relating to the financing to a 3rd party.  The $12,500 was converted to a 5% interest in the company’s share of the net revenue received from the Bond #1-18 well.

In May 2009 the company closed its intended unit funding at 72 units totaling $180,000.  The Company has a 36% participation in the Gleason #4-16 well, with 67% of the company’s net revenue received being allocated proportionally to the unit holders.  The funds were raised via a unit private placement.  Each of the 72 units was priced at $2,500 per unit totaling $180,000 cash and consisted of 5,000 restricted common shares and 10,000 share purchase options at $0.25 per share with an expiration date of November 15, 2010.  The Company issued a total of 360,000 shares and 720,000 options related to the private placement.  The unit holder also has the option to surrender their interest in the well back to the company in exchange for 5,000 restricted common shares per unit surrendered for a period of 36 months from the date of receipt of the first revenue cheque paid to the unit holders.

The company intends to continue to raise additional capital for participation in additional oil and gas projects.

Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors. We will need to raise additional capital to expand our operations to the point at which we are able to operate profitably. Other than anticipated explorations costs associated with the resource and mineral interests that we acquire and anticipated increases in the legal and accounting costs of being a public company, we are not aware of any other known trends, events or uncertainties, which may affect our future liquidity.

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In the event that we experience a shortfall in our capital, we intend to pursue capital through public or private financing as well as borrowings and other sources, such as our officers, directors and principal shareholders. We cannot guaranty that additional funding will be available on favorable terms, if at all.  If adequate funds are not available, then our ability to expand our operations may be significantly hindered. If adequate funds are not available, we believe that our officers, directors and principal shareholders will contribute funds to pay for our expenses to achieve our objectives over the next twelve months.

Our belief that our officers, directors and principal shareholders will pay our expenses is based on the fact that our officers, directors and principal shareholders collectively own approximately 44.7% of our outstanding common stock. We believe that our officers, directors and principal shareholders will continue to pay our expenses as long as they maintain their ownership of our common stock.

We are not currently conducting any research and development activities.  We do not anticipate conducting such activities in the near future. We do not anticipate that we will purchase or sell any significant equipment. In the event that we expand our customer base, then we may need to hire additional employees or independent contractors as well as purchase or lease additional equipment.

Off-Balance Sheet Arrangements.  We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. We maintain controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed as of September 30, 2009, the date of this report, our chief executive officer and the principal financial officer concluded that our disclosure controls and procedures were effective.

Item 4(T). Controls and Procedures.

Changes in internal controls. There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Not applicable.

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

None.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Submission of Matters to Vote of Security Holders

None.

Item 5.  Other Information

None.

Item 6.  Exhibits

31. Rule 13a-14(a)/15d-14(a) Certifications.

32. Section 1350 Certifications.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Royal Quantum Group, Inc.
	a Nevada corporation
November 20, 2009	By:	/s/ Ron Ruskowsky
		Ron Ruskowsky
	Its:	Principal executive officer
		Principal accounting officer
		President, CEO and a director
November 20, 2009	By:	/s/ Roger Janssen
		Roger Janssen
	Its:	Vice-President, Secretary and a director