American Energy 10-Q 2018 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2018
¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM ___ TO ___

Commission file number: 0-26402

THE AMERICAN ENERGY GROUP, LTD.

(Exact name of registrant as specified in its charter)

Nevada	87-0448843
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer  Identification No.)
20 Nod Hill Road Wilton, Connecticut	06897
(Address of principal executive offices)	(Zip code)

(Registrant’s telephone number 203/222-7315)

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under section 12(g) of the Act:

Common Stock, Par Value $.001 Per Share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ¨

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨

APPLICABLE ONLY TO CORPORATE ISSUERS

As of May 23, 2018, the number of Common shares outstanding was 73,547,147

THE AMERICAN ENERGY GROUP, LTD.

INDEX TO FORM 10-Q

		PAGE
PART I-FINANCIAL INFORMATION PAGE
Item 1.	Financial Statements (unaudited)
Item 2.	Management’s Discussion and Analysis of Financial Condition And Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	11
Items 4 and 4T.	Controls and Procedures	11
PART II-OTHER INFORMATION
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Mine Safety Disclosures	12
Item 5.	Other Information	12
Item 6.	Exhibits	13

2

PART I-FINANCIAL INFORMATION

THE AMERICAN ENERGY GROUP, LTD.

Condensed Consolidated Balance Sheets

	March 31,			June 30,
	2018			2017
	(Unaudited)
Assets
Current Assets
Cash	$	4,453		$	70,254
Prepaid expenses		2,578			27,801
Total Current Assets		7,031			98,055
Property and Equipment
Office equipment		25,670			25,670
Accumulated depreciation		(24,350	)		(24,012	)
Net Property and Equipment		1,320			1,658
Total Assets	$	8,351		$	99,713
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable	$	63,835		$	57,013
Note payable		-			25,833
Accrued liabilities		837,689			646,146
Derivative liability		76,514			-
Notes payable – related parties – current portion		320,000			300,000
Total Current Liabilities		1,298,038			1,028,992
Non-Current Liabilities
Notes payable – related parties, less current portion		1,620,389			1,447,000
Total Liabilities		2,918,427			2,475,992
Stockholders’ Deficit
Common stock, par value $0.001 per share; authorized 80,000,000 shares; 72,832,862 and 70,118,576 shares issued and outstanding, respectively		72,833			70,119
Capital in excess of par value		18,648,600			18,461,314
Accumulated deficit		(21,631,509	)		(20,907,712	)
Total Stockholders’ Deficit		(2,910,076	)		(2,376,279	)
Total Liabilities and Stockholders’ Deficit	$	8,351		$	99,713

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

3

THE AMERICAN ENERGY GROUP, LTD.

Condensed Consolidated Statements of Operations

For the Three Months and Nine Months Ended March 31, 2018 and 2017

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31,			March 31,			March 31,			March 31,
	2018			2017			2018			2017
Revenue	$	-		$	-		$	-		$	-
Expenses
Administrative salaries		94,067			23,367			180,891			81,804
Legal and professional		101,403			61,557			255,191			292,494
General and administrative		54,121			39,749			136,201			124,284
Office overhead expenses		-			-			-			687
Depreciation		112			127			338			382
Total Expenses		249,703			124,800			572,621			499,651
Net Operating Income (Loss)		(249,703	)		(124,800	)		(572,621	)		(499,651	)
Other Income and (Expense)
Change in fair value of derivative liabilities		(76,514	)		-			(76,514	)		-
Loss on extinguishment of debt		-			-			-			(258,183	)
Interest expense		(26,184	)		(21,434	)		(74,662	)		(82,861	)
Total Other Income (Expense)		(102,698	)		(21,434	)		(151,176	)		(341,044	)
Net Income (Loss) Before Taxes		(352,401	)		(146,234	)		(723,797	)		(840,695	)
Income Taxes		-			-			-			-
Net Income (Loss)	$	(352,401	)	$	(146,234	)	$	(723,797	)	$	(840,695	)
Earnings per Share
Basic and Fully Diluted	$	.00		$	.00		$	(.01	)	$	(.01	)
Weighted Average Number of Shares Outstanding
Basic and Fully Diluted		71,890,798			66,986,830			71,047,930			66,823,854

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

4

THE AMERICAN ENERGY GROUP, LTD.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended March 31, 2018 and 2017

(Unaudited)

	2018			2017
Cash Flows From Operating Activities
Net Income (Loss)	$	(723,797	)	$	(840,695	)
Adjustments to reconcile net loss to net cash (used in) operating activities:
Depreciation		338			382
Loss on extinguishment of debt		-			258,183
Non-cash expense related to commitment of common stock in excess of authorized shares		76,514			-
Amortization of debt discount		-			17,865
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses		25,223			25,226
Increase (decrease) in accounts payable		6,822			(15	)
Increase (decrease) in accrued expenses and other current liabilities		191,543			134,966
Net Cash (Used In) Operating Activities		(423,357	)		(404,088	)
Cash Flows From Financing Activities
Proceeds from the issuance of note payable – related party		193,389			220,000
Principal payments on notes payable		(25,833	)		(28,654	)
Proceeds from the issuance of common stock		190,000			222,000
Net Cash Provided By Financing Activities		357,556			413,346
Net Increase (Decrease) in Cash		(65,801	)		9,258
Cash and Cash Equivalents, Beginning of Period		70,254			213
Cash and Cash Equivalents, End of Period	$	4,453		$	9,471
Cash Paid For:
Interest	$	7,369		$	4,829
Taxes	$	-		$	-
Non-Cash Financing Activities:
Common stock issued in satisfaction of accounts payable and accrued expenses	$	-		$	-
Common stock issued for services rendered	$	-		$	-

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

5

THE AMERICAN ENERGY GROUP, LTD.

Notes to the Unaudited Financial Statements

March 31, 2018

Note 1 – General

The accompanying unaudited condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed financial statements be read in conjunction with the Company’s audited financial statements and notes thereto included in its June 30, 2017 Annual Report on Form 10-K. Operating results for the three months and nine months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending June 30, 2018.

Note 2 – Basic Loss Per Share of Common Stock

	Three Months Ended						Nine Months Ended
	March 31,			March 31,			March 31,			March 31,
	2018			2017			2018			2017
Income (Loss) (numerator)	$	(352,401	)	$	(146,234	)	$	(723,797	)	$	(840,695	)
Basic and Fully Diluted Shares (denominator)		71,890,798			66,986,830			71,047,930			66,823,854
Basic Income (Loss) Per Share	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)

The basic loss per share of common stock is based on the weighted average number of shares issued and outstanding during the period of the financial statements. Stock warrants convertible into 10,933,334 shares of common stock have not been included in the fully diluted income per share calculation for the three or nine months ended March 31, 2018 or the three and nine months ended March 31, 2017, because their inclusion would be anti-dilutive, thereby reducing the net loss per common share.

Note 3 – Derivative Liability

The Company computes the fair value of the derivative liability arising from the over commitment of shares at each reporting period with the change in the fair value recorded as non-cash expense or non-cash income. The key component in the value of the derivative liability is the Company’s stock price, which is subject to significant fluctuation and is not under the Company’s control. Therefore, the resulting effect on net loss is subject to significant fluctuation and will continue to be so until the Company’s outstanding warrants are converted into common stock, or the Company increases its authorized shares in excess of its committed shares. Assuming all other fair value inputs remain constant, the Company will record non-cash expense when its stock price increases and non-cash income when its stock price decreases.

When the Company determines that is does not have sufficient shares to meet the obligations of derivative unexercised warrants, the derivatives must be valued using the Black Scholes option pricing model and a liability is recorded as though the obligations would be settled using some means other than stock. For the nine months ended March 31, 2018, the Company determined that it was over committed to the number of shares issuable on the exercise of outstanding warrants for approximately 3,800,000 shares, resulting in the recognition of non-cash expenses of $76,514 during the nine months ended March 31, 2018.

Note 4 - Common Stock

During August 2017, the Company issued 714,286 shares of common stock for cash at $0.07 per share for proceeds of $50,000.

During December 2017, the Company issued 142,857 shares of common stock for cash at $0.07 per share for proceeds of $10,000.

During February 2018, the Company issued 1,071,429 shares of common stock for cash at $0.07 per share for proceeds of $75,000.

During March 2018, the Company issued 214,286 shares of common stock for cash at $0.07 per share for proceeds of $15,000.

6

THE AMERICAN ENERGY GROUP, LTD.

Notes to the Unaudited Financial Statements

March 31, 2018

Note 5 – Notes Payable – Related Parties

During the nine months ended March 31, 2018, the Company borrowed $115,000 from a current shareholder with interest at 5%, payable in full at maturity.

During the nine months ended March 31, 2018, the Company borrowed an additional $4,000 from an individual investor with interest at 2.5%, payable in full in one year.

During the nine months ended March 31, 2018, the Company borrowed an additional $74,389 from an officer at 0%, payable in full in one year.

For the three and nine months ended March 31, 2018, the Company incurred interest expense on these notes payable in the amount of $23,117 and $67,293, respectively as compared to $21,125 and $60,166, respectively, for the three and nine months ended March 31, 2017.

Note 6 – Warrants

During the nine months ended March 31, 2018, no stock warrants were issued.

A summary of the status of the Company’s stock warrants as of March 31, 2018 is presented below:

	Stock Warrants		Exercise Price		Weighted Ave. Exercise Price
Outstanding and Exercisable, June 30, 2017		10,933,334	$	0.10-0.20	$	0.14
Granted		-	$	-	$	-
Expired/Canceled		-	$	-		-
Exercised		-	$	-		-
Outstanding and Exercisable, March 31, 2018		10,933,334	$	0.10-0.20	$	0.14

A summary of outstanding stock warrants at March 31, 2018 follows:

Number of Common Stock Equivalents		Expir. Date	Remaining Contracted Life (Years)		Exercise Price		Weighted Ave Exer. Price
	2,333,334	February 2020		2.000	$	0.10	$	0.10
	1,500,000	February 2020		2.000	$	0.10	$	0.10
	2,600,000	May 2018		.250	$	0.15	$	0.15
	2,000,000	February 2020		2.000	$	0.20	$	0.20
	1,000,000	February 2020		2.000	$	0.20	$	0.20
	500,000	February 2020		2.000	$	0.10	$	0.10
	1,000,000	February 2020		2.000	$	0.10	$	0.10

7

THE AMERICAN ENERGY GROUP, LTD.

Notes to the Unaudited Financial Statements

March 31, 2018

Note 7 – Other Contingencies – Litigation

In August, 2014, we initiated separate legal actions in Pakistan for an injunction against Sui Southern Gas Company Limited (“Sui Southern”) and Hycarbex-American Energy, Inc. (“Hycarbex”), respectively, in furtherance of the prior interim orders of the Arbitration Tribunal. The new action filed in the Sindh, Karachi High Court named as defendants Sui Southern, Hycarbex, its parent company, Hycarbex Asia Pte. Ltd. (“Hycarbex Asia”) and two additional pro forma defendants and requests an injunction against Sui Southern against payment to Hycarbex of 18% of the total proceeds of gas sales. The requested injunction was granted to us by the Karachi Court but later vacated as premature as it pertains to the third party gas gatherer. However, we also filed in the Islamabad High Court an action against Hycarbex, Hycarbex Asia and Hydro Tur as defendants and obtained injunctive relief against Hycarbex from interference with the Arbitration Tribunal-ordered notifications to Sui Southern to pay us directly our 18% of production, and injunctive relief requiring Hycarbex to escrow the 18% of production which would have been payable to the Company. On April 15, 2015, the ICC Arbitration Tribunal rendered its Partial Final Award in the pending arbitration proceedings which declared that the November 9, 2003 Stock Purchase Agreement between the Company, Hycarbex and Hydro-Tur, which was amended on February 16, 2004, and December 15, 2009, is void ab initio and of no legal effect on account of the fraud and misrepresentations of Hycarbex, Hydro-Tur and Hycarbex-Asia and that the Company is thus the 100% owner of the common stock of Hycarbex relating back to the original Stock Purchase Agreement date of November 9, 2003. In connection with its findings, the ICC Arbitration Tribunal ordered that the register of shareholders for Hycarbex be corrected to reflect the Company as the owner of 100% of the common stock, that Hycarbex and Hycarbex-Asia take any and all steps necessary to effect the rectification of the register of shareholders of Hycarbex to reflect the Company as the owner of 100% of the common stock, and that Hycarbex and Hycarbex-Asia bear all costs of the arbitration proceedings, including the Company’s legal costs, which costs and fees are to be fixed by the ICC Arbitration Tribunal in a subsequent award after submission of the total costs and fees by AEGG. The ICC Arbitration Tribunal dismissed Hydro-Tur’s application for costs. The April 15 Award makes moot certain of the pending actions in Pakistan due to the recovery of ownership of 100% of the stock of Hycarbex.

The Company has effected the shareholder and management registration changes ordered by the ICC and has caused Hycarbex to open a new office in Islamabad, Pakistan for Hycarbex’s future operations. The new management of Hycarbex has also assumed control of Hycarbex’s Pakistan personnel. Finally, the new management of Hycarbex has begun its efforts to assume complete control of the Pakistan-based assets, including review and appraisement of each asset and interfacing with the local oil and gas regulatory authorities with jurisdiction over those assets to assure regulatory compliance. The Government of Pakistan, including the Ministry of Petroleum, the Director General of Petroleum Concessions, the Securities and Exchange Commission of Pakistan and the Pakistan Board of Investment have each advised that they view the Company as the legal owner of Hycarbex. Further, subsequent to March 31, 2018, the Government of Pakistan granted to Hycarbex an extension to the Yasin Exploration License relating back to the date of the request for extension in March, 2013. Planning has been initiated toward development and exploration activities for the Yasin Exploration License based on this extension. The extension is subject to performance requirements pertaining to seismic, rework of the Haseeb #1 Well and the work program financial obligations which are being reviewed by Management and which will be discussed with the Government of Pakistan as the work at the site moves forward. Management intends to conduct a detailed review of the benefits and obligations associated with these Pakistan-based assets.

Note 8 – Going Concern

The Company’s financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments related to the recoverability of assets or classification of liabilities that might be necessary should the Company be unable to continue as a going concern. At March 31, 2018, the Company’s current liabilities exceeded its current assets and it has recorded negative cash flows from operations. The preceding circumstances combine to raise substantial doubt about the Company’s ability to continue as a going concern. Management has been successful in capital raises in the past to continue operations, but there can be no assurance that success will continue in the future.

Note 9 – Subsequent Events

In accordance with ASC 855-10, management of the Company has reviewed all material events from March 31, 2018 through the date the financial statements were issued. Subsequent to March 31, 2018 the Company received $50,000 from a current shareholder relating to a stock purchase agreement entered into after the quarter ended March 31, 2018 whereby the shareholder agreed to purchase 714,286 shares of common stock for a total purchase price of $50,000. Subsequent to March 31, 2018, the Company borrowed $50,000 from a current shareholder with interest at 5% payable in full at maturity.

8

ITEM 2-MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains statements about the future, sometimes referred to as “forward-looking” statements. Forward-looking statements are typically identified by the use of the words “believe,” “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “project,” “propose,” “plan,” “intend” and similar words and expressions. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that describe our future strategic plans, goals or objectives are also forward-looking statements.

Readers of this report are cautioned that any forward-looking statements, including those regarding the Company or its management’s current beliefs, expectations, anticipations, estimations, projections, proposals, plans or intentions, are not guarantees of future performance or results of events and involve risks and uncertainties, such as:

· The future results of drilling individual wells and other exploration and development activities;

· Future variations in well performance as compared to initial test data;

· Future events that may result in the need for additional capital;

· Fluctuations in prices for oil and gas;

· Future drilling and other exploration schedules and sequences for various wells and other activities;

· Uncertainties regarding future political, economic, regulatory, fiscal, taxation and other policies in Pakistan;

· Our future ability to raise necessary operating capital.

The forward-looking information is based on present circumstances and on our predictions respecting events that have not occurred, which may not occur or which may occur with different consequences from those now assumed or anticipated. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the risk factors detailed in this report. The forward-looking statements included in this report are made only as of the date of this report. We are not obligated to update such forward-looking statements to reflect subsequent events or circumstances.

Overview

On April 15, 2015, the ICC Arbitration Tribunal rendered its Partial Final Award in the pending arbitration proceedings which declared that the November 9, 2003 sale of 100% of the stock of Hycarbex is void ab initio and of no legal effect on account of the fraud and misrepresentations of Hycarbex, Hydro-Tur and Hycarbex-Asia, thereby returning the Company to its 100% ownership position of the common stock of Hycarbex which it held in calendar 2003. In connection with its findings, the ICC Arbitration Tribunal ordered that the register of shareholders for Hycarbex be corrected to reflect the Company as the owner of 100% of the common stock, that Hycarbex and Hycarbex-Asia take any and all steps necessary to effect the rectification of the register of shareholders of Hycarbex to reflect the Company as the owner of 100% of the common stock, and that Hycarbex and Hycarbex-Asia bear all costs of the arbitration proceedings, including the Company’s legal costs, which costs and fees are to be fixed by the ICC Arbitration Tribunal in a subsequent award after submission of the total costs and fees by AEGG. The ICC Arbitration Tribunal dismissed Hydro-Tur’s application for costs. The April 15 Award made moot certain of the pending actions in Pakistan due to the recovery of ownership of 100% of the stock of Hycarbex. The Company has effected the shareholder and management registration changes ordered by the ICC and has caused Hycarbex to open a new office in Islamabad, Pakistan for Hycarbex’s future operations. New management of Hycarbex has also assumed control of Hycarbex’s Pakistan personnel. New Hycarbex management has begun its efforts to assume complete control of the Pakistan-based assets, including review and appraisement of each asset, interfacing with the local oil and gas regulatory authorities with jurisdiction over those assets to assure regulatory compliance, and continuation of legal proceedings where necessary to enforce its rights. The Government of Pakistan, including the Ministry of Petroleum, the Director General of Petroleum Concessions, the Securities and Exchange Commission of Pakistan and the Pakistan Board of Investment have each advised that they view the Company as the legal owner of Hycarbex. Further, subsequent to March 31, 2018, the Government of Pakistan granted to Hycarbex an extension to the Yasin Exploration License relating back to the date of the request for extension in March, 2013. Planning has been initiated toward development and exploration activities for the Yasin Exploration License based on this extension. The extension is subject to performance requirements pertaining to seismic, rework of the Haseeb #1 Well and the work program financial obligations which are being reviewed by Management and which will be discussed with the Government of Pakistan as the work at the site moves forward. Management intends to conduct a detailed review of the benefits and obligations associated with these Pakistan-based assets.

9

During the year ended June 30, 2016, we were advised by Heritage Oil and Gas Limited (Heritage), the operator of both the Zamzama North and the Sanjawi Exploration Licenses, that both a Notice of Termination (Sanjawi Petroleum Concession Agreement – notice dated February 12, 2016) and a Notice of Breach (Zamzama North Petroleum Concession Agreement – notice dated February 22, 2016) were issued to Heritage by the Director General of Petroleum Concessions of the Government of Pakistan. With respect to the Sanjawi Petroleum Concession, Heritage has acknowledged and accepted the notice of termination in regards to the Sanjawi Petroleum Concession Agreement because of local safety concerns which could substantially impair development operations.. With regard to the Notice of Breach pertaining to the Zamzama North Petroleum Concession Agreement, Heritage has contested the notice while asserting that all reasonable efforts have been made to fulfill its work commitments and financial obligations under the Concession Agreement but was prevented from achieving the tasks for reasons outside its control. Despite the force majeure assertions under the terms of the Concession Agreement to the DGPC, we have determined that it is reasonably possible that our working interest investment in the Zamzama North Block may be lost if the Concession Agreement is terminated.

Results of Operations

Our operations for the three months and nine months ended March 31, 2018 reflected net (losses) of $(352,401) and $(723,797), respectively, as compared to net losses of $(146,234) and $(840,695), respectively, for the three and nine months ended March 31, 2017.

Liquidity and Capital Resources

We have funded our operations through private loans and the private sale of securities due to the non-payment by Hycarbex of the 18% of production revenues from the Haseeb #1 Well while the litigation and arbitration proceedings with the Hycarbex parties was ongoing. We sold 1,857,143 shares during the nine months ended March 31, 2018 for $130,000 and subsequent to the quarter ended March 31, 2018 have received the balance of an additional $50,000 for which we will issue an additional 714,286 shares. The funds have been and will continue to be utilized for general and administrative expenses incurred by the Company, including the non-recurring legal and accounting costs associated with the pending litigation in Pakistan and, where necessary, the administrative expenses incurred by the newly acquired subsidiary, Hycarbex.

While the April 15 Arbitration Award decreed that we are the 100% owner of Hycarbex, the recent cessation of production from the Haseeb #1 Well due to water infusion into the wellbore will mean that production revenues will not be available as a source of capital unless and until the well is successfully reworked to correct the problem and re-establish commercial production. Based upon available cost estimates, management believes that Hycarbex can bear these workover costs has formulated the workover plan. While a successful workover of the Haseeb #1 Well cannot be assured, due to the available technical data, management believes that the well can be repaired so as to re-establish commercial gas production. Management is likewise optimistic that its ongoing negotiations with potential strategic development partners will result in the consummation of a transaction which will provide needed capital for the development of the other Hycarbex exploration licenses and funding of future administrative costs. We will seek additional loans or make additional sales of securities in the future, as necessary, to fund the Company’s working capital needs as they arise in the event that the anticipated results are not achieved. There is no assurance of management’s ability to secure loans or consummate securities sales to meet working capital requirements.

10

Off Balance Sheet Arrangements

We had no off balance sheet arrangements during the three months ended March 31, 2018.

ITEM 3-QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not a party to nor does it engage in any activities associated with derivative financial instruments, other financial instruments and/or derivative commodity instruments.

ITEMS 4 AND 4T - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2018, these disclosure controls and procedures were not effective to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no material changes in internal control over financial reporting that occurred during the first fiscal quarter that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Inherent Limitations Over Internal Controls

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

11

PART II-OTHER INFORMATION

ITEM 1-LEGAL PROCEEDINGS

On April 15, 2015, the ICC Arbitration Tribunal rendered its Partial Final Award in the pending arbitration proceedings which declared that the November 9, 2003 sale of 100% of the stock of Hycarbex is void ab initio and of no legal effect on account of the fraud and misrepresentations of Hycarbex, Hydro-Tur and Hycarbex-Asia, thereby returning the Company to its 100% ownership position of the common stock of Hycarbex. In connection with its findings, the ICC Arbitration Tribunal ordered that the register of shareholders for Hycarbex be corrected to reflect the Company as the owner of 100% of the common stock, that Hycarbex and Hycarbex-Asia take any and all steps necessary to effect the rectification of the register of shareholders of Hycarbex to reflect the Company as the owner of 100% of the common stock, and that Hycarbex and Hycarbex-Asia bear all costs of the arbitration proceedings, including the Company’s legal costs, which costs and fees are to be fixed by the ICC Arbitration Tribunal in a subsequent award after submission of the total costs and fees by AEGG. The ICC Arbitration Tribunal dismissed Hydro-Tur’s application for costs. The April 15 Award made moot certain of the pending actions in Pakistan due to the recovery of ownership of 100% of the stock of Hycarbex.

The Company has effected the shareholder and management registration changes ordered by the ICC and has caused Hycarbex to open a new office in Islamabad, Pakistan for Hycarbex’s future operations. New management of Hycarbex has also assumed control of Hycarbex’s Pakistan personnel. New Hycarbex management has begun its efforts to assume complete control of the Pakistan-based assets, including review and appraisement of each asset, interfacing with the local oil and gas regulatory authorities with jurisdiction over those assets to assure regulatory compliance, and continuation of legal proceedings where necessary to enforce its rights. The Government of Pakistan, including the Ministry of Petroleum, the Director General of Petroleum Concessions, the Securities and Exchange Commission of Pakistan and the Pakistan Board of Investment have each advised that they view the Company as the legal owner of Hycarbex. Further, subsequent to March 31, 2018, the Government of Pakistan granted to Hycarbex an extension to the Yasin Exploration License relating back to the date of the request for extension in March, 2013. Planning has been initiated toward development and exploration activities for the Yasin Exploration License based on this extension. The extension is subject to performance requirements pertaining to seismic, rework of the Haseeb #1 Well and the work program financial obligations which are being reviewed by Management and which will be discussed with the Government of Pakistan as the work at the site moves forward. Management intends to conduct a detailed review of the benefits and obligations associated with these Pakistan-based assets.

ITEM 1A-RISK FACTORS

Not applicable.

ITEM 2-UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the quarter ended March 31, 2018, we sold to a private investor 1,857,143 shares for $130,000. The funds raised were applied to salaries, office rent, legal and accounting expenses and other general and administrative expenses incurred, including the costs associated with our pending litigation with Hycarbex.

ITEM 3-DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4-MINE SAFETY DISCLOSURES

None.

ITEM 5-OTHER INFORMATION

None.

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ITEM 6-EXHIBITS

The following documents are filed as Exhibits to this report:

Exhibit 31.1	Certification by R. Pierce Onthank, President, Chief Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a);
Exhibit 32.1	Certification by R. Pierce Onthank, President, Chief Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Section 1350(a) and (b).
101	Interactive data files pursuant to Rule 405 of Regulation S-T

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE AMERICAN ENERGY GROUP, LTD.
DATED: May 23, 2018	By:	/s/ R. Pierce Onthank
		R. Pierce Onthank, President, Chief Executive
		Officer, Principal Financial Officer and Director

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