AMERICAN ENERGY GROUP LTD - FORM 10-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934

FOR FISCAL YEAR ENDED JUNE 30, 2014

¨ 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.

(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.)

1 Gorham Island, Suite 303
Westport, Connecticut		06880
(Address of principal executive offices)		(Zip code)

(Issuer’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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the issuer 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, 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	¨	Non-accelerated filer	¨
Accelerated filer	¨	Smaller reporting company	x

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity as of October 14, 2014, was $7,518,883.

As of October 14, 2014, the number of Common shares outstanding was 52,154,716

DOCUMENTS INCORPORATED BY REFERENCE – None

THE AMERICAN ENERGY GROUP, LTD.

INDEX TO FORM 10-K

		PAGE
PART I

Items 1and 2.	Business and Properties	3

Item 1A.	Risk Factors	8

Item 1B.	Unresolved Staff Comments	14

Item 3.	Legal Proceedings	14

Item 4.	Mine Safety Disclosures	15

PART II

Item 5.	Market For Common Equity and Related Stockholder Matters and Issuer Purchase of Equity Securities	16

Item 6.	Selected Financial Data	17

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 7A	Quantitative and Qualitative Disclosures About Market Risk	21

Item 8.	Financial Statements and Supplementary Data	22

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	22

Item 9A	Controls and Procedures	22

Item 9B	Other Information	22

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	23

Item 11.	Executive Compensation	24

Item 12.	Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters	25

Item 13.	Certain Relationships and Related Transactions, and Director Independence	26

Item 14.	Principal Accounting Fees and Services	26

PART IV

Item 15.	Exhibits and Financial Statement Schedules	27

SIGNATURES		28

PART I

ITEMS 1 AND 2 – BUSINESS AND PROPERTIES.

Overview

Until our 2002 bankruptcy filing, we were an independent oil and natural gas company engaged in the exploration, development, acquisition and production of crude oil and natural gas properties in the Texas gulf coast region of the United States and in the Jacobabad area of the Republic of Pakistan. We emerged from bankruptcy in January 2004 with two assets, a non-producing 18% gross production interest in the Yasin 2768-7 Block in Pakistan, and a non-producing working interest in an oil and gas lease in Galveston County, Texas. While the bankruptcy proceedings were pending, our producing oil and gas leases in Fort Bend County, Texas were foreclosed by a secured lender. Our non-producing Galveston County, Texas oil and gas lease rights were not affected by the foreclosure. In November 2003, we sold the capital stock of our then existing subsidiary, Hycarbex-American Energy, Inc., which held the exploration license in Pakistan, to Hydro Tur (Energy) Ltd., a company organized under the laws of the Republic of Turkey (“Hydro Tur”). We retained an 18.0% gross production interest in future production. We emerged from bankruptcy in January 2004 with these two assets intact and with our sole business being the maintenance and management of these assets.

Acquisition of the Original Pakistan Concession and the 18% Production Interest in the Yasin Concession

In April 1995, our wholly owned subsidiary at the time, Hycarbex-American Energy, Inc., acquired an exploration license for the Jacobabad (2768-4) Block in the Sindh Province of the Middle Indus Basin of Pakistan, approximately 230 miles northeast of the port city of Karachi. At that time, our assets and the assets of our subsidiaries included both North American and Pakistan development properties. Original exploration efforts on the Jacobabad Block indicated the presence of commercially viable natural gas in the area, but a commercial well was not achieved. On August 11, 2001, Hycarbex was awarded a new exploration license on the Yasin (2768-7) Block. Hycarbex was, at the time, required to relinquish some of its Jacobabad Concession acreage. Due to management’s belief that the acreage held great potential based upon geologic analysis and gas shows which appeared in the drilling of the Jacobabad wells, Hycarbex negotiated a simultaneous surrender of some of the Jacobabad acreage while retaining the desired acreage as part of the new Yasin Concession. As indicated below, in the latter stages of our bankruptcy proceedings, we sold all of the stock of our Hycarbex subsidiary to Hydro Tur (Energy) Ltd. and received an 18% gross royalty in the future production from the Yasin Concession.

Acquisition of Zamzama North and Sanjawi Working Interests

On October 29, 2009, we executed an agreement to acquire from Hycarbex a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan. Each concession block is operated by Heritage Oil and Gas Limited. Heritage Oil and Gas Limited is an affiliate of Heritage Oil, plc, an independent oil and gas company which focuses its oil and gas operations on Africa, the Middle East, and Russia. Heritage Oil’s shares trade on the London Stock Exchange under the symbol HOIL with a secondary listing on the Toronto Stock Exchange under the symbol HOC. Other working interest participants in the two Blocks are Sprint Energy (Private) Limited, an affiliate of Pakistan-based JS Group, and Trakker Energy (Private) Limited, an affiliate of Pakistan-based TPL Holdings, Ltd. Under the terms of the agreement, our 2-1/2% working interests are “carried” by Hycarbex for the initial two (2) wells on the Sanjawi Block and the initial three (3) wells on the Zamzama North Block. The term “carried” means that the costs associated with work programs, seismic, road preparation, drillsite preparation, rig and equipment mobilization, drilling, reworking, testing, logging completion and governmental fees (except taxes on production) shall be borne entirely by Hycarbex. Infrastructure costs such as pipelines and surface facilities constructed after the first discovery well on each Block are not carried. After the initial carried wells have been drilled, we will be required to bear our proportionate share of drilling and exploration costs. The agreement provides an option to The American Energy Group, Ltd. to convert our working interest in any well at any time to a 1.5% gross royalty interest free of any exploration costs or operating costs.

Galveston County, Texas Assets

In June 1997, we purchased the interests of Luck Petroleum Corporation (“Luck”) in two oil and gas leases in Galveston County, Texas. The leases are situated in an area of the Texas Gulf Coast which is productive in multiple zones or horizons and the leases themselves have produced commercial quantities of oil and gas from both shallow and mid-range zones. In 1986, Luck assigned these mid-range zones to Smith Energy, reserving for itself an “after-payout” 15% back-in working interest. Luck also limited the depths assigned to Smith Energy, thereby resulting in depths generally greater than 10,000 feet being entirely reserved to Luck, except for a small overriding royalty in the deep zones which was also conveyed to Smith Energy. We succeeded to the interests of Luck free of liens and encumbrances as a result of the 1997 purchase. With regard to the mid-range zones, once “payout” has occurred, as defined in the 1986 conveyance by Luck to Smith Energy, we were entitled to receive 15% of the monthly working interest production from the existing Smith Energy wells on the leases. The leases also include deep zones under the leases which were acquired from Luck in which we own 100% of the working interest.

We previously notified Smith Energy of our claim that the 15% interest in the mid-range zones had matured and filed a bankruptcy proceeding against Smith Energy to obtain an accounting. Smith Energy contested this assertion resulting in a dispute over relative rights of the parties. We dismissed the suit in the bankruptcy court with the intention of pursuing civil litigation against Smith Energy in the Texas state court system. However, on April 14, 2006, we entered into a Compromise Settlement Agreement with Smith Energy and Howard A. Smith, fully resolving the dispute without the need for further litigation. Under the settlement terms, we have agreed to relinquish our 15% back-in interest in the mid-range zones in exchange for Smith Energy’s overriding royalties in the deep zones, access to Smith Energy’s existing seismic data covering the leases, and a stipulation by Smith Energy that we can operate all wells drilled by us or our agents in the deep zones and, where needed, utilize existing Smith Energy roads, water injection wells, and other facilities.

Our management has explored some of the opportunities to realize value from these deep rights, including potential farmout or sale. The best course for these assets has not been determined, but the leases are held in force by third party production and, therefore, do not require development of these rights by a certain date.

Bankruptcy Proceedings and Sale of Hycarbex Subsidiary

On June 28, 2002, involuntary bankruptcy proceedings were initiated against us in the Southern District of Texas, which were converted to Chapter 11 debtor-in-possession proceedings in December 2002. In the first quarter of 2003, our primary secured lender obtained the approval of the Bankruptcy Court to foreclose all of the Texas-based oil and gas leases except the leases in Galveston County, Texas. At the time, the status of the exploration license for the Yasin Concession was also under close governmental scrutiny due to the financial and continuous drilling requirements imposed under the terms of the license by the Pakistan Government. In November 2003, after management concluded negotiations with several interested prospective purchasers, we reached an agreement with Hydro Tur (Energy) Ltd. (“Hydro Tur”) to sell to Hydro Tur all of our interest in the stock of our then-existing subsidiary, Hycarbex-American Energy, Inc. Hydro Tur was selected as the purchaser due to its strong financial background, its commitment to implement a multiple well development of the Yasin Concession and its willingness to assign to us an 18% gross royalty on oil and gas production from all acreage in the concession for as long as the concession exists.

Pursuant to our Second Amended Plan of Reorganization which was approved by the Bankruptcy Court on September 3, 2003, all outstanding shares of common and preferred stock were cancelled and the issuance of new shares of common stock to the bankruptcy creditors was authorized by the Court. We emerged from bankruptcy in January 2004 with new management, virtually debt-free, and with our outstanding common stock reduced to almost one third of pre-bankruptcy level. We emerged from bankruptcy as a restructured company, focused upon acquiring and developing new oil and gas-based projects through prudent management of our two assets, the 18% gross production interest in the Yasin Concession in Pakistan and our working interests in our oil and gas leases in Galveston County, Texas.

Pakistan Activities and Additional Opportunities

Pakistan has a very large sedimentary area of 827,268 square kilometers (319,325 square miles). Most of this area remains virgin and unexplored. According to the Ministry of Petroleum and Natural Resources (“MPNR”), cumulative drilling within Pakistan has resulted in a very encouraging success ratio of 1:3.2. There have been 850 exploratory wells drilled through September 2013 and there have been 271 oil and gas fields discovered (62 oil and 209 gas and oil) through September, 2012. A total of 97 wells were drilled during the 2012-2013 year. According to the Ministry, oil production reached 76,277 barrels per day during 2012-2013 and gas production reached 4.259 billion cubic feet per day during 2011-12. The Pakistani government’s current liberal policies toward foreign investment and development of these resources have fostered a great deal of activity and opportunities to acquire exploration rights in these undeveloped areas. According to the Ministry, during the last three fiscal years of the Ministry, 32 concession agreements were signed.

Relevant Features of Pakistan Oil and Gas Laws

In Pakistan, exploration licenses are awarded directly by the office of the President. Under the current rules, the term of each concession is twenty five (25) years with the opportunity for a five (year) extension. The rules are silent as to extensions beyond 30 years, but recent aggressive efforts by the government to privatize the oil and gas industry have resulted in requests from potential private bidders to clarify the possibility of additional extensions if wells continue to produce. At the time of a concession award, the recipient is awarded a 95% working interest and the remaining 5% is awarded to the government-owned Government Holdings (Private) Limited (“GHPL”). A twelve and one half percent (12.5%) royalty is also retained by the government of Pakistan. The 5% working interest held by GHPL is a “carried interest” and thus does not share in the costs of drilling and completion of the wells. Production profits and gains (as determined by a 1979 Income Tax Ordinance) are subject to a forty percent (40%) income tax. The working interest owners (other than GHPL) are also required to pay the President a production bonus should the production achieve certain milestones. A bonus of $500,000 is the first threshold at commencement of Commercial Production, then $1,000,000 upon achieving 30 million barrels of oil equivalent (“BPOE”), then $1,500,000 upon achieving 60 million BPOE, then $3,000,000 upon achieving 80 million BPOE and finally $5,000,000 upon achieving 100 million BPOE. Under the concession agreement, the production bonuses are required to be expended upon infrastructure in the area. The term “Commercial Production” is defined as production of petroleum from a Commercial Discovery which ensures at least the recovery of all expenses attributable to the discovery within a reasonable time and the earning of a reasonable profit. The term Commercial Discovery refers to a discovery well which is declared by the operator, then verified by an appraisal well, with the concurrence of the Operating Committee and the government, and which would justify economic development. If the operator believes that an appraisal well is not justified, then the working interest owners have the right to seek Commercial Discovery status on a one-well basis. At such time as the operator achieves a Commercial Discovery, GHPL has the right to increase its 5% working interest up to a maximum of 25% in the discovery area by reimbursing to the operator out of GHPL’s share of production 5% of the costs of drilling and completion. Thereafter, GHPL must pay its proportionate share of all development costs. In the last several years, the government of Pakistan has not exercised its rights to increase its working interest when Commercial Discoveries occurred, but the option to do so is nevertheless included within each concession agreement.

The concession agreements contain acreage relinquishment provisions which require relinquishment of 20% of the undeveloped acreage at the end of the initial term of the license and an additional 30% of the undeveloped acreage at the end of the second renewal period. The area surrounding producing wells may be retained, as determined by the government at the time of relinquishment. However, there is no relinquishment requirement if upon the Commercial Discovery, the operator applies for and is granted a “Lease”. Such an application for Lease must be accompanied by a development plan disclosing how the operator intends to develop the acreage, equip the wells, and transport the resulting production. The Lease has a duration equivalent to the duration of the license.

Under the current rules, working interests can be transferred with the approval of the Government. There is, however, no existing registry for a non-cost bearing royalty carved from the working interest and transferred to a private party. Contracts which create such interests are legal and enforceable in Pakistan, just as in United States’ venues, under the Pakistan law titled: Specific Relief Act of 1887. The production interest assigned to us is free of the costs of development and exploration and thus does not have the financial exposure associated with a traditional working interest. However, title to the production interest is not registered similar to an interest in real estate as it would be in the United States. A production interest in Pakistan is dependent upon the viability of the concession to continue in force. Therefore, any future forfeiture or surrender of the concession will result in elimination of the American Energy interest.

Gas Pricing in Pakistan

The Oil and Gas Regulatory Authority (“OGRA”) is the agency with jurisdiction over wellhead and consumer gas pricing. According to the OGRA, the pricing is directly linked to the international prices for crude oil and furnace oil. Prices are based upon a baseline of 1,000 British Thermal Units (“BTU”). If the gas which is sold has a BTU content which is less than or greater than 1,000 BTUs, the negotiated price is proportionately decreased or increased, respectively. The gas prices for each producing concession are published by the OGRA.

Early Drilling Efforts on Concession Acreage

In the 1950’s, Burmah Oil Company (predecessor to Pakistan Petroleum Ltd. (“PPL”) drilled two wells on concession acreage to just over 5,800 feet, each of which indicated gas and oil. In the 1970’s, Amoco Oil drilled a 15,000 feet well which also demonstrated gas and oil. The seismic database acquired in 1995 with the original Jacobabad Concession was extremely limited, consisting of only a few old Amoco vibroseis lines. In 1997, Hycarbex shot 262 km of new 2-D date and acquired the P9222 2-D line running north-south, just outside the eastern boundary of the concession and this data was processed. The remaining Amoco vibroseis data and all the remaining ODGC 2-D lines (approximately 600 km) were not processed when acquired. Hycarbex originally drilled four exploratory wells on the Jacobabad concession. The first well was drilled in 1998 to a depth sufficient to test the primary producing zone in the region. This well found natural gas in several zones and a drill stem test confirmed the presence of high-quality gas before operations were suspended. At the time, equipment available on the well site was inadequate to deal with downhole problems. We believe that this well could be redrilled. The second well, drilled in a different portion of the concession, encountered mechanical problems and did not reach sufficient depth to test any targeted formations. The third well encountered large quantities of hydrogen sulfide and carbon dioxide, which appeared to be confined to a relatively small area around the wellbore. In July 2000, approximately 40km of new seismic was shot and processed, but the acreage comprising the concession was so vast that early drillsite selection still involved some degree of speculation. In 2001, Hycarbex drilled its fourth well which likewise indicated natural gas in the Sui Main and upper Chiltan formations, but did not result in a commercial completion.

The Haseeb No. 1 Well

The Haseeb No. 1 Well was drilled on the Yasin Concession by the Polish Oil and Gas Company for Hycarbex during March and April 2005 to a total depth of 4,945 feet (1,507 meters). The well is located approximately 9 miles from the Hassan No. 1 well drilled by PPL and 5.6 miles from the City of Shikapur in the Sindh Province. Open hole logs performed on the well demonstrated gas shows from 3,543 feet to 3,688 feet and a net pay thickness of 82 feet. The drill stem test conducted over a short duration on a one-half inch choke indicated a production rate form the Sui Main Limestone equivalent to approximately 7.3 MM cubic feet of 805 BTU gas per day. The gas was tested for carbon dioxide and water content and was found to have low levels of each, indicating a likelihood that processing will not be required prior to pipeline transmission.

In the fall of 2005, Hycarbex completed the acidization of the Haseeb No. 1. Post-treatment testing by Schlumberger Oilfield Services indicated an increase in the natural gas flow rate originally calculated at the time of the drill stem test at 7.3 million cubic feet per day. Schlumberger further concluded that the 10 million cubic feet rate could be potentially increased to as high as 25-28 million cubic feet per day if the existing production tubing is replaced with higher diameter production tubing and if the wellhead pressure is maintained at approximately 1,000 psi. In September, 2010, Hycarbex completed its pipe line connection and commenced gas sales to Sui Southern Gas Company under the Extended Well Test Gas Sales and Purchase Agreement covering the sale of gas from the Haseeb Gas Field on Yasin Block (2768-7) signed by the parties in December, 2009. Initial production into the line quickly ceased due to mechanical difficulties encountered in the commissioning of the gas processing facility. In July, 2011, production into the line recommenced at a rate of approximately 3.5 million cubic feet of gas per day (MMCFD) and this rate has gradually increased under the Extended Well Test to over ten (10) MMCFD.

The Yasin Concession has access to pipeline infrastructure. The 12-inch Quetta gas line runs NW-SE through the concession and connects to the 20-inch Sui-Karachi gas line. The Karachi-Muzaffargarh oil line also runs through the southern portion of the concession. The Haseeb #1 Well well was connected to the gas pipe line in September, 2010, but quickly ceased production due to mechanical problems in the commissioning of the surface facility owned by a third party. These issues were resolved and the well recommenced production into the gas pipe line in July, 2011 at an initial rate of 3.5 MMCFD under the Extended Well Test relating to the well. Production has gradually increased to over ten (10) MMCFD under the Extended Well Test.

Seismic Database

The efforts by Hycarbex to substantially expand the seismic database in 2004 and 2005 resulted in several miles of additional seismic being shot on the concession. Currently, Hycarbex has captured approximately 700 kilometers (435 miles) of high resolution 2D seismic raw data. This seismic raw data has been processed with the old seismic data using current techniques and has been analyzed by highly experienced geophysicists. The results have not only verified geologic structures with closure and high likelihood of gas productivity, but have also delineated drillsite locations which are likely to enhance drilling success. The technical staff at Hycarbex has identified at least ten (10) areas to date on the Yasin Concession which are recommended for drilling.

The Al-Ali No. 1 Well

Hycarbex drilled the Al-Ali No. 1 Well on the Yasin Concession in 2006. The drilling of Al-Ali #1 Well as an exploratory well was undertaken to fulfill the work obligations for the third contract year under the Concession License. While gas shows were encountered during drilling, the gas volumes, on preliminary analysis, did not appear to be commercially viable and the well was plugged.

The Yasin Exploratory Well No. 1

The Yasin Exploratory Well No. 1 was commenced in November, 2008. On September 28, 2009, Hycarbex announced the results of the drilling and its drilling analysis to date. After drilling to the Sui Main Limestone, which was only one of the target zones for the well, mechanical difficulties were encountered in the hole. The Sui Main Limestone showed strong intermittent gas during the drilling, but a steady flow was not achieved. Hycarbex spent several months attempting to resolve the mechanical difficulties and considering alternative remedial operations while simultaneously evaluating the geologic data obtained from the drilling. After evaluation, angular redrilling in the same wellbore and other remedial measures targeted at saving the wellbore were decided against because the preliminary data collected by Hycarbex indicates that the drilling placement was not at the optimum position on the producing structure.

Other Factors Affecting Pakistan Exploration Opportunities

With regard to Pakistan in-country opportunities, experts view Pakistan as a country with realistic potential for the discovery of large oil and gas reserves. Previously perceived as containing far less oil and gas potential than the Arabian Peninsula countries, Pakistan has never received the extensive exploration efforts required to fully explore the vast and numerous structures warranting such attention. However, in recent years, a significant number of well known international oil and gas operators have moved into Pakistan, and their efforts have met with a high degree of success. These operators include BP Amoco and Premier from the United Kingdom, BHP from Australia, China Oil from China, OMV from Austria, Petronas from Malasia, MOL from Hungary and Shell Oil from the Netherlands. A number of new commercial discoveries have been announced in recent years. There is also geological data which suggests nearly identical structures with those of the Arabian Peninsula. Of the 725 exploratory wells drilled through 2008 (15 of which have been offshore), an above-average number (i.e. 1:3.3) have succeeded and this degree of success supports the position that Pakistan is a good location in which to focus exploration efforts.

The MPNR openly states in its website that the agency felt a need to move toward a more liberalized and deregulated framework, with the government limiting its role to policy formulation and implementation. In its website under the section “Strategy to Achieve Mission”, the Ministry states that its strategies will include deregulation, liberalization and privatization of oil, gas and mineral sectors.

Exploration and production opportunities in Pakistan are attractive for a number of additional reasons. One such reason is high demand relative to the available supply. Domestic demand for natural gas greatly exceeds supply in Pakistan, and is expected to continue to do so for the foreseeable future. Pakistan is undergoing rapid economic growth. Energy represents a significant percentage of total Pakistani imports and the country currently imports over 80% of the oil it consumes, all at a significant cost.

In 2001, the Pakistan government launched a new Petroleum Exploration and Production Policy which offers efficient procedures complimented by a liberal policy framework for obtaining and developing concessions. This policy framework was further updated in 2007, 2009 and 2012. Operators conduct regular meetings with ministry officials but the regulatory involvement is relaxed and on a par with international standards. The licenses are granted directly by the President of Pakistan through his oil ministry officials. Foreign investors are permitted unrestricted expatriation of funds, including profits. The sales markets are unregulated and producers may sell to state marketing organizations or third parties. Current efforts are underway to get the market prices on a par with international prices. Energy Information Administration (EIA) reports, and Pakistani sources confirm, that future commercial discoveries will have a ready market at favorable pricing. Imports of goods, including vehicles and equipment is also simplistic, with no tariffs. The current exploration policy is published in its entirety at the website for the Ministry of Petroleum & Natural Resources, the internet address for which is www.mpnr.gov.pk.

Pakistan sits in a strategic location geographically. The Republic of China has been aggressive in identifying potential sources of energy, including Pakistan, to fuel its exploding industrial economy. Several extremely large pipeline projects are in the planning stages. The World Bank compares Pakistan’s economic energy intensity per GDP to its neighbors, China and India and rates Pakistan as the third fastest growing economy. Natural resources often provide a developing country with a significant portion of its hard currency reserves and therefore contribute to economic development in a material fashion. Pakistan’s government has demonstrated a strong commitment to economic development and is working cooperatively with the oil and gas industry to further this agenda. These cooperative efforts will accelerate foreign investment in Pakistan, accelerate the development of additional oil and gas reserves, and reduce Pakistan’s dependency upon imported sources of energy. Private investment is highly regarded as evidenced by the current efforts of Pakistan Petroleum Limited (PPL), which is state owned, to sell 51 percent of the company and to transfer management control to a strategic investor. (See discussion below regarding proposed changes to exploration rules to lengthen the terms of exploration licenses).

While the region has shown political instability and violence, including inside Pakistan’s borders, the Government of Pakistan has proven to be an ally on the war against global terrorism.

Office Facilities

Our principal executive offices are located at 1 Gorham Island, Suite 303, Westport, Connecticut. Subsequent to the end of the fiscal year, our office lease was renewed with modified terms from the prior lease. The office space now contains approximately 1,467 square feet instead of the prior 3,574 square feet and has been leased for a 5-year term which expires in 2019. There is one 3-year renewal option available to us if we elect to exercise it at the expiration of the base term.

Employees

As of June 30, 2014, we had two (2) full-time employees, which include the President, Pierce Onthank, and an administrative assistant in the corporate office.

ITEM 1A – RISK FACTORS

Company-related Risks

An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below before deciding to purchase shares of our Common Stock. If any of the events, contingencies, circumstances or conditions described in the risks below actually occur, our business, financial condition or results of third party operations upon which our royalty interests depend could be seriously harmed. The trading price of our Common Stock could, in turn, decline and you could lose all or part of your investment.

The Company’s limited history and prior bankruptcy proceedings make an evaluation of us and our future extremely difficult, and profits are not assured.

In view of our limited history in the oil and gas exploration business, our prior bankruptcy proceedings between June 2002 and January 2004, and the fact that Hycarbex suspended its obligatory Yasin production payments to us shortly after the revenues began in 2011, resulting in litigation with Hycarbex it may be difficult for investors to evaluate our business and prospects. Each investor must consider our business and prospects in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. For our business plan to succeed, we must successfully undertake most of the following activities:

	*	Find and acquire rights in attractive oil and gas properties including the ability to successfully negotiate with foreign governments to obtain these rights;
	*	Develop or cause third parties to develop the oil and gas projects to a stage at which oil and gas are being produced in commercially viable quantities;
	*	Procure purchasers of commercial production of oil and gas;
	*	Comply with applicable laws and regulations;
	*	Identify and enter into binding agreements with suitable joint venture partners for future projects;
	*	Raise a sufficient amount of funds to continue acquisition, exploration and development programs;
	*	Implement and successfully execute its business strategy;
	*	Respond to competitive developments and market changes; and
	*	Attract, retain and motivate qualified personnel.

There can be no assurance that we will be successful in undertaking any or all of such activities. A failure to undertake successfully most, if not all, of the activities described above could materially and adversely affect our business, prospects, financial condition and results of operations. In addition, there can be no assurance that exploration and production activities, if any, will produce oil and gas in commercially viable quantities, if any at all. There can be no assurance that sales of oil and gas production will generate significant revenues for a sustained period or that we will be able to achieve or sustain profitability in any future period.

Cumulative voting is not available to stockholders.

Cumulative voting in the election of directors is expressly denied in our Articles of Incorporation. Accordingly, the holder or holders of a majority of the outstanding shares of our common stock may elect all of our Directors. Management's large percentage ownership of the outstanding common stock helps enable them to maintain their positions as such and thus control of our business and affairs.

The trading price of the common stock entails additional regulatory requirements, which may negatively affect such trading price.

The trading price of our common stock is below $5.00 per share. As a result of this price level, trading in our common stock is subject to the requirements of certain rules promulgated under the Exchange Act. These rules require additional disclosure by broker‑dealers in connection with any trades generally involving any non‑NASDAQ equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Such rules require the delivery, before any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith, and impose various sales practice requirements on broker‑dealers who sell penny stocks to persons other than established customers and accredited investors (generally institutions). For these types of transactions, the broker‑dealer must determine the suitability of the penny stock for the purchaser and receive the purchaser's written consent to the transaction before sale. The additional burdens imposed upon broker‑dealers by such requirements may discourage broker‑dealers from effecting transactions in our common stock. As a consequence, the market liquidity of our common stock could be severely affected or limited by these regulatory requirements.

The Company will incur significant costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as well as rules subsequently implemented by the SEC, have imposed various new requirements on public companies, including requiring changes in corporate governance practices. The Company’s management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase the Company’s legal and financial compliance costs and will make some activities more time-consuming and costly. For example, these new rules and regulations are expected to make it more difficult and more expensive to obtain director and officer liability insurance, and the Company may be required to incur substantial costs to maintain the same or similar coverage.

In addition, the Sarbanes-Oxley Act requires, among other things, that the Company maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, the Company must perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Compliance with Section 404 will require that the Company incur substantial accounting expense and expend significant management efforts. The Company currently does not have an internal audit group, and will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if the Company is unable to comply with the requirements of Section 404 in a timely manner, or if the independent registered public accounting firm identifies deficiencies in the Company’s internal controls over financial reporting that are deemed to be material weaknesses, the market price of the stock could decline, and the Company could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

Management controls a significant percentage of our current outstanding common stock and their interests may conflict with those of our shareholders.

As of June 30, 2014, the directors and executive officers and their respective affiliates collectively and beneficially owned approximately 10.18% of the outstanding common stock, including all warrants exercisable within 60 days. This concentration of voting control gives the Directors and executive officers and their respective affiliates substantial influence over any matters which require a shareholder vote, including, without limitation, the election of directors, even if their interests may conflict with those of other shareholders. It could also have the effect of delaying or preventing a change in control of or otherwise discouraging a potential acquirer from attempting to obtain control. This could have a material adverse effect on the market price of the common stock or prevent the shareholders from realizing a premium over the then prevailing market prices for their shares of common stock.

The Company is dependent on key personnel.

We depend to a large extent on the services of certain key management personnel, including R. Pierce Onthank, our President and Chief Executive Officer. The future loss of Mr. Onthank could adversely affect the implementation of the Company’s business plan. We do not maintain key-man life insurance with respect to any officer or director.

The Company’s revenues from production are derived from a single well

The revenues accrued to us from the Yasin Block are derived from a single well, the Haseeb No. 1. In the event of mechanical or natural conditions at the well which adversely affect production, our accruing revenues could decrease or be eliminated altogether until the adverse conditions are removed or an alternative production source is drilled on the Yasin Block.

The further development of the Yasin Block may depend upon Hycarbex’s ability to secure a strategic development partner.

Hycarbex Asia Pte. Ltd., and its subsidiary firm, Hycarbex-American Energy, Inc., the operator of the Yasin 2768-7 Block petroleum concession suspended the obligatory revenue payments to the Company in the fall of 2011 based upon asserted financial difficulties. Litigation with Hycarbex was initiated in December, 2011. Hycarbex’s stated financial difficulties could hinder the further development of the Haseeb Gas Field and the Yasin Block which could adversely affect our expected revenues. In the event that the Government of Pakistan imposes a forfeiture of concession privileges as to undeveloped acreage in the future, the prospects for additional productive wells would be diminished. Investors are advised not to rely on the expectation of future revenues in making their investments, nor on the expectation that current revenues will be ultimately collected.

The favorable policies toward foreign investment in Pakistan oil and gas exploration could change.

Future governmental enactments or changes to existing policies could impact our ownership or asset value. The royalty interest which we hold in the Yasin Block, the working interests we hold in the Sanjawi and Zamzama North Blocks and other interests which we will seek to acquire in other concession opportunities could be adversely affected by future regulatory and/or policy changes. Since the value of these interests is derived from the actual net proceeds of production, changes to the duration of the exploration license, applicable taxes or tariffs, or commodity purchase prices could significantly affect our interests in the region.

We may experience potential fluctuations in results of operations.

Our future revenues may be affected by a variety of factors, many of which are outside our control, including (a) the success of project results; (b) swings in availability of services needed to implement projects and the pricing of such services; (c) a volatile oil and gas pricing market which may make certain projects that we undertake uneconomic; (d) the ability to develop infrastructure to accommodate growth; (e) the ability to attract new independent producers with prospects in a timely and effective manner; and (f) the amount and timing of operating costs and capital expenditures relating to establishing our business operations and infrastructure. As a result of our limited operating history and the emerging nature of our business plan, it is difficult to forecast revenues or earnings accurately, which may fluctuate significantly from quarter to quarter.

The issuance of additional authorized shares of our common and preferred stock or the exercise of stock options and warrants may dilute our investors and adversely affect the market for our common stock.

We are authorized to issue 80,000,000 shares of our common stock. The 52,154,716 shares of our common stock issued and outstanding does not include shares reserved in anticipation of the exercise of options or warrants. As of June 30, 2014, we had outstanding warrants to purchase shares of our common stock, the exercise price of which ranges from $0.15 to $1.50 per share, and we have reserved shares of our common stock for issuance in connection with the potential exercise thereof. To the extent such options or warrants are exercised, the holders of our common stock will experience further dilution. In addition, in the event that any future financing should be in the form of, be convertible into or exchangeable for, equity securities, and upon the exercise of options and warrants, investors may experience additional dilution.

Possible or actual sales of a substantial number of shares of common stock by the selling stockholders in this offering could have a negative impact on the market price of our common stock. No prediction can be made as to the effect, if any, that sales of shares of common stock or the availability of such shares for sale will have on the market prices prevailing from time to time. Nevertheless, the possibility that substantial amounts of common stock may be sold in the public market would likely have a material adverse effect on prevailing market prices for the common stock and could impair our ability to raise capital through the sale of our equity securities.

The exercise of the outstanding convertible securities will reduce the percentage of common stock held by our stockholders. Further, the terms on which we could obtain additional capital during the life of the convertible securities may be adversely affected, and it should be expected that the holders of the convertible securities would exercise them at a time when we would be able to obtain equity capital on terms more favorable than those provided for by such convertible securities. As a result, any issuance of additional shares of common stock may cause our current stockholders to suffer significant dilution which may adversely affect the market.

In addition to our shares of common stock which may be issued without stockholder approval, we have 20,000,000 shares of authorized preferred stock, the terms of which may be fixed by our Board of Directors. We presently have no issued and outstanding shares of preferred stock and while we have no present plans to issue any shares of preferred stock, our Board of Directors has the authority, without stockholder approval, to create and issue one or more series of such preferred stock and to determine the voting, dividend and other rights of holders of such preferred stock. The issuance of any of such series of preferred stock may have an adverse effect on the holders of common stock.

The Company and the operators of projects in which it participates depend on industry vendors and may not be able to obtain adequate services.

Our third party oil and gas operators are largely dependent on industry vendors for our success. These contracted services include, but are not limited to, accounting, drilling, completion, workovers and reentries, geological evaluations, engineering, leasehold acquisition (landmen), operations, legal, investor relations/public relations, and prospect generation. We could be harmed if the operators of our projects fail to attract quality industry vendors to participate in the drilling of prospects or if industry vendors do not perform satisfactorily. We have little control over factors that influence the performance of such vendors.

The Company relies on third parties for production services and processing facilities.

The marketability of our production depends upon the proximity of our projects’ reserves to, and the capacity of, facilities and third party services, including oil and natural gas gathering systems, pipelines, trucking or terminal facilities, and processing facilities. The unavailability or lack of capacity of such services and facilities could result in the shut-in of producing wells or the delay or discontinuance of development plans for properties. A shut-in or delay or discontinuance could materially adversely affect our financial condition.

The Company’s Directors and Officers have limited liability and have rights to indemnification.

Our Articles of Incorporation and Bylaws provide, as permitted by governing Nevada law, that our directors and officers shall not be personally liable to the Company or any of its stockholders for monetary damages for breach of fiduciary duty as a director or officer, with certain exceptions. The Articles further provide that we will indemnify our directors and officers against expenses and liabilities they incur to defend, settle, or satisfy any civil litigation or criminal action brought against them on account of their being or having been its directors or officers unless, in such action, they are adjudged to have acted with gross negligence or willful misconduct.

The inclusion of these provisions in the Articles may have the effect of reducing the likelihood of derivative litigation against directors and officers, and may discourage or deter stockholders or management from bringing a lawsuit against directors and officers for breach of their duty of care, even though such an action, if successful, might otherwise have benefited us and our stockholders.

The Articles provide for the indemnification of our officers and directors, and the advancement to them of expenses in connection with any proceedings and claims. The Articles include related provisions meant to facilitate the indemnitee's receipt of such benefits. These provisions cover, among other things: (i) specification of the method of determining entitlement to indemnification and the selection of independent counsel that will in some cases make such determination, (ii) specification of certain time periods by which certain payments or determinations must be made and actions must be taken, and (iii) the establishment of certain presumptions in favor of an indemnitee.

General Risks of the Oil and Gas Business

Investment in the oil and gas business is risky.

Oil and gas exploration and development is an inherently speculative activity. There is no certain method to determine whether or not a given prospect will produce oil or gas or yield oil or gas in sufficient quantities and quality to result in commercial production. There is always the risk that development of a prospect may result in dry holes or in the discovery of oil or gas that is not commercially feasible to produce. There is no guarantee that a producing asset will continue to produce. Because of the high degree of risk involved, there can be no assurance that the Company will recover any portion of its investment or that its investment in oil and gas exploration activities will be profitable.

The oil and gas business is subject to drilling and operational hazards.

The oil and gas business involves a variety of operating risks, including:

	•	blowouts, cratering and explosions;
	•	mechanical and equipment problems;
	•	uncontrolled flows of oil and gas or well fluids;
	•	fires;
	•	marine hazards with respect to offshore operations;
	•	formations with abnormal pressures;
	•	pollution and other environmental risks; and
	•	natural disasters.

Any of these events could result in loss of human life, significant damage to property, environmental pollution, impairment of operations and substantial losses. Locating pipelines near populated areas, including residential areas, commercial business centers and industrial sites, could increase these risks. In accordance with customary industry practice, our operators will maintain insurance against some, but not all, of these risks and losses. The occurrence of any of these events not fully covered by insurance could have a material adverse effect on our financial position and the results of operations.

The Company will face fierce competition from other companies in the acquisition of development opportunities.

A large number of companies and individuals engage in drilling for gas and oil, and there is competition for the most desirable prospects. This is likewise the case in Pakistan where foreign investment is accelerating at a tremendous pace. We will encounter intense competition from other companies and other entities in the pursuit of quality prospects for investment. We may be competing with numerous gas and oil companies which may have financial resources significantly greater than ours.

Oil and gas properties are subject to unanticipated depletion.

The acquisition of oil and gas prospects is almost always based on available geologic and engineering data, the extent and quality of which vary in each case. Successful wells may deplete more rapidly than the available geological and engineering data originally indicated. Unanticipated depletion, if it occurs, would result in a lower return for the Company or a loss to the shareholders.

Oil and gas prices are volatile.

Our revenues, cash flow, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on the prices that we receive for oil and gas production. Declines in oil and gas prices may materially adversely affect our financial condition, liquidity, ability to obtain financing and operating results. Lower oil and gas prices also may reduce the amount of oil and gas that we can produce economically. High oil and gas prices could preclude acceptance of our business model. Depressed prices in the future would have a negative effect on our future financial results.

Historically, oil and gas prices and markets have been volatile, with prices fluctuating widely, and they are likely to continue to be volatile. Prices for oil and gas are subject to wide fluctuations in response to relatively minor changes in supply of and demand, market uncertainty and a variety of additional factors that are beyond our control. These factors include:

	•	the threat of global terrorism;
	•	regional political instability in areas where the exploratory wells are drilled;
	•	the available supply of oil;
	•	the level of consumer product demand;
	•	weather conditions;
	•	political conditions and policies in the greater oil producing regions, including the Middle East;
	•	the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;
	•	the price of foreign imports;
	•	actions of governmental authorities;
	•	domestic and foreign governmental regulations;
	•	the price, availability and acceptance of alternative fuels; and
	•	overall economic conditions.

These factors and the volatile nature of the energy markets make it impossible to predict with any certainty future oil and gas prices. Our inability to respond appropriately to changes in these factors could negatively affect our profitability.

Terrorist attacks and continued hostilities in the Middle East or other sustained military campaigns may adversely impact the industry and us.

The terrorist attacks that took place in the United States on September 11, 2001, were unprecedented events that have created many economic and political uncertainties, some of which may materially adversely impact us. The long-term impact that terrorist attacks and the threat of terrorist attacks may have on the oil and gas business is not known at this time. Uncertainty surrounding continued hostilities in the Middle East or other sustained military campaigns may adversely impact us in unpredictable ways.

Political instability both internal and external to Pakistan could adversely affect drilling operations and gas marketing.

Pakistan is geographically positioned in a region which has experienced a great deal of political instability and violence. The current regime is viewed as pro-western, but a change in government in Pakistan, such as an Islamic fundamentalist government, could have many wide-ranging adverse effects upon the validity of existing exploration licenses and concession agreements and upon our ability to enforce our contractual agreements. Additionally, with or without such governmental changes, recurring incidents of violence could adversely affect oil and gas exploration and marketing operations which would, in turn, adversely affect our ability to receive royalty payments derived from those operations. Examples of regional conflicts, incidents and political unrest inside Pakistan’s borders include the following:

	•	the Kashmir region bordering India, Pakistan, Afghanistan and China, has been a continuing source of tension and armed conflict between India and Pakistan since 1947;

	•	Baluchistan Province tribesmen have previously attacked the Sui gas fields in Balochistan in Southwest Pakistan generally as a protest for more jobs and higher royalty payments; and

	•	Pakistan has experienced violence along its Afghanistan border as well as incidents of internal urban violence from fundamentalist militant Islamic groups who oppose governmental ties with the United States.

Continued incidents of political unrest and violence in the future could interrupt drilling operations and gas marketing of our projects.

The Company’s domestic assets are subject to domestic governmental regulations and hazards related to environmental issues.

Gas and oil operations in the United States are subject to extensive government regulation and to interruption or termination by governmental authorities on account of ecological and other considerations. The Environmental Protection Agency of the United States and the various state departments of environmental affairs closely regulate gas and oil production effects on air, water and surface resources. Furthermore, proposals concerning regulation and taxation of the gas and oil industry are constantly before Congress. It is impossible to predict future proposals that might be enacted into law and the effect they might have on the Company. Thus, restrictions on gas and oil activities, such as production restrictions, price controls, tax increases and pollution and environmental controls may have a material adverse effect on the Company.

Hazards in the drilling and/or the operation of gas and oil properties, such as accidental leakage or spillage, are sometimes encountered. Such hazards may cause substantial liabilities to third parties or governmental entities, the payment of which could reduce distributions or result in the loss of Company leases. Although it is anticipated that insurance will be obtained by third-party operators for the benefit of the Company, we may be subject to liability for pollution and other damages due to environmental events which cannot be insured against due to prohibitive premium costs, or for other reasons. Environmental regulatory matters also could increase substantially the cost of doing business, may cause delays in producing oil and gas or require the modification of operations in certain areas. Operations are subject to numerous stringent and complex laws and regulations at the federal, state and local levels governing the discharge of materials into the environment or otherwise relating to environmental protection. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial requirements, and the imposition of injunctions to force future compliance.

The Oil Pollution Act of 1990 (“OPA 90”) and its implementing regulations impose a variety of requirements related to the prevention of oil spills, and liability for damages resulting from such spills in United States waters. OPA 90 imposes strict joint and several liability on responsible parties for oil removal costs and a variety of public and private damages, including natural resource damages. While liability limits apply in some circumstances, a party cannot take advantage of liability limits if the spill was caused by gross negligence or willful misconduct or resulted from violation of a federal safety, construction or operation regulation. If a party fails to report a spill or to cooperate fully in a cleanup, liability limits likewise do not apply. Even if applicable, the liability limits for offshore facilities require the responsible party to pay all removal costs, plus up to $75 million in other damages. For onshore facilities, the total liability limit is $350 million. OPA 90 also requires a responsible party at an offshore facility to submit proof of its financial ability to cover environmental cleanup and restoration costs that could be incurred in connection with an oil spill.

The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), also known as the “Superfund” law, and analogous state laws impose strict, joint and several liability on certain classes of persons that are considered to have contributed to the release of a “hazardous substance” into the environment. These parties include the owner or operator of the site where the release occurred, and those that disposed or arranged for the disposal of hazardous substances found at the site. Responsible parties under CERCLA may be subject to joint and several liability for remediation costs at the site, and may also be liable for natural resource damages. Additionally, it is not uncommon for neighboring landowners and other third parties to file tort claims for personal injury and property damage allegedly caused by hazardous substances released into the environment.

State statutes and regulations require permits for drilling operations, drilling bonds and reports concerning operations. In addition, there are state statutes, rules and regulations governing conservation matters, including the unitization or pooling of oil and gas properties, establishment of maximum rates of production from oil and gas wells and the spacing, plugging and abandonment of such wells. Such statutes and regulations may limit the rate at which oil and gas could otherwise be produced from the Company’s properties and may restrict the number of wells that may be drilled on a particular lease or in a particular field.

ITEM 1B – UNRESOLVED STAFF COMMENTS

There were no unresolved staff comments as of June 30, 2014 or the date of this report.

ITEM 3 – LEGAL PROCEEDINGS

In December 2011, we initiated civil legal proceedings against Hycarbex and others in the High Court of Islamabad, Pakistan. Our pleadings with respect to the 2.5% carried working interest positions in the Sanjawi and Zamzama North concessions sought a registration of those interests with the Government of Pakistan and simultaneously sought the imposition of an injunction preventing the transfer of the working interest in those concessions until the registration can be effected, thereby protecting our interests. In our pleadings with respect to the Yasin concession and the right to receive 18% of the gross production revenues, our pleadings sought a referral to arbitration based upon ownership of, in effect, a 25% carried working interest to which is attributed 18% of gross production revenues and the right to receive pertinent records and data, the appointment of a receiver to both protect and cause disbursement of the 18% of gross revenues since the inception of production in April 2011, and the imposition of an injunction against the transfer of the working interest in the Yasin concession. The Court immediately issued two injunction orders preserving the status quo as to the Company’s interests in each of the Yasin, Sanjawi and Zamzama North petroleum concessions.

On March 27, 2012, the Islamabad High Court issued its final order (later clarified as to certain arbitration procedures by a clarification Order dated April 4, 2012). The Court directed the parties to proceed to arbitration in London, UK under the ICC Rules of Arbitration and further reaffirmed the continuation of the pending temporary injunctions against Hycarbex’s potential transfer of interests in the concessions prior to final resolution in the arbitration forum. Our application for the appointment of a receiver was neither granted nor denied, but was instead deferred by the Court to the arbitration forum. Hycarbex appealed the March 27, 2012 Order asserting that litigation should not have been initiated by American Energy without first going to arbitration, asserting that our claims to 18% of gross production revenues were premature (despite already having made some payments toward that production interest) because a “commercial discovery” had not yet been declared, and asserting that the injunctions had the effect of enjoining all of the working interest, not just a portion. American Energy countered with an appeal that the Court should reconsider the application for a receiver due to an existing arbitration rule which would prevent the arbitration forum from granting interim relief of that type, irrespective of the merits of such an application. These appeals are expected to be docketed and resolved during the current fiscal year or to become moot by virtue of the ICC Order granting interim relief announced September 25, 2013, discussed below, and by virtue of the actual commencement of the scheduled final arbitration hearing in February, 2014.

On April 10, 2012, pursuant to the terms of the March 27, 2012, Islamabad High Court Order, we filed our claim with the International Chamber of Commerce (“ICC”) International Court of Arbitration. In this claim, we are seeking an order which voids, ab initio, the original 2003 Stock Purchase Agreement under which Hycarbex’s parent company acquired the stock of Hycarbex (and thus the underlying Yasin concession owned by Hycarbex) and in conjunction therewith, seeks the recovery of any financial dividends or advances which may have been made by Hycarbex to its shareholders. Alternatively, our claim requests the declaration of a 25% carried working interest (and the in-country registration of same) to which is attributed 18% of gross production free of taxes and costs, plus the recovery from the respondents of all accrued, unpaid production revenues. The request in our arbitration claim for a voiding of the original Stock Purchase Agreement is based upon our assertions in the claim that Hydro Tur, Ltd., the original purchaser of the Hycarbex stock under the 2003 Stock Purchase Agreement, fraudulently misrepresented to American Energy that “no current or past shareholders, officers and/or directors of [American Energy] or Hycarbex have any interest, direct or indirect, in the ownership of [Hydro Tur, Ltd.].” The 3-arbitrator panel has been appointed and has scheduled the final hearing in this arbitration for the month of February 2014.

In February, 2013, we filed an Application For Interim Relief with the ICC which was heard by the tribunal on June 13, 2013. By Order dated September 25, 2013, the ICC granted all requests made by the Company against Hycarbex American Energy, Inc. (“Hycarbex”), Hycarbex Asia Pte, Ltd. (“Hycarbex Asia”) and Hydro Tur, Ltd. (“Hydro Tur”) in its Application For Interim Relief filed with the ICC in February, 2013 and presented to the ICC in a hearing conducted June 13, 2013. By Order dated September 25, 2013, the ICC granted to the Company all requested relief and therein ordered Hycarbex, Hycarbex Asia and Hydro Tur to do the following within fourteen (14) days of the Order: (1) to produce to the Company the records of production and sales from the Yasin petroleum concession in Pakistan for the period August 2011 through the date of the Order and to continue to do so pending further order, (2) to pay to the Company 18% of all sales proceeds of hydrocarbons received by such parties between August 2011 through December 2012, (3) to pay to the Company 18% of all sales proceeds of hydrocarbons received by such parties between December 2012 and the date of the Order, and (4) to direct the purchaser of the hydrocarbons to pay direct to the Company 18% of all future sale proceeds during the pendency of the arbitration proceedings. The ICC further ordered that in the event that Hycarbex, Hycarbex Asia and Hydro Tur fail to produce to the Company the production and sales records for the period August 2011 through December 2012 within the fourteen (14) days following the Order, that such parties are ordered to pay to the Company $1,436,138 as an approximate interim amount pending the determination of actual sale proceeds from the actual records. The ICC further ordered that in the event that Hycarbex, Hycarbex Asia and Hydro Tur fail to produce to the Company the production and sales records for the period December 2012 through the date of the Order and continue to do so, that the arbitration tribunal will consider an application from the Company for a further Order as to an approximate interim monetary amount pending the determination of actual sales proceeds for such period. The Order granting interim relief is not appealable to a court or other tribunal and under Pakistan’s Arbitration Act of 1940, international arbitration orders are enforceable in the Pakistan courts.

Subsequent to the ICC Order, Hycarbex produced certain sales records and other records of Hycarbex but Hycarbex and Hycarbex Asia failed to pay the ordered monetary sum. Hycarbex and Hycarbex Asia also requested a modification of the Order granting interim relief. The Order was not suspended by the ICC while this request was under consideration. By communication from the ICC dated February 4, 2014, the modification requested by Hycarbex and Hycarbex Asia was denied by the arbitration tribunal. The Liquidators for Hycarbex Asia appointed in 2013 in the pending insolvency proceedings for Hycarbex Asia in Singapore replaced their legal counsel and then requested a stay of the arbitration proceedings on February 12, 2014 from the English High Court of Justice, Chancery Division. However, this request for stay of the arbitration proceedings was promptly denied by the English Court and Hycarbex Asia was directed by the Court to pay to the Company costs of £40,000, which have been paid.

On February 17, 2014, the arbitration proceedings commenced before the 3-arbitrator tribunal with the first order of business being consideration of another request to the arbitration tribunal by the Liquidators of Hycarbex Asia for suspension of the proceeding or, in the alternative, a postponement to permit newly appointed legal counsel to prepare a proper defense to the Company’s claims in arbitration. A complete suspension was rejected by the Tribunal. The Liquidators voluntarily offered to pay interim costs of $50,000 toward the actual costs determined by the Tribunal as caused by the request. We opposed the postponement and indicated that any consideration of same must be conditioned upon protection of the disputed assets and adequate measures to assure payment to us of the monies due to us under the September 25, 2013 Order granting interim relief. The tribunal adjourned the final hearing on the merits until June 16, 2014, based upon Hycarbex Asia’s assertion that the change of counsel was necessitated by a conflict arising out of a divergence of the respective interests of Hycarbex Asia and the other Defendants. We were awarded the $50,000 in inconvenience costs offered by Hycarbex Asia, which have been paid, and given the opportunity to request an increase in that sum based upon actual costs incurred. The Tribunal further issued an interim Order dated February 25, 2014, requiring Hycarbex to produce to us all records of production from August 2011 forward, including any production which occurs after the date of the Order. The Order further required Hycarbex to produce any future notices of regulatory action or default received from the Government of Pakistan. The Order further ordered that the parties prepare a joint letter to Sui Southern Gas Company Limited (the purchaser of the gas from the Haseeb #1 Well) withdrawing Hycarbex’s October 8, 2013 instruction letter to Sui Southern Gas Company and further ordered that the joint letter direct Sui Southern Gas Company Limited to pay 18% of the gross production proceeds directly to the Company going forward. The Order further directed that the joint letter be submitted to Sui Southern Gas Company Limited within 7 days after agreement is reached on the form of the letter. The Company and Hycarbex Asia reached agreement as to the form of the letter during the second week of May, 2014, and the joint letter was submitted to Sui Southern Gas Company Limited. The Order further authorized our use of any documents and transcripts from the arbitration proceedings in any ancillary proceeding initiated by the Company in Pakistan. As of the date of this report, we are awaiting the final ruling on the merits from the Arbitration Tribunal based upon the June, 2014 proceedings.

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 names 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 has been granted to us by the Karachi Court. The new action filed in the Islamabad High Court names Hycarbex, Hycarbex Asia and Hydro Tur as defendants and seeks injunctive relief against Hycarbex from interference with the Arbitration Tribunal-ordered notifications to Sui Southern to pay us directly our 18% of production, seeks injunctive relief against Hycarbex from acceptance by Hycarbex of any production proceeds which may be paid by Sui Southern, and seeks a deposit into the Court from Hycarbex of the sum of $1,436,137.81, which Hycarbex was ordered to pay to us by prior Interim Order of the Arbitration Tribunal dated September 25, 2013 as the sum due through December, 2012. The Arbitration Tribunal likewise ordered in that prior Interim Order that Hycarbex direct Sui Southern to pay to us directly 18% of production occurring after December, 2012. The decision on the Islamabad High Court injunction application is expected within the coming weeks.

ITEM 4 – MINE SAFETY DISCLOSURES

None.

PART II

ITEM 5 – MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES

Our common stock is traded on the over-the-counter pink sheets (previously the over the counter bulletin board through February 22, 2011) under the symbol AEGG. The trading market began during the quarter ending December 31, 2004. The following table sets forth the quarterly high and low bid prices for each quarter for the five (5) most recent fiscal years. Such prices represent quotations between dealers, without dealer markup, markdown or commissions, and may not represent actual transactions.

Quarter	High		Low
September 30, 2009	$	0.86	$	0.61
December 31, 2009	$	0.76	$	0.52
March 31, 2010	$	0.94	$	0.63
June 30, 2010	$	0.90	$	0.65
September 30, 2010	$	0.85	$	0.64
December 31, 2010	$	1.04	$	0.60
March 31, 2011	$	0.71	$	0.45
September 30, 2011	$	0.57	$	0.12
December 31, 2011	$	0.25	$	0.05
March 31, 2012	$	0.40	$	0.13
June 30, 2012	$	0.25	$	0.10
September 30, 2012	$	0.17	$	0.15
December 31, 2012	$	0.15	$	0.11
March 31, 2013	$	0.15	$	0.12
June 30, 2013	$	0.14	$	0.14
September 30, 2013	$	0.35	$	0.14
December 31, 2013	$	0.39	$	0.25
March 31, 2014	$	0.30	$	0.16
June 30, 2014	$	0.33	$	0.18

As of June 30, 2014, the final trading day of the fiscal year, the closing price for shares of our common stock in the over-the-counter market, as reported by the OTC Pink Sheets, was $0.33. As of June 30, 2014, we had approximately 44 registered holders of our common stock (excluding holders in “street name”). As of June 30, 2014, there were 51,066,878 shares of common stock issued and outstanding and as of October 14, 2014, there were 52,154,716 shares of common stock issued and outstanding.

Dividend Policy

There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

	1.	We would not be able to pay our debts as they become due in the usual course of business; or

	2.	Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future. Our current policy is to retain any earnings in order to finance the expansion of our operations. Our Board of Directors will determine future declaration and payment of dividends, if any, in light of the then-current conditions they deem relevant and in accordance with the Nevada Revised Statutes.

Equity Compensation Plan Information

The following table sets forth all equity compensation plans as of June 30, 2014.

Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights(a)		Weighted-average exercise price of outstanding options, warrants and rights(b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)(c)
Equity compensation plans approved by security holders		-0-		-0-		-0-
Equity compensation plans not approved by security holders		3,650,000 Common	$	0.15		-0-
Total			$	0.15		-0-

Recent Sales of Unregistered Securities

During the fiscal year commencing July 1, 2013 and ending June 30, 2014, we sold 5,316,667 unregistered shares of Common Stock for a cash consideration of $915,000 which we used for general working capital, including attorneys’ fees incurred in the pending litigation with Hycarbex. We also issued 467,262 shares to directors for $87,500 in director fees, 20,000 shares to a consultant for services at a value of $3,000 and 20,000 shares to an employee at a value of $6,000. Subsequent to the end of the fiscal year, we sold 900,000 shares of Common Stock for a cash consideration of $180,000. In addition, subsequent to the fiscal year, we issued 150,000 shares of Common Stock with a value of $30,000 to our Pakistan counsel for legal fees and issued 37,838 shares to directors for director services

ITEM 6 – SELECTED FINANCIAL DATA

The following table sets forth in dollars selected financial data regarding the Company as of and for each of the annual periods (each ending June 30) indicated. The following data should be read in conjunction with Items 7 and 8 herein.

	2014			2013			2012			2011			2010
													restated
Revenue
Oil and Gas Sales	$	1,108,163		$	1,217,553		$	849,980			-0-			-0-
General and Administrative Expenses
Legal and Professional		1,007,570			217,709			231,650			191,879			144,562
Depreciation and Amortization Expense		4,550			4,733			5,188			6,561			6,642
Bad Debt		-0-			-0-			-0-			-0-			-0-
General and Administrative		1,455,350			1,053,292			707,133			772,504			780,545
Total Expenses		2,467,470			1,275,734			943,971			970,944			931,749
Net Operating Income (Loss)		(1,359,307	)		(58,181	)		(93,991	)		(970,944	)		(931,749	)
Other Income and (Expense)
Taxes-Other		(7,068	)		(8,381	)		(5,755	)		(5,220	)		(3,083	)
Interest Expense		(19,872	)		(12,857	)		(9,706	)		(15,620	)		(7,960	)
Total Other Income and (Expense)		(26,940	)		(21,238	)		(15,461	)		(20,840	)		(11,043	)
Net Loss Before Federal Income Tax		(1,386,247	)		(79,419	)		(109,452	)		(991,784	)		(942,792	)
Federal Income Tax		-0-			-0-			-0-			-0-			-0-
Net Loss		(1,386,247	)		(79,419	)		(109,452	)		(991,784	)		(942,792	)
Basic Loss Per Common Share		(0.03	)		(0.00	)		(0.00	)		(0.03	)		(0.03	)
Weighted Average Number of Shares Outstanding		48,007,962			41,209,615			36,490,028			33,539,434			32,441,034

ITEM 7 – 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 event or circumstances.

Overview

In November, 2003, we sold our Hycarbex-American Energy, Inc. (“Hycarbex”) subsidiary, which was the owner and operator of the Yasin 2768-7 Petroleum Concession Block in the Republic of Pakistan, to a foreign corporation. We retained in the sale an 18% overriding royalty interest in the Yasin Block. Drilling of the first well in Pakistan as to which our overriding royalty pertains, named the Haseeb No. 1 Well, was successfully completed by Hycarbex-American Energy, Inc. (“Hycarbex”), in the fourth quarter of the fiscal year ended June 30, 2005. A state-of-the-art, third party owned, surface facility for the well was constructed for Hycarbex after well completion. During September 2010, Hycarbex connected the well to the Sui Southern Gas Company pine line, and commenced gas sales under an Extended Well Test but the production quickly ceased due to mechanical difficulties encountered in the commissioning of the surface facility owned by the third party. The production re-commenced into the pipe line in July, 2011, at the initial rate of 3.5 million cubic feet of gas per day (MMCFD). Hycarbex has advised that this rate is expected to be gradually increased to 15 MMCFD during the Extended Well Test. Such production can likewise experience temporary interruptions to permit testing, calibration and other activities common with an extended well test.

In the fall of 2011, we received the initial two production revenue payments for Yasin production, but in November, 2011, Hycarbex, the operator of the Yasin concession, suspended the monthly revenue payments in breach of its contractual payment obligations due to Hycarbex’s asserted financial difficulties and advised that it would continue to accrue the revenues to the Company until it resolved its financial difficulties. Hycarbex further breached its contractual obligations by refusing to provide to American Energy detailed information regarding the production from the well and regarding the production revenues received from the sale of the produced hydrocarbons. These overt and unjustified contractual breaches have continued through the date of this report. Although the daily production rate has increased to over 10 million cubic feet per day under the Extended Well Test based upon information which we have garnered from reliable third party sources, the accrued production revenues due to the Company from August 2011 through the date of this report have not been paid by Hycarbex to the Company.

In December, 2011, we initiated legal proceedings against Hycarbex and others in the High Court of Islamabad, Pakistan to enforce the revenue payment obligations (See Part I, Item 3, Legal Proceedings). Since initiating the proceedings, we have sold shares of Common Stock to certain private investors to provide working capital to the Company (See Part II, Item 5) and we anticipate making future sales as needed for working capital requirements should the pending litigation not result in the near term resumption of production revenue payments to the Company.

On October 29, 2009, we executed an agreement to acquire from Hycarbex a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan. Consistent with this strategy, as under the terms of the agreement, our 2-1/2% working interests will be deemed “carried” by Hycarbex for the initial two (2) wells on the Sanjawi Block and the initial three (3) wells on the Zamzama North Block. The term “carried” means that the costs associated with work programs, seismic, road preparation, drillsite preparation, rig and equipment mobilization, drilling, reworking, testing, logging completion and governmental fees (except taxes on production) shall be borne entirely by Hycarbex. Infrastructure costs such as pipelines and surface facilities constructed after the first discovery well on each Block are not carried. After the initial carried wells have been drilled, we are required to bear our proportionate share of drilling and exploration costs in subsequent wells, but the agreement provides an option to us to convert our working interest in any well at any time to a 1.5% gross royalty interest free of any exploration costs, operating costs or deductions related to the well in which the conversion has been made other than applicable production taxes assessed against the royalty.

Results of Operations

Our operations for the twelve months ended June 30, 2014 reflected a net operating loss of $1,359,307 as compared to a net operating loss of $58,181 for the twelve months ended June 30, 2013. The increase in net operating loss is due to an increase in legal and professional fees. The total net loss figures for these same periods were $1,386,247 and $79,419, respectively. Prior to September, 2011, we had no recurring income stream and relied upon the proceeds of securities sales and loans. In the fall of 2011, Hycarbex, the operator of the Yasin concession, commenced revenue payments to the Company but then abruptly suspended the monthly revenue payments due to Hycarbex’s financial difficulties after only two revenue payments totaling $30,425 covering Hycarbex’s April 2011 and July 2011 production. Hycarbex advised us in its notice of suspension that it would continue to accrue the revenues to the Company which was viewed by the Company as a clear breach of Hycarbex’s contractual operations. Accordingly, a lawsuit was initiated against Hycarbex in December, 2011 for collection of all sums then owning and accruing thereafter. Management expects to collect in the pending litigation and arbitration proceedings which ensued all production revenues due from Hycarbex.

Reliable third party reports have indicated to Company management that production has increased to a level above ten (10) million cubic feet per day. We have based our production and revenue accruals and assumptions near that daily figure due to Hycarbex’s failure to provide us with updated, accurate production and sale information. Given the early information received from Hycarbex as to the BTU content of the gas sold, management believes that the appropriate gas price applicable to these sale volumes is $1.80 per million cubic feet of gas sold. Using this price and using the production figures derived from extremely reliable sources for the period, would result in an accrual to the Company for the annual fiscal period of $943,313 and for the final quarter of the fiscal year of $313,201. Actual monthly accruals for the period could be higher or lower depending upon the actual BTU content.

In December, 2011, we initiated legal proceedings against Hycarbex and others in the High Court of Islamabad, Pakistan to enforce the revenue payment obligations. Management is extremely optimistic that such proceedings will be successful in causing the resumption of revenue payments to the Company. In order to provide necessary working capital for the Company while these revenue payments are being wrongfully withheld, we sold unregistered common shares to private investors. The funds were utilized for general and administrative expenses incurred by the Company, including the non-recurring legal costs associated with the pending litigation in Pakistan. Management expects to be successful in making additional sales of securities in the future to fund the Company’s working capital needs as they arise in the event that the pending litigation in Pakistan does not result in a near term resumption of monthly revenue payments from Hycarbex. Despite management’s expectations, there can be no assurance of litigation success in the short term or upon final resolution on the merits, and there can be no assurance of management’s ability to consummate securities sales to meet working capital requirements. (See Note 10 – Going Concern footnote to Financial Statements above).

Liquidity and Capital Resources

Prior to the connection of the Haseeb No. 1 to the gas marketing pipe line, we funded our operations through private loans, all of which have been repaid, and through the private sale of securities. The re-connection to the marketing pipe line and resulting gas sales under the Extended Well Test were expected to provide future cash flow sufficient to meet the Company’s ongoing expenses because the level of production was sufficiently high to cause production revenues to exceed the Company’s monthly operating capital requirements. The suspension of revenue payments by Hycarbex due to its financial difficulties after just two (2) monthly revenue payments caused management to develop a different short term approach to funding its operations. In order to provide necessary working capital for the Company while these revenue payments were and are being wrongfully withheld, we sold to private investors unregistered common shares and the funds were and will be utilized for general and administrative expenses incurred by the Company, including the non-recurring legal costs associated with the pending litigation in Pakistan. Management is optimistic that such proceedings will be successful in causing the resumption of payments to the Company. However, we will make additional sales of securities in the future to fund the Company’s working capital needs as they arise in the event that the pending litigation in Pakistan does not result in a near term resumption of monthly revenue payments from Hycarbex. Management expects to have continued success in raising operating capital through securities sales pending the completion of these legal proceedings against Hycarbex. Management further expects to have success in the legal proceedings. Despite management’s expectations, there can be no assurance of litigation success in the short term or upon final resolution on the merits, and there can be no assurance of management’s ability to consummate securities sales to meet working capital requirements. (See Note 10 – Going Concern footnote to Financial Statements above).

Business Strategy and Prospects

In July, 2011, the Haseeb No. 1 Well began producing into the Sui Southern Gas Company line under the Extended Well Test Gas Sales and Purchase Agreement covering the sale of gas from the Haseeb Gas Field on Yasin Block (2768-7) signed by the parties in December, 2009. While the Company received only the initial two production payments from Hycarbex before the wrongful suspension and accrual of payments, we are optimistic that pending litigation in Pakistan will be successful in causing a resumption of monthly payments. We are further optimistic that the Company will continue to be successful in making sales of securities to private investors to fund the Company’s working capital requirements. We further expect that the monthly production currently being accrued by Hycarbex to the Company’s interest will increase as the sales volume under the Extended Well Test is gradually increased to the target daily production level of 15 million cubic feet per day. Our business strategy is to use these sales of securities to meet our administrative expenditure requirements until the monthly payments derived from production are resumed. Further, since the accrual rate exceeds the Company’s actual and historical monthly cash requirements for operations, management expects to seek similar non-cost bearing production purchase opportunities in Pakistan and other petroleum producing regions.

The Yasin Block, to date, has no reported Proved Reserves as that term and the calculation for discounted future net cash flows for reporting purposes is mandated by the Financial Accounting Standards Board in Statement of Financial Accounting Standards No. 69, titled “Disclosures About Oil and Natural Gas Producing Activities”. However, based upon test results upon the Haseeb No. 1 and other data collected by Hycarbex from its drilling and seismic activities, we strongly believe that the Yasin Block acreage contains oil and gas producing physical structures which are worthy of further exploration. If successfully developed, our reserved 18% production interest will likely be a good source of cash revenues because the royalty, by its nature, entitles us to share in gross, rather than net, production. We expect to use these anticipated revenues for further investment in other revenue generating assets or business activities.

On October 29, 2009, the Company executed an agreement to acquire from Hycarbex a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan, concessions, each of which is operated by Heritage Oil and Gas Limited. Heritage is an affiliate of Heritage Oil, PLC, an independent oil and gas company which focuses its oil and gas operations in Africa, the Middle East, and Russia. Heritage’s shares trade on the London Stock Exchange under the symbol HOIL with a secondary listing on the Toronto Stock Exchange under the symbol HOC. Heritage owns a 54% interest in the Zamzama North Block and a 48% interest in the Sanjawi Block. Other working interest participants in the two Blocks are Sprint Energy (Private) Limited, an affiliate of Pakistan-based JS Group, and Tracker Energy (Private) Limited, an affiliate of Pakistan-based TPL Holdings, Ltd. Under the terms of the agreement with Hycarbex, The American Energy Group, Ltd’s 2-1/2% working interests are “carried” by Hycarbex for the initial two (2) wells on the Sanjawi Block and the initial three (3) wells on the Zamzama North Block. The term “carried” means that the costs associated with work programs, seismic, road preparation, drillsite preparation, rig and equipment mobilization, drilling, reworking, testing, logging completion and governmental fees (except taxes and production) shall be borne by Hycarbex. Infrastructure costs such as pipelines and surface facilities constructed after the first discovery well on each Block are not carried. After the initial carried wells have been drilled, The American Energy Group, Ltd. shall bear its proportionate share of drilling and exploration costs. The agreement provides an option to The American Energy Group, Ltd. to convert its working interest in any well at any time to a 1.5% gross royalty interest free of any exploration costs or operating costs.

According to information set forth on Heritage’s website [www.heritageoilplc.com], the Sanjawi Block is considered a very viable prospect due to the recent oil discovery to the West, a number of gas fields to the Southeast and the presence of oil seeps. The Sanjawi Block is dominated by a series of broad East-West trending surface features including the Dabbar and Warkan Shah anticlines. These are large structures, with the Dabbar anticline being some 300 square kilometers in area. The Zamzama North Block is immediately to the North of the Zamzama Gas Field, a major Upper Cretaceous gas accumulation. Heritage has acquired approximately 750 kilometers of fair to good quality, 2D seismic and has mapped a number of structural leads. If Heritage development activities occur in the future and are successful, then our Zamzama North interest would also be a source of revenue in the future.

Recent Pakistan Political Developments

Incidents of violence and political protest continue to occur within the country according to international news sources. These political events have not impacted our ownership of the overriding royalty or the ongoing business practices within the country, including oil and gas exploration, development and production by Hycarbex and other major operators doing business in Pakistan. We cannot predict the effect of future political events or political changes upon Hycarbex’s operations and our expectations of deriving revenues from our interests through the sale of gas into Pakistan’s pipeline infrastructure.

Galveston County, Texas Leases

We believe that the deeper zones which we currently hold may have development potential. We are exploring the various opportunities to realize value from these deep rights, including potential sale. We have not yet determined the best course for these assets. These leases are held in force by third party production and, therefore, the leases do not require development of these rights by a certain date.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements during the fiscal year ended June 30, 2014.

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are not exposed to market risk from changes in interest rates and commodity prices.

ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements required to be filed pursuant to this Item 7 begin on Page F-1 of this report. Such consolidated financial statements are hereby incorporated by reference into this Item 8. The Supplementary Data requirement as set forth in Item 302 of Regulation S-K is inapplicable to the Company.

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

There were no changes in or disagreements with accountants on accounting and financial disclosure for the year ended June 30, 2014.

ITEM 9A – 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 our disclosure controls and procedures were effective in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is included in the reports that we file with the Securities and Exchange Commission.

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

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management assessed the effectiveness of our internal controls over financial reporting as of June 30, 2014. In making this assessment, management used the criteria set forth by the Commission of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework to identify the risks and control objectives related to the evaluation of our control environment. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of June 30, 2014.

Our independent registered public accounting firm, Pritchett, Siler & Hardy, P.C. has taken into consideration internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but has not expressed an opinion on the effectiveness of the Company’s internal control over financial reporting in its report below.

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.

ITEM 9B – OTHER INFORMATION

Subsequent to the end of the fiscal year we sold 900,000 unregistered Common shares for $180,000 which was and will be used for general working capital, including attorneys’ fees incurred in the pending litigation with Hycarbex. We also issued 150,000 restricted shares to our Pakistan legal counsel for fees and issued 37,838 shares to directors for services. Management expects to have continued success in raising capital through securities sales pending the completion of the pending litigation with Hycarbex seeking recovery of accrued, unpaid production revenues.

PART III

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The directors and executive officers of the Company at June 30, 2013, included the following persons, each of whom serves on the audit committee of the Company:

Name	Age	Position

R. Pierce Onthank	54	Director, President, CEO, CFO & Secretary-Treas.
John S. Gebhardt	67	Director

R. Pierce Onthank, age 54, serves as President, CEO, Secretary-Treasurer. Mr. Onthank has also served as our Director since 2003. Mr. Onthank received a BA in economics from Denison University in 1983. He served as the investment broker for the Company from 1998 until 2001. In addition to serving The American Energy Group, Ltd. as one of its prior investment bankers, Mr. Onthank has specialized in oil and gas investments for his previous clients. With over 20 years of experience in the securities business, Mr. Onthank has held senior positions in investment banking firms and has managed high yield net worth and institutional portfolios. Mr. Onthank began his career in the Merrill Lynch training program and subsequently was employed by Bear Stearns in 1985 where he became a limited partner in 1987. In 1988, he became a Senior Vice President at Drexel Burnham Lambert, where his primary responsibilities were to manage the private client group, which was involved in both public and private investments for individual and institutional accounts. Mr. Onthank served as a Senior Vice President at Paine Webber from 1990 to 1993. From 1993 to 1995, he was employed by Smith Barney Shearson where he managed the investments of institutional and individual clients. Before becoming a director and an executive officer of The American Energy Group, Ltd., he co-founded Crary Onthank & O’Neill, an investment banking company, in 1998.

John S. Gebhardt, age 67, became a member of the Board of Directors upon the April, 2011 retirement of Karl Welser. Mr. Gebhardt resides in Celebration, Florida. Mr. Gebhardt studied economics at both the Lubin School of Business at Pace University and the Stern School of Business at New York University. Mr. Gebhardt was previously employed as a Managing Director at Paine Webber in New York City from 1981 to 1998, and as a Managing Director at Knight Capital Markets in Purchase, New York from 1998 to 2001. Since 2001, Mr. Gebhardt has been self employed as a manager of securities portfolios for private clients and as a consultant to companies as to exchange listing matters. Mr. Gebhardt has also served on many civic and educational boards, including twelve years on the Byram Hills Board of Education, Armonk, New York, eleven years on the Board of the Westchester-Putnam School Boards Association, and two terms on the Board of Directors of the New York State School Boards Association.

Board of Directors

We held no physical meetings and four telephonic meetings of the Board of Directors during the fiscal year ended June 30, 2014, and the Board of Directors took action at Board meetings or by unanimous written consent twenty one (21) times during that period. Mr. Onthank and Mr. Gebhardt are our only Directors who are also our officers and/or operations executives. Mr. Onthank and Mr. Gebhardt serve upon the audit committee. There are not any other standing committees of the Board of Directors based on the size of our business.

We do not currently have a process for security holders to send communications to the Board of Directors. However, we welcome comments and questions from our shareholders. Shareholders can direct communications to our Chief Executive Officer, Pierce Onthank, at our executive offices, 1 Gorham Island, Suite 303, Westport, Connecticut 06880. While we appreciate all comments from shareholders, we may not be able to individually respond to all communications. We attempt to address shareholder questions and concerns in our press releases and documents filed with the SEC so that all shareholders have access to information about the Company at the same time. Mr. Onthank collects and evaluates all shareholder communications. If the communication is directed to the Board of Directors generally or to a specific director, Mr. Onthank will disseminate the communications to the appropriate party at the next scheduled Board of Directors meeting. If the communication requires a more urgent response, Mr. Onthank will direct that communication to the appropriate executive officer. All communications addressed to our directors and executive officers will be reviewed by those parties unless the communication is clearly frivolous.

Nomination and/or Appointment of Directors

The Board of Directors has not adopted a formal policy with regard to the process to be used for identifying and evaluating nominees for director. The consideration of candidates nominated by directors is at the Board’s discretion. We believe this practice is adequate based on the size of our business and current Board member qualifications. Our Bylaws do not contain a specific procedure for nomination of persons to serve for election to the Board of Directors. Our Bylaws provide that the number of Directors shall be not less than two nor more than seven. Vacancies in the Board of Directors may be filled by a majority of remaining Directors.

Compensation of Directors

Our Directors are reimbursed for reasonable out-of-pocket expenses in connection with their services as members of the Board including attendance at Board of Director meetings, and may be granted options to purchase shares of our common stock at the discretion of our Board of Directors. Directors are given common stock remuneration for their services as our Directors.

Compliance with Section 16(A) of the Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our directors and executive officers and persons who beneficially own more than 10% of our common stock file with the Securities and Exchange Commission various reports as to their ownership of and activities relating to our common stock. Such reporting persons are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Our officers and directors are currently compliant with all filing requirements under Section 16(a) of the Securities Exchange Act of 1934.

Code of Ethics

In September 2004, we adopted a Code of Ethics that is applicable to all directors, officer and employees. A copy of the Code of Ethics may be obtained without charge by writing to: The American Energy Group, Ltd., 1 Gorham Island Suite 303, Westport, Connecticut 06880.

ITEM 11 – EXECUTIVE COMPENSATION

Summary Compensation Table

The following table reflects all forms of compensation for the fiscal years ended June 30, 2010, 2011, 2012, 2013 and 2014 for services provided by our executive officers and directors.

SUMMARY COMPENSATION TABLE

			ANNUAL COMPENSATION						LONG TERM COMPENSATION
									Awards					Payouts
Name	Title	Year	Salary		Bonus		Other Annual Comp- ensation		Restricted Stock Awarded			Options/ SARs Warrants (#)		LTIP payouts ($)		All Other Comp- ensation
R.Pierce	President,	2014	$	360,000		-0-	$	20,662		233,631	⁽²⁾		-0-		-0-		-0-
Onthank	CEO and	2013	$	360,000		-0-	$	24,325		126,760	⁽¹⁾		-0-		-0-		-0-
	Sec. Treas.	2012	$	350,785		-0-		-0-		-0-			-0-		-0-		-0-
		2011	$	240,000		-0-	$	29,673		-0-			-0-		-0-		-0-
		2010	$	240,000		-0-	$	74,214		-0-			-0-		-0-		-0-

John S.	Director	2014		-0-		-0-		-0-		233,631	⁽²⁾		-0-		-0-		-0-
Gebhardt		2013		-0-		-0-		-0-		176,760	⁽¹⁾		-0-		-0-		-0-
		2012		-0-		-0-		-0-		-0-			-0-		-0-		-0-

Notes to Summary Compensation Table:

	(1)	Directors Onthank and Gebhardt were issued restricted stock for each of the quarterly periods of the 2011-2012 year based upon a compensation value of $6,250 per quarter. Director Gebhardt also received 50,000 restricted shares for Board service prior to June 30, 2011.
	(2)	Directors Onthank and Gebhardt were issued restricted stock for the quarterly periods ending 9/30/12-3/31/14 based upon a compensation value of $6,250 per quarter.

Stock Option/SAR and Warrant Grants

During the fiscal year ended June 30, 2014 there were not any grants of warrants, stock options or SAR’s to executive officers or directors. There are currently no outstanding stock options or SAR’s.

Aggregated Option/SAR/Warrant Exercises In

Last Fiscal Year and FY-End Option/SAR Values

Name

Shares
Acquired on Exercise
(#)

Value
Realized
($)

Number of Unexercised Underlying Options/SARs/ Warrants at FY end (#);

Exercisable/ Unexercisable

Value of Unexercised In-The-Money Options/SARs/ Warrants at FY end ($);

Exercisable/ Unexercisable

Pierce Onthank

-0-

0/0/3,250,000

0/0/585,000

John S. Gebhardt

-0-

0/0/400,000

0/0/72,000

There were no stock options, SAR’s or warrants exercised by any of our named executive officers during our most recent fiscal year ended June 30, 2014.

Long-Term Incentive Plans

We currently have no Long-Term Incentive Plans.

Employment contracts and change-in-control arrangements

There are no employment contracts or change-in-control agreements between us and our executive officers or directors.

ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of October 14, 2014, with respect to the beneficial ownership of shares of common stock by (i) each person known to us who owns beneficially more than 5% of the outstanding shares of common stock, (ii) each of our Directors, (iii) each of our Executive Officers and (iv) all of our Executive Officers and Directors as a group. Unless otherwise indicated, each stockholder has sole voting and investment power with respect to the shares shown. As of October 14, 2014, we had 52,154,756 shares of common stock issued and outstanding.

Name and address of beneficial owner	Title of Class of Stock	Number of Shares of Common Stock			Percentage of Common Stock (1
R. Pierce Onthank 1 Gorham Island Suite 303 Westport, Connecticut 06680	Common stock		4,849,499	^(1,2)		8.75	^(1,2)

John S. Gebhardt 509 Longmeadow Celebration, Florida 34747	Common stock		829,330	^(1,3)		1.58	^(1,3)

All Officers and Directors as a group (total of two)	Common stock		5,678,829	⁽¹⁾		10.18	⁽¹⁾

⁽¹⁾ Under Rule 13d-3 promulgated under the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on June 30, 2014. As of October 14, 2014 there were 52,154,716 shares of our common stock issued and outstanding disregarding shares which may be acquired upon exercise of outstanding warrants.

⁽²⁾Includes 3,250,000 shares issuable upon the exercise of warrants to purchase shares of common stock.

⁽³⁾Includes 400,000 shares issuable upon the exercise of warrants to purchase shares of common stock.

ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE

None of the following persons has any direct or indirect material interest in any transaction to which we were or are a party during the past two years, or in any proposed transaction to which we propose to be a party:

(A)	any of our directors or executive officers;

(B)	any nominee for election as one of our directors;

(C)	any person who is known by us to beneficially own, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock; or

(D)	any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons named in paragraph (A), (B) or (C) above.

ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

Audit fees billed by the Company’s Principal Accountant were $25,310 during the year ended June 30, 2014. Audit fees billed by the Company's Principal Accountant were $14,948 during the year ended June 30, 2013.

Audit Related Fees

There have been no audit related fees billed by the Company’s Principal Accountant as of the date of this report.

Tax Fees

There have been no tax fees billed by the Company’s Principal Accountant as of the date of this report.

All Other Fees

There have been no other fees billed by the Company’s Principal Accountant as of the date of this report.

PART IV

ITEM 15 – EXHIBITS

The following documents are filed as Exhibits to this report:

Exhibit 31.1 –		Certification by R. Pierce Onthank, President and Acting Chief Financial and Principal Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a);

Exhibit 32.1 –		Certification by R. Pierce Onthank, President and Acting Chief Financial and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Section 1350(a) and

101		Interactive data files pursuant to Rule 405 of Regulation ST.

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: October 14, 2014.	By:	/s/ R. Pierce Onthank
		R. Pierce Onthank
		President, Secretary, Director
		Chief Financial Officer and Principal Accounting Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company in the capacities and on the dates indicated.

Date signed: October 14, 2014	By	/s/ John S. Gebhardt
		John S. Gebhardt
		Director

THE AMERICAN ENERGY GROUP, LTD.

FINANCIAL STATEMENTS

June 30, 2014 and 2013

CONTENTS

Report of Independent Registered Public Accounting Firm	F-2

Balance Sheets	F-3

Statements of Operations	F-4

Statements of Stockholders’ Equity	F-5

Statements of Cash Flows	F-7

Notes to the Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
The American Energy Group, Ltd.

We have audited the accompanying balance sheets of The American Energy Group, Ltd. as of June 30, 2014 and 2013 and the related statements of operations, stockholders' equity and cash flows for the years then ended. The American Energy Group, Ltd.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The American Energy Group, Ltd. as of June 30, 2014 and 2013 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming The American Energy Group, Ltd. will continue as a going concern. As discussed in Note 10 to the financial statements, The American Energy Group, Ltd. has incurred losses and negative cash flows from operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Management’s plans in regards to these matters are also described in Note 10. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

PRITCHETT, SILER & HARDY, P.C.

Salt Lake City, Utah

October 14, 2014

F-2

THE AMERICAN ENERGY GROUP, LTD.

Balance Sheets

For the Years Ended June 30,

		2014			2013
Assets
Current Assets
	Cash	$	11,814		$	44,101
	Prepaid expenses		33,826			33,826

	Total Current Assets		45,640			77,927

Property and Equipment
	Office equipment		23,417			30,417
	Leasehold improvements		-			26,458
	Accumulated depreciation		(21,926	)		(42,465	)

	Net Property and Equipment		1,491			14,410

Other Assets
	Investment in oil & gas working interest		1,583,914			1,583,914
	Oil & gas sales receivable		3,145,306			2,037,143
	Security deposit		11,858			16,312

	Total Other Assets		4,741,078			3,637,369

	Total Assets	$	4,788,209		$	3,729,706

Liabilities and Stockholders’ Equity
Current Liabilities
	Accounts payable	$	62,096		$	59,683
	Security deposits		-			13,200
	Note payable		26,401			27,378
	Accrued liabilities		358,283			254,936

	Total Current Liabilities		446,780			355,197

Non-Current Liabilities
	Notes payable – related party		650,000			-

	Total Non-Current Liabilities		650,000			-

	Total Liabilities		1,096,780			355,197

Commitments and Contingencies			-			-

Stockholders’ Equity
	Common stock, par value $0.001 per share; authorized 80,000,000 shares; 51,066,878 and 45,242,949 shares issued and outstanding, respectively		51,067			45,243
	Capital in excess of par value		15,258,164			13,560,821
	Preferred Stock, 20,000,000 authorized (none issued)		-			-
	Accumulated deficit		(11,617,802	)		(10,231,555	)

	Total Stockholders’ Equity		3,691,429			3,374,509

	Total Liabilities and Stockholders’ Equity	$	4,788,209		$	3,729,706

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

F-3

THE AMERICAN ENERGY GROUP, LTD.

Statements of Operations

For the Years Ended June 30,

	2014			2013

Revenue	$	1,108,163		$	1,217,553

General and Administrative Expenses
Legal and professional		1,007,570			217,709
Depreciation and amortization expense		4,550			4,733
General and administrative		1,455,350			1,053,292

Total Expenses		2,467,470			1,275,734

Net Operating Income (Loss)		(1,359,307	)		(58,181	)

Other Income and (Expense)
Interest expense		(19,872	)		(12,857	)
Taxes – other		(7,068	)		(8,381	)

Total Other Income and (Expense)		(26,940	)		(21,238	)

Net Loss before Federal Income Tax		(1,386,247	)		(79,419	)
Federal Income Tax		-			-

Net Loss	$	(1,386,247	)	$	(79,419	)

Basic Loss per Common Share	$	(0.03	)	$	(0.00	)

Weighted Average Number of Shares Outstanding		48,007,962			41,209,615

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

F-4

THE AMERICAN ENERGY GROUP, LTD.

Statements of Stockholders’ Equity

For the Period July 1, 2012 through June 30, 2013

	Common Stock				Capital in Excess		Accumulated
	Shares		Amount		of Par Value		Deficit			Totals

Balance June 30, 2012	39,432,761		$	39,433	$	12,336,385	$	(10,152,136	)	$	2,223,682

August 2012, new shares issued for cash at $0.15 per share		1,046,668		1,047		155,953		-			157,000

September 2012, new shares issued for cash at $0.15 per share		200,000		200		29,800		-			30,000

October 2012, new shares issued for cash at $0.15 per share		400,000		400		59,600		-			60,000

November 2012, new shares issued for cash at $0.15 per share		200,000		200		29,800		-			30,000

December, 2012, new shares issued for cash at $0.15 per share		566,667		566		84,434		-			85,000

December 2012, 1,260,000 warrants in connection with warrant term modifications		-		-		19,646		-			19,646

January 2013, new shares issued for cash at $0.15 per share		700,000		700		104,300		-			105,000

January 2013, new shares issued for payables incurred for services rendered through December 2012 at $0.15 per share		433,333		433		64,567		-			65,000

March 2013, new shares issued for cash at $0.15 per share		770,000		770		114,730		-			115,500

May 2013, new shares issued for payables incurred for services rendered through June 2012 at $0.23 per share		303,520		304		69,696		-			70,000

May 2013, 2,600,000 warrants in connection with warrants issued to officers, directors and counsel		-		-		314,600		-			314,600

June 2013, new shares issued for cash at $0.15 per share		1,190,000		1,190		177,310		-			178,500

Net (loss) for the year ended June 30, 2013		-		-		-		(79,419	)		(79,419	)

Balance June 30, 2013		45,242,949	$	45,243	$	13,560,821	$	(10,231,555	)	$	3,374,509

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

F-5

THE AMERICAN ENERGY GROUP, LTD.

Statements of Stockholders’ Equity

For the Period July 1, 2013 through June 30, 2014

	Common Stock				Capital in Excess		Accumulated
	Shares		Amount		of Par Value		Deficit			Totals
Balance June 30, 2013	45,242,949		$	45,243	$	13,560,821	$	(10,231,555	)	$	3,374,509

July 2013, new shares issued for cash at $0.15 per share		500,000		500		74,500		-			75,000

September 2013, new shares issued for cash at $0.15 per share		600,000		600		89,400		-			90,000

October 2013, new shares issued for cash at $0.15 per share		700,000		700		104,300		-			105,000

November 2013, new shares issued for cash at $0.20 per share		900,000		900		179,100		-			180,000

January 2014, new shares issued for services rendered through December, 2013 at $0.15 per share		20,000		20		2,980		-			3,000

February, 2014, new shares issued for cash at $0.15 per share		1,166,667		1,167		173,833		-			175,000

February 2014, 2,333,334 warrants in connection with debt issuance		-		-		361,667		-			361,667

April 2014, new shares issued for payables incurred for directors fees rendered through March 2014 at average $0.19 per share		467,262		467		87,033		-			87,500

April 2014, new shares issued for services rendered through March, 2014 at $0.30 per share		20,000		20		5,980		-			6,000

June 2014, new shares issued for cash at $0.20 per share		1,450,000		1,450		288,550		-			290,000

June 2014, 1,500,000 warrants in connection with debt issuance		-		-		330,000		-			330,000

Net (loss) for the year ended June 30, 2014		-		-		-		(1,386,247	)		(1,386,247	)

Balance June 30, 2014		51,066,878	$	51,067	$	15,258,164	$	(11,617,802	)	$	3,691,429

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

F-6

THE AMERICAN ENERGY GROUP, LTD.

Statements of Cash Flows

For the Years Ended June 30,

	2014			2013

Cash Flows From Operating Activities
Net loss	$	(1,386,247	)	$	(79,419	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		4,550			4,733
Warrant expense		691,667			334,246
Common stock issued for current debt, services		46,500			45,000
Loss on impairment of assets		8,369			-
Changes in operating assets and liabilities
(Increase) decrease in oil & gas sales receivable		(1,108,163	)		(1,217,553	)
(Increase) decrease in prepaid expenses		-			(552	)
(Increase) decrease in security deposits		4,454			-
Increase (decrease) in accounts payable		2,413			1,493
Increase (decrease) sublease security deposit		(13,200	)		-
Increase (decrease) in accrued expenses and other current liabilities		152,370			112,720

Net Cash Used In Operating Activities		(1,597,287	)		(799,332	)

Cash Flows From Investing Activities
Cash paid for equipment acquisitions		-			-
Funds reserved for acquisitions		-			-

Net Cash Provided By (Used In) Investing Activities		-			-

Cash Flows From Financing Activities
Proceeds from the issuance of debt		650,000			-
Cash received from stock issuance		915,000			761,000

Net Cash Provided By Financing Activities		1,565,000			761,000

Net Increase (Decrease) in Cash		(32,287	)		(38,332	)

Cash and Cash Equivalents, Beginning of Year		44,101			82,433

Cash and Cash Equivalents, End of Year	$	11,814		$	44,101

Cash Paid For:
Interest	$	12,708		$	12,857
Taxes	$	-		$	-

Non-Cash Financing Activities:
Common stock issued in satisfaction of accounts payable and accrued expenses	$	50,000		$	90,000
Common stock issued for services rendered	$	46,500		$	45,000

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

F-7

THE AMERICAN ENERGY GROUP, LTD.

Notes to the Financial Statements

June 30, 2014 and 2013

Note 1 - Organization and Summary of Significant Accounting Policies

a. Organization

The American Energy Group, Ltd. (the Company) was incorporated in the State of Nevada on July 21, 1987 as Dimension Industries, Inc. Since incorporation, the Company has had several name changes including DIM, Inc. and Belize-American Corp. Internationale with the name change to The American Energy Group, Ltd. effective November 18, 1994. The Company’s authorized common stock, par value $0.001 is 80,000,000 shares. The Company’s authorized preferred stock, par value $0.001, is 20,000,000 shares. There is no preferred stock issued and outstanding.

During the year ended June 30, 1995, the Company incorporated additional subsidiaries including American Energy-Deckers Prairie, Inc., The American Energy Operating Corp., Tomball American Energy, Inc., Cypress-American Energy, Inc., Dayton North Field-American Energy, Inc. and Nash Dome Field-American Energy, Inc. In addition, in May 1995, the Company acquired all of the issued and outstanding common stock of Hycarbex, Inc. (Hycarbex), a Texas corporation, in exchange for 120,000 shares of common stock of the Company, a 1% overriding royalty on the Pakistan Project (see Note 2) and a future $200,000 production payment if certain conditions are met. The acquisition was accounted for as a pooling-of-interests on the date of the acquisition. The fair value of the assets and liabilities assumed approximated the fair value of the 120,000 shares issued of $60,000 as of the date of the acquisition. Accordingly, book value of the assets and liabilities assumed was $60,000. In April 1995, the name of that company was changed to Hycarbex-American Energy, Inc. The Company and its subsidiaries were principally in the business of acquisition, exploration, development and production of oil and gas properties.

On June 28, 2002, the Company was placed into involuntary Chapter 7 bankruptcy by three creditors, including Georg von Canal, an officer and director who was then involved in litigation with the Company to invalidate an attempt to remove him from his management positions. The bankruptcy filing followed an unsuccessful effort by management to resolve both the litigation and the need for a substantial cash infusion through a stock sale to a German-based investor which would have simultaneously resulted in a restructure of management. Shortly after this bankruptcy filing, the secured creditor holding a first lien on the Company’s only producing oil and gas leases in Fort Bend County, Texas, sought permission from the bankruptcy court to foreclose on those assets. The Company responded by converting the Chapter 7 bankruptcy proceedings to a Chapter 11 reorganization proceeding. The Company obtained approval of a plan of reorganization in September 2002, but the secured creditor was nevertheless permitted to foreclose upon the Fort Bend County oil and gas leases. Subsequent to the approval of the foreclosure of the oil and gas producing properties, the Company abandoned the remaining oil and gas properties except for one lease in southeast Texas. For the year ended June 30, 2003, the Company recognized a loss of $13,040,120 on the foreclosure and abandonment of the oil and gas properties and the sale of the fixed assets.

On October 26, 2003, the Company sold its wholly-owned subsidiary, Hycarbex-American Energy, Inc., for an 18% overriding royalty interest in the Exploration License No. 2768-7 dated August 11, 2001, of the Yasin Exploration Block.

On January 29, 2004, the Company was released from bankruptcy. Pursuant to the plan, all of the existing 66,318,037 shares of common stock and 41,499 shares of preferred stock were cancelled. The Company issued 18,898,518 new shares of common stock to creditors. Also, the Company adopted the provisions for fresh-start reporting. Accordingly, the accumulated deficit accumulated through January 29, 2004 has been eliminated. The Company is considered to have a fresh-start due to the cancellation of the prior shareholders’ common stock and the subsequent issuance of common stock to creditors, the new shareholders.

F-8

THE AMERICAN ENERGY GROUP, LTD.

Notes to the Financial Statements
June 30, 2014 and 2013

Note 1 - Organization and Summary of Significant Accounting Policies (continued)

a. Organization (continued)

On April 14, 2005, the Company’s wholly owned inactive subsidiary, The American Energy Operating Corp. (AEOC) filed for voluntary bankruptcy liquidation. On July 24, 2006, The American Energy Operating Corp. received a final decree from the United States Bankruptcy Court – Southern District of Texas that the Company’s estate had been fully administered and that the Chapter 7 was closed. The Company no longer has any subsidiaries.

b. Accounting Methods

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end.

c. Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

d. Property and Equipment and Depreciation

Property and equipment are stated at cost. Depreciation on drilling and related equipment, vehicles and office equipment is provided using the straight-line method over expected useful lives of five to ten years. For the years ended June 30, 2014 and 2013, the Company incurred total depreciation of $4,550 and $4,733, respectively.

e. Basic Loss Per Share of Common Stock

	For the Year			For the Year
	Ended June 30,			Ended June 30,
	2014			2013

Loss (numerator)	$	(1,386,247	)	$	(79,419	)

Shares (denominator)		48,007,962			41,209,615

Per Share Amount	$	(0.03	)	$	(0.00	)

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 8,693,334 and 4,860,000 shares of common stock for the years ended June 30, 2014 and 2013, respectively, are not included in the basic calculation because their inclusion would be antidilutive, thereby reducing the net loss per common share.

f. Use of Estimates

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

F-9

THE AMERICAN ENERGY GROUP, LTD.

Notes to the Financial Statements

June 30, 2014 and 2013

Note 1 - Organization and Summary of Significant Accounting Policies (continued)

g. Long Lived Assets

All long lived assets are evaluated for impairment per FASB ASC 360 whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Any impairment in value is recognized as an expense in the period when the impairment occurs. During the year ended June 30, 2014, the Company recorded in the general and administrative expense an impairment expense in the amount of $8,369 related to the abandonment of leasehold improvements in connection with the relocation of their corporate offices subsequent to year end.

h. Oil and Gas Sales Receivable and Revenue Recognition

The Company recognizes revenue in accordance with SEC SAB 104 which is that pervasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collection is reasonably assured. Pricing is under the jurisdiction of the Oil and Gas Regulatory which has jurisdiction over wellhead and consumer gas pricing. Our revenue is derived exclusively from an overriding royalty interest. The Company recognizes royalty revenues when production has occurred and royalties are due and payable under its contract with Hycarbex (Note 9 – Other Contingencies). The receivable has been classified as long-term because timing or collection is not known, however, collection is expected to occur within a reasonable time frame, after final ruling is obtained from the June, 2014 Arbitration Tribunal hearings. Because it appears the payor has exhausted all of its legal remedies and failed to appear at the June 14, 2014 proccedings management has determined that collection is reasonably assured and has removed any prior allowances it may have recorded during the year.

i. Concentrations

The Company’s revenue and receivable is derived solely from its overriding royalty interest in the Yasin Concession which is located in the country of Pakistan.

j. Equity Securities

Equity securities issued for services rendered have been accounted for at the fair market value of the securities on the date of issuance.

k. Income Taxes

The Company accounts for corporate income taxes in accordance with FASB ASC 740-10 “Income Taxes”. FASB ASC 740-10 requires an asset and liability approach for financial accounting and reporting for income tax purposes.

The tax provision (benefit) for the year-ended June 30, 2014 and the year ended June 30, 2013 consisted of the following:

	2014		2013
Current:
Federal	$	-	$	-
State		-		-
Deferred
Federal		-		-
State		-		-
Total tax provision (benefit)	$	-	$	-

F-10

THE AMERICAN ENERGY GROUP, LTD.
Notes to the Financial Statements
June 30, 2014 and 2013

Deferred income taxes reflect the net tax effects of net operating losses and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Net operating loss carryovers of the Company will begin expiring in the year ended June 30, 2019. The Company’s total deferred tax liabilities, deferred tax assets, and deferred tax asset valuation allowances at June 30, 2014 and June 30, 2013 are as follows:

k. Income Taxes (continued)

	2014			2013
Net Operating Losses:
Federal	$	(47,865,356	)	$	(47,170,776	)
State		-			-
Total tax provision (benefit)	$	(47,865,356	)	$	(47,170,776	)
Less valuation allowance		47,865,356			47,170,776

Deferred tax asset	$	-		$	-

The reconciliation of income tax computed at statutory rates of income tax benefits is as follows:

	2014			2013
Expense (benefit) at federal statutory rate	$	(236,157	)	$	89,189
State tax effects		-			-
Non deductible expenses		-			-
Deferred tax asset valuation allowance		236,157			(89,189	)
Income tax provision (benefit)	$	-		$	-

The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10 (Prior authoritative literature: Financial Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48)). FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with prior literature FASB Statement No. 109, Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10.

At the adoption date of July 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of June 30, 2014, the Company had no accrued interest or penalties.

The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2014, 2013, and 2012.

F-11

THE AMERICAN ENERGY GROUP, LTD.
Notes to the Financial Statements
June 30, 2014 and 2013

l. Fair Value of Financial Instruments

On January 1, 2008, the Company adopted FASB ASC 820-10-50, “Fair Value Measurements. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

l. Fair Value of Financial Instruments (continued)

	·	Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
	·	Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
	·	Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The carrying value of the promissory notes approximates fair value because negotiated terms and conditions are consistent with current market rates as of June 30, 2014.

m. Concentration of Credit Risk

Financial instruments which subject the Company to concentrations of credit risk include cash and cash equivalents. The Company maintains its cash and cash equivalents with major financial institutions selected based on management’s assessment of the banks’ financial stability. Balances occasionally exceed the $250,000 federal deposit insurance limit. The Company has not experienced any losses on deposits.

n. Restoration, Removal and Environmental Liabilities

The Company is subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefit are expensed.

Liabilities for expenditures of a noncapital nature are recorded when environmental assessments and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments for the liability or component are fixed or reliably determinable. As of June 30, 2014, the Company believes it has no such liabilities.

o. New Accounting Pronouncements

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ ("ASC") is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. We have reviewed the FASB issued Accounting Standards Update ("ASU") accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted for public entities. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted. Management has reviewed the ASU and believes that they currently account for these awards in a manner consistent with the new guidance, therefore there is no anticipation of any effect to the consolidated financial statements.

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met conditions which would subject these financial statements for additional disclosure.

F-12

THE AMERICAN ENERGY GROUP, LTD.
Notes to the Financial Statements
June 30, 2014 and 2013

Note 2 - Oil and Gas Properties

The Company owns an interest in two oil and gas leases located in Southeast Texas. The Company is exploring various opportunities to realize value from these interests, including potential farm-out or sale. The Company intends to adopt the full cost method of accounting for oil and gas properties in the event that the Company develops their interests in these leases. The Company also holds an investment in an oil and gas working interest as further described in ‘Note 7 - Investment in Oil and Gas Working Interest.’ As of June 30, 2014, the Company does not have any proved reserves as defined under FASB ASC 932-235-50 (formerly SFAS No. 69) and has not incurred any costs associated with the development of these oil and gas properties and had not received any oil and gas revenue from these leases.

The Company also holds an 18% gross royalty interest in the Yasin Concession in Pakistan. The concession was acquired in 2003 through the sale of a wholly owned subsidiary of the Company. Revenues to be derived from this interest are overriding in nature and there are no future financial obligations or commitments required of the Company to secure this royalty revenue. The Company’s revenue recognition policy has been to recognize oil and gas sales receivable upon realization of oil and gas production. The Company feels that collections of the royalties were always reasonably assured but delayed by the arbitration process. Even though the Company won an arbitration order to receive the past due amounts and all future amounts, the Company has had to pursue further litigation in the courts for collection. (See Note 9 – Other Contingencies)

Revenue based on the oil and gas production for the years ended are as follows:

2012	$	849,980
2013		1,217,553
2014		1,108,163
Total	$	3,175,696

Note 3 – Notes Payable – Related Party

During the year ended June 30, 2014, the Company borrowed $650,000 from a current shareholder with interest at 5%, payable in full at its 18 month maturity of August, 2015. The Company incurred $7,164 of interest expense on these notes during the year ended June 30, 2014. The oil and gas properties in Southeast Texas are collateral on these notes.

Note 4 – Lease Commitments

For the year ended June 30^,2014 the Company leased office space on a month to month basis via the extension of its prior lease which had been extended through October, 2013. Subsequent to the year ended June 30, 214, the Company entered into a new long term lease for office space with an original lease term of 5 years. Monthly payments due on the new lease range from $6,203 per month at inception and increase to $6,174 per month on the last year of the lease. Minimum future lease payments under this lease are as follows:

Year ended June 30, 2015	$	71,425
Year ended June 30, 2016		71,823
Year ended June 30, 2017		72,557
Year ended June 30, 2018		73,290
Year ended June 30, 2019		74,024
Year ended June 30, 2020		6,174

Total obligation under operating lease	$	369,293

During the years ended June 30, 2014 and 2013, the Company incurred net rental expense of $57,600 and $52,737, respectively, related to their occupancy lease.

Note 5 – Common Stock

During August 2012, the Company issued 1,046,668 shares of common stock for cash in the amount of $157,000.

During September 2012, the Company issued 200,000 shares of common stock for cash in the amount of $30,000.

F-13

THE AMERICAN ENERGY GROUP, LTD.
Notes to the Financial Statements
June 30, 2014 and 2013

Note 5 – Common Stock (continued)

During October 2012, the Company issued 400,000 shares of common stock for cash in the amount of $60,000.

During November 2012, the Company issued 200,000 shares of common stock for cash in the amount of $30,000.

During December 2012, the Company issued 566,667 shares of common stock for cash in the amount of $85,000.

During January 2013, the Company issued 700,000 shares of common stock for cash in the amount of $105,000.

During January 2013, the Company issued 433,333 shares of common stock for services and payables valued at $65,000.

During March 2013, the Company issued 770,000 shares of common stock for cash in the amount of $115,500.

During May 2013, the Company issued 303,520 shares of common stock for services and payables valued at $70,000.

During June 2013, the Company issued 1,190,000 shares of common stock for cash in the amount of $178,500.

During July 2013, the Company issued 500,000 shares of common stock for cash in the amount of $75,000.

During September 2013, the Company issued 600,000 shares of common stock for cash in the amount of $90,000.

During October 2013, the Company issued 700,000 shares of common stock for cash in the amount of $105,000.

During November 2013, the Company issued 900,000 shares of common stock for cash in the amount of $180,000.

During January 2014, the Company issued 20,000 shares of common stock for services in the amount of $3,000.

During February 2014, the Company issued 1,166,667 shares of common stock for cash in the amount of $175,000.

During April 2014, the Company issued 467,262 shares of common stock for payment of director fees in the amount of $87,500.

During April 2014, the Company issued 20,000 shares of common stock for services in the amount of $6,000.

During June 2014, the Company issued 1,450,000 shares of common stock for cash in the amount of $290,000.

F-14

THE AMERICAN ENERGY GROUP, LTD.
Notes to the Financial Statements
June 30, 2014 and 2013

Note 6 – Common Stock Warrants

Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB ASC 480-10 “Share Based Payment” using the modified-prospective-transition method. Under this transition method, total compensation cost recognized in the statement of operations for the years ended June 30, 2007 and 2006 includes compensation costs for all share-based payments granted prior to, but not yet vested as of January 1,

2006, based on the grant date fair value estimated in accordance with the original provisions of FASB ASC

480-10, and compensation costs for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of FASB ASC 480-10. The Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model.

During the year ended June 30, 2013, the Company issued 2,600,000 warrants to officers, directors and counsel and also amended the terms of 1,260,000 previously existing warrants reducing the exercise price on those warrants to $0.15.

During the year ended June 30, 2014, the Company issued 3,833,334 warrants in connection with the financing addressed in Note 3. 2,333,334 of the warrants can be purchased at $0.15 per share and 1,500,000 of the warrants can be purchased at $0.20 per share. The Company reported $691,667 of expense during the year ended June 30, 2014 related to the warrant issuances. The expense of these warrants was calculated using the Black-Scholes option pricing model using the following assumptions:

Dividend yield			0
Expected volatility			203% ~ 212%
Risk free interest			0.31% ~ 0.40%
Expected life			2 years

A summary of the status of the Company’s stock warrants as of June 30, 2014 and 2013 is presented below:

	Stock		Exercise		Weighted Ave. Exercise
	Warrants		Price		Price

Outstanding and Exercisable, June 30, 2012		2,360,000	$	0.75-1.75	$	1.09

Granted		2,600,000	$	0.15	$	0.15
Expired/Canceled		100,000	$	1.75	$	1.75
Exercised		-		-		-

Outstanding and Exercisable, June 30, 2013		4,860,000	$	0.15-1.50	$	0.35

Granted		3,833,334	$	0.15-0.20	$	0.17
Expired/Canceled		-		-		-
Exercised		-		-		-

Outstanding and Exercisable, June 30, 2014		8,693,334	$	0.15-1.50	$	0.28

F-15

THE AMERICAN ENERGY GROUP, LTD.
Notes to the Financial Statements
June 30, 2014 and 2013

Note 6 – Common Stock Warrants (continued)

A summary of outstanding stock warrants at June 30, 2014 follows:

		Remaining				Weighted
		Contracted		Exercise		Ave Exer.
Number of Common Stock Equivalents	Expir. Date	Life (Years)		Price		Price

50,000	October, 2015		1.250	$	0.15	$	0.15
210,000	September, 2015		1.250	$	0.15	$	0.15
500,000	December 2015		1.500	$	0.75	$	0.75
500,000	December 2015		1.500	$	0.15	$	0.15
250,000	December 2015		1.500	$	1.00	$	1.00
250,000	December 2015		1.500	$	0.15	$	0.15
250,000	December 2015		1.500	$	1.50	$	1.50
250,000	December 2015		1.500	$	0.15	$	0.15
2,333,334	February 2016		1.750	$	0.15	$	0.15
1,500,000	June 2016		2.000	$	0.20	$	0.20
2,600,000	May 2018		3.000	$	0.15	$	0.15

Note 7 – Investment in Oil and Gas Working Interest

On October 29, 2009, the Company executed an agreement to acquire from Hycarbex – American Energy, Inc. (Hycarbex), a related party, a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan. In exchange for the working interest, the Company issued (1) 2,000,000 shares of common stock to Hycarbex, (2) 100,000 warrants with a three year duration to purchase an additional 100,000 shares at $1.75 per share and (3) $100,000 in cash. In addition, the purchase agreement requires Hycarbex to transfer $50,000 per month of the funds remaining in escrowed funds reserved for acquisitions to the Company until such time as the Company has received $200,000 in royalty payments from the Haseeb Exploratory Well No. 1. Once the Company has received $200,000 of royalty payments from the Haseeb Exploratory Well No. 1, any remaining balance in the funds reserved for acquisitions will be forfeited to Hycarbex for additional consideration of the acquisition of the oil and gas working interests. As of June 30, 2014, the Company has not received any royalty payments and the entire $392,500 held by Hycarbex was returned to the Company. The Company has the option to convert the two and one half percent working interests described above to a one and one half percent gross royalty working interest at any time. As of June 30, 2014 and 2013, the Company has capitalized $1,583,914 related to these working interests.

Note 8 – Subsequent Events

Subsequent to June 30, 2014, the Company issued an additional 900,000 shares of its common shares at $0.20 for a total of $180,000. In addition, the Company issued an additional 37,838 shares to directors and 150,000 shares to outside legal counsel for services rendered. There were no events or transactions occurring during this period that required recognition or disclosure in these financial statements.

F-16

THE AMERICAN ENERGY GROUP, LTD.
Notes to the Financial Statements
June 30, 2014 and 2013

Note 9 – Other Contingencies

Litigation

In December, 2011, we initiated civil legal proceedings against Hycarbex and others in the High Court of Islamabad, Pakistan. Our pleadings with respect to the 2.5% carried working interest positions in the Sanjawi and Zamzama North concessions sought a registration of those interests with the Government of Pakistan and simultaneously sought the imposition of an injunction preventing the transfer of the working interest in those concessions until the registration can be effected, thereby protecting our interests. In our pleadings with respect to the Yasin concession and the right to receive 18% of the gross production revenues, our pleadings sought a referral to arbitration based upon ownership of, in effect, a 25% carried working interest to which is attributed 18% of gross production revenues and the right to receive pertinent records and data, the appointment of a receiver to both protect and cause disbursement of the 18% of gross revenues since the inception of production in April, 2011, and the imposition of an injunction against the transfer of the working interest in the Yasin concession. The Court immediately issued two injunction orders preserving the status quo as to the Company’s interests in each of the Yasin, Sanjawi and Zamzama North petroleum concessions.

On March 27, 2012, the Islamabad High Court issued its final order (later clarified as to certain arbitration procedures by a clarification Order dated April 4, 2012). The Court directed the parties to proceed to arbitration in London, UK under the ICC Rules of Arbitration and further reaffirmed the continuation of the pending temporary injunctions against Hycarbex’s potential transfer of interests in the concessions prior to final resolution in the arbitration forum. Our application for the appointment of a receiver was neither granted or denied, but was instead deferred by the Court to the arbitration forum. Hycarbex appealed the March 27, 2012 Order asserting that litigation should not have been initiated by American Energy without first going to arbitration, asserting that our claims to 18% of gross production revenues were premature (despite already having made some payments toward that production interest) because a “commercial discovery” had not yet been declared, and asserting that the injunctions had the effect of enjoining all of the working interest, not just a portion. American Energy countered with an appeal that the Court should reconsider the application for a receiver due to an existing arbitration rule which would prevent the arbitration forum from granting interim relief of that type, irrespective of the merits of such an application. However, the interim relief has now been granted. The appeals are expected to be docketed and resolved during the second quarter of the current year.

F-17

THE AMERICAN ENERGY GROUP, LTD.
Notes to the Financial Statements

June 30, 2014 and 2013

Note 9 – Other Contingencies (continued)

In February, 2013, we filed an Application For Interim Relief with the ICC which was heard by the tribunal on June 13, 2013. By Order dated September 25, 2013, the ICC granted all requests made by the Company against Hycarbex American Energy, Inc. (“Hycarbex”), Hycarbex Asia Pte, Ltd. (“Hycarbex Asia”) and Hydro Tur, Ltd. (“Hydro Tur”) in its Application For Interim Relief filed with the ICC in February, 2013 and presented to the ICC in a hearing conducted June 13, 2013. By Order dated September 25, 2013, the ICC granted to the Company all requested relief and therein ordered Hycarbex, Hycarbex Asia and Hydro Tur to do the following within fourteen (14) days of the Order: (1) to produce to the Company the records of production and sales from the Yasin petroleum concession in Pakistan for the period August 2011 through the date of the Order and to continue to do so pending further order, (2) to pay to the Company 18% of all sales proceeds of hydrocarbons received by such parties between August 2011 through December 2012, (3) to pay to the Company 18% of all sale proceeds of hydrocarbons received by such parties between December 2012 and the date of the Order, and (4) to direct the purchaser of the hydrocarbons to pay direct to the Company 18% of all future sale proceeds during the pendency of the arbitration proceedings. The ICC further ordered that in the event that Hycarbex, Hycarbex Asia and Hydro Tur fail to produce to the Company the production and sales records for the period August 2011 through December 2012 within the fourteen (14) days following the Order, that such parties are ordered to pay to the Company $1,436,137.81 as an approximate interim amount pending the determination of actual sales proceeds from the actual records. The ICC further ordered that in the event that Hycarbex, Hycarbex Asia and Hydro Tur fail to produce to the Company the production and sales records for the period December 2012 through the date of the Order and continue to do so, that the arbitration tribunal will consider an application from the Company for a further Order as to an approximate interim monetary amount pending the determination of actual sale proceeds for such period. The Order of the ICC is not appealable to a court or other tribunal. Under Pakistan’s Arbitration Act of 1940, international arbitration orders are enforceable in the Pakistan courts.

On February 17, 2014, the arbitration proceedings commenced before the 3-arbitrator tribunal with the first order of business being consideration of another request to the arbitration tribunal by the Liquidators of Hycarbex Asia for suspension of the proceeding or, in the alternative, a postponement to permit newly appointed legal counsel to prepare a proper defense to the Company’s claims in arbitration. A complete suspension was rejected by the Tribunal. The Liquidators voluntarily offered to pay interim costs of $50,000 toward the actual costs determined by the Tribunal as caused by the request. The Company opposed the postponement and indicated that any consideration of same must be conditioned upon protection of the disputed assets and adequate measures to assure payment to us of the monies due to us under the September 25, 2013 Order granting interim relief. The tribunal adjourned the final hearing on the merits until June 16, 2014, based upon Hycarbex Asia’s assertion that the change of counsel was necessitated by a conflict arising out of a divergence of the respective interests of Hycarbex Asia and the other Defendants. The Company was awarded the $50,000 in inconvenience costs offered by Hycarbex Asia, which have been paid, and given the opportunity to request an increase in that sum based upon actual costs incurred. The Tribunal further issued an interim Order dated February 25, 2014, requiring Hycarbex to produce to us all records of production from August 2011 forward, including any production which occurs after the date of the Order. The Order further required Hycarbex to produce any future notices of regulatory action or default received from the Government of Pakistan. The Order further ordered that the parties prepare a joint letter to Sui Southern Gas Company Limited (the purchaser of the gas from the Haseeb #1 Well) withdrawing Hycarbex’s October 8, 2013 instruction letter to Sui Southern Gas Company and further ordered that the joint letter direct Sui Southern Gas Company Limited to pay 18% of the gross production proceeds directly to the Company going forward. The Order further directed that the joint letter be submitted to Sui Southern Gas Company Limited within 7 days after agreement is reached on the form of the letter. The Company and Hycarbex Asia reached agreement as to the form of the letter during the second week of May, 2014, and the joint letter was submitted to Sui Southern Gas Company Limited. The Order further authorized the Company’s use of any documents and transcripts from the arbitration proceedings in any ancillary proceeding initiated by the Company in Pakistan. As of the date of this report, the Company is awaiting the final ruling on the merits from the Arbitration Tribunal based upon the June, 2014 proceedings.

F-18

THE AMERICAN ENERGY GROUP, LTD.
Notes to the Financial Statements

June 30, 2014 and 2013

In August, 2014, the Company 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 names 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 has been granted to the Company by the Karachi Court. The new action filed in the Islamabad High Court names Hycarbex, Hycarbex Asia and Hydro Tur as defendants and seeks injunctive relief against Hycarbex from interference with the Arbitration Tribunal-ordered notifications to Sui Southern to pay us directly our 18% of production, seeks injunctive relief against Hycarbex from acceptance by Hycarbex of any production proceeds which may be paid by Sui Southern, and seeks a deposit into the Court from Hycarbex of the sum of $1,436,137.81, which Hycarbex was ordered to pay to the Company by prior Interim Order of the Arbitration Tribunal dated September 25, 2013 as the sum due through December, 2012. The Arbitration Tribunal likewise ordered in that prior Interim Order that Hycarbex direct Sui Southern to pay to the Company directly 18% of production occurring after December, 2012. The decision on the Islamabad High Court injunction application is expected within the coming weeks.

Foreign Operations

Incidents of violence and political protest continue to occur within the country according to international news sources. These political events have not impacted the Company’s ownership of the overriding royalty or the ongoing business practices within the country, including oil and gas exploration, development and production by Hycarbex and other major operators doing business in Pakistan. The Company cannot predict the effect of future political events or political changes upon Hycarbex’s operations and management’s expectations of deriving revenues from the sale of gas into Pakistan’s pipeline infrastructure.

Note 10 – 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 June 30, 2014, in addition to the Company’s current liabilities exceeding its current assets, it has recorded negative cash flows from operations and net losses in this year and prior fiscal years. In addition, the collection of the Company’s oil and gas sales receivables have been delayed and are subject to the final outcome of the litigation previously mentioned in Note 9 to these financial statements. The preceding circumstances combine to raise substantial doubt about the Company’s ability to continue as a going concern. Management expects to continue to be successful in future capital raises, if necessary, to continue operations until current oil and gas receivables are collected. In addition, revenues from the Pakistan petroleum concession continue to accrue on a monthly basis.

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined there were no additional items to report.

F-19

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AMERICAN ENERGY GROUP LTD Reports

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