Royal Energy Resources, Inc. - FORM 10-K

Royal Energy Resources, Inc. - FORM 10-K - December 11, 2014

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Royal Energy Resources, Inc. Reports

file	filename
EX-32.1 - EXHIBIT 32.1 - Royal Energy Resources, Inc.	ex32-1.htm
EXCEL - IDEA: XBRL DOCUMENT - Royal Energy Resources, Inc.	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - Royal Energy Resources, Inc.	ex31-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended: August 31, 2014

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

For the transition period from: _____________ to _____________

Royal Energy Resources, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-52547	11-3480036
(State or Other Jurisdiction of	(Commission	(I.R.S. Employer
Incorporation or Organization)	File Number)	Identification No.)

543 Bedford Ave, #176, Brooklyn, NY 11211
(Address of Principal Executive Offices) (Zip Code)

800-620-3029
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class - None
Name of each exchange on which registered – N/A

Securities registered pursuant to Section 12(g) of the Act:

Title of each class – Common Stock, $0.00001 Par Value
Name of each exchange on which registered – N/A

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 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 [ ] No [X]

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. Yes [ ] No [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.

Large accelerated filer [ ]

Accelerated filer [ ]

Non-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]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. February 28, 2014 - $50,213.

Note. — If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in the Form.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of December 8, 2014, the registrant had outstanding 8,254,609 shares of its common stock, par value of $0.00001 and 100,000 shares of its preferred stock, par value $0.00001.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).

Royal Energy Resources, Inc.

Table of Contents

Form 10-K

		Page
PART I
Item 1	Business	3
Item 1A	Risk Factors	9
Item 2	Properties	18
Item 3	Legal Proceedings	19
Item 4	Mine Safety Disclosures	19

PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 6	Selected Financial Data	22
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	27
Item 8	Financial Statements and Supplementary Data	28
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	29
Item 9A	Controls and Procedures	29
Item 9B	Other Information	30

PART III
Item 10	Directors, Executive Officers and Corporate Governance	31
Item 11	Executive Compensation	32
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13	Certain Relationships and Related Transactions, and Director Independence	35
Item 14	Principal Accountant Fees and Services	36

PART IV
Item 15	Exhibits and Financial Statement Schedules	37

From time to time, we may publish forward-looking statements relative to such matters as anticipated financial results, business prospects, technological developments and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. The following discussion and analysis should be read in conjunction with the report on the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements appearing later in this report. All statements other than statements of historical fact included in this Annual Report on Form 10-K are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, the following: our current liquidity needs, as described in our periodic reports; changes in the economy; our inability to raise additional capital; our involvement in potential litigation; volatility of our stock price; the variability and timing of business opportunities; changes in accounting policies and practices; the effect of internal organizational changes; adverse state and federal regulation and legislation; and the occurrence of extraordinary or catastrophic events and terrorist acts. These factors and others involve certain risks and uncertainties that could cause actual results or events to differ materially from management’s views and expectations. Inclusion of any information or statement in this report does not necessarily imply that such information or statement is material. We do not undertake any obligation to release publicly revised or updated forward-looking information, and such information included in this report is based on information currently available and may not be reliable after this date.

PART I

Item 1:

Business

ORGANIZATION

Royal Energy Resources, Inc. (“RER” or the “Company”) was originally organized in Delaware on March 22, 1999, with the name Webmarketing, Inc. (“Webmarketing”). On July 7, 2004, the Company revived its charter and changed its name from Webmarketing to World Marketing, Inc.

On August 7, 2012, the Company received approval by written consent, in lieu of a special meeting, of the holders of a majority of our outstanding voting power authorizing the Board of Directors of the Company to: (i) effectuate the reverse stock split of our issued and outstanding shares of common stock, par value $0.00001, on a 1 for 500 basis and (ii) increase the authorized shares of common stock, par value $0.00001, from 100,000,000 shares to 500,000,000 shares. The stock split was effectuated on October 1, 2012 upon filing appropriate documentation with FINRA. The increase in authorized shares was completed on October 9, 2012 when the amendment was filed with the Delaware Secretary of State. All share references included herein have been adjusted as if the change took place before the date of the earliest transaction reported.

On August 26, 2014, the Company formed a wholly owned subsidiary, Development Resources Inc (“DRI”) pursuant to the provisions of the Delaware Revised Statutes, as amended. DRI had no operations as of August 31, 2014.

On April 1, 2011, the Company, through its CEO completed the initial stages of forming a Romanian subsidiary to be used to acquire and develop possible gold, silver and copper mining concessions in Romania. The subsidiary, S.C. Golden Carpathan Resources S.R.L., will be located in Bucharest, Romania. As of August 31, 2014, the Romanian subsidiary has not had any activity.

On November 5, 2007, the Company filed its Definitive Information Statement on Schedule 14C to report the following corporate actions:

	1.	To approve an amendment to the Company’s Articles of Incorporation to increase the Company’s authorized capital to 110,000,000 shares comprising 100,000,000 shares of common stock par value $0.00001 per share and 10,000,000 shares of preferred stock par value $0.00001 per share;

	2.	To specifically delineate the rights of the holders of common stock $0.00001 par value with respect to dividends, liquidation and voting rights;

	3.	To confirm the right of the Company’s board of directors to designate and issue from time to time, in one or more series, shares of preferred stock par value $0.00001 per share subject to such designations and powers, preferences and rights, and qualifications, limitations and restrictions thereof hereinafter adopted by the Company’s board of directors;

	4.	To specifically delineate the right of the Company’s board of directors to issue shares of common and preferred stock for such consideration as may be determined by the Company’s board of directors (but not less than par value) and to issue rights or options to acquire such shares on terms and conditions to be determined by the Company’s board of directors; and

	5.	To change the name of the Company to Royal Energy Resources, Inc.

The foregoing became effective on December 12, 2007, upon filing the amendment with the Delaware Secretary of State.

RER was organized in 1999 and attempted to start a web-based marketing business for health-care products. The health-care products business had no revenue and was discontinued in 2001 and the Company remained inactive until July 22, 2005 when it commenced its real estate business.

BUSINESS

As a result of the current real estate market, the Company expects to concentrate the majority of its resources in energy projects.

ENERGY AND MINING

MINING

The Company is currently pursuing gold, silver, copper and rare earth metals mining concessions in Romania and mining leases in the United States. If successful, the Company plans to concentrate its efforts to develop these properties. At August 31, 2014 and August 31, 2013, the Company held the lease for 2,100 acres of rare earth and precious metals leases in Crook County, Wyoming, respectively. The rare earth and precious metals leases are approximately 5-15 miles from Bear Lodge Mountain near Sundance, Wyoming. The U.S. Geological Survey has studied Bear Lodge Mountain extensively (USGS Prof. Paper #1049-D) and has estimated it contains one of the largest deposits of disseminated rare earth elements in North America.

In addition, the Company held the lease for uranium rights on approximately 960 acres in Laramie County, Wyoming as of August 31, 2012 and on February 28, 2013 decided not to renew the lease. The carrying value of $4,329 was recorded as an asset impairment.

UNDEVELOPED LEASEHOLD NOT BEING AMORTIZED

The Company has been the successful bidder in United States Government auctions to purchase certain oil and gas lease rights. The Company has entered into agreements and then sold, by assignment, the rights, title and interest in certain of these leases and retained an over-riding royalty interest. Revenue from these transactions is accounted for using the full cost method of accounting. At August 31, 2014 and 2013, all leases covering oil and gas lease rights had been sold with an overriding royalty interest retained and the Company had collected approximately $89,000 from sales of these leases and royalty interests. As of August 31, 2014, the operators of some of the leases have drilled non-productive wells and the Company is not currently deriving any additional revenue from the overriding royalty interests.

OIL AND GAS DRILLING PROSPECTS

During 2008, the Company prepaid $119,011 as estimated drilling and completion costs for a 25% working interest in three wells in Washington County, Oklahoma. Two of the wells were completed in September and October 2008 and the third well was abandoned in 2010. During 2009, the Company advanced an additional $42,000, net, to apply toward workover of three additional wells. The work on the workover wells was completed during 2010 without obtaining commercial production. These workovers proved unsuccessful and the wells were all abandoned. Effective October 1, 2010, the Company’s interest in the two producing wells were sold

Proved Reserves and Estimated Future Net Revenue

The SEC defines proved oil and gas reserves as the estimated quantities of crude oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e. prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions.

The process of estimating oil and natural gas reserves is complex and requires significant judgment. Our policies regarding booking reserves require proved reserves to be in compliance with the SEC definitions and guidance. With the sale of our only producing reserves effective October 1, 2010, we have no proved reserves at August 31, 2014 and 2013.

Drilling Activities

The following table summarizes the results of our development drilling activity for the years ended August 31, 2014, 2013, 2012, 2011, and 2010. The Company has not had any exploratory drilling activity.

Development Well Activity

	Wells Drilling				Net Wells Completed (2)
	Gross (1)		Net (2)		Productive		Dry

Year ended August 31, 2014		-		-		-		-
Year ended August 31, 2013		-		-		-		-
Year ended August 31, 2012		-		-		-		-
Year ended August 31, 2011		-		-		-		-
Year ended August 31, 2010		-		-		0.50		0.98

	(1)	Gross wells are the sum of all wells in which we own an interest.
	(2)	Net wells are gross wells multiplied by our fractional working interests therein.

The initial properties in which the Company participated involved the well bore only and did not include any acreage. The Company had the right to participate in additional wells in this prospect until the properties were sold effective October 1, 2010.

Operation of Properties

Currently, the Company does not have the infrastructure necessary to operate oil and gas properties and relies on other companies to provide operations.

Title to Properties

Title to properties is subject to contractual arrangements customary in the oil and gas industry, liens for current taxes not yet due and, in some instances, other encumbrances. We believe that such burdens do not materially detract from the value of such properties or from the respective interests therein or materially interfere with their use in the operation of the business.

As is customary in the industry, other than a preliminary review of local records, little investigation of record title is made at the time of acquisitions of undeveloped properties. Investigations, which generally include a title opinion of outside counsel, are made prior to the consummation of an acquisition of producing properties and before commencement of drilling operations on undeveloped properties.

REAL ESTATE

Our primary objective was to acquire, make necessary renovations and resell both residential and commercial real estate. It was anticipated that we might lease some of the properties while they were being held for sale. We completed the acquisition of our first property on August 25, 2005, a condominium located in Brooklyn, New York, in exchange for $25,000 in cash and 3,800 shares of our common stock which was valued at $190,000. We received a deed to the property and there was no mortgage on the property nor were there any liens on the property.

In March 2008, the Company entered into a rescission agreement to return the real estate that it previously held to the individual who originally transferred the property in exchange for 3,800 shares of the Company’s common stock. The original value of the real estate was $215,000 and upon the rescission was valued at $200,000. The Company has recorded a loss of $15,000 on this transaction during this period, upon transferring the real estate to the original seller and canceling the 3,800 shares.

As a result of the current real estate environment in the United States, we are currently limiting any potential acquisitions to Eastern European countries. The real estate will be sold directly by us to the extent deemed practical. If necessary, broker services will be used to expedite a given sale.

OTHER

Mr. Roth, our President, Chief Executive Officer and Chief Financial Officer, is our sole active employee. Mrs. Taub, our Secretary and Treasurer, is not active in our day-to-day operations.

The mailing address of the Company is 543 Bedford Avenue, #176, Brooklyn, New York 11211 and our telephone number is 800-620-3029.

FINANCIAL POSITION AND FUTURE FINANCING NEEDS

We have not established sources of revenues sufficient to fund the development of business, projected operating expenses and commitments for our fiscal year ending August 31, 2015. We have accumulated a net loss of $4,508,333 through August 31, 2014, and incurred a loss of $816,857 for the year then ended.

The Company sold its common stock in private transactions which raised $120,500 in 2006, $80,070 in 2007, $413,172 in 2008, $3,600 in 2009 and $7,500 in 2012. The Company plans to make sales of its common stock in private transactions or to borrow funds as needed to raise sufficient capital to fund the development of business, projected operating expenses and commitments. However, there can be no assurance that we will be able to obtain sufficient funding to develop our current business plan.

COMPETITION

ENERGY AND MINING

The Company expects to concentrate the majority of its resources in oil and gas and mining by acquiring leasehold interests and either selling or farming them out to other companies for development, while retaining an over-riding royalty interest. The Company had elected to participate in the development of certain properties in Oklahoma. The Company is much smaller than most participants in this industry and has limited expertise in operating energy and mining businesses.

REAL ESTATE

The first competitive consideration is to locate real estate for purchase that is within the Company’s pricing limitations and is considered to be priced right for the market in that particular area. The competition for real estate is intense, and includes firms as small as one person working out of their home to multi-national conglomerates.

Once a property is acquired, the first task is to complete necessary repairs and renovations. When the property is available for sale, the major risk factor is to conclude a profitable sale. In this regard, a problem with some properties is the individuals who agree to a purchase contract may not be qualified to receive mortgage financing. The time period of removing the property from the market and then discovering that the purchaser is not mortgage qualified is costly in terms of reduced profits when a sale is concluded.

The profit potential to the Company is wholly dependent upon the ability of its officers and employees to purchase property and resell it at a price level which will provide profits to the Company. There is no assurance that these objectives will be realized. It is reasonable to assume that any property acquired and prepared for resale will eventually be sold. However, it may be that an eventual resale will be at a loss.

Because of the nature of this business there are no statistics that indicate the number of investors in the business or the financial extent of their activities. The Company will basically be in the same competitive position as any other investor seeking to purchase real estate in our anticipated price range. The Company rescinded the purchase of the real estate property it had during the quarter ended May 31, 2008 and currently is limiting any potential real estate acquisitions to Eastern European countries, due to the current real estate environment in the United States.

GOVERNMENTAL REGULATIONS, APPROVAL, COMPLIANCE

ENERGY AND MINING

If we elect to participate directly in development of oil and gas properties, our operations are or will be subject to various types of regulation at the federal, state and local levels. Such regulations includes requiring permits for the drilling of wells; maintaining bonding requirements in order to drill or operate wells; implementing spill prevention plans; submitting notification and receiving permits relating to the presence, use and release of certain materials incidental to oil and gas operations; and regulating the location of wells, the method of drilling and casing wells, the use, transportation, storage and disposal of fluids and materials used in connection with drilling and production activities, surface usage and the restoration of properties upon which wells have been drilled, the plugging and abandoning of wells and the transporting of production. Our operations are or will be also subject to various conservation matters, including the regulation of the size of drilling and spacing units or pro-ration units, the number of wells which may be drilled in a unit, and the unitization or pooling of oil and gas properties. In this regard, some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases, which may make it more difficult to develop oil and gas properties. In addition, state conservation laws establish maximum rates of production from oil and gas wells, generally limit the venting or flaring of gas, and impose certain requirements regarding the ratable purchase of production. The effect of these regulations is to limit the amounts of oil and gas we may be able to produce from our wells and to limit the number of wells or the locations at which we may be able to drill.

Our business is affected by numerous laws and regulations, including energy, environmental, conservation, tax and other laws and regulations relating to the oil and gas industry. We plan to develop internal procedures and policies to ensure that our operations are conducted in full and substantial environmental regulatory compliance.

Failure to comply with any laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of injunctive relief or both. Moreover, changes in any of these laws and regulations could have a material adverse effect on business. In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to us, we cannot predict the overall effect of such laws and regulations on our future operations.

We believe that our operations comply in all material respects with applicable laws and regulations and that the existence and enforcement of such laws and regulations have no more restrictive an effect on our operations than on other similar companies in the energy industry. We do not anticipate any material capital expenditures to comply with federal and state environmental requirements.

ENVIRONMENTAL

ENERGY AND MINING

Operations on properties in which we have an interest are subject to extensive federal, state and local environmental laws that regulate the discharge or disposal of materials or substances into the environment and otherwise are intended to protect the environment. Numerous governmental agencies issue rules and regulations to implement and enforce such laws, which are often difficult and costly to comply with and which carry substantial administrative, civil and criminal penalties and in some cases injunctive relief for failure to comply.

Some laws, rules and regulations relating to the protection of the environment may, in certain circumstances, impose “strict liability” for environmental contamination. These laws render a person or company liable for environmental and natural resource damages, cleanup costs and, in the case of oil spills in certain states, consequential damages without regard to negligence or fault. Other laws, rules and regulations may require the rate of oil and gas production to be below the economically optimal rate or may even prohibit exploration or production activities in environmentally sensitive areas. In addition, state laws often require some form of remedial action, such as closure of inactive pits and plugging of abandoned wells, to prevent pollution from former or suspended operations.

Legislation has been proposed in the past and continues to be evaluated in Congress from time to time that would reclassify certain oil and gas exploration and production wastes as “hazardous wastes.” This reclassification would make these wastes subject to much more stringent storage, treatment, disposal and clean-up requirements, which could have a significant adverse impact on operating costs. Initiatives to further regulate the disposal of oil and gas wastes are also proposed in certain states from time to time and may include initiatives at the county, municipal and local government levels. These various initiatives could have a similar adverse impact on operating costs.

The regulatory burden of environmental laws and regulations increases our cost and risk of doing business and consequently affects our profitability. The federal Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, also known as the “Superfund” law, imposes liability, without regard to fault, on certain classes of persons with respect to the release of a “hazardous substance” into the environment. These persons include the current or prior owner or operator of the disposal site or sites where the release occurred and companies that transported, disposed or arranged for the transport or disposal of the hazardous substances found at the site. Persons who are or were responsible for releases of hazardous substances under CERCLA may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources, and it is not uncommon for the federal or state government to pursue such claims.

It is also not uncommon for neighboring landowners and other third parties to file claims for personal injury or property or natural resource damages allegedly caused by the hazardous substances released into the environment. Under CERCLA, certain oil and gas materials and products are, by definition, excluded from the term “hazardous substances.” At least two federal courts have held that certain wastes associated with the production of crude oil may be classified as hazardous substances under CERCLA. Similarly, under the federal Resource, Conservation and Recovery Act, or RCRA, which governs the generation, treatment, storage and disposal of “solid wastes” and “hazardous wastes,” certain oil and gas materials and wastes are exempt from the definition of “hazardous wastes.” This exemption continues to be subject to judicial interpretation and increasingly stringent state interpretation. During the normal course of operations on properties in which we have an interest, exempt and non-exempt wastes, including hazardous wastes, that are subject to RCRA and comparable state statutes and implementing regulations are generated or have been generated in the past. The federal Environmental Protection Agency and various state agencies continue to promulgate regulations that limit the disposal and permitting options for certain hazardous and non-hazardous wastes.

We plan to establish guidelines and management systems to ensure compliance with environmental laws, rules and regulations if we participate directly in the development of oil and gas resources. The existence of these controls cannot, however, guarantee total compliance with environmental laws, rules and regulations. We will rely on the operator of the properties in which we have an interest to be in substantial compliance with applicable laws, rules and regulations relating to the control of air emissions at all facilities on those properties. Although we plan to maintain insurance against some, but not all, of the risks described above, including insuring the costs of clean-up operations, public liability and physical damage, there is no assurance that our insurance will be adequate to cover all such costs, that the insurance will continue to be available in the future or that the insurance will be available at premium levels that justify our purchase. The occurrence of a significant event not fully insured or indemnified against could have a material adverse effect on our financial condition and operations. Compliance with environmental requirements, including financial assurance requirements and the costs associated with the cleanup of any spill, could have a material adverse effect on our capital expenditures, earnings or competitive position. We do believe, however, that our operators are in substantial compliance with current applicable environmental laws and regulations. Nevertheless, changes in environmental laws have the potential to adversely affect operations. At this time, we have no plans to make any material capital expenditures for environmental control facilities.

Employees

It is anticipated that the only active employee of this business in the near future will be its President. All other operative functions, such as acquiring energy investments will be handled by the President or independent contractors and consultants.

Item 1a:

RISK FACTORS

RISKS ASSOCIATED WITH BUSINESS OF COMPANY

THE COMPANY HAS INCURRED SIGNIFICANT OPERATING LOSSES SINCE INCEPTION AND EXPECTS THE LOSSES WILL CONTINUE INTO THE FUTURE. IF THE LOSSES CONTINUE, THE COMPANY MAY HAVE TO SUSPEND OPERATIONS OR CEASE OPERATIONS.

The Company has no profitable operating history upon which an evaluation of its future success or failure can be made. The Company has incurred significant operating losses since inception and has limited financial resources to support it until such time that it is able to generate positive cash flow from operations. The Company’s accumulated deficit from inception to August 31, 2014 was $4,508,333. See “Management Discussion and Analysis” for more details.

The Company’s ability to achieve and maintain profitability and positive cash flow is dependent upon its ability to (1) locate a profitable mineral property in Romania, (2) generate revenues from its planned business operations, and (3) reduce exploration costs. Based upon current plans, The Company expects to incur operating losses in future periods. This will happen because there are expenses associated with the research and exploration of any of the Company’s mineral properties to be identified and acquired in the future. The Company cannot guarantee that it will be successful in generating revenues in the future. Failure to generate revenues may cause the Company to suspend or cease operations.

THE COMPANY HAS A WORKING CAPITAL DEFICIT AND SIGNIFICANT CAPITAL REQUIREMENTS. THE COMPANY MAY INCUR LOSSES UNTIL IT IS ABLE TO GENERATE SUFFICIENT REVENUES TO OFFSET ITS EXPENSES. THEREFORE, INVESTORS MAY BE UNABLE TO SELL THE COMPANY’S SHARES AT A PROFIT OR AT ALL.

The Company had a net loss of ($816,857) and ($388,957) for fiscal years ended August 31, 2014 and August 31, 2013, respectively. The Company also has a working capital deficit of $145,911 and thus may not have sufficient operating capital. Given these possible financial results along with the Company’s expected cash requirements in fiscal 2015, additional capital investment will be necessary to develop and sustain its operations.

THE COMPANY’S EXPLORATION ACTIVITIES ON ITS POTENTIAL MINING PROPERTIES MAY NOT BE SUCCESSFUL, WHICH COULD LEAD THE COMPANY TO ABANDON ITS PLANS TO DEVELOP THE PROPERTY AND ITS INVESTMENTS IN EXPLORATION.

The Company’s long-term success depends on its ability to establish commercially recoverable quantities of minerals on its properties that can then be developed into commercially viable mining operations. Mineral exploration is highly speculative in nature, involves many risks and is frequently non-productive. These risks include unusual or unexpected geologic formations, and the inability to obtain suitable or adequate machinery, equipment or labor. The success of mineral exploration is determined in part by the following factors:

	●	identification of potential mineralization based on superficial analysis;

	●	availability of government-granted exploration permits;

	●	the quality of management and geological and technical expertise; and

	●	the capital available for exploration.

Substantial expenditures are required to establish proven and probable reserves through drilling and analysis, to develop processes to extract the mineral, and to develop the mining and processing facilities and infrastructure at any chosen site. Whether a mineral deposit will be commercially viable depends on a number of factors, which include, without limitation, the particular attributes of the deposit, such as size, grade and proximity to infrastructure; mineral prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of mineral and environmental protection. The Company may invest significant capital and resources in exploration activities and abandon such investments if the Company is unable to identify commercially exploitable mineral reserves. The decision to abandon a project may reduce the trading price of the Company’s common stock and impair its ability to raise future financing. The Company cannot provide any assurance to investors that it will discover or acquire any mineralization in sufficient quantities on any of its potential properties to justify commercial operations. Further, the Company may not be able to recover the funds that it spent on exploration if the Company is not able to establish commercially recoverable quantities of minerals on its properties.

THE ADMINISTRATIVE COSTS OF PUBLIC COMPANY REGULATORY COMPLIANCE COULD BECOME BURDENSOME AND CONSUME A SIGNIFICANT AMOUNT OF THE COMPANY’S CASH RESOURCES, WHICH COULD MATERIALLY AND ADVERSELY AFFECT ITS BUSINESS.

The Company will incur significant costs and expenses in connection with assuring compliance with all laws, rules and regulations applicable to it as a public company. The Company anticipates that its ongoing costs and expenses of complying with our public reporting company obligations will be approximately $50,000 annually. The Company’s reporting and compliance costs and expenses may increase substantially if it is able to deploy its business model on an international basis, which will add significant cross-border jurisdictional complexity to its regulatory compliance and accounting controls and procedures. The Company’s compliance costs and expenses could also increase substantially if it applies for trading of its securities on a national stock exchange which may have listing requirements that engender additional administration and compliance costs. The Company will assign a high priority to establishing and maintaining controls, procedures, corporate compliance and public company reporting; however, there can be no assurance that the Company will have sufficient cash resources available to satisfy its public company reporting and compliance obligations. If the Company is unable to cover the cost of proper administration of its public company compliance and reporting obligations, the Company could become subject to sanctions, fines and penalties, its stock could be barred from trading in public capital markets and it may have to cease doing business.

AS PART OF THE COMPANY’S GROWTH STRATEGY, IT INTENDS TO ACQUIRE ADDITIONAL MINERAL EXPLORATION PROPERTIES, INCLUDING IN ROMANIA.

Such acquisitions may pose substantial risks to the Company’s business, financial condition, and results of operations. In pursuing acquisitions, the Company will compete with other companies, many of which have greater financial and other resources to acquire attractive properties. Even if the Company is successful in acquiring additional properties, some of the properties may not produce positive results of exploration, or the Company may not complete exploration of such prospects within specified time periods may cause the forfeiture of the lease in that prospect. There can be no assurance that the Company will be able to successfully integrate acquired properties, which could result in substantial costs and delays or other operational, technical, or financial problems. Further, acquisitions could disrupt ongoing business operations. If any of these events occur, it would have a material adverse effect upon the Company’s operations and results from operations.

WE ENTERED THE MINERAL EXPLORATION INDUSTRY APPROXIMATELY 2006 AND HAVE NO PROFITABLE OPERATING HISTORY.

Since approximately 2006, the Company’s activities have involved efforts in seeking and identifying prospective mineral properties. The Company has recently been concentrating on acquiring and developing a limited number of properties, including in Romania. As a result, there is limited information regarding production or revenue generation. As a result, the Company’s future revenues may be limited. The business of mineral acquisition and exploration is subject to many risks and if minerals are found in economic production quantities, the potential profitability of future possible mining ventures depends upon factors beyond the Company’s control. The potential profitability of mining mineral properties if economic quantities of minerals are found is dependent upon many factors and risks beyond the Company’s control, including, but not limited to: (i) unanticipated ground and water conditions and adverse claims to water rights; (ii) geological problems; (iii) metallurgical and other processing problems; (iv) the occurrence of unusual weather or operating conditions and other force majeure events; (v) lower than expected grades of minerals; (vi) accidents; (vii) delays in the receipt of or failure to receive necessary government permits; (viii) delays in transportation; (ix) labor disputes; (x) government permit restrictions and regulation restrictions; (xi) unavailability of materials and equipment; and (xii) the failure of equipment or processes to operate in accordance with specifications or expectations.

THE RISKS ASSOCIATED WITH EXPLORATION AND, IF APPLICABLE, MINING COULD CAUSE PERSONAL INJURY OR DEATH, ENVIRONMENTAL DAMAGES, DELAYS IN MINING, MONETARY LOSSESS AND POSSIBLE LEGAL LIABILITY.

The Company is not currently engaged in mining operations because it continues in the exploration phase and has not yet any proved mineral reserves. The Company does not presently carry property and liability insurance. Cost effective insurance contains exclusions and limitations on coverage and may be unavailable in some circumstances.

THE MINERAL EXPLORATION AND MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT THE COMPANY WILL BE SUCCESSFUL.

The mineral exploration and mining industry is intensely competitive, and the Company competes with other companies that have greater resources. Many of these companies not only explore for and produce minerals but also market minerals and other products on a regional, national or worldwide basis. These companies may be able to pay more for productive mineral properties and exploratory prospects or define, evaluate, bid for and purchase a greater number of properties and prospects than the Company’s financial or human resources permit. In addition, these companies may have a greater ability to continue exploration activities during periods of low mineral market prices. The Company’s larger competitors may be able to absorb the burden of present and future foreign, federal, state, local and other laws and regulations more easily than the Company can, which would adversely affect its competitive position. The Company’s ability to acquire additional properties and to discover productive prospects in the future will be dependent upon its ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. In addition, because the Company has fewer financial and human resources than many companies in its industry, the Company may be at a disadvantage in bidding for exploratory prospects and producing mineral properties.

THE MARKETABILITY OF MINERALS WILL BE AFFECTED BY NUMEROUS FACTORS BEYOND THE COMPANY’S CONTROL WHICH MAY RESULT IN THE COMPANY NOT RECEIVING AN ADEQUATE RETURN ON INVESTED CAPITAL TO BE PROFITABLE OR VIABLE.

The marketability of minerals which may be acquired or discovered by the Company will be affected by numerous factors beyond the Company’s control. These factors include macroeconomic factors, market fluctuations in commodity pricing and demand, the proximity and capacity of natural resource markets and processing equipment, governmental regulations, land tenure, land use, regulation concerning the importing and exporting of minerals and environmental protection regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital to be profitable or viable.

MINERAL MINING OPERATIONS ARE SUBJECT TO COMPREHENSIVE REGULATION, WHICH MAY CAUSE SUBSTANTIAL DELAYS OR REQUIRE CAPITAL OUTLAYS IN EXCESS OF THOSE ANTICIPATED, CAUSING AN ADVERSE EFFECT ON THE COMPANY’S BUSINESS OPERATIONS.

If economic quantities of minerals is found by the Company in sufficient quantities to warrant mining operations, such mining operations are subject to foreign, federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Mining operations are also subject to foreign, federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of mining methods and equipment. Various permits from government bodies are required for mining operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, provincial, or local authorities may be changed and any such changes may have material adverse effects on the Company’s activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus resulting in an adverse effect on the Company. Additionally, the Company may be subject to liability for pollution or other environmental damages which the Company may elect not to insure against due to prohibitive premium costs and other reasons. To date the Company has not been required to spend material amounts on compliance with environmental regulations. However, the Company may be required to do so in future and this may affect its ability to expand or maintain its operations.

MINERAL EXPLORATION AND MINING ACTIVITIES ARE SUBJECT TO CERTAIN ENVIRONMENTAL REGULATIONS, WHICH MAY PREVENT OR DELAY THE COMMENCEMENT OR CONTINUANCE OF THE COMPANY’S OPERATIONS.

Mineral exploration and future potential mining operations are or will be subject to stringent federal, state, provincial, and local laws and regulations relating to improving or maintaining environmental quality. The Company’s potential global operations, including those in Romania, are also subject to many environmental protection laws. Environmental laws often require parties to pay for remedial action or to pay damages regardless of fault. Environmental laws also often impose liability with respect to divested or terminated operations, even if the operations were terminated or divested of many years ago.

Future potential mineral mining operations and current exploration activities are or will be subject to extensive laws and regulations governing prospecting, development, production, exports, taxes, labor standards, occupational health, waste disposal, protection and remediation of the environment, protection of endangered and protected species, mine safety, toxic substances and other matters. Mining is also subject to risks and liabilities associated with pollution of the environment and disposal of waste products occurring as a result of exploration and production. Compliance with these laws and regulations will impose substantial costs on us and will subject us to significant potential liabilities.

COSTS ASSOCIATED WITH ENVIRONMENTAL LIABILITIES AND COMPLIANCE MAY INCREASE WITH AN INCREASE IN FUTURE SCALE AND SCOPE OF OPERATIONS.

The Company believes that its operations will comply, in all material respects, with all applicable environmental regulations. However, the Company is not fully insured at the current date against possible environmental risks.

ANY CHANGE IN GOVERNMENT REGULATION/ADMINISTRATIVE PRACTICES MAY HAVE A NEGATIVE IMPACT ON THE COMPANY’S ABILITY TO OPERATE AND ITS PROFITABILITY.

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in any applicable jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the Company’s ability to carry on business. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on the Company. Any or all of these situations may have a negative impact on the Company’s ability to operate and/or its profitably.

THE COMPANY MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN.

The Company’s independent auditors’ report on its financial statements as of August 31, 2014 includes an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concern. As a result of this going concern modification in the auditor’s report on its financial statements, the Company may have a difficult time obtaining significant additional financing. If the Company is unable to secure significant additional financing, the Company may be obligated to seek protection under the bankruptcy laws and its stockholders may lose their investment.

THE COMPANY HAS LIMITED MINERAL PROPERTY ASSETS OR INTERESTS AND CANNOT GUARANTEE THAT IT WILL IDENTIFY OR ACQUIRE ANY ADDITIONAL VIABLE MINERAL PROPERTY ASSETS OR INTERESTS.

The Company presently has only 2,100 acres of mineral property assets or mineral property interest in any mineral claim, which has had no development. The Company is currently seeking to identify mineral properties to acquire and the Company cannot guarantee it will ever find any mineral properties, including within Romania. Accordingly, the Company has no means of producing any income at this time. Even if the Company acquires a viable mineral property asset or mineral property interest and finds that there are minerals on the mineral claims, the Company cannot guarantee that it will be able to recover any minerals for an ore reserve or generate any cash flow from that ore reserve. Even if the Company recovers any minerals, it cannot guarantee that it will make a profit.

If the Company cannot acquire any viable mineral property assets or mineral property interests, or cannot find any minerals on such mineral properties, or it is not economical to recover the minerals from those mineral properties, the Company will have to cease operations.

THE COMPANY MAY NOT HAVE SUFFICIENT FUNDS TO ACQUIRE AN INTEREST IN ANY MINERAL PROPERTY OR TO COMPLETE A PROPOSED MINERAL EXPLORATION PROGRAM ON A MINERAL PROPERTY.

Any of the Company’s future mineral exploration programs will be limited and restricted by the amount of working capital that the Company has and is able to raise from financings. The Company currently does not have sufficient funds to complete a proposed mineral exploration program on any mineral property. As a result, the Company may have to suspend or cease its operations. The Company’s current operating funds are less than necessary to complete the acquisition and consummation of an interest in a mineral property or a proposed mineral exploration program on any mineral property, and therefore the Company will need to obtain additional financing in order to acquire an interest in a mineral property and to complete a proposed mineral exploration program. As of August 31, 2014, the Company has approximately $288 in cash. The Company currently does not have any operations and has generated no revenue from mining operations. A proposed mineral exploration program will call for significant expenses in connection with the exploration of the respective mineral property. During the 12 months ended August 31, 2015, it is estimated that the Company will need to raise additional capital of approximately $1,000,000 to identify and acquire mineral property assets or mineral property interests and commence and complete any proposed mineral exploration programs. The Company will also require additional financing if the costs of the proposed exploration programs are greater than anticipated. The Company will require additional financing to sustain its business operations if the Company is not successful in generating revenues once exploration is complete. Obtaining additional financing would be subject to a number of factors, including the market prices for minerals, investor acceptance of the Company’s mineral claims, and investor sentiment. These factors may make the timing, amount, terms or conditions of additional financing unavailable to the Company. The most likely source of future funds presently available to the Company is through an equity line or the sale of equity capital. Any sale of share capital will result in dilution to existing stockholders. The only other anticipated alternatives for the financing of a proposed mineral exploration program would be (1) the offering by the Company of an interest in a mineral property to be earned by another party or parties carrying out further exploration thereof, which is not presently contemplated, or (2) private loans.

THE COMPANY MAY NOT HAVE ACCESS TO ALL OF THE SUPPLIES AND MATERIALS IT NEEDS FOR ANY PROPOSED MINERAL EXPLORATION PROGRAM, WHICH COULD CAUSE THE COMPANY TO DELAY OR SUSPEND OPERATIONS.

Competition and unforeseen limited sources of supplies and contractors in the industry could result in occasional spot shortages of supplies, such as explosives, and certain equipment, such as drill rigs, bulldozers and excavators, and labor that the Company might need to conduct a mineral exploration program on any mineral property assets or mineral property interests it acquires. The Company has not attempted to locate or negotiate with any suppliers of products, equipment or materials. The Company will attempt to locate products, equipment and materials after it acquires a mineral property asset or mineral property interest. If the Company cannot find the products and equipment it needs for a proposed mineral exploration program, the Company will have to suspend the mineral exploration program until the Company can find the products and equipment it needs.

THE COMPANY’S PROFITS, IF ANY, MAY BE NEGATIVELY IMPACTED BY CURRENCY EXCHANGE.

The Company’s assets, earnings and cash flows my be influenced by a variety of currencies, including the Romanian leu, due to the possible geographic diversities of the country in which the Company may operate or acquire its mineral property assets or mineral property interests. Fluctuations in the exchange rate of those currencies may have a significant impact on the Company’s financial results. The U.S. dollar is the currency in which the Company’s costs are denominated. Operating costs will be influenced by the currencies of those countries where the Company’s mineral properties may be located and also by those currencies in which the costs of imported equipment and services are determined. The U.S. dollar and the Romanian leu will be the most important currencies influencing the Company’s operating costs. Given the dominant role of the U.S. currency in the Company’s affairs, the U.S. dollar is the currency in which the Company measures its financial performance. It is also the currency for borrowing and for holding surplus cash. Management does not generally believe that active currency hedging provides long-term benefits to the Company’s stockholders. Management may consider currency protection measures appropriate in specific commercial circumstances, subject to strict limits established by the Company’s board of directors. Therefore, in any particular year, currency fluctuations may have a significant impact on the Company’s financial results.

THE COMPANY’S POTENTIAL FOREIGN BUSINESS OPERATIONS MAY BE SUBJECT TO AND MAY BE ADVERSELY AFFECTED BY VARIOUS POLITICAL AND ECONOMIC FACTORS IN THE FOREIGN JURISDICTION.

The Company may operate in countries, including Romanian, that are subject to various political, economic and other uncertainties, including among other things, the risks of war and civil unrest, expropriation, nationalization, renegotiation or nullification of existing concessions, licenses, permits, approvals and contracts, taxation policies, foreign exchange and repatriation restrictions, changing political conditions, international monetary fluctuations, currency controls and foreign governmental regulations that favor or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. In addition, if there is a dispute arising from foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in the United States or Romania. The Company also may be hindered or prevented from enforcing its rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. It is not possible for the Company to accurately predict such developments or changes in laws or policy or to what extent any such development or changes may have a material adverse effect on the Company’s business operations.

OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS RAISED DOUBT OVER OUR ABILITY TO CONTINUE AS A GOING CONCERN.

The independent registered public accounting firms’ reports accompanying the Company’s August 31, 2014 and 2013 audited financial statements contain an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concern. The financial statements have been prepared “assuming that the Company will continue as a going concern.” The Company’s ability to continue as a going concern is dependent on raising additional capital to fund our operations and ultimately on generating future profitable operations. There can be no assurance that the Company will be able to raise sufficient additional capital or eventually have positive cash flow from operations to address all of the Company’s cash flow needs. If the Company is not able to find alternative sources of cash or generate positive cash flow from operations, the Company’s business and shareholders will be materially and adversely affected.

BECASE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINERAL PROPERTIES, THERE IS A SUBSTANTIAL RISK THAT THE COMPANY’S BUSINESS WILL FAIL.

Exploration for minerals is a speculative venture necessarily involving substantial risk. Any mineral property that the Company may acquire or obtain an interest in may not contain commercially exploitable reserves of minerals. Also, the expenditures to be made by the Company in the exploration of the mineral properties may not result in the discovery of commercial quantities of minerals. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In each such case, the Company would be unable to complete its business plan.

SHAREHOLDERS MAY EXPERIENCE DILUTION OF THEIR OWNERSHIP INTERESTS DUE TO THE POSSIBLE FUTURE ISSUANCES OF SHARES OF THE COMPANY’S COMMON STOCK, WHICH COULD BE MATERIALLY ADVERSE TO THE VALUE OF THE COMPANY’S COMMON STOCK.

As of the date this Annual Report was issued, the Company has 8,254,609 shares of common stock issued and outstanding and 100,000 shares of Series A preferred stock issued and outstanding. The Company is authorized to issue up to 500,000,000 shares of common stock and 10,000,000 shares of preferred stock. The Board of Directors may authorize the issuance of additional common or preferred shares under applicable state law without shareholder approval. The Company may also issue additional shares of its common stock or other securities that are convertible into or exercisable for common stock in connection with the hiring of personnel, future acquisitions, future private placements of its securities for capital raising purposes or for other business purposes. Future sales of substantial amounts of our common stock, or the perception that sales could occur, could have a material adverse effect on the price of the Company’s common stock. If the Company needs to raise additional capital to expand or continue operations, it may be necessary for the Company to issue additional equity or convertible debt securities. If the Company issues equity or convertible debt securities, the net tangible book value per share may decrease, the percentage ownership of the Company’s current stockholders may be diluted and such equity securities may have rights, preferences or privileges senior or more advantageous to the Company’s common stockholders.

RISKS RELATED TO OUR COMMON STOCK

THE COMPANY’S OFFICER AND DIRECTOR MAY BE SUBJECT TO CONFLICTS OF INTEREST.

The Company’s officer and director serves full time but may become subject to conflicts of interest. Mr. Roth may also devote part of his working time to other business endeavors, including consulting relationships with other entities, and may have responsibilities to these other entities. Such conflicts include deciding how much time to devote to the Company’s affairs, as well as what business opportunities should be presented to the Company. Because of these relationships, the Company’s officer and director could be subject to conflicts of interest. Currently, the Company has no policy in place to address such conflicts of interest.

DELAWARE LAW AND OUR ARTICLES OF INCORPORATION MAY PROTECT THE COMPANY’S DIRECTORS FROM CERTAIN TYPES OF LAWSUITS.

Delaware law provides that the Company’s officers and directors will not be liable to the Company or its stockholders for monetary damages for all but certain types of conduct as officers and directors. The Company’s Bylaws permit it broad indemnification powers to all persons against all damages incurred in connection with the Company’s business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing stockholders from recovering damages against the Company’s officers and directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use the Company’s limited assets to defend its officers and directors against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

FAILURE TO MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH SECTION 404 OF THE SARBANES-OXLEY ACT WOULD LEAD TO LOSS OF INVESTOR CONFIDENCE IN THE COMPANY’S REPORTED FINANCIAL INFORMATION.

Pursuant to proposals related to Section 404 of the Sarbanes-Oxley Act of 2002, the Company has been required to furnish a report by its management on the Company’s internal control over financial reporting. If the Company cannot provide reliable financial reports or prevent fraud, then its business and operating results could be harmed, investors could lose confidence in the Company’s reported financial information, and the trading price of the Company’s stock could drop significantly.

To maintain compliance with Section 404 of the Act, the Company engages in a process to document and evaluate its internal control over financial reporting, which is both costly and challenging and requires management to dedicate scarce internal resources and to retain outside consultants.

During the course of the Company’s testing, it may identify deficiencies which the Company may not be able to remediate in time for securities disclosure reporting deadlines. In addition, if the Company fails to maintain the adequacy of its internal controls, as such standards are modified, supplemented or amended from time to time, the Company may not be able to ensure that it can conclude on an ongoing basis that the Company has effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for the Company to produce reliable financial reports and are important to helping prevent financial fraud.

THERE IS NO SIGNIFICANT ACTIVE TRADING MARKET FOR THE COMPANY’S SHARES, AND IF AN ACTIVE TRADING MARKET DOES NOT DEVELOP, INVESTORS MAY BE UNABLE TO SELL THEM PUBLICLY.

There is no significant active trading market for the Company’s shares, and the Company does not know if an active trading market will develop. An active market will not develop unless broker-dealers develop interest in trading the Company’s shares, and the Company may be unable to generate interest in its shares among broker-dealers until the Company generates meaningful revenues and profits from operations. Until that time occurs, if it does at all, purchasers of the Company’s shares may be unable to sell them publicly. In the absence of an active trading market:

	●	Investors may have difficulty buying and selling the Company’s shares or obtaining market quotations;

	●	Market visibility for the Company’s common stock may be limited; and

	●	A lack of visibility for the Company’s common stock may depress the market price for its shares.

Moreover, the market price for the Company’s shares is likely to be highly volatile and subject to wide fluctuations in response to various factors, including the following: (i) actual or anticipated fluctuations in the Company’s quarterly operating results and revisions to its expected results; (ii) changes in financial estimates by securities research analysts; (iii) conditions in the market for the Company’s products; (iv) changes in the economic performance or market valuations of companies specializing in the mining industries; (v) announcements by the Company or its competitors of new industry mining techniques, strategic relationships, joint ventures or capital commitments; (vi) addition or departure of key personnel; (vii) litigation related to any intellectual property; and (viii) sales or perceived potential sales of the Company’s shares.

In addition, the securities market has from time to time, and to an even greater degree since the last quarter of 2007, experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also have a material adverse effect on the market price of the Company’s ordinary shares. Furthermore, in the past, following periods of volatility in the market price of a public company’s securities, shareholders have frequently instituted securities class action litigation against that company. Litigation of this kind could result in substantial costs and a diversion of the Company’s management’s attention and resources.

THE COMPANY’S COMMON STOCK IS CONSIDERED TO BE “PENNY STOCK.”

The Company’s common stock is considered to be a “penny stock” because it meets one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g) of the Securities Exchange Act of 1934, as amended. These include but are not limited to, the following: (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; (iii) it is not quoted on The NASDAQ Stock Market, or even if quoted, has a price less than $5.00 per share; or (iv) is issued by a company with net tangible assets less than $2.0 million, if in business more than a continuous three years, or with average revenues of less than $6.0 million for the past three years. The principal result or effect of being designated a “penny stock” is that securities broker-dealers cannot recommend the stock but must trade it on an unsolicited basis.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for stock that becomes subject to those penny stock rules. If a trading market for our common stock develops, our common stock will probably become subject to the penny stock rules, shareholders may have difficulty in selling their shares and could lose all of their investment.

BROKER-DEALER REQUIREMENTS MAY AFFECT TRADING AND LIQUIDITY.

Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Potential investors in the Company’s common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stocks.” Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of the Company’s common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

THE COMPANY’S COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT SHAREHOLDERS MAY NOT BE ABLE TO SELL THEIR SHARES AT OR ABOVE THE PRICE THAT THEY MAY HAVE PAID FOR THE SHARES.

Because of the limited trading market for the Company’s common stock, and because of the possible price volatility, shareholders may not be able to sell their shares of common stock when they desire to do so. The inability to sell their shares in a rapidly declining market may substantially increase their risk of loss because of such illiquidity and because the price for the Company’s common stock may suffer greater declines because of its price volatility. As a result, our shareholders could lose the full amount of their investment.

The market price of the Company’s common stock may be higher or lower than the price that the shareholder may have paid for the shares. Certain factors, some of which are beyond the Company’s control, that may cause the Company’s share price to fluctuate significantly include, but are not limited to, the following:

	●	Variations in the Company’s quarterly operating results;

	●	loss of a key relationship or failure to complete significant transactions;

	●	Additions or departures of key personnel; and

	●	fluctuations in stock market price and volume.

Additionally, in recent years the stock market in general, and the over-the-counter markets in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our stock price, regardless of our operating performance.

In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies’ common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on a shareholder’s investment in the Company’s stock.

THE COMPANY HAS NOT PAID ANY CASH DIVIDENDS IN THE PAST AND WILL NOT PAY ANY CASH DIVIDENDS IN THE FORESEEABLE FUTURE

The Company has not paid any cash dividends on its common stock. The Company generally intends to retain future earnings, if any, for reinvestment in the development and expansion of its business. Dividend payments in the future may also be limited by other loan agreements or covenants contained in other securities which the Company may issue. Any future determination to pay cash dividends will be at the discretion of the Company’s board of directors and depend on its financial condition, results of operations, capital and legal requirements and such other factors as the board of directors deems relevant.

Item 2:

Properties

Our principal executive offices are located at 543 Bedford Avenue, Suite 176, Brooklyn, New York 11211. At the present time, we do not own any real estate. We do not have any policies regarding investments in real estate, securities or other forms of property.

MINING

UNDEVELOPED LEASEHOLD NOT BEING AMORTIZED

Item 3:

LEGAL PROCEEDINGS

There are no pending or threatened lawsuits against us.

Item 4:

MINE SAFETY DISCLOSURES

Not applicable.

PART II

Item 5:

Market for REGISTRANT’S Common Equity, Related Stockholder Matters and issuer purchases of equity securities

MARKET INFORMATION

Our $0.00001 par value per share common stock is traded in the over-the-counter market and is quoted on the National Association of Securities Dealers (“NASD”) Over-The Counter Bulletin Board (“OTCBB”) under the symbol “ROYE.OB.” Until we began trading on September 5, 2007, there was no public market for our common stock. Previously we traded under the symbol WRLM.OB.

The following table sets forth the quarterly high and low daily close for our common stock as reported by the OTCBB for the two years ended August 31, 2014 and 2013. The bids reflect inter dealer prices without adjustments for retail mark-ups, mark-downs or commissions and may not represent actual transactions. There is a very limited market for the Company’s common stock.

Period	High		Low

2014
Quarter ended August 31, 2014	$	1.000	$	0.400
Quarter ended May 31, 2014	$	1.000	$	0.075
Quarter ended February 28, 2014	$	0.075	$	0.075
Quarter ended November 30, 2013	$	0.170	$	0.075

2013
Quarter ended August 31, 2013	$	0.370	$	0.170
Quarter ended May 31, 2013	$	0.520	$	0.260
Quarter ended February 28, 2013	$	0.560	$	0.020
Quarter ended November 30, 2012	$	0.600	$	0.050

The OTCBB is a quotation service sponsored by the NASD that displays real-time quotes and volume information in over-the-counter (“OTC”) equity securities. The OTCBB does not impose listing standards or requirements, does not provide automatic trade executions and does not maintain relationships with quoted issuers. A company traded on the OTCBB may face loss of market makers and lack of readily available bid and ask prices for its stock and may experience a greater spread between the bid and ask price of its stock and a general loss of liquidity with its stock. In addition, certain investors have policies against purchasing or holding OTC securities. Both trading volume and the market value of our securities have been, and will continue to be, materially affected by the trading on the OTCBB.

PENNY STOCK CONSIDERATIONS

Our shares will be “penny stocks” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000, or annual income exceeding $100,000 individually or $300,000 together with his or her spouse, is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:

	●	Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;

	●	Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;

	●	Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks; and

	●	Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.

Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may decrease, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.

RECENT SALES OF UNREGISTERED SECURITIES

During fiscal year ended August 31, 2014 and to current date, the Company issued an aggregate of 8,075,082 shares of unregistered common stock as follows.

Consulting Agreement

The Company’s Board of Directors authorized and approved the issuance of 800,000 shares of restricted common stock at a per share price of $0.40 pursuant to that certain consulting agreement.. The shares of common stock were issued to one United States resident in reliance on Section 4(2) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The shares of common stock issued to the consultant have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements.

Related Party

The Company’s Board of Directors authorized and approved the issuance of 6,700,000 shares of restricted common stock at a per share price of $0.015 pursuant to the settlement of certain amounts due to the Company’s Chief Executive Officer ($100,500) at a time when the closing price for the stock was $0.075 per share. The fair value of the stock was $502,500. The difference of $402,000 is included in selling, general and administrative expense in the statement of operations. The shares of common stock were issued to one United States resident in reliance on Section 4(2) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The shares of common stock issued have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements.

Loan Principal

The Company’s Board of Directors authorized and approved the issuance of 300,000 shares of restricted common stock at a per share price of $0.075 pursuant to payment of loan principal in the amount of $22,500. The shares of common stock were issued to one United States resident in reliance on Section 4(2) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The shares of common stock issued to the creditor have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements.

Loan Extension Fee

The Company’s Board of Directors authorized and approved the issuance of 275,000 shares of restricted common stock at a per share price of $0.075 pursuant to payment of a loan extension fee in the amount of $20,625. The shares of common stock were issued to one United States resident in reliance on Section 4(2) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The shares of common stock issued to the creditor have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements.

HOLDERS

As of December 1, 2014, there are approximately 32 shareholders of record of the Company’s common stock, which does not include shareholders holding their shares in street name.

DIVIDENDS

The Board of Directors has never declared or paid a cash dividend. At this time, the Board of Directors does not anticipate paying dividends in the future. The Company is under no legal or contractual obligation to declare or to pay dividends, and the timing and amount of any future cash dividends and distributions is at the discretion of our Board of Directors and will depend, among other things, on the Company’s future after-tax earnings, operations, capital requirements, borrowing capacity, financial condition and general business conditions. The Company plans to retain any earnings for use in the operation of our business and to fund future growth.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table summarizes certain information as of August 31, 2014, with respect to compensation plans (including individual compensation arrangements) under which our common stock is authorized for issuance:

	Number of securities to be
	issued upon exercise of	Weighted average exercise	Number of securities
	outstanding options,	price of outstanding	remaining available
Plan category	warrants and rights	options, warrants and rights	for future issuance

Equity compensation plans approved by security holders:
2008 Plan	-		8,000
	-		8,000

The Royal Energy Resources, Inc. 2008 Stock Option Plan (“Plan”) was filed on June 27, 2008 and reserves 8,000 shares for Awards under the Plan, of which up to 6,000 may be designated as Incentive Stock Options. The Company’s Compensation Committee is designated to administer the Plan at the direction of the Board of Directors.

Item 6:

SELECTED FINANCIAL DATA

Not applicable.

Item 7:

Management’s Discussion and Analysis OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This statement contains forward-looking statements within the meaning of the Securities Act. Discussions containing such forward-looking statements may be found throughout this statement. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, the matters set forth in this statement. The following analysis of our consolidated financial condition and results of operations for the years ended August 31, 2014 and August 31, 2013 should be read in conjunction with the Financial Statements and other information presented elsewhere in this Annual Report.

RESULTS OF OPERATIONS

Fiscal Year Ended August 31, 2014 Compared to Fiscal Year Ended August 31, 2013.

Our net loss for fiscal year ended August 31, 2014 was ($816,857) compared to a net loss of ($388,957) during fiscal year ended August 31, 2013 (an increase in net loss of $427,900).

During fiscal years ended August 31, 2014 and August 31, 2013, the Company did not generate any revenues from oil or gas sales.

During fiscal year ended August 31, 2014, the Company incurred operating expenses of $796,694 compared to $399,981 incurred during fiscal year ended August 31, 2013 (an increase of $396,713). These operating expenses incurred during fiscal year ended August 31, 2014 consisted of: (i) asset impairment of $-0- (2013: $4,329); and (ii) selling, general and administrative expenses of $796,694 (2013: $399,981).

	2014		2013

Asset impairment	$	-	$	4,329
Other selling, general and administrative expense		796,694		395,652
Total	$	796,694	$	399,981

During fiscal year ended August 31, 2014, the Company incurred selling, general and administrative expenses of $796,694 compared to $395,652 incurred during fiscal year ended August 31, 2013 (an increase of $401,042). These operating expenses incurred during fiscal year ended August 31, 2014 consisted of: (i) $402,000 (2013: $320,000) in officer compensation; (ii) $348,365 (2013: $45,633) in consulting service expenses; (iii) $16,435 (2013: $14,790) in accounting and auditing; (iv) $18,353 (2013: $12,527) in legal fees and corporate filings; (v) $7,935 (2013: $-0-) in New York State city and state franchise taxes and penalties; and (v) $3,606 (2013: $2,702) in other.

	2014		2013

Officer compensation	$	402,000	$	320,000
Consulting services expense		348,365		45,633
Accounting and auditing		16,435		14,790
Legal fees and corporate filings		18,353		12,527
New York city and state franchise taxes and penalties		7,935		-
Other		3,606		2,702
Total	$	796,694	$	395,652

Officer compensation

Consulting service expense

Consulting service expense amounted to $348,365 in 2014 and $45,633 in 2013. The 2014 amount includes one consulting agreement for 800,000 shares of the Company’s common stock which was valued at $0.40 per share based on the trading price on the date of the agreement. This is the primary cause of the increase in consulting service expense.

New York city and state franchise tax and penalties

During the fiscal year ended August 31, 2014, the Company completed and filed several years of delinquent franchise tax returns. The majority of the expense is for interest and penalties and should not recur.

Other expense (income) - Other expense (income) consists of the following for the years ended August 31, 2014 and August 31, 2013.

	2014			2013

Other income	$	-		$	(12,386	)
Marketable securities - realized gains		(1,451	)		-
Interest expense		21,614			5,866
Interest income from related parties		-			(4,504	)
Total	$	20,163		$	(11,024	)

Other income in 2013 was realized from debt forgiven in the amount of $12,386 for previously accrued interest as the result of the payoff of a convertible note.

In 2014, the Company realized $1,451 in gains from commodities transactions. In 2013, the Company did not own any commodities.

Interest expense amounted to $21,614 and $5,866 in 2014 and 2013, respectively. Interest expense in 2014 includes a loan fee amortization in the amount of $20,625 which was paid with shares of our common stock. This caused the increase in interest expense.

Interest income from related parties was $4,504 in 2013. Interest was being accrued on stock subscription receivables from our officers and directors until the loans were paid in May 2013.

Thus, the Company’s net loss for fiscal year ended August 31, 2014 was ($816,857) or ($0.16) per share compared to a net loss for fiscal year ended August 31, 2013 of ($388,957) or ($2.17) per share. The weighted average number of shares outstanding was 5,060,675 for fiscal year ended August 31, 2014 compared to 179,527 for fiscal year ended August 31, 2013.

LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN

As of August 31, 2014, our current assets were $20,357 (2013: $32,541), and our current liabilities were $166,268 (2013: $221,933), which resulted in a working capital deficit of $145,911 (2013: $189,392),. As of August 31, 2014, current assets were comprised of: (i) $288 (2013: $32,541), in cash; and (ii) $20,069 (2013: $-0-), in marketable securities. As of August 31, 2014, current liabilities were comprised of: (i) $74,741 (2013: $98,091), in accounts payable and accrued expenses; (ii) $33,785 (2013: $45,650), in notes payable; (iii) $49,400 (2013: $49,400), in convertible notes payable; and (iv) $8,342 (2013: $28,792), due to related party.

As of August 31, 2014, our total assets were $33,257 comprised of: (i) $20,357 (2013: $32,541), in current assets; and (ii) $12,900 (2013: $10,760), in valuation of mining properties. The decrease in total assets during fiscal year ended August 31, 2014 from fiscal year ended August 31, 2013 (from $43,301 to $33,257) was primarily due to the decrease in cash.

As of August 31, 2014, our total liabilities were $166,268 comprised entirely of current liabilities as compared to $221,933 at August 31, 2013. The decrease in liabilities during fiscal year ended August 31, 2014 from fiscal year ended August 31, 2013 was primarily due to the exchange of common stock for $100,500 in amounts due related party and $11,865, netin loan principal.

Stockholders’ deficit decreased from ($178,632) at fiscal year ended August 31, 2013 to ($131,011) at fiscal year ended August 31, 2014.

Cash Flows from Operating Activities

The Company did not generate positive cash flows from operating activities. For fiscal year ended August 31, 2014, net cash flows used in operating activities was $46,101 compared to $48,775 for fiscal year ended August 31, 2013. Net cash flows used in operating activities consisted primarily of a net loss of $816,857 (2013: $388,957), which was partially adjusted by: (i) $742,625 (2013: $-0-) in value of common shares issued for services; (ii) $-0- (2013: $2,389) in amortization of stock option cost; (iii) $-0- (2013: ($4,504) in interest accrued on stock subscription; (iii) $-0- (2013: $4,329 in asset impairment; and (iv) $-0- (2013: $320,000 in accrued officer compensation.

Net cash flows used in operating activities during fiscal year ended August 31, 2014 was further changed by: (i) increase of ($20,069) (2013: $-0-) in marketable securities; (ii) an increase of $48,200 (2013: $14,369) in accounts payable and accrued expenses; and (iii) a decrease of $-0- (2013: $3,599 in prepaid expenses and other assets.

Cash Flows from Investing Activities

For fiscal year ended August 31, 2014, net cash flows used in investing activities was $5,287 compared to $2,140 for fiscal year ended August 31, 2013. Net cash flows used in investing activities during fiscal year ended August 31, 2014 consisted of: (i) $3,147 (2013: $-0-) in treasury stock acquired; and (ii) $2,140 (2013: $2,140) in investment in rare earth and precious metals properties.

Cash Flows from Financing Activities

The Company has financed its operations primarily from debt or the issuance of equity instruments. For the fiscal year ended August 31, 2014, net cash flows provided from financing activities was $19,135 compared to $65,070 for fiscal year ended August 31, 2013. Net cash flows from financing activities for the fiscal year ended August 31, 2014 consisted of: (i) $1,000 (2013: $-0-) in proceeds of related party loans; (ii) $18,135 (2013: $149,000) in loan proceeds; and (iii) $-0- (2013: $19,420 in proceeds from subscriptions receivable. Net cash flows from financing activities during fiscal year ended August 31, 2013 was offset by ($103,350) in loan repayment.

MATERIAL OBLIGATIONS

During fiscal year 2015, the Company has the following material obligations:

Effective September 1, 2011, the Company exchanged accounts payable in the amount of $49,400 for two promissory notes in the same amount. The notes bear interest at 2% per annum and were due on October 31, 2011. Total accrued interest for the convertible notes payable as of August 31, 2014 and 2013 are $2,964 and $1,977, respectively. The notes are currently past due. On September 11, 2011, the board of directors authorized the Company to issue up to 40,000,000 shares of its common stock in exchange for the notes, limited to a maximum of 9.9% of the total outstanding shares. At August 31, 2014, up to 1,175,818 of the Company’s common shares could be issued for a portion of the convertible notes payable due to the 9.9% limitation.

On March 10, 2013, the Company arranged a non-interest bearing demand loan with an individual in the amount of $149,000, which has a balance of $33,785 and $45,650 at August 31, 2014 and 2013, respectively. The balance of $33,785 and $45,650 at August 31, 2014 and 2013 included accrued interest of $700 and $900, respectively.

PLAN OF OPERATION AND FUNDING

The Company has incurred losses for the past two fiscal years and had a net loss of $816,857 during fiscal year ended August 31, 2014 and $388,957 during fiscal year ended August 31, 2013. A substantial portion of the fiscal year ended August 31, 2014 was dedicated to seeking and identifying mineral properties located in Romania. We also sought to identify financing partners with the intent of conducting a private placement to raise funds to advance exploration and development on interests in mineral properties. Possible further advances from related parties and the sale of securities may be required to fund our exploration and development operations over the next twelve months. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. Management anticipates additional increases in operating expenses and capital expenditures relating to commencing and structuring new business operations. We would finance these expenses with further issuances of equity securities and debt issuances. We expect we would need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities could result in dilution to our current shareholders. Further, such securities may have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all.

Going Concern Factors

We have not established sources of revenues sufficient to fund the development of business, projected operating expenses and commitments for our fiscal year ending August 31, 2015. The Company has accumulated a net loss of $4,508,333 through August 31, 2014, and incurred a loss of $816,857 for the year then ended.

New Accounting Standards

There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or operating results. See Note 1 to the financial statements.

Critical Accounting Policies

The SEC issued Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure about Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition our most critical accounting policies are discussed below. The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results we report in our financial statements.

REVENUE RECOGNITION – We have derived our revenue from sale of mineral interests and in the future will predominately derive our revenue from the sale of produced crude oil and natural gas and mining results. Revenue is recorded in the month the product is delivered to the purchaser. We receive payment from one to three months after delivery. At the end of each month, we estimate the amount of production delivered to purchasers and the price we will receive. Variances between our estimated revenue and actual payment are recorded in the month the payment is received; however, the differences should be insignificant.

FULL COST METHOD OF ACCOUNTING – We account for our oil and natural gas operations using the full cost method of accounting. Under this method, all costs associated with property acquisition, exploration and development of oil and gas reserves are capitalized. Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and cost of drilling and equipping productive and non-productive wells. Drilling costs include directly related overhead costs. All of our properties are currently located within the continental United States.

OIL AND NATURAL GAS RESERVE QUANTITIES – Reserve quantities and the related estimates of future net cash flows affect our periodic calculations of depletion and impairment of our oil and natural gas properties. Proved oil and natural gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future periods from known reservoirs under existing economic and operating conditions. Reserve quantities and future cash flows included in this Annual Report are prepared in accordance with guidelines established by the SEC and FASB. The accuracy of our reserve estimates is a function of:

	●	The quality and quantity of available data;

	●	The accuracy of various mandated economic assumptions; and

	●	The judgments of the person preparing the estimates.

Because these estimates depend on many assumptions, all of which may differ substantially from actual results, reserve estimates may be different from the quantities of oil and natural gas that are ultimately recovered. We will make changes to depletion rates and impairment calculations in the same period that changes in reserve estimates are made.

All capitalized costs of oil and gas properties, including estimated future costs to develop proved reserves and estimated future costs of site restoration, are amortized on the unit-of-production method using our estimate of proved reserves. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined.

IMPAIRMENT OF OIL AND NATURAL GAS PROPERTIES – We review the value of our oil and natural gas properties whenever management judges that events and circumstances indicate that the recorded carrying value of properties may not be recoverable. We provide for impairments on undeveloped property when we determine that the property will not be developed or a permanent impairment in value has occurred. Under the full cost method the net book value of oil and natural gas properties, less related deferred income taxes, may not exceed the estimated after-tax future net revenues from proved oil and natural gas properties, discounted at 10% (the “Ceiling Limitation”). In arriving at estimated future net revenues, estimated lease operating expenses, development costs, and certain production-related taxes are deducted. In calculating future net revenues, prices and costs in effect at the time of the calculation are held constant indefinitely, except for changes that are fixed and determinable by existing contracts. The net book value is compared to the ceiling limitation on a quarterly and yearly basis. The excess, if any, of the net book value above the ceiling limitation is charged to expense in the period in which it occurs and is not subsequently reinstated.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

Not applicable.

Item 7A:

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Item 8:

Financial Statements AND SUPPLEMENTARY DATA

The Financial Statements of Royal Energy Resources, Inc. together with the report thereon of GZTY CPA Group, LLC for the year ended August 31, 2014 and Paritz & Company, P.A. for the year ended August 31, 2013, is set forth as follows:

Index to Financial Statements

	Page

Reports of Independent Registered Public Accounting Firms:
GZTY CPA Group, LLC	F-1
Paritz & Company, P.A.	F-2
Balance Sheets	F-3
Statements of Operations	F-4
Statements of Stockholders’ Deficit	F-5
Statements of Cash Flows	F-7
Notes to Financial Statements	F-8

GZTY CPA Group, LLC

52 Bridge Street

Metuchen, NJ 08840

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Royal Energy Resources, Inc.

(formerly World Marketing, Inc.)

We have audited the accompanying balance sheet of Royal Energy Resources, Inc. as of August 31, 2014 and the related statements of operations, cash flows and the statement of stockholders’ deficit for the year ended August 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Royal Energy Resources, Inc., as of August 31, 2014, and the results of its operations and its cash flows for the year ended August 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

The financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 11 to the financial statements, the Company has no established source of revenue and is dependent on its ability to raise capital from shareholders or other sources to sustain operations. These factors among other matters as set forth in Note 11, raise substantial doubt that the Company will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ GZTY CPA Group, LLC

Metuchen, New Jersey
December 8, 2014

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Royal Energy Resources, Inc.

(formerly World Marketing, Inc.)

We have audited the accompanying balance sheet of Royal Energy Resources, Inc. as of August 31, 2013 and the related statements of operations, cash flows and the statement of stockholders’ deficit for the year ended August 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Royal Energy Resources, Inc., as of August 31, 2013, and the results of its operations and its cash flows for the year ended August 31, 2013 in conformity with accounting principles generally accepted in the United States of America.

The financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 11 to the financial statements, the Company is in the development stage, and has no established source of revenue and is dependent on its ability to raise capital from shareholders or other sources to sustain operations. These factors among other matters as set forth in Note 11, raise substantial doubt that the Company will be able to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Paritz & Company, P.A.

Hackensack, New Jersey
November 25, 2013

F-2

ROYAL ENERGY RESOURCES, INC.

Balance Sheets

August 31, 2014 and 2013

	2014			2013
Assets
Current assets
Cash	$	288		$	32,541
Marketable securities		20,069			-
Total current assets		20,357			32,541
Properties
Mining properties		12,900			10,760
Accumulated depreciation, depletion and amortization		-			-
Total properties		12,900			10,760
Total assets	$	33,257		$	43,301

Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable and accrued expenses	$	74,741		$	98,091
Notes payable		33,785			45,650
Convertible notes payable		49,400			49,400
Due to related party		8,342			28,792
Total current liabilities		166,268			221,933

Commitments and contingencies

Stockholders’ deficit
Preferred stock: $0.00001 par value; authorized 10,000,000 shares; issued and outstanding - 100,000 shares at August 31, 2014 and August 31, 2013		1			1
Common stock: $0.00001 par value; authorized 500,000,000 shares; 8,604,609 shares issued and 8,249,317 shares outstanding at August 31, 2014; 179,527 shares issued and outstanding at August 31, 2013		83			2
Additional paid-in capital		4,378,385			3,512,841
Accumulated deficit		(4,508,333	)		(3,691,476	)
Treasury stock at cost (5,292 shares)		(3,147	)		-
Total stockholders’ deficit		(133,011	)		(178,632	)
Total liabilities and stockholders’ deficit	$	33,257		$	43,301

See accompanying notes to financial statements.

F-3

ROYAL ENERGY RESOURCES, INC.

Statements of Operations

Years Ended August 31, 2014 and 2013

	Years Ended August 31,
	2014			2013

Oil and gas sales	$	-		$	-
Costs and expenses:
Asset impairment		-			4,329
Selling, general and administrative expense:
Related Party		402,000			320,000
Other		394,694			75,652
Total costs and expenses		796,694			399,981
Loss from operations		(796,694	)		(399,981	)
Other expenses (income):
Other income		-			(12,386	)
Marketable securities - realized gains		(1,451	)		-
Interest expense		21,614			5,866
Interest income from related party		-			(4,504	)
Total other expenses (income)		20,163			(11,024	)
Net loss	$	(816,857	)	$	(388,957	)

Net loss per share, basic and diluted	$	(0.16	)	$	(2.17	)

Weighted average shares outstanding, basic and diluted		5,060,675			179,527

See accompanying notes to financial statements.

F-4

ROYAL ENERGY RESOURCES, INC.

Statements of Stockholders’ Deficit

Years ended August 31, 2014 and August 31, 2013

										Additional
	Preferred stock				Common stock					Paid-in
	Shares		Amount		Shares			Amount		Capital

Balance August, 31, 2012		100,000	$	1		179,527		$	2	$	3,510,452
Amortization of deferred expense		-		-		-			-		-
Amortization of option cost		-		-		-			-		2,389
Stock subscription receivable:
Payments received		-		-		-			-		-
Interest accrued		-		-		-			-		-
Net loss		-		-		-			-		-
Balance August, 31, 2013		100,000		1		179,527			2		3,512,841
Treasury stock acquired		-		-		(5,292	)		-		-
Common stock issued for:
Consulting contract		-		-		800,000			8		319,992
Amounts due related party and compensation		-		-		6,700,000			67		502,433
Loan extension fee		-		-		275,000			3		20,622
Loan principal		-		-		300,000			3		22,497
Rounding		-		-		82			-		-
Net loss		-		-		-			-		-
Balance August, 31, 2014		100,000	$	1		8,249,317		$	83	$	4,378,385

Continued

See accompanying notes to financial statements.

F-5

ROYAL ENERGY RESOURCES, INC.

Statements of Stockholders’ Deficit

Years ended August 31, 2014 and August 31, 2013

	Subscription			Deferred			Accumulated			Treasury
	Receivable			Expenses			Deficit			Stock			Total

Balance August, 31, 2012	$	(379,856	)	$	(1,964	)	$	(3,302,519	)		-		$	(173,884	)
Amortization of deferred expense		-			1,964			-						1,964
Amortization of option cost		-			-			-						2,389
Stock subscription receivable:
Payments received		384,360			-			-						384,360
Interest accrued		(4,504	)		-			-						(4,504	)
Net loss		-			-			(388,957	)					(388,957	)
Balance August, 31, 2013		-			-			(3,691,476	)		-			(178,632	)
Treasury stock acquired		-			-			-			(3,147	)		(3,147	)
Common stock issued for:
Consulting contract		-			-			-			-			320,000
Amounts due related party and compensation		-			-			-			-			502,500
Loan extension fee		-			-			-			-			20,625
Loan principal		-			-			-			-			22,500
Rounding		-			-			-			-			-
Net loss		-			-			(816,857	)		-			(816,857	)
Balance August, 31, 2014	$	-		$	-		$	(4,508,333	)	$	(3,147	)	$	(133,011	)

See accompanying notes to consolidated financial statements.

F-6

ROYAL ENERGY RESOURCES, INC.

Statements of Cash Flows

Years Ended August 31, 2014 and 2013

	Years Ended August 31,
	2014			2013

Cash flows from operating activities
Net loss	$	(816,857	)	$	(388,957	)
Adjustment to reconcile net loss to net cash used in operating activities:
Value of common shares issued for services and loan fees:
Related party		402,000			-
Other		340,625			-
Amortization of stock option cost		-			2,389
Interest accrued on stock subscription		-			(4,504	)
Asset impairment		-			4,329
Accrued officer compensation		-			320,000
Change in other assets and liabilities:
Marketable securities		(20,069	)		-
Prepaid expenses and other assets		-			3,599
Accounts payable and accrued expenses		48,200			14,369
Net cash used in operations		(46,101	)		(48,775	)

Cash flows from investing activities
Treasury stock acquired		(3,147	)		-
Investment in rare earth and precious metals properties		(2,140	)		(2,140	)
Net cash provided by (used in) investing activities		(5,287	)		(2,140	)

Cash flows from financing activities
Proceeds of related party loans		1,000			-
Proceeds from subscription receivable		-			19,420
Loan proceeds		18,135			149,000
Loan repayment		-			(103,350	)
Net cash provided by (used in) financing activities		19,135			65,070

Net increase (decrease) in cash		(32,253	)		14,155
Cash, beginning of period		32,541			18,386
Cash, end of period	$	288		$	32,541

Supplemental cash flow information
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

Non-cash investing and financing activities:
Stock subscription receivable paid to reduce convertible note payable	$	-		$	65,600
Common stock to be issued for consulting contract included in accounts payable	$	-		$	42,500
Accrued officers compensation applied to pay stock subscriptions receivable	$	-		$	299,340
Common stock issued for:
Amounts due related party	$	100,500		$	-
Loan principal	$	22,500		$	-
Accounts payable and accrued expenses assumed by related party	$	71,550		$	-
Loan principal assumed by related party	$	7,500		$	-
Consulting agreement cancelled	$	42,500		$	-

See accompanying notes to financial statements

F-7

ROYAL ENERGY RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS

AUGUST 31, 2014

1	ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

These financial statements include the accounts of Royal Energy Resources, Inc. (“RER”) (formerly known as World Marketing, Inc. (“WMI”).

Organization and nature of business

RER is a Delaware corporation which was incorporated on March 22, 1999, under the name Webmarketing, Inc. (“Webmarketing”). On July 7, 2004, the Company revived its charter and changed its name from Webmarketing to World Marketing, Inc. In December 2007 the Company changed its name to Royal Energy Resources, Inc.

In 2011, the Company began pursuing gold, silver, copper and rare earth metals mining concessions in Romania and mining leases in the United States.

At the end of August 2006, the Company began acquiring oil and gas and uranium leases and has since resold all of its leases and retained an overriding royalty interest. During 2008 the Company prepaid the estimated drilling and completion costs for interests in three oil & gas drilling prospects in Washington County, Oklahoma. Two of the wells were completed in September and October 2008 and the third well was abandoned after testing in 2010. During 2009, the Company advanced another $42,000, net, to apply toward workover of three additional wells. All workover attempts were abandoned in 2010. Effective October 1, 2010, the Company sold its interest in its remaining proved reserves.

On July 22, 2005, the Company began selling its common stock to obtain the funds necessary to begin implementation of its new business plan. The primary objective of the new business plan was to acquire, make necessary renovations and resell both residential and commercial real estate. The Company expected to acquire real estate using cash, mortgage financing or its common stock, or any combination thereof, and anticipated that the majority of the properties acquired would be in the New York City area. The real estate would be sold directly by the Company to the extent deemed practical. If necessary, broker services will be used to expedite a given sale. The Company rescinded the purchase of the real estate property it had during the quarter ended May 31, 2008 and currently is limiting any potential real estate acquisitions to Eastern European countries, due to the current real estate environment in the United States.

F-8

Webmarketing attempted to establish a web-based marketing business for health care products from its inception in 1999 until 2001. However, the Company did not establish any revenues and discontinued these operations in 2001.

Cash and cash equivalents

The Company considers all cash on hand, cash in banks and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

Marketable equity securities

The Company’s investment in marketable equity securities is carried at fair value and is classified as a current asset in the balance sheet. Unrealized gains and losses, net of tax, are reported in the statement of operations as unrealized (gain) loss on marketable equity securities. Gains and losses are reported in the statements of operations when realized, based on the disposition of specifically identified investments, using a first-in, first-out method. At August 31, 2014, the Company’s investments consist solely of commodities contracts maturing within four months.

Revenue recognition

Revenue from the sale of oil and gas leases is recognized in accordance with the full cost method of accounting.

Oil and gas production income will be recognized when the product is delivered to the purchaser. We will receive payment from one to three months after delivery. At the end of each month, we will estimate the amount of production delivered to purchasers and the price we will receive. Variances between our estimated revenue and actual payment are recorded in the month the payment is received; however, differences should be insignificant.

Revenue from real estate sales is recognized when the related property is subject to a binding contract and all significant obligations have been satisfied.

Stock option plans

The compensation cost relating to share-based payment transactions (including the cost of all employee stock options) is required to be recognized in the financial statements. That cost will be measured based on the estimated fair value of the equity or liability instruments issued. The accounting literature covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

F-9

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models may not necessarily provide a reliable single measure of the fair value of its options. However, the Black-Scholes option valuation model provides the best available estimate for this purpose.

There are no options outstanding at August 31, 2014 from the stock option plan.

Property and equipment

The Company follows the full cost method of accounting for oil and natural gas operations. Under this method all productive and nonproductive costs incurred in connection with the acquisition, exploration and development of oil and natural gas reserves are capitalized. No gains or losses are recognized upon the sale or other disposition of oil and natural gas properties except in transactions that would significantly alter the relationship between capitalized costs and proved reserves. The costs of unevaluated oil and natural gas properties are excluded from the amortizable base until the time that either proven reserves are found or it has determined that such properties are impaired. The Company had no capitalized costs relating to unevaluated properties and leases at August 31, 2014 and August 31, 2013. As properties are evaluated, the related costs would be transferred to proven oil and natural gas properties using full cost accounting. There are no capitalized costs for proved properties as of August 31, 2014 and 2013.

Under the full cost method the net book value of oil and natural gas properties, less related deferred income taxes, may not exceed the estimated after-tax future net revenues from proved oil and natural gas properties, discounted at 10% (the “Ceiling Limitation”). In arriving at estimated future net revenues, estimated lease operating expenses, development costs, and certain production-related taxes are deducted. In calculating future net revenues, prices and costs in effect at the time of the calculation are held constant indefinitely, except for changes that are fixed and determinable by existing contracts. The net book value is compared to the ceiling limitation on a quarterly and yearly basis. The excess, if any, of the net book value above the ceiling limitation is charged to expense in the period in which it occurs and is not subsequently reinstated.

The Company assesses the recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the asset. No impairments of other assets was recorded in 2014. The Company did not renew a uranium lease in 2013 and recorded an impairment of $4,329.

Depreciation and amortization

All capitalized costs of oil and natural gas properties and equipment, including the estimated future costs to develop proved reserves, are amortized using the unit-of-production method based on total proved reserves.

Natural gas sales and gas imbalances

The Company follows the entitlement method of accounting for natural gas sales, recognizing as revenues only its net interest share of all production sold. Any amount attributable to the sale of production in excess of or less than the Company’s net interest is recorded as a gas balancing asset or liability. At August 31, 2014 and 2013, there were no natural gas imbalances.

F-10

Oil and natural gas reserve estimates

Proved reserves, estimated future net revenues and the present value of our reserves are estimated based upon a combination of historical data and estimates of future activity. The reserve estimates are used in calculating depletion, depreciation and amortization and in the assessment of the Company’s Ceiling Limitation. Significant assumptions are required in the valuation of proved oil and natural gas reserves which may affect the amount at which oil and natural gas properties are recorded. Actual results could differ materially from these estimates. The Company had no proved reserves at August 31, 2014 and 2013.

Income taxes

We use the asset and liability method of accounting for income taxes in accordance with Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

Earnings (loss) per common share

The Company is required to report both basic earnings per share, which is based on the weighted-average number of common shares outstanding, and diluted earnings per share, which is based on the weighted-average number of common shares outstanding plus all potential dilutive shares outstanding. At August 31, 2014 and 2013, there were no potentially dilutive common stock equivalents. Accordingly, basic and diluted earnings (loss) per share are the same for each of the periods presented. At August 31, 2014, up to 1,175,818 shares of the Company’s common stock could be issued for a portion of the convertible notes payable, subject to a 9.9% limitation of the total outstanding shares.

Use of estimates in the preparation of financial statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Credit risk

In 2014 and 2013, the Company had cash deposits in certain banks that at times may have exceeded the maximum insured by the Federal Deposit Insurance Corporation. The Company monitors the financial condition of the banks and has experienced no losses on these accounts.

F-11

Contingencies

Certain conditions may exist as of the date financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Company management and its legal counsel assess such contingencies related to legal proceeding that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probably that a liability has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or if probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed.

Asset retirement obligations

The fair value of a liability for an asset retirement obligation is required to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the associated retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Company determines its asset retirement obligation by calculating the present value of the estimated cash flows related to the liability. Periodic accretion of the discount of the estimated liability would be recorded in the statement of operations. At August 31, 2014 and 2013, the Company had no proved producing properties and no asset retirement obligation.

Share-Based Compensation

The Company accounts for share-based compensation in accordance with Financial Accounting Standards Board (“FASB”) ASC 718, “Compensation-Stock Compensation.” Under the fair value recognition provisions of this pronouncement, share-based compensation cost is measured at the grant date based on the fair value of the award, reduced as appropriate based on estimated forfeitures, and is recognized as expense over the applicable vesting period of the stock award using the accelerated method. The excess tax benefit associated with stock compensation deductions have not been recorded in additional paid-in capital. When evaluating whether an excess tax benefit has been realized, share based compensation deductions are not considered realized until NOLs are no longer sufficient to offset taxable income. Such excess tax benefits will be recorded when realized.

Fair value Instruments

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash, accounts payable, accrued expenses and notes payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 – quoted prices in active markets for identical assets or liabilities;

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable; and

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions).

F-12

Recent accounting pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from Generally Accepted Accounting Principles (“GAAP”). In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer in a development stage that in prior years it had been in the development stage.

The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entity’s governing documents and contractual arrangements allow additional equity investments. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company adopted ASU No. 2014-10 effective August 31, 2014.

We have evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through December 8, 2014 and find no others that would have a material impact on the financial statements of the Company.

F-13

2	MARKETABLE SECURITIES

The Company has purchased several commodities positions, principally in wheat and soybeans, which are due in September 2014 and December 2014. These contracts are valued at August 31, 2014, as follows:

	2014		2013

Open contracts	$	20,069	$	-
Unrealized (gain) loss		-		-
Balance, August 31, 2014	$	20,069	$	-

3	INVESTMENT IN ENERGY PROPERTIES

Property costs are summarized as follows at August 31, 2014 and 2013.

	2014		2013

Gold, silver, copper and rare earth metals mining	$	12,900	$	10,760
Total mining properties		12,900		10,760
Accumulated depreciation, depletion and amortization		-		-
	$	12,900	$	10,760

MINING

UNDEVELOPED LEASEHOLD NOT BEING AMORTIZED

The Company has been the successful bidder in United States Government auctions to purchase certain oil and gas lease rights. The Company has entered into agreements and then sold, by assignment, the rights, title and interest in certain of these leases and retained an over-riding royalty interest. Revenue from these transactions is accounted for using the full cost method of accounting. At August 31, 2014, all leases covering oil and gas lease rights had been sold with an overriding royalty interest retained and the Company had collected approximately $89,000 from sales of these leases and royalty interests. As of August 31, 2014, the operators of some of the leases have drilled non-productive wells and the Company is not currently deriving any additional revenue from the overriding royalty interests.

F-14

4	ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following as of August 31, 2014 and 2013:

	2014		2013

Trade accounts payable	$	41,777	$	22,930
Consulting fees payable		30,000		73,185
Accrued interest		2,964		1,976
	$	74,741	$	98,091

5	NOTES PAYABLE

Convertible notes payable - Effective September 1, 2011, the Company exchanged accounts payable in the amount of $49,400 for two promissory notes in the same amount. The notes bear interest at 2% per annum and were due on October 31, 2011. Total accrued interest for the convertible notes payable as of August 31, 2014 and 2013 are $2,964 and $1,977, respectively. The notes are currently past due. On September 11, 2011, the board of directors authorized the Company to issue up to 40,000,000 shares of its common stock in exchange for the notes, limited to a maximum of 9.9% of the total outstanding shares. At August 31, 2014, up to 1,175,818 of the Company’s common shares could be issued for a portion of the convertible notes payable due to the 9.9% limitation.

Note payable - On March 10, 2013, the Company arranged a non-interest bearing demand loan with an individual in the amount of $149,000, which has a balance of $33,785 and $45,650 at August 31, 2014 and 2013, respectively. The balance of $33,785 and $45,650 at August 31, 2014 and 2013 included accrued interest of $700 and $900, respectively.

6	INCOME TAXES

Actual income tax expense applicable to earnings before income taxes is reconciled with the “effective” Federal statutory income tax rates for the years ended August 31, 2014 and 2013 as follows:

	2014			2013

Income tax benefit at U.S. statutory rate (34%)	$	277,700		$	132,200
State income taxes net of federal tax benefit		32,700			15,600
Change in valuation allowance		(310,400	)		(147,800	)
Actual income tax expense	$	-		$	-

RER has available unused net operating loss carryforwards of approximately $2,149,000 which will expire in various periods from 2019 to 2033, some of which may be limited as to the amount available on an annual basis.

F-15

The Company’s income tax provision was computed based on the federal statutory rate and the average state rates, net of the related federal benefit. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	2014			2013

Net operating loss carryforward	$	816,700		$	662,700
Deferred expenses		705,100			552,300
Accrued expenses		11,400			7,800
Valuation allowance		(1,533,200	)		(1,222,800	)
Total	$	-		$	-

Federal and state income tax returns for years prior to 2010 are no longer subject to examination by tax authorities.

7	STOCKHOLDERS’ EQUITY

Common stock

In October 2012, the Company amended its charter to authorize issuance of up to 500,000,000 shares of common stock with a par value of $.00001. At August 31, 2014, 8,254,609 shares were issued, 5,292 shares were in treasury stock and 8,249,317 shares were outstanding. At August 31, 2013, 179,527 shares were issued and outstanding. During the quarter ended May 31, 2014, the Company issued 1,850,000 shares of its common stock in exchange for certain liabilities. The agreements were cancelled effective August 31, 2014 and the shares were cancelled.

Reverse stock split and increase in authorized shares

Series A preferred stock

In November 2007, the Company amended its charter to authorize issuance of up to 10,000,000 shares of its $0.00001 preferred stock. The amendment became effective on December 12, 2007, upon filing with the Delaware secretary of state. In December 2007 the Company issued 100,000 shares of its Series A preferred stock to its President and Chief Executive Officer for $1,000. The certificate of designation of the Series A preferred stock provides: the holders of Series A preferred stock shall be entitled to receive dividends when, as and if declared by the board of directors of the Company; participates with common stock upon liquidation; convertible into one share of common stock; and has voting rights such that the Series A preferred stock shall have an aggregate voting right for 54% of the total shares entitled to vote.

Stock option plan

F-16

Consulting and financial services agreements

During 2014 and 2013, the Company entered into various consulting and financial services agreements as well as new loan agreements and amendments to an existing loan agreement. The following table summarizes the agreements.

	2014		2013
Shares issued		800,000		*
Value of common stock and options	$	320,000	$	42,500
Unamortized balance, end of year	$	-	$	40,865
Terms of agreements		2 months		6 months

* This agreement was cancelled in July 2014 with no liability to the Company

Stock option

On August 23, 2013, the Company issued an option to a consultant for 750,000 shares at $0.07 per share which expires on December 31, 2014 if not previously exercised. The agreement was forfeited in July 2014.

The Black Scholes option valuation model yielded an estimated valuation of $126,963 for the option. At August 31, 2013, $2,389 was recorded as general and administrative expense and an increase to additional paid-in capital. During the nine months ended May 31, 2014, $69,574 was recorded as non-cash compensation and an increase to additional paid-in capital. The option was forfeited in July 2014 with no liability to the Company and the $69,574 was reversed.

Shares issued to related party

For the year ended August 31, 2014, the Company issued 6,700,000 shares of its common stock to its Chief Executive Officer and Director for $100,500 owed to him, including $71,550 assumed by him of the Company’s liabilities to third party vendors. The amount owed him included $20,660 of compensation accrued in 2013 but not paid until 2014. The fair value of the shares was $502,500 (market price of common stock $0.075 per share on date of transaction). The difference between the value of the shares and the amount paid of $402,000 is included as non-cash compensation in selling, general and administrative expense in the statement of operations. This compensation is for the years 2008 through 2014 for which the President and Chief Executive Officer had not been previously received any compensation.

8	RELATED PARTY TRANSACTIONS

The President and Chief Executive Officer of the Company made loans and advances to the Company since its inception. During fiscal 2005, the total amount of $6,560 was contributed to the capital of the Company.

Due to related party at August 31, 2014 and August 31, 2013 amounted to $8,342 and $28,792, respectively. The President and Chief Executive Officer of the Company made a loan to the Company of $8,132 during 2012. During 2014, $7,290 of this loan was used to acquire common stock from the Company. An addition to the loan of $7,500 was made when the President and Chief Executive Officer assumed this amount that was owed by the Company to a third party lender. The total balance of $8,342 at August 31, 2014 is due on demand, is non-interest bearing and has no repayment date. The balance at August 31, 2013 of $28,792 includes the loan of $8,132 and the balance owed of $20,660 from the May 31, 2013 compensation accrual described below.

In January 2014, the President and Chief Executive Officer of the Company acquired 6,700,000 shares of the Company’s common stock in exchange for $100,500 due to him, including $71,550 assumed by him of the Company’s liabilities to third party vendors. The fair value of the shares was $502,500. The difference between the value of the shares and the amount paid of $402,000 is included as non-cash compensation in selling, general and administrative expense in the statement of operations. This compensation is for the years 2008 through 2014 for which the President and Chief Executive Officer had not been previously received any compensation.

F-17

Effective May 31, 2013, the Board of Directors of the Company approved compensation in the amount of $320,000 for the Company’s President, who also serves as Chief Executive Officer and Chief Financial Officer of the Company. The compensation covered the years 1999 through 2007, for which the executive had not received any prior compensation. Subsequently, $299,340 of this amount was used to repay the remaining balance of stock subscription loans, which completed payment for the amount owed for 83,400 shares of the Company’s common stock. The $20,660 balance at August 31, 2013 was used during 2014 to acquire common stock from the Company.

In December 2007 the Company issued 100,000 shares of its Series A preferred stock to its President and Chief Executive Officer for $1,000. The certificate of designation of the Series A preferred stock provides: the holders of Series A preferred stock shall be entitled to receive dividends when, as and if declared by the board of directors of the Company; participates with common stock upon liquidation; convertible into one share of common stock; and has voting rights such that the Series A preferred stock shall have an aggregate voting right for 54% of the total shares entitled to vote.

The President and Chief Executive Officer of the Company was paid approximately $550 for office and travel expense reimbursements during the year ended August 31, 2013.

9	supplementary oil and gas reserve information (unaudited)

The Company had no interests in proved oil and natural gas properties during 2014 and 2013. Accordingly, no supplementary oil and gas reserve information is presented.

10	SUBSEQUENT EVENTS

During the quarter ended May 31, 2014, the Company issued 1,850,000 shares of its common stock in exchange for certain liabilities. On December 7, 2014, the Company and the parties reached agreement to cancel the May 31, 2014 agreements, effective August 31, 2014, and the shares were cancelled. An accounting adjustment was reflected in the financial statements as of August 31, 2014. See Note 7 and Note 8.

11	GOING CONCERN

These financial statements are presented on the basis that we will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has not established sources of revenues sufficient to fund the development of business, projected operating expenses and commitments for the year ended August 31, 2015. The Company, has accumulated a net loss of $4,508,333 through August 31, 2014, and incurred a loss of $816,857 for the year then ended. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

In March 2006, the Company sold 1,300 shares of its common stock for $65,000 to provide a portion of the cash required to purchase its first real estate investment. Subsequently, the Company continued to sell its common stock to raise capital to continue operations. Previously, the Company revised its business plan, rescinded its real estate purchase and began investing in energy and mining leases and oil and gas drilling prospects. However, the energy business has a high degree of risk and there can be no assurance that the Company will be able to obtain sufficient funding to develop the Company’s current business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

F-18

ITEM 9:

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

(a) Termination of Paritz & Company, P.A.

i. Effective March 17, 2014, Royal Energy Resources, Inc. (the “Company”) terminated Paritz & Company, P.A. (“Paritz”) as its principal independent registered public accounting firm. The board of directors does not have a separate audit committee and approved the decision to terminate Paritz.

ii. The report of Paritz on the Company’s financial statements for the fiscal years ended August 31, 2013 and 2012, did not contain an adverse opinion or disclaimer of opinion, nor was it modified as to uncertainty, audit scope or accounting principles, except that Paritz’s report for those fiscal years includes an explanatory paragraph and note stating, among other things, that the Company has incurred a loss since inception, has a net accumulated deficit and may be unable to raise further equity, which raises substantial doubt about the Company’s ability to continue as a going concern.

iii. During the fiscal years ended August 31, 2013 and 2012 and during the subsequent period through the date of Paritz’s termination, there were no disagreements between the Company and Paritz, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to the satisfaction of Paritz, would have caused Paritz to make reference thereto in its report on the Company’s audited financial statements. In connection with the audits of the fiscal years ended August 31, 2013 and 2012 and the subsequent period through March 17, 2014, there have been no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K).

(b) Engagement of GZTY CPA Group, LLC

i. Effective March 17, 2014, the Company engaged GZTY CPA Group, LLC (“GZTY”) as the Company’s independent registered public accounting firm. The engagement was approved by the board of directors, which also serves the role of audit committee.

ii. In connection with the Company’s appointment of GZTY as the Company’s independent registered accounting firm, the Company has not consulted GZTY on any matter relating to the application of accounting principles to a specific transaction, either completed or contemplated, or the type of audit opinion that might be rendered on the Company’s financial statements.

Item 9A:

Controls and Procedures

Evaluation of disclosure controls and procedures

Under the PCAOB standards, a control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit the attention by those responsible for oversight of the company’s financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of August 31, 2014. Our management has determined that, as of August 31, 2014, the Company’s disclosure controls and procedures are not effective due to a lack of segregation of duties.

Management’s report on internal control over financial reporting

Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements in accordance with the United States’ generally accepted accounting principles (US GAAP), including those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) as set forth in its Internal Control - Integrated Framework. Based on our evaluation under the framework in Internal Control - Integrated Framework, our management has concluded that our internal control over financial reporting was not effective as of August 31, 2014 due to a lack of segregation of duties.

There were no significant changes in internal controls or in other factors that could significantly affect these controls during the quarter ended August 31, 2014.

Item 9B:

Other Information

Not applicable.

PART III

Item 10:

Directors, Executive Officers and corporate governance

Executive Officers and Directors

The following section sets forth the names, ages and current positions with the Company held by the Directors, Executive Officers and Significant Employees; together with the year such positions were assumed. Frimet Taub is the daughter of Jacob Roth. We are not aware of any arrangement or understanding between any Director or Executive Officer and any other person pursuant to which he was elected to his current position. Each Executive Officer will serve until he or she resigns or is removed or otherwise disqualified to serve, or until his or her successor is elected and qualified. The Company currently has two Directors. The Board of Directors does not expect to appoint additional Directors until a potential acquisition is identified.

JACOB ROTH was named President, Chief Executive Officer, Chief Financial Officer and Director of RER on March 22, 1999. Previously, Mr. Roth was Chief Executive Officer of Virilitec Industries, Inc., a public company engaged in attempting to distribute a line of bioengineered virility nutritional supplements, from July 1, 2002, until December 1, 2003. Additionally, Mr. Roth was the President of JR Consulting, a public company engaged in consulting for other corporations, from 1982 until 1995. When not otherwise employed, Mr. Roth is a financial consultant to corporations.

FRIMET TAUB was named Secretary, Treasurer and Director of the Company on March 22, 1999. Mrs. Taub was a teacher at UTA in Brooklyn, New York from 1999 through 2002 and is not currently employed outside her home.

Audit Committee

The Board of Directors of the Company serves as the audit committee.

Compliance with Section 16(a) Of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers, directors and persons who own more than ten percent of the Company’s common stock to file initial reports of ownership and changes in ownership with the SEC. Additionally, SEC regulations require that the Company identify any individuals for whom one of the referenced reports was not filed on a timely basis during the most recent fiscal year or prior fiscal years. To the Company’s knowledge, based solely on a review of reports furnished to it, all required reports have been filed when due.

Code of Ethics

The Company has not yet adopted a code of ethics to apply to its principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions.

Item 11:

Executive Compensation

Jacob Roth currently serves as President, Chief Executive Officer and Chief Financial Officer of the Company and Frimet Taub serves as Secretary and Treasurer of the Company. There are no other individuals involved in the management or administration of the Company.

The Compensation Committee of the Board of Directors deliberates executive compensation matters to the extent they are not delegated to the Chief Executive Officer.

a.	Summary Compensation Table

The following table shows the compensation of the Company’s Chief Executive Officer and each executive officer whose total cash compensation exceeded $100,000 for the two years ended August 31, 2014.

Annual Compensation

					Option		Stock
Name and Principal Position	Year		Salary		Awards		Awards		Other		Total

Jacob Roth (CEO and CFO since		2014	$	-	$	-	$	-	$	402,000	$	402,000
March 22, 1999)		2013	$	320,000	$	-	$	-	$	-	$	320,000

Frimet Taub (Secretary and		2014	$	-	$	-	$	-	$	-	$	-
Treasurer since March 22, 1999)		2013	$	-	$	-	$	-	$	-	$	-

Narrative disclosure to summary compensation table

Required columns for bonus, non-entity incentive plan compensation, change in pension value and nonqualified deferred compensation earnings are omitted from the table above as the amounts are all zero. Compensation levels and amounts are determined by the Board of Directors based on amounts paid to executives in similar sized companies with similar responsibilities.

In January 2014, the President and Chief Executive Officer of the Company acquired 6,700,000 shares of the Company’s common stock in exchange for $100,500 due to him, including $71,550 assumed by him of the Company’s liabilities to third party vendors. The fair value of the shares was $502,500. The difference between the value of the shares and the amount paid of $402,000 is included in selling, general and administrative expense in the statement of operations.

The officers of the corporation have not received regular compensation.

Outstanding Equity Awards at Fiscal Year-End

There are no outstanding equity awards at August 31, 2014 for the named executives.

EMPLOYMENT AGREEMENTS

Appropriate employment agreements will be developed when necessary. The Company intends to pay its Executives and Directors salaries, wages, or fees commensurate with experience and industry standards in relationship to the success of the company.

Compensation of directors

			Fees
			earned or		Stock		Option		All other
			paid in		Awards		Awards		compensation
Name and Principal Position	Year		cash ($)		($)		($)		($)		Total

Jacob Roth	2014	$	-	$	-	$	-	$	-	$	-
	2013	$	-	$	-	$	-	$	-	$	-

Frimet Taub	2014	$	-	$	-	$	-	$	-	$	-
	2013	$	-	$	-	$	-	$	-	$	-

The Board of Directors are also officers of the Company and do not currently receive separate compensation for their services as directors.

Item 12:

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following tables set forth information as of December 8, 2014 regarding the beneficial ownership of the Company’s common and preferred stock (Series A), (a) each stockholder who is known by the Company to own beneficially in excess of 5% of our outstanding common stock; (b) each director known to hold common or preferred stock; (c) the Company’s chief executive officer; and (d) the executive officers and directors as a group. Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their shares of stock, except to the extent that authority is shared by spouses under applicable law, and (ii) record and beneficial ownership with respect to their shares of stock. The percentage of beneficial ownership of common stock is based upon 8,254,609 shares of common stock outstanding as of December 8, 2014. The percentage of beneficial ownership of preferred stock is based upon 100,000 shares of preferred stock outstanding as of December 8, 2014.

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. We believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. There are currently no outstanding convertible securities, warrants, options or other rights, except as noted below.

Title of class	Name and address of beneficial owner	Amount and nature of beneficial owner			Percent of class

	OFFICERS AND DIRECTORS

Common Preferred	Jacob Roth		6,783,400			82.18	%
	543 Bedford Avenue, #176		100,000			100.00	%
	Brooklyn, New York 11211

Common	Frimet Taub		1,700			0.02	%
	543 Bedford Avenue, #176
	Brooklyn, New York 11211

Common Preferred	All officers and directors as a group (2 persons)		6,785,100			82.20	%
			100,000			100.00	%

	5% OR GREATER SHAREHOLDERS

Common	Isaac Fisch		843,819	(1)		9.90	%
	C/O Royal Energy Resources, Inc.
	543 Bedford Avenue, #176
	Brooklyn, New York 11211

Common	Meir Leifer (2)		906,999	(2)		9.90	%
	C/O Royal Energy Resources, Inc.
	543 Bedford Avenue, #176
	Brooklyn, New York 11211

Common	Yitzhak Diamant		813,516			9.85	%
	C/O Royal Energy Resources, Inc.
	543 Bedford Avenue, #176
	Brooklyn, New York 11211

	(1)	As of the date of this Annual Report, Mr. Fisch holds of record 575,000 shares of common stock. In the event Mr. Fisch elects to convert a portion of $29,900 of debt due and owing under that certain convertible note, the Company will issue a further 83,055 shares of common stock up to a limit of 9.9% of total outstanding shares. Thus the figure above includes those shares held of record and those shares issuable upon conversion of debt. . See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Material Obligations.”

	(2)	As of the date of this Annual Report, Mr. Leifer holds of record 160 shares of common stock. In the event Mr. Leifer elects to convert a portion of $19,500 of debt due and owing under that certain convertible note, the Company will issue a further 906,839 shares of common stock up to a limit of 9.9% of total outstanding shares. Thus the figure above includes those shares held of record and those shares issuable upon conversion of debt. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Material Obligations.”

The above table reflects share ownership as of the most recent date. Each share of common stock has one vote per share on all matters submitted to a vote of our shareholders. We have one class of preferred stock, which we named “Series A.” Each share of Series A preferred stock has the equivalent of the aggregate voting rights for 54% of the total shares entitled to vote on all matters. Accordingly, Mr. Roth’s preferred stock has the voting rights of and is convertible into aggregate voting right for 54% of the total shares entitled to vote.

Equity Compensation Plan Information

			Number of securities
			remaining available for
			future issuance under
	Number of securities to be	Weighted-average exercise	equity compensation
	issued upon exercise of	price of outstanding	plans (excluding
	outstanding options,	options, warrants	securities reflected
Plan category	warrants and rights	and rights	in the first column

Equity compensation plans approved by security holders	-		8,000

Equity compensation plans not approve by security holders	-		-

Total	-		8,000

Item 13:

Certain Relationships and Related Transactions and director independence

Jacob Roth is our only promoter. He has not previously received anything of value, tangible or intangible, directly or indirectly, from us, other than reimbursements of expenses incurred in the ordinary course of business.

Due to related party at August 31, 2014 and August 31, 2013 amounted to $8,342 and $28,792, respectively. The President and Chief Executive Officer of the Company made a loan to the Company of $8,132 during 2012. The loan is due on demand and is non-interest bearing. During 2014, $7,290 of this loan was used to acquire common stock from the Company. The balance at August 31, 2013 of $28,792 includes the loan of $8,132 and the balance owed of $20,660 from the May 31, 2013 compensation accrual described below.

In January 2014, the President and Chief Executive Officer of the Company acquired 6,700,000 shares of the Company’s common stock in exchange for $100,500 due to him, including $71,550 assumed by him of the Company’s liabilities to third party vendors. The fair value of the shares was $502,500. The difference between the value of the shares and the amount paid of $402,000 is included in selling, general and administrative expense in the statement of operations.

Mrs. Taub is the daughter of Mr. Roth. Mrs. Taub acquired 500 shares of our common stock for a total consideration of $25 ($.0001 per share) in March 1999. In July 2009, Mrs. Taub acquired 1,200 shares of common stock in exchange for cash of $63 and a note receivable in the amount of $29,937. The note was paid during 2013.

On April 14, 2011, the Company’s CEO returned 8,500 shares of the Company’s common stock to the Company and it was cancelled, along with the related stock subscription notes with a combined principal balance of $144,866 and accrued interest of $2,470.

Effective May 31, 2013, the Board of Directors of the Company approved compensation in the amount of $320,000 for the Company’s President, who also serves as Chief Executive Officer and Chief Financial Officer of the Company. The compensation covered the years 1999 through 2007, for which the executive had not received any prior compensation. Subsequently, $299,340 of this amount was used to repay the remaining balance of stock subscription loans. The $20,660 balance at August 31, 2013 was applied to purchase common stock from the Company in 2014.

The President and Chief Executive Officer of the Company was paid approximately $550 for office and travel expense reimbursements during the year ended August 31, 2013.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees – The aggregate fees billed as of October 31, 2014 and 2013 for professional services rendered by the Company’s accountant was approximately $8,395 and $9,070 for the audit of the Company’s annual financial statements and the quarterly reviews for the fiscal years ended August 31, 2014 and 2013, respectively. The 2013 audit is included in the 2014 amount and the 2012 audit is included in the 2013 amount.

Audit-Related Fees – None.

Tax Fees – None.

All Other Fees – Other than the services described above, no other fees were billed for services rendered by the principal accountant.

Audit Committee Policies and Procedures – Not applicable.

If greater than 50 percent, disclose the percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees – Not applicable.

PART IV

ITEM 15:

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)

The following documents are filed as part of this report:

Financial Statements – The following financial statements of Royal Energy Resources, Inc. are contained in Item 8 of this Form 10-K:

	●	Reports of Independent Registered Public Accountants

	●	Balance Sheets at August 31, 2014 and 2013

	●	Statements of Operations for the years ended August 31, 2014 and 2013

	●	Statements of Stockholders’ Deficit for the years ended August 31, 2014 and 2013

	●	Notes to Financial Statements

	2	Financial Statement Schedules were omitted, as they are not required or are not applicable, or the required information is included in the Financial Statements.

	3	Exhibits – The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule 12b-32 under the Securities Exchange Act of 1934.

Exhibit		Description

3.1		Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Form SB-2 Registration Statement dated May 19, 2006)

3.2		Amended and Restated By Laws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Form SB-2 Registration Statement dated May 19, 2006)

10.1		Real estate purchase agreement from Mermelstein dated August 25, 2005 (incorporated by reference to Exhibit 10.1 to the Company’s Form SB-2 A/4 Registration Statement dated May 19, 2006)

10.2		Amendment to agreement to purchase real estate dated February 28, 2006 (incorporated by reference to Exhibit 10.1 to the Company’s Form SB-2 A/4 Registration Statement dated May 19, 2006)

10.3		Form of Non-Qualified Stock Option Agreement used by the Company in connection with the Company’s 2008 Stock Option Plan (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 filed July 14, 2008)

31.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934

32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

101.INS #		XBRL Instance Document
101.SCH #		XBRL Taxonomy Extension Schema Document
101.CAL #		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF #		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB #		XBRL Taxonomy Extension Label Linkbase Document
101.PRE #		XBRL Taxonomy Extension Presentation Linkbase Document

In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Annual Report on Form 10-K shall be deemed “furnished” and not “filed”

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.

Date: December 11, 2014

	Royal Energy Resources, Inc.

	By:	/s/ Jacob Roth
		Jacob Roth President, CEO and CFO

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Jacob Roth	Director, President, CEO and CFO	December 11, 2014

/s/ Frimet Taub	Director	December 11, 2014

DATE FIRST

POSITION

ELECTED/APPOINTED

Jacob Roth

President, Chief Executive Officer, Chief Financial Officer and Director

March 22, 1999

Frimet Taub

Secretary, Treasurer and Director

March 22, 1999