U.S.
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q/A
 
 QUARTERLY
REPORT UNDER SECTION 13 OR 15(d)
 OF THE
SECURITIES EXCHANGE ACT OF 1934
 
 For the
quarterly period ended: February 28, 2009
 
 File No.
000-52547
 
 Royal Energy
Resources,
Inc.
 (Name
of small business issuer in our charter)
 
 Delaware
                    
                    11-3480036(State
      or other jurisdiction of
                    
                    (IRS
      Employerincorporation
      or organization)
                    
                    Identification
      No.)
 
 256-260 Broadway, Suite 309,
Brooklyn, NY11211
 (Address
of principal executive offices) (Zip Code)
 
 Registrant's
telephone number:  800-620-3029
 
 Indicate
by check mark whether the registrant: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act 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 is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.  (Check one):
 
 Large
accelerated filer  ̈
Accelerated filer  ̈
Non-accelerated filer  ̈
Smaller reporting company x
 
 (Do not
check if a smaller reporting company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) Yes  ̈
Nox
 
 State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 19,114,731 shares of common stock outstanding
as of March 31, 2009.
  
 
 EXPLANATORY
NOTE
 
 We filed
our  Quarterly Report on Form 10-Q for the quarter ended February 28,
2009 on April 14, 2009 (the "Original Report").  We are filing this
Amendment No. 1 on Form 10-
 Q/A (this
"Amendment") to:
 
 ·
              include
      our non-producing mineral interests in our full cost pool since we adopted
      the full cost accounting method (see Note 8 for related
      details);
 ·
              modify
      our disclosure concerning the commencement date of our current development
      stage in Note 1;
 ·
              modify
      our disclosure concerning our non-producing mineral interests in Note
      2;
 ·
              modify
      our disclosure concerning income taxes in Note
  4;
 ·
              update
      disclosures in Item 4T; and
 ·
              include
      currently dated Exhibits 31 and 32.
 
 This
Amendment is being filed in response to comments we received from the staff of
the Division of Corporate Finance of The Securities and Exchange Commission (the
"SEC") in connection with the staff's review of the Original
Report.  We have made no attempt in this Amendment to modify or update
the disclosures presented in the Original Report other than as noted in the
previous paragraph.  Also, this Amendment does not reflect events
occurring after the filing of the Original Report.  Accordingly, this
Amendment should be read in conjunction with the Original Report and our other
filings with the SEC subsequent to the filing of the Original
Report.
  2
 
 The
accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial reporting
and pursuant to the rules and regulations of the Securities and Exchange
Commission ("Commission"). While these statements reflect all normal recurring
adjustments which are, in the opinion of management, necessary for fair
presentation of the results of the interim period, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. For further information, refer to
the financial statements and footnotes thereto, contained in the Company’s Form
10-K/A dated August 31, 2008.
 
 TABLE OF
CONTENTS
 
 PagePART I – FINANCIAL INFORMATIONItem
      1:
                  Financial
      Statements
                  4Item
      2:
                  Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  19Item
      3:
                  Quantitative
      and Qualitative Disclosures About Market Risk
                  21Item
      4T:
                  Controls
      and Procedures
                  21PART
      II - OTHER INFORMATION
                  22Item
      1:
                  Legal
      Proceedings
                  22Item
      1A:
                  Risk
      Factors
                  22Item
      2:
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  22Item
      3:
                  Defaults
      upon Senior Securities
                  22Item
      4:
                  Submission
      of Matters to a Vote of Security Holders
                  22Item
      5:
                  Other
      Information
                  22Item
      6:
                  Exhibits
                  22
  3
  PART I - FINANCIAL INFORMATION
 
 ITEM 1:  FINANCIAL STATEMENTS
 
 ROYAL
ENERGY RESOURCES, INC.
 (A
Development Stage Company)
 Condensed
Balance Sheet
 February
28, 2009 (unaudited) and August 31, 2008
  February 28,
                                
                                
                                August 31,2009
                                
                                
                                2008(Restated
                                
                                
                                (RestatedNote 8)
                                
                                
                                Note 8)AssetsCurrent
      assetsCash
      and cash equivalents
                                
                                $
                                153,339
                                
                                
                                $
                                343,739Accounts
      receivable
                                
                                
                                26,267
                                
                                
                                
                                -Total
      current assets
                                
                                
                                179,606
                                
                                
                                
                                343,739Oil
      and gas properties, on full cost method:Proved
      properties
                                
                                
                                74,840
                                
                                
                                
                                63,097Undeveloped
      leasehold not being amortized
                                
                                
                                -
                                
                                
                                
                                18,05174,840
                                
                                
                                
                                81,148Other
      assetsPrepaid
      drilling costs
                                
                                
                                25,313
                                
                                
                                
                                55,914Investment
      in uranium properties
                                
                                
                                4,329
                                
                                
                                
                                3,379Deposits
                                
                                
                                1,040
                                
                                
                                
                                440Total
      other assets
                                
                                
                                30,682
                                
                                
                                
                                59,733Total
      assets
                                
                                $
                                285,128
                                
                                
                                $
                                484,620Liabilities
      and Stockholders' EquityCurrent
      liabilitiesAccounts
      payable
                                
                                $
                                35,000
                                
                                
                                $
                                53,343Note
      payable
                                
                                
                                100,000
                                
                                
                                
                                140,000Total
      current liabilities
                                
                                
                                135,000
                                
                                
                                
                                193,343Commitments
      and contingenciesStockholders'
      equityPreferred
      stock: $0.00001 par value; authorized  10,000,000 shares;
      100,000 at November 30, 2008 and  at August 31, 2008, issued and
      outstanding, respectively
                                
                                
                                1
                                
                                
                                
                                1Common
      stock: $0.00001 par value; authorized 100,000 shares; 19,114,731 and
      17,267,731 shares issued and outstanding at February 28, 2009 and August
      31, 2008, respectively
                                
                                
                                191
                                
                                
                                
                                173Additional
      paid-in capital
                                
                                
                                2,253,960
                                
                                
                                
                                1,724,978Deferred
      option and stock compensation
                                
                                
                                (289,005
                                )
                                
                                
                                (680,699
                                )Common
      stock subscription receivable
                                
                                
                                (72,766
                                )
                                
                                
                                (72,092
                                )Deficit
      accumulated during the development stage
                                
                                
                                (1,742,253
                                )
                                
                                
                                (681,084
                                )Total
      stockholders' equity
                                
                                
                                150,128
                                
                                
                                
                                291,277Total
      liabilities and stockholders' equity
                                
                                $
                                285,128
                                
                                
                                $
                                484,620
    4
 
 ROYAL
ENERGY RESOURCES, INC.
 (A
Development Stage Company)
 Condensed
Statements of Operations
 Three
Months Ended February 28, 2009 and February 29, 2008
 (Unaudited)
 
 2009
                                  
                                  
                                  2008(Restated
                                  
                                  
                                  (RestatedNote 8)
                                  
                                  
                                  Note 8)Lease
      sales before adopting the full cost method
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -Oil
      and gas production
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Total
      revenues
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Cost
      of sales
                                  
                                  
                                  1,346
                                  
                                  
                                  
                                  -Gross
      profit
                                  
                                  
                                  (1,346
                                  )
                                  
                                  
                                  -Costs
      and expenses:Non-cash
      compensation
                                  
                                  
                                  436,110
                                  
                                  
                                  
                                  -Other
      selling, general and administrative expense
                                  
                                  
                                  80,743
                                  
                                  
                                  
                                  10,697Total
      costs and expenses
                                  
                                  
                                  516,853
                                  
                                  
                                  
                                  10,697Loss
      from operations
                                  
                                  
                                  (518,199
                                  )
                                  
                                  
                                  (10,697
                                  )Other
      expenses (income):Loss
      on comodities trading
                                  
                                  
                                  9,713
                                  
                                  
                                  
                                  -Interest
      income
                                  
                                  
                                  (937
                                  )
                                  
                                  
                                  -Interest
      income - related party
                                  
                                  
                                  (826
                                  )
                                  
                                  
                                  -Interest
      expense
                                  
                                  
                                  3,875
                                  
                                  
                                  
                                  -11,825
                                  
                                  
                                  
                                  -Loss
      before income taxes
                                  
                                  
                                  (530,024
                                  )
                                  
                                  
                                  (10,697
                                  )Provision
      for income taxes
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net
      loss
                                  
                                  $
                                  (530,024
                                  )
                                  
                                  $
                                  (10,697
                                  )Net
      loss per share, basic and diluted
                                  
                                  $
                                  (0.03
                                  )
                                  
                                  $
                                  (0.00
                                  )Weighted
      average shares outstanding,basic
      and diluted
                                  
                                  
                                  18,739,975
                                  
                                  
                                  
                                  13,907,027
 
 See
accompanying notes to condensed financial statements.
  5
 
 ROYAL
ENERGY RESOURCES, INC.
 (A
Development Stage Company)
 Condensed
Statements of Operations
 Six
Months Ended February 28, 2009 and February 29, 2008 and
 from
inception (July 22, 2005) through February 28, 2009
 (Unaudited)
 
 Inception(July22,2005)SixMonthsEnded
                                                                                      
                                                                                      
                                                                                      ThroughFebruary28,
                                                                                      
                                                                                      
                                                                                      February29,
                                                                                      
                                                                                      
                                                                                      February28,2009
                                                                                      
                                                                                      
                                                                                      2008
                                                                                      
                                                                                      
                                                                                      2009(Restated
                                                                                      
                                                                                      
                                                                                      (Restated
                                                                                      
                                                                                      
                                                                                      (RestatedNote8)
                                                                                      
                                                                                      
                                                                                      Note8)
                                                                                      
                                                                                      
                                                                                      Note8)Sale
      of oil and gas leases
                                                                                      
                                                                                      $
                                                                                      -
                                                                                      
                                                                                      
                                                                                      $
                                                                                      -
                                                                                      
                                                                                      
                                                                                      $
                                                                                      -Oil
      and gas production
                                                                                      
                                                                                      
                                                                                      689
                                                                                      
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      689Total
      revenues
                                                                                      
                                                                                      
                                                                                      689
                                                                                      
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      689Cost
      of sales
                                                                                      
                                                                                      
                                                                                      2,989
                                                                                      
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      3,131Gross
      profit
                                                                                      
                                                                                      
                                                                                      (2,300
                                                                                      )
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      (2,442
                                                                                      )Costs
      and expenses:Non-cash
      compensation
                                                                                      
                                                                                      
                                                                                      917,094
                                                                                      
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      1,255,641Other
      selling, general and administrative expense
                                                                                      
                                                                                      
                                                                                      109,771
                                                                                      
                                                                                      
                                                                                      
                                                                                      25,139
                                                                                      
                                                                                      
                                                                                      
                                                                                      404,806Total
      costs and expenses
                                                                                      
                                                                                      
                                                                                      1,026,865
                                                                                      
                                                                                      
                                                                                      
                                                                                      25,139
                                                                                      
                                                                                      
                                                                                      
                                                                                      1,660,447Loss
      from operations
                                                                                      
                                                                                      
                                                                                      (1,029,165
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (25,139
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (1,662,889
                                                                                      )Other
      expenses (income):Loss
      on disposition by rescission agreementof
      condominium
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      15,000Loss
      on comodities trading
                                                                                      
                                                                                      
                                                                                      27,737
                                                                                      
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      27,737Interest
      income
                                                                                      
                                                                                      
                                                                                      (2,434
                                                                                      )
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      (3,917
                                                                                      )Interest
      income - related party
                                                                                      
                                                                                      
                                                                                      (1,674
                                                                                      )
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      (5,576
                                                                                      )Interest
      expense
                                                                                      
                                                                                      
                                                                                      8,375
                                                                                      
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      17,12532,004
                                                                                      
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      50,369Loss
      before income taxes
                                                                                      
                                                                                      
                                                                                      (1,061,169
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (25,139
                                                                                      )
                                                                                      
                                                                                      
                                                                                      (1,713,258
                                                                                      )Provision
      for income taxes
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      -
                                                                                      
                                                                                      
                                                                                      
                                                                                      -Net
      loss
                                                                                      
                                                                                      $
                                                                                      (1,061,169
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      (25,139
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      (1,713,258
                                                                                      )Net
      loss per share, basic and diluted
                                                                                      
                                                                                      $
                                                                                      (0.06
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      (0.00
                                                                                      )
                                                                                      
                                                                                      $
                                                                                      (0.14
                                                                                      )Weighted
      average shares outstanding,basic
      and diluted
                                                                                      
                                                                                      
                                                                                      18,489,510
                                                                                      
                                                                                      
                                                                                      
                                                                                      13,907,027
                                                                                      
                                                                                      
                                                                                      
                                                                                      11,839,174
 
 See
accompanying notes to condensed financial statements.
  6
 
 ROYAL
ENERGY RESOURCES, INC.
 (A
Development Stage Company)
 Condensed
Statements of Cash Flows
 Six
Months Ended February 28, 2009 and February 29, 2008, and
 from
inception (July 22, 2005) through February 28, 2009
 (Unaudited)
 
 FrominceptionJuly22,2005Sixmonthsended
                                                                        
                                                                        
                                                                        throughFebruary28,
                                                                        
                                                                        
                                                                        February29,
                                                                        
                                                                        
                                                                        February28,2009
                                                                        
                                                                        
                                                                        2008
                                                                        
                                                                        
                                                                        2009(Restated
                                                                        
                                                                        
                                                                        (Restated
                                                                        
                                                                        
                                                                        (RestatedNote8)
                                                                        
                                                                        
                                                                        Note8)
                                                                        
                                                                        
                                                                        Note8)Cash
      flows from operating activitiesNet
      loss
                                                                        
                                                                        $
                                                                        (1,061,169
                                                                        )
                                                                        
                                                                        $
                                                                        (25,139
                                                                        )
                                                                        
                                                                        $
                                                                        (1,713,258
                                                                        )Adjustment
      to reconcile net loss to net cash
      used        in operating
      activities:Depreciation
      and depletion
                                                                        
                                                                        
                                                                        189
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        189Value
      of common shares issued for services
                                                                        
                                                                        
                                                                        917,094
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        1,255,641Loss
      on rescission of condominium purchase
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        15,000Interest
      accrued on stock subscription
                                                                        
                                                                        
                                                                        (1,674
                                                                        )
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        (5,576
                                                                        )Change
      in other assets and liablities:Accounts
      receivable
                                                                        
                                                                        
                                                                        (26,267
                                                                        )
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        (26,267
                                                                        )Prepaid
      expenses and other assets
                                                                        
                                                                        
                                                                        2,151
                                                                        
                                                                        
                                                                        
                                                                        4,510
                                                                        
                                                                        
                                                                        
                                                                        (54,203
                                                                        )Accounts
      payable
                                                                        
                                                                        
                                                                        (12,700
                                                                        )
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        (14,828
                                                                        )Net
      cash used in operations
                                                                        
                                                                        
                                                                        (182,376
                                                                        )
                                                                        
                                                                        
                                                                        (20,629
                                                                        )
                                                                        
                                                                        
                                                                        (543,302
                                                                        )Cash
      flows from investing activitiesInvestment
      in real estate
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        (11,000
                                                                        )Oil
      and gas property expenditures
                                                                        
                                                                        
                                                                        (1,941
                                                                        )
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        (99,453
                                                                        )Proceeds
      from sales of undeveloped leasehold
                                                                        
                                                                        
                                                                        30,267
                                                                        
                                                                        
                                                                        
                                                                        5,626
                                                                        
                                                                        
                                                                        
                                                                        47,975Investment
      in uranium properties
                                                                        
                                                                        
                                                                        (950
                                                                        )
                                                                        
                                                                        
                                                                        (3,379
                                                                        )
                                                                        
                                                                        
                                                                        (5,673
                                                                        )Net
      cash used in investing activities
                                                                        
                                                                        
                                                                        27,376
                                                                        
                                                                        
                                                                        
                                                                        2,247
                                                                        
                                                                        
                                                                        
                                                                        (68,151
                                                                        )Cash
      flows from financing activitiesProceeds
      of stockholder loans
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        50Proceeds
      from subscription receivable
                                                                        
                                                                        
                                                                        1,000
                                                                        
                                                                        
                                                                        
                                                                        10,400
                                                                        
                                                                        
                                                                        
                                                                        14,400Loan
      proceeds (repayment)
                                                                        
                                                                        
                                                                        (40,000
                                                                        )
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        100,000Proceeds
      from sale of common stock
                                                                        
                                                                        
                                                                        3,600
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        649,342Proceeds
      from sale of preferred stock
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        1,000
                                                                        
                                                                        
                                                                        
                                                                        1,000Net
      cash provided by financing activities
                                                                        
                                                                        
                                                                        (35,400
                                                                        )
                                                                        
                                                                        
                                                                        11,400
                                                                        
                                                                        
                                                                        
                                                                        764,792Net
      increase (decrease) in cash and cash equivalents
                                                                        
                                                                        
                                                                        (190,400
                                                                        )
                                                                        
                                                                        
                                                                        (6,982
                                                                        )
                                                                        
                                                                        
                                                                        153,339Cash and cash
      equivalents, beginning of period
                                                                        
                                                                        
                                                                        343,739
                                                                        
                                                                        
                                                                        
                                                                        7,611
                                                                        
                                                                        
                                                                        
                                                                        -Cash and cash
      equivalents, end of period
                                                                        
                                                                        $
                                                                        153,339
                                                                        
                                                                        
                                                                        $
                                                                        629
                                                                        
                                                                        
                                                                        $
                                                                        153,339Supplemental
      cash flow informationCash
      paid for interest
                                                                        
                                                                        $
                                                                        4,500
                                                                        
                                                                        
                                                                        $
                                                                        -
                                                                        
                                                                        
                                                                        $
                                                                        13,250Cash
      paid for income taxes
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -Non-cash
      investing and financing activities:Issuance
      of common stock for real estate
                                                                        
                                                                        $
                                                                        -
                                                                        
                                                                        
                                                                        $
                                                                        -
                                                                        
                                                                        
                                                                        $
                                                                        190,000Contribution
      of stockholder loan to capital
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        6,560Disposition
      of real estate per stock rescissionagreement
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        -
                                                                        
                                                                        
                                                                        
                                                                        200,000
 
 See
accompanying notes to condensed financial statements.
  7
 
 ROYAL
ENERGY RESOURCES, INC.
 (A
Development Stage Company)
 
 NOTES TO
FINANCIAL STATEMENTS
 
 February
28, 2009
 (Unaudited)
 
 
 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"). RER is a development
stage enterprise within the meaning of Statement of Financial Accounting
Standards No. 7, ("SFAS No. 7") "Accounting and Reporting by Development Stage
Enterprises."
 
 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.  Accordingly, the current development stage has a
commencement date of July 22, 2005 and all prior losses of $28,995 have been
transferred to accumulated deficit.
 
 The
condensed financial statements included in this report have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission for interim reporting and include all adjustments (consisting only of
normal recurring adjustments) that are, in the opinion of  management,
necessary for a fair presentation. These condensed financial statements have not
been audited.
 
 Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to such rules and
regulations for interim reporting. The Company believes that the disclosures
contained herein are adequate to make the information presented not misleading.
However, these condensed financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's Annual
Report for the year ended August 31, 2008.
 
 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.
  8
 
 Commencing
at the end of August 2006, the Company began acquiring oil and gas and uranium
leases and has since resold some of its leases and retained an overriding
royalty interest.  During the last half of fiscal 2008, the Company
invested in three oil & gas drilling prospects in Washington County,
Oklahoma, and expects to continue this activity in the future, as funds become
available.  Two wells began initial sales in November 2008 and a third
well is being re-completed.
 
 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 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.
 
 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.
 
 Going
Concern
 
 The
Company has not established sources of revenues sufficient to fund the
development of business, projected operating expenses and commitments for fiscal
year 2009. The Company, which has been in the development stage since its
inception, March 22, 1999, has accumulated a net loss of $1,734,651 through
February 28, 2009, and incurred losses of $1,061,169 for the six months then
ended.
 
 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.  Accordingly, the current development stage has a
commencement date of July 22, 2005 and all prior losses of $28,995 have been
transferred to accumulated deficit.
 
 In March
2006, the Company sold 650,000 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.  In the previous
fiscal year, the Company revised its business plan, rescinded its real estate
purchase and began investing in energy leases and oil and gas drilling
prospects.  The Company borrowed $140,000 ($100,000 balance at
February 28, 2009) with a note payable and raised $413,172 from the sale of its
common stock during fiscal 2008.  However, energy prices are currently
much lower and 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.
  9
 
 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.
 
 Revenue
recognition
 
 Revenue
from the sale of oil and gas and uranium leases is recognized when the
transaction is completed.  The cost of the leases sold is included in
cost of sales at the time of the sale.
 
 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
 
 In
December 2004, the FASB issued SFAS 123 (revised 2004), "Share-Based Payment"
(SFAS 123(R)). Among other things, SFAS 123(R) requires expensing the fair value
of stock options, previously optional accounting. For transition, upon adoption
on September 1, 2005, SFAS 123(R) would require expensing any unvested options
and will also require changing the classification of certain tax benefits from
option deductions to financing rather than operating cash flows. As of August
31, 2006, the Company did not have any unvested options which would require
adjustment upon adoption of SFAS 123(R).  SFAS 123, "Accounting for
Stock Based compensation" (SFAS 123), required the Company to disclose pro forma
information regarding option grants made to its employees until adoption of SFAS
123(R) discussed above. SFAS 123 specifies certain valuation techniques that
produce estimated compensation charges that would be included in the required
pro forma results. These amounts would not have been reflected in the Company's
statements of operations, because APB 25 specifies that no compensation charge
arises when the price of the employees' stock options equal the market value of
the underlying stock at the grant date.
 
 Under
SFAS 123, the fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model.   The Company,
during the three months ended May 31, 2008 granted options to acquire 1,000,000
shares of its common stock that were fair valued under the Black Scholes model
in the amount of $328,975.  This amount is being amortized over the
twelve month option period.
  10
 
 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 related to
unevaluated properties at February 28, 2009.  As properties are
evaluated, the related costs would be transferred to proven oil and natural gas
properties using full cost accounting.  All capitalized costs were
included in the amortization base as of February 28,
2009.  Amortization in the amount of $189 was recorded during the six
months ended February 28, 2009, based on initial production.
 
 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.  Reserve
estimates used in determining estimated future net revenues have been prepared
by the Company with the assistance of the operator of the
properties.
 
 In
accordance with the impairment provisions of Statement of Financial Accounting
Standards (SFAS) 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets,” the Company assesses the recoverability of the carrying value of its
non-oil and gas long-lived assets when events occur that indicate an 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 have been recorded as of February
28, 2009.
 
 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.  Depreciation of other equipment is computed on the straight
line method over the estimated useful lives of the assets, which range from
three to twenty-five years.
  11
 
 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 February 28, 2009 and August 31, 2008, there were no
natural gas imbalances.
 
 Investments
in real estate
 
 Costs
associated with the acquisition, development and construction of real estate
properties are capitalized when incurred. The carrying value of the properties
will be reviewed, at least annually, for impairment. In the event the property
is leased, depreciation will be recorded based upon a thirty-year
life.  The Company rescinded the purchase of the real estate property
it had during the quarter ended May 31, 2008.
 
 Oil
and natural gas reserve estimates
 
 The
Company prepared its oil and natural gas reserves with the assistance of the
operator of the properties.  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.  Consistent with SEC requirements, we have based our present
value of proved reserves on spot prices on the date of the
estimate.  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, as described herein, may affect the
amount at which oil and natural gas properties are recorded.  Actual
results could differ materially from these estimates.
 
 Deferred
income taxes
 
 Deferred
income taxes are provided for temporary differences between financial and tax
reporting in accordance with the liability method under the provisions of SFAS
109, "Accounting for Income Taxes." A valuation allowance is recorded to reduce
the carrying amounts of deferred tax assets unless management believes it is
more likely than not that such asset will be realized.
 
 Earnings
(loss) per common share
 
 Earnings
(loss) per common share are calculated under the provisions of SFAS 128,
"Earnings per Share," which established new standards for computing and
presenting earnings per share. SFAS 128 requires RER 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 February 28, 2009 and February 29, 2008, there were no
common stock equivalents. Accordingly, basic and diluted earnings per share are
the same for all periods presented.
  12
 
 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
 
 The
Company had cash deposits in certain banks that at times 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.
 
 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
 
 SFAS 143,
“Accounting for Asset Retirement Obligations,” addresses financial accounting
and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs and amends FASB 19,
“Financial Accounting and Reporting by Oil and Gas Producing
Companies.”  SFAS 143 requires that the fair value of a liability for
an asset retirement obligation 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
February 28, 2009 and August 31, 2008, the Company has estimated that its share
of the salvage value of lease equipment would exceed its share of the cost of
plugging and abandoning its producing properties.
  13
 
 Recent
accounting pronouncements
 
 Recent
accounting pronouncements issued by the FASB (including its Emerging Issues Task
Force), the AICPA, and the SEC did not, or are not, believed by management to
have a material impact on the Company's present or future financial
statements.
 
 Fair
value determination
 
 Financial
instruments consist of cash, marketable securities, promissory notes receivable,
accounts payable, accrued expenses and short-term borrowings. The carrying
amount of these financial instruments approximates fair value due to their
short-term nature or the current rates at which the Company could borrow funds
with similar remaining maturities.
 
 2
              INVESTMENT
      IN ENERGY PROPERTIES
 
 Oil and
gas property costs using the full cost method are as follows at February 28,
2009and
August 31, 2008:
 
 February 28,
                    
                    
                    August 31,2009
                    
                    
                    2008Leasehold
      cost
                    
                    $
                    4,933
                    
                    
                    $
                    4,933Intangible
      development cost
                    
                    
                    49,667
                    
                    
                    
                    40,932Lease
      equipment
                    
                    
                    30,704
                    
                    
                    
                    17,232Total
                    
                    
                    85,304
                    
                    
                    
                    63,097Accumulated
      depreciation and depletion
                    
                    
                    (10,464
                    )
                    
                    
                    -Proved
      properties
                    
                    
                    74,840
                    
                    
                    
                    63,097Undeveloped
      leasehold cost not being amortized
                    
                    
                    -
                    
                    
                    
                    18,051$
                    74,840
                    
                    
                    $
                    81,148
 
 LEASES
 
 The
Company has been the successful bidder in United States Government auctions to
purchase certain oil and gas lease rights.  The oil and gas leases
currently comprise approximately 10,000 acres in Crook, Banner, Weston, Goshen,
Niobrara, Converse, Campbell, Freemont, Laramie, Sublette and Platt Counties,
Wyoming as of February 28, 2009 and August 31, 2008, respectively.  In
addition, the Company holds the lease for uranium rights on approximately 3,500
acres in Wyoming as of February 28, 2009 and August 31, 2008,
respectively.
 
 The
Company is negotiating with energy companies to develop the potential resources
that may be contained in these properties.  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 recorded when the
transaction is completed at which time the cost of the related leases is
included in cost of sales.
  14
 
 OIL
AND GAS PRODUCING PROPERTIES
 
 During
fiscal 2008, the Company prepaid $119,153 as estimated drilling and completion
costs for a 25% working interest in three wells in Washington County,
Oklahoma.  Two of the wells began initial sales in November 2008 and
the third well is being re-completed.
 
 Prepaid
drilling cost includes a balance of $25,313 and $55,914 in prepaid costs for the
initial three wells in Washington County, Oklahoma as of February 28, 2009and August
31, 2008, respectively.
 
 3
              NOTE
      PAYABLE
 
 The
Company has a loan with an individual in the original amount of $140,000, with
interest payable monthly at 15% and which is due July 29, 2009.  The
loan has a balance of $100,000 at February 28, 2009.
 
 4
              INCOME
      TAXES
 
 RER has
not recorded a deferred tax benefit or expense for all prior periods through
February 28, 2009, as all net deferred benefits have a full valuation
allowance.
 
 Actual
income tax expense applicable to earnings before discontinued operations and
income taxes is reconciled with the “normally expected” Federal income tax for
the three months ended February 28, 2009 and February 29, 2008 as
follows:
 
 2009
                    
                    
                    2008"Normally
      expected" income tax benefit
                    
                    $
                    360,800
                    
                    
                    $
                    8,500State
      income taxes net of federal benefit
                    
                    
                    42,400
                    
                    
                    
                    1,000Valuation
      allowance
                    
                    
                    (403,200
                    )
                    
                    
                    (9,500
                    )Actual
      income tax expense
                    
                    $
                    -
                    
                    
                    $
                    -
 
 RER has
available unused net operating loss carryforwards of approximately $1,739,000
which will expire in various periods from 2019 to 2028, some of which may be
limited as to the amount available on an annual basis.
 
 5
              STOCKHOLDERS’
      EQUITY
 
 In
November 2007, the Company amended its charter to authorize issuance of up to
100,000,000 shares of common stock with a par value of $.00001.  At
February 28, 2009 and August 31, 2008, 19,114,731 and 17,267,731 shares were
issued and outstanding, respectively.
  15
 
 At this
same time, the Company was authorized to issue 10,000,000 shares of its $0.00001
preferred stock.  In December 2007 the Company issued 100,000 shares
of its preferred stock for $1,000.
 
 During
fiscal 2008 and September 2008, the Company entered into various consulting and
financial services agreements as well as a new loan agreement.  Included in
these agreements was the payment of $85,000 in cash, which has been paid. 
In addition, an aggregate of 3,965,000 shares of the Company’s common stock were
issued along with the granting of options to purchase 1,000,000 shares of the
Company’s common stock.  During fiscal 2009, contracts with a total value
of $566,300 were issued which included issuance of 1,827,000 shares of common
stock and cash of $40,900 to be paid.  The agreements cover periods
ranging from 3 months to 16.5 months and the related fair value of the shares
and options as well as the cash component, are being amortized over the life of
the agreements.  The Company has determined the total cost of the
agreements to approximate $1,629,075.  As of February 28, 2009, the
un-amortized portion of these agreements amounts to approximately $289,005 and
is included as a reduction of stockholders equity in the accompanying financial
statements.
 
 6
              RELATED
      PARTY TRANSACTIONS
 
 Stock subscription receivable
- On August 16, 2007, the President and Chief Executive Officer of the Company
purchased 4,100,000 shares of the Company’s $0.00001 par value common shares for
$0.02 per share.  The Company received a cash payment of $410 and a
note receivable in the amount of $81,590 for this purchase.  The note
bears interest at 5% per annum and payments of principal and interest are due on
August 15, 2012.  Payments of $14,400 have been received by the
Company and at February 28, 2009 the Company is owed $72,766, including accrued
interest.
 
 Equity contribution - 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.
 
 7
              CONTINGENCIES
 
 The
Company has a lease for its corporate office which commences September 1, 2008,
for a period of two years at a monthly rental of $600.
  16
 
 8
              RESTATEMENT
 
 We
adopted the full cost method of accounting for our oil and gas exploration and
development activities effective when we first began oil and gas operations in
2007.  Previously we had been the successful bidder in United States
Government auctions to purchase certain oil and gas lease rights.  In
our original report for the six months ended February 28, 2009, we included
$30,267 in sales with cost of sales of $2,094 (net $28,173) in the statement of
operations that, under the full cost method, should have been recorded as a
reduction of the related cost included in the full cost pool.  Of this
amount, $17,898 has eliminated the balance in undeveloped leasehold cost not
being amortized and $10,275 has increased the accumulated depreciation,
depletion and amortization of the proved properties.  The carryover
effect from the period ended August 31, 2008 is a reduction in undeveloped
leasehold not being amortized of $15,821 and a corresponding increase to the
deficit accumulated during the development stage of $15,821.  The
following summarizes the effect of the adjustment:
 
 As OriginallyReported
                            
                            
                            Adjustment
                            
                            
                            As RestatedSix months ended February 28,
      2009Balance sheetInvestment
      in oil and gas properties, net
                            
                            $
                            85,115
                            
                            
                            $
                            (85,115
                            )
                            
                            $
                            -Investment
      in oil and gas leases
                            
                            
                            33,719
                            
                            
                            
                            (33,719
                            )
                            
                            
                            -Oil
      and gas properties, on the full cost method:Proved
      properties
                            
                            
                            -
                            
                            
                            
                            85,115
                            
                            
                            
                            74,840(10,275
                            )Undeveloped
      leasehold not being amortized
                            
                            
                            -
                            
                            
                            
                            33,719
                            
                            
                            
                            -(15,821
                            )(17,898
                            )-Deficit
      accumulated during development stage
                            
                            
                            (1,698,259
                            )
                            
                            
                            (15,821
                            )
                            
                            
                            (1,742,253
                            )(28,173
                            )Statements of operationsSales
      of oil and gas leases
                            
                            
                            30,267
                            
                            
                            
                            (30,267
                            )
                            
                            
                            -Cost
      of sales
                            
                            
                            5,083
                            
                            
                            
                            (2,094
                            )
                            
                            
                            2,989Net
      loss
                            
                            
                            (1,032,996
                            )
                            
                            
                            (28,173
                            )
                            
                            
                            (1,061,169
                            )Net
      loss per share, basic and diluted
                            
                            $
                            (0.06
                            )
                            
                            $
                            -
                            
                            
                            $
                            (0.06
                            )Statements of cash flowsNet
      loss
                            
                            
                            (1,032,996
                            )
                            
                            
                            (28,173
                            )
                            
                            
                            (1,061,169
                            )Investment
      in oil and gas leases
                            
                            
                            153
                            
                            
                            
                            (153
                            )
                            
                            
                            -Proceeds
      from sale of undeveloped leasehold
                            
                            
                            -
                            
                            
                            
                            30,267
                            
                            
                            
                            30,267Oil
      and gas property expenditures
                            
                            
                            -
                            
                            
                            
                            (1,941
                            )
                            
                            
                            (1,941
                            )
  17
  As OriginallyReported
                                
                                
                                Adjustment
                                
                                
                                As RestatedSix months ended February 29,
      2008Statements of operationsSales
      of oil and gas leases
                                
                                
                                5,626
                                
                                
                                
                                (5,626
                                )
                                
                                
                                -Cost
      of sales
                                
                                
                                449
                                
                                
                                
                                (449
                                )
                                
                                
                                -Net
      loss
                                
                                
                                (19,962
                                )
                                
                                
                                (5,177
                                )
                                
                                
                                (25,139
                                )Net
      loss per share, basic and diluted
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -Statements of cash flowsNet
      loss
                                
                                
                                (19,962
                                )
                                
                                
                                (5,177
                                )
                                
                                
                                (25,139
                                )Investment
      in oil and gas leases
                                
                                
                                4,959
                                
                                
                                
                                (4,959
                                )
                                
                                
                                -Proceeds
      from sale of undeveloped leasehold
                                
                                
                                -
                                
                                
                                
                                5,626
                                
                                
                                
                                5,626Prepaid
      expenses
                                
                                
                                -
                                
                                
                                
                                4,510
                                
                                
                                
                                4,510
  18
  ITEM
2:               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 the matters set forth in
this statement.
 
 At the
present time we have only nominal overhead costs.  Our officers do not
receive any payroll and our administrative assistance is now being provided on a
reimbursement basis.  This situation will remain constant until such
time as we have sufficient capital to afford to pay salaries.
 
 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
1,900,000 shares of our common stock which was valued at $190,000.  In
March 2008, we entered into a rescission agreement, the result of which was the
cancellation of 1,900,000 common shares in exchange for the condominium
property.  At the time of the exchange, the condominium was appraised
at a fair market value of $200,000 and we recorded a loss of $15,000 on the
transaction.  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
Company was the successful bidder in United States Government auctions to
purchase certain oil and gas lease rights.  The oil and gas leases
currently represent approximately 10,000 acres of property located in Crook,
Banner, Weston, Goshen, Niobrara, Converse, Campbell, Freemont, Laramie,
Sublette and Platt County Wyoming.  The Company also holds leases for
the uranium rights on approximately 3,500 acres in Wyoming.  The
Company is negotiating with energy companies to develop the potential resources
that may be contained in these properties.  The Company has completed
several transactions wherein the Company sold the lease rights and retained a
royalty interest.  No exploration activities have yet taken
place.
 
 During
fiscal 2008, we prepaid $119,153 as estimated drilling and completion costs for
a 25% working interest in three wells in Washington County,
Oklahoma.  Two of the wells began initial sales in November 2008 and
the third well is in process of being re-completed.  We have plans to
continue to participate in additional drilling prospects as funding becomes
available.
 
 We have
had only nominal revenues since inception.  Our auditors have
expressed substantial doubt about our ability to continue as a going
concern.  Our current assets at February 28, 2009, consist of our cash
balance of $153,339 and accounts receivable of $26,267.  Our ability
to continue as a going concern is contingent upon our ability to raise funds
through private placements of our common stock and obtaining loans until we
establish sufficient business to support our operating costs.
 
 We
anticipate requiring substantial capital for investments in energy leases and
oil and gas drilling prospects and our operating costs have increased for
consultants finding prospects.  There can be no assurance that we will
be able to continue to find sufficient funding to support our current business
plan.
  19
 
 COMPARISON
OF THREE MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 
 We had no
revenues during the three month periods in fiscal 2009 and 2008.
 
 Non-cash
compensation amounted to $436,110 in fiscal 2009 as compared to none in fiscal
2008.  Non-cash compensation is from the amortization of the
calculated value of common shares issued for consulting
agreements.  (Note 5).
 
 During
the three-month period in fiscal 2009, selling, general and administrative
expenses amounted to $80,743 as compared to $10,697 in the year earlier
period.  Increases are primarily due to the increase in cash
consulting fees and higher office expenses.
 
 During
the three-month period in fiscal 2009, we recognized a loss of $9,713 from
commodities trading, recognized interest expense of $3,875 and recorded interest
income in the amount of $1,763 ($826 from a related party).
 
 COMPARISON
OF SIX MONTHS ENDED FEBRUARY 28, 2009 AND FEBRUARY 29, 2008
 
 During
the six-month period in fiscal 2009 we had total revenues of $689 with none in
the comparable fiscal 2008 period.  During the fiscal 2009 period, our
revenues of $689 was from our initial oil production.
 
 Non-cash
compensation amounted to $917,094 in fiscal 2009 as compared to none in fiscal
2008.  Non-cash compensation is from the amortization of the
calculated value of common shares issued for consulting
agreements.  (Note 5).
 
 During
the fiscal 2009 period, selling, general and administrative expenses amounted to
$109,771 as compared to $25,139 in the year earlier period.  Increases
are primarily due to the increase in cash consulting fees, increases in
professional fees associated with public filing requirements and higher office
expenses.
 
 During
the fiscal 2009 period, we recognized a loss of $27,737 from commodities
trading, recognized interest expense of $8,375 and recorded interest income in
the amount of $4,108 ($1,674 from a related party).
 
 OFF-BALANCE
SHEET ARRANGEMENTS
 
 None.
  20
  ITEM 3:
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 Not
applicable.
 
 ITEM
      4T:
              CONTROLS
      AND PROCEDURES
  1    (a)
Evaluation of Disclosure Controls and Procedures
 
 The
Company’s Chief Executive Officer has reviewed and evaluated the effectiveness
of the Company’s disclosure controls and procedures (as defined in Rules
240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of
1934) as of February 28, 2009.  Based on that review and evaluation,
which included inquiries made to certain other employees of the Company, the CEO
concluded that the Company’s current disclosure controls and procedures, as
designed and implemented, are not effective, primarily due to a lack of
segregation of duties, , in ensuring that information relating to the Company
required to be disclosed in the reports the Company files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission’s
rules and forms, including insuring that such information is accumulated and
communicated to the Company’s management, including the CEO, as appropriate to
allow timely decisions regarding required disclosure.
 
 (b)  Changes in
Internal Controls
 
 There
have been no changes in internal controls over financial reporting or in other
factors that could significantly affect these controls that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting during the quarter ended February 28, 2009, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
  21
  PART
II - OTHER INFORMATION
 
 ITEM
      1:
              LEGAL
      PROCEEDINGS
 
 None
 
 ITEM
      1A:
              RISK
      FACTORS
 
 Not applicable.
 
 ITEM
      2:
                UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
 
 During
the three months ended February 28, 2009, the Company issued 827,000 shares of
its common stock, valued at $206,300, including cash requirements of $40,900,
for a consulting services agreement.
 
 The
shares issued were sold pursuant to an exemption from registration under Section
4(2) promulgated under the Securities Act of 1933, as amended.
 
 ITEM
      3:
              DEFAULTS
      UPON SENIOR SECURITIES.
 
 None
 
 ITEM 4:
              SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS.
 
 None
 
 ITEM 5:
              OTHER INFORMATION.
 
 None
 
 ITEM
      6:
              EXHIBITS
 
 Exhibit
      31
              Certification
      pursuant to 18 U.S.C. Section 1350Section
      302 of the Sarbanes-Oxley Act of
2002
 
 Exhibit
      32
              Certification
      pursuant to 18 U.S.C. Section 1350Section
      906 of the Sarbanes-Oxley Act of
2002
  22
  SIGNATURE
 
 Pursuant
to the requirements 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.
 
 ROYAL
      ENERGY RESOURCES, INC.Date:  December
      7, 2009By:
                    /s/
                    Jacob
      RothPresident,
      Chief Executive Officer andChief
      Financial Officer
  23