U.S.
SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





QUARTERLY
REPORT UNDER SECTION 13 OR 15(d)


OF THE
SECURITIES EXCHANGE ACT OF 1934





For the
quarterly period ended: November 30, 2010





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.)





543 Bedford
Avenue,#176, Brooklyn,
NY  11211


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





State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 72,613,731 shares of common stock outstanding
as of December 31, 2010.










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 dated August 31, 2010.





TABLE OF
CONTENTS





PagePART
      I – FINANCIAL INFORMATION
                  3Item
      1:
                  Condensed
      Unaudited Financial Statements
                  3Item
      2:
                  Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  21Item
      3:
                  Quantitative
      and Qualitative Disclosures About Market Risk
                  23Item
      4T:
                  Controls
      and Procedures
                  23PART
      II - OTHER INFORMATION
                  24Item
      1:
                  Legal
      Proceedings
                  24Item
      1A:
                  Risk
      Factors
                  24Item
      2:
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  24Item
      3:
                  Defaults
      upon Senior Securities
                  24Item
      4:
                  Submission
      of Matters to a Vote of Security Holders
                  24Item
      5:
                  Other
      Information
                  24Item
      6:
                  Exhibits
                  24




2


PART
I - FINANCIAL INFORMATION


ITEM
1:  FINANCIAL STATEMENTS





ROYAL
ENERGY RESOURCES, INC.


(A
Development Stage Company)


Condensed
Balance Sheets


November
30, 2010 (unaudited) and August 31, 2010





November
      30,
                      
                      
                      August
      31,2010
                      
                      
                      2010AssetsCurrent
      assetsCash
      and cash equivalents
                      
                      $
                      5,480
                      
                      
                      $
                      311Accounts
      receivable
                      
                      
                      17,619
                      
                      
                      
                      10,617Prepaid
      expenses
                      
                      
                      5,142
                      
                      
                      
                      20,571Total
      current assets
                      
                      
                      28,241
                      
                      
                      
                      31,499Oil
      and gas properties, on full cost method:Unproved
      properties not being amortized
                      
                      
                      6,335
                      
                      
                      
                      6,350Other
      assetsPrepaid
      drilling costs
                      
                      
                      -
                      
                      
                      
                      28,583Investment
      in uranium properties
                      
                      
                      4,329
                      
                      
                      
                      4,329Total
      other assets
                      
                      
                      4,329
                      
                      
                      
                      32,912Total
      assets
                      
                      $
                      38,905
                      
                      
                      $
                      70,761Liabilities
      and Stockholders' Equity (Deficit)Current
      liabilitiesAccounts
      payable
                      
                      $
                      60,857
                      
                      
                      $
                      73,226Accrued
      expenses
                      
                      
                      -
                      
                      
                      
                      243Note
      payable
                      
                      
                      80,000
                      
                      
                      
                      86,000Total
      current liabilities
                      
                      
                      140,857
                      
                      
                      
                      159,469Commitments
      and contingenciesStockholders'
      equity (deficit)Preferred
      stock: $0.00001 par value; authorized10,000,000
      shares; 100,000 at November 30, 2010 andat
      August 31, 2010, issued and outstanding, respectively
                      
                      
                      1
                      
                      
                      
                      1Common
      stock: $0.00001 par value; authorized 100,000,000 shares;72,613,731
      and 39,713,731 shares issued and outstanding atNovember
      30, 2010 and August 31, 2010, respectively
                      
                      
                      726
                      
                      
                      
                      397Additional
      paid-in capital
                      
                      
                      3,407,564
                      
                      
                      
                      3,267,893Deferred
      option and stock compensation
                      
                      
                      (10,952
                      )
                      
                      
                      (28,809
                      )Common
      stock subscription receivable
                      
                      
                      (545,632
                      )
                      
                      
                      (422,340
                      )Deficit
      accumulated during the development stage
                      
                      
                      (2,953,659
                      )
                      
                      
                      (2,905,850
                      )Total
      stockholders' equity (deficit)
                      
                      
                      (101,952
                      )
                      
                      
                      (88,708
                      )Total
      liabilities and stockholders' equity (deficit)
                      
                      $
                      38,905
                      
                      
                      $
                      70,761





See
accompanying notes to condensed financial statements.




3





ROYAL
ENERGY RESOURCES, INC.


(A
Development Stage Company)


Condensed
Statements of Operations


Three
Months Ended November 30, 2010 and 2009 and


from
inception (July 22, 2005) through November 30, 2010


(Unaudited)





Inception(July 22, 2005)Three Months Ended
                    
                    
                    ThroughNovember 30,
                    
                    
                    November 30,2010
                    
                    
                    2009
                    
                    
                    2010Oil
      and gas production
                    
                    $
                    -
                    
                    
                    $
                    2,045
                    
                    
                    $
                    12,704Total
      revenues
                    
                    
                    -
                    
                    
                    
                    2,045
                    
                    
                    
                    12,704Costs
      and expenses:Lease
      operating expense
                    
                    
                    504
                    
                    
                    
                    1,362
                    
                    
                    
                    14,494Production
      taxes
                    
                    
                    -
                    
                    
                    
                    147
                    
                    
                    
                    913Depreciation,
      depletion and amortization
                    
                    
                    -
                    
                    
                    
                    256
                    
                    
                    
                    2,148Asset
      impairment
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    75,164Non-cash
      compensation
                    
                    
                    17,857
                    
                    
                    
                    178,419
                    
                    
                    
                    2,121,763Other
      selling, general and administrative expense
                    
                    
                    28,964
                    
                    
                    
                    56,149
                    
                    
                    
                    634,198Total
      costs and expenses
                    
                    
                    47,325
                    
                    
                    
                    236,333
                    
                    
                    
                    2,848,680Loss
      from operations
                    
                    
                    (47,325
                    )
                    
                    
                    (234,288
                    )
                    
                    
                    (2,835,976
                    )Other
      expenses (income):Loss
      on disposition by rescission agreement of condominium
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    15,000Loss
      on comodities trading
                    
                    
                    -
                    
                    
                    
                    719
                    
                    
                    
                    36,557Interest
      income
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (4,414
                    )Interest
      income - related party
                    
                    
                    (3,269
                    )
                    
                    
                    (1,243
                    )
                    
                    
                    (17,326
                    )Interest
      expense
                    
                    
                    3,753
                    
                    
                    
                    3,000
                    
                    
                    
                    58,871484
                    
                    
                    
                    2,476
                    
                    
                    
                    88,688Loss
      before income taxes
                    
                    
                    (47,809
                    )
                    
                    
                    (236,764
                    )
                    
                    
                    (2,924,664
                    )Provision
      for income taxes
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Net
      loss
                    
                    $
                    (47,809
                    )
                    
                    $
                    (236,764
                    )
                    
                    $
                    (2,924,664
                    )Net
      loss per share, basic and diluted
                    
                    $
                    (0.00
                    )
                    
                    $
                    (0.01
                    )Weighted
      average shares outstanding, basic and diluted
                    
                    
                    54,252,193
                    
                    
                    
                    22,454,665





See
accompanying notes to condensed financial statements.




4




ROYAL
ENERGY RESOURCES, INC.


(A
Development Stage Company)


Statements
of Stockholders' Equity


Inception
of Development Stage, July 22, 2005, through November 30, 2010





AdditionalPreferred stock
                  
                  
                  Common stock
                  
                  
                  Paid-inShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  CapitalInception,
      July 22, 2005
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,930,300
                  
                  
                  
                  59
                  
                  
                  
                  22,426Sale
      of common stock for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  320,000
                  
                  
                  
                  3
                  
                  
                  
                  31,997Common
      stock issued for real estate investment
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,900,000
                  
                  
                  
                  19
                  
                  
                  
                  189,981Contribution
      to capital
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6,560Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Balance
      August 31, 2005
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  8,150,300
                  
                  
                  
                  81
                  
                  
                  
                  250,964Sale
      of common stock for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,086,667
                  
                  
                  
                  12
                  
                  
                  
                  120,488Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Balance,
      August 31, 2006
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  9,236,967
                  
                  
                  
                  93
                  
                  
                  
                  371,452Sale
      of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4,670,060
                  
                  
                  
                  46
                  
                  
                  
                  161,614Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Balance,
      August 31, 2007
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  13,907,027
                  
                  
                  
                  139
                  
                  
                  
                  533,066Sale
      of preferred stock
                  
                  
                  100,000
                  
                  
                  
                  1
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  999Sale
      of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,295,704
                  
                  
                  
                  23
                  
                  
                  
                  413,149Common
      stock issued for consulting contracts
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,965,000
                  
                  
                  
                  30
                  
                  
                  
                  977,745Cash
      portion of consulting contracts
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Rescission
      of real estate purchase
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,900,000
                  )
                  
                  
                  (19
                  )
                  
                  
                  (199,981
                  )Amortization
      of prepaid consulting contracts:Non-cash
      portion
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Cash
      portion
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Stock
      subscription receivable:Payments
      received
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Interest
      accrued
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Balance,
      August 31, 2008
                  
                  
                  100,000
                  
                  
                  
                  1
                  
                  
                  
                  17,267,731
                  
                  
                  
                  173
                  
                  
                  
                  1,724,978Sale
      of common stock for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  20,000
                  
                  
                  
                  -
                  
                  
                  
                  3,600Common
      stock issued for consulting contracts
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,551,000
                  
                  
                  
                  36
                  
                  
                  
                  887,403Cash
      portion of consulting contracts
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Amortization
      of prepaid consulting contracts:Non-cash
      portion
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Cash
      portion
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Stock
      subscription receivable:Sold
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,550,000
                  
                  
                  
                  15
                  
                  
                  
                  263,485Payments
      received
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Interest
      accrued
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Balance,
      August 31, 2009
                  
                  
                  100,000
                  
                  
                  $
                  1
                  
                  
                  
                  22,388,731
                  
                  
                  $
                  224
                  
                  
                  $
                  2,879,466


(Continued)


See
accompanying notes to financial statements.


5





ROYAL
ENERGY RESOURCES, INC.


(A
Development Stage Company)


Statements
of Stockholders' Equity, continued


Inception
of Development Stage, July 22, 2005, through November 30, 2010





DeficitAccumulatedDuringSubscription
                  
                  
                  Deferred
                  
                  
                  Accumulated
                  
                  
                  DevelopmentReceivable
                  
                  
                  Expenses
                  
                  
                  Deficit
                  
                  
                  Stage
                  
                  
                  Total(RestatedNote
      11)Inception,
      July 22, 2005
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (28,995
                  )
                  
                  
                  -
                  
                  
                  
                  (6,510
                  )Sale
      of common stock for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  32,000Common
      stock issued for real estate investment
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  190,000Contribution
      to capital
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6,560Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (7,739
                  )
                  
                  
                  (7,739
                  )Balance
      August 31, 2005
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (28,995
                  )
                  
                  
                  (7,739
                  )
                  
                  
                  214,311Sale
      of common stock for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  120,500Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (80,825
                  )
                  
                  
                  (80,825
                  )Balance,
      August 31, 2006
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (28,995
                  )
                  
                  
                  (88,564
                  )
                  
                  
                  253,986Sale
      of common stock
                  
                  
                  (81,590
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  80,070Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (95,813
                  )
                  
                  
                  (95,813
                  )Balance,
      August 31, 2007
                  
                  
                  (81,590
                  )
                  
                  
                  -
                  
                  
                  
                  (28,995
                  )
                  
                  
                  (184,377
                  )
                  
                  
                  238,243Sale
      of preferred stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,000Sale
      of common stock
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  413,172Common
      stock issued for consulting contracts
                  
                  
                  -
                  
                  
                  
                  (977,775
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Cash
      portion of consulting contracts
                  
                  
                  -
                  
                  
                  
                  (85,000
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (85,000
                  )Rescission
      of real estate purchase
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (200,000
                  )Amortization
      of prepaid consulting contracts:Non-cash
      portion
                  
                  
                  -
                  
                  
                  
                  338,547
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  338,547Cash
      portion
                  
                  
                  -
                  
                  
                  
                  43,529
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  43,529Stock
      subscription receivable:Payments
      received
                  
                  
                  13,400
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  13,400Interest
      accrued
                  
                  
                  (3,902
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,902
                  )Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (467,712
                  )
                  
                  
                  (467,712
                  )Balance,
      August 31, 2008
                  
                  
                  (72,092
                  )
                  
                  
                  (680,699
                  )
                  
                  
                  (28,995
                  )
                  
                  
                  (652,089
                  )
                  
                  
                  291,277Sale
      of common stock for cash
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,600Common
      stock issued for consulting contracts
                  
                  
                  -
                  
                  
                  
                  (887,440
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Cash
      portion of consulting contracts
                  
                  
                  -
                  
                  
                  
                  (40,901
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (40,901
                  )Amortization
      of prepaid consulting contracts:Non-cash
      portion
                  
                  
                  -
                  
                  
                  
                  1,252,861
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,252,861Cash
      portion
                  
                  
                  -
                  
                  
                  
                  82,371
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  82,371Stock
      subscription receivable:Sold
                  
                  
                  (77,500
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  186,000Payments
      received
                  
                  
                  1,168
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,168Interest
      accrued
                  
                  
                  (3,545
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (3,545
                  )Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,723,711
                  )
                  
                  
                  (1,723,711
                  )Balance,
      August 31, 2009
                  
                  $
                  (151,969
                  )
                  
                  $
                  (273,808
                  )
                  
                  $
                  (28,995
                  )
                  
                  $
                  (2,375,800
                  )
                  
                  $
                  49,120





See
accompanying notes to financial statements.




6





ROYAL
ENERGY RESOURCES, INC.


(A
Development Stage Company)


Statements
of Stockholders' Equity


Inception
of Development Stage, July 22, 2005, through November 30, 2010





AdditionalPreferred stock
                  
                  
                  Common stock
                  
                  
                  Paid-inShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  CapitalBalance
      August 31, 2009
                  
                  
                  100,000
                  
                  
                  $
                  1
                  
                  
                  
                  22,388,731
                  
                  
                  $
                  224
                  
                  
                  $
                  2,879,466Common
      stock issued for:Consulting
      contracts
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,525,000
                  
                  
                  
                  25
                  
                  
                  
                  81,475Drilling
      program participation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  100,000
                  
                  
                  
                  1
                  
                  
                  
                  5,999Loan
      extension
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  700,000
                  
                  
                  
                  7
                  
                  
                  
                  13,993Amortization
      of prepaidConsulting
      contracts
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Beneficial
      conversion feature of convertible debt
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,100Stock
      subscription receivable:Sold
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  14,000,000
                  
                  
                  
                  140
                  
                  
                  
                  284,860Payments
      received
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Interest
      accrued
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Balance
      August 31, 2010
                  
                  
                  100,000
                  
                  
                  $
                  1
                  
                  
                  
                  39,713,731
                  
                  
                  $
                  397
                  
                  
                  $
                  3,267,893Amortization
      of prepaidConsulting
      contracts
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Stock
      subscription receivable:Sold
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  33,000,000
                  
                  
                  
                  330
                  
                  
                  
                  139,670Payments
      received
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Interest
      accrued
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Common
      stock cancelled for rescinded drilling program
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (100,000
                  )
                  
                  
                  (1
                  )
                  
                  
                  1Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Balance
      November 30, 2010
                  
                  
                  100,000
                  
                  
                  $
                  1
                  
                  
                  
                  72,613,731
                  
                  
                  $
                  726
                  
                  
                  $
                  3,407,564





(Continued)


See
accompanying notes to financial statements.




7





ROYAL
ENERGY RESOURCES, INC.


(A
Development Stage Company)


Statements
of Stockholders' Equity, continued


Inception
of Development Stage, July 22, 2005, through November 30, 2010





DeficitAccumulatedDuringSubscription
                  
                  
                  Deferred
                  
                  
                  Accumulated
                  
                  
                  DevelopmentReceivable
                  
                  
                  Expenses
                  
                  
                  Deficit
                  
                  
                  Stage
                  
                  
                  TotalBalance,
      August 31, 2009
                  
                  $
                  (151,969
                  )
                  
                  $
                  (273,807
                  )
                  
                  $
                  (28,995
                  )
                  
                  $
                  (2,375,800
                  )
                  
                  $
                  49,120Common
      stock issued for:Consulting
      contracts
                  
                  
                  -
                  
                  
                  
                  (81,500
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Drilling
      program participation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6,000Loan
      extension
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  14,000Amortization
      of prepaid consulting contracts:
                  
                  
                  -
                  
                  
                  
                  326,498
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  326,498Beneficial
      conversion feature of convertible debt
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,100Stock
      subscription receivable:Sold
                  
                  
                  (285,000
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Payments
      received
                  
                  
                  21,239
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  21,239Interest
      accrued
                  
                  
                  (6,610
                  )
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (6,610
                  )Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (501,055
                  )
                  
                  
                  (501,055
                  )Balance
      August 31, 2010
                  
                  
                  (422,340
                  )
                  
                  
                  (28,809
                  )
                  
                  
                  (28,995
                  )
                  
                  
                  (2,876,855
                  )
                  
                  
                  (88,708
                  )Amortization
      of prepaidConsulting
      contracts
                  
                  
                  -
                  
                  
                  
                  17,857
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  17,857Stock
      subscription receivable:Sold
                  
                  
                  (140,000
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Payments
      received
                  
                  
                  19,977
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  19,977Interest
      accrued
                  
                  
                  (3,269
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,269
                  )Common
      stock cancelled for rescinded drilling program
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (47,809
                  )
                  
                  
                  (47,809
                  )Balance
      November 30, 2010
                  
                  $
                  (545,632
                  )
                  
                  $
                  (10,952
                  )
                  
                  $
                  (28,995
                  )
                  
                  $
                  (2,924,664
                  )
                  
                  $
                  (101,952
                  )





See
accompanying notes to financial statements.




8





ROYAL
ENERGY RESOURCES, INC.


(A
Development Stage Company)


Condensed
Statements of Cash Flows


Three
Months Ended November 30, 2010 and 2009, and


from
inception (July 22, 2005) through November 30, 2010


(Unaudited)





From inceptionJuly 22, 2005Three months ended
                
                
                throughNovember 30,
                
                
                November 30,2010
                
                
                2009
                
                
                2010Cash
      flows from operating activitiesNet
      loss
                
                $
                (47,809
                )
                
                $
                (236,764
                )
                
                $
                (2,924,664
                )Adjustment
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and depletion
                
                
                -
                
                
                
                256
                
                
                
                2,148Value
      of common shares issued for services
                
                
                17,857
                
                
                
                178,419
                
                
                
                2,121,763Loss
      on rescission of condominium purchase
                
                
                -
                
                
                
                -
                
                
                
                15,000Interest
      accrued on stock subscription
                
                
                (3,269
                )
                
                
                (1,243
                )
                
                
                (17,326
                )Asset
      impairment
                
                
                -
                
                
                
                -
                
                
                
                75,164Loan
      extension paid with common stock
                
                
                -
                
                
                
                -
                
                
                
                14,000Beneficial
      conversion feature of convertible note payable
                
                
                -
                
                
                
                -
                
                
                
                2,100Change
      in other assets and liablities:Accounts
      receivable
                
                
                6,500
                
                
                
                (66
                )
                
                
                (367
                )Prepaid
      expenses and other assets
                
                
                15,933
                
                
                
                34,297
                
                
                
                44,250Accounts
      payable and accrued expenses
                
                
                1,965
                
                
                
                10,487
                
                
                
                (16,039
                )Net
      cash used in operations
                
                
                (8,823
                )
                
                
                (14,614
                )
                
                
                (683,971
                )Cash
      flows from investing activitiesInvestment
      in real estate
                
                
                -
                
                
                
                -
                
                
                
                (11,000
                )Oil
      and gas property expenditures
                
                
                -
                
                
                
                (3,777
                )
                
                
                (150,342
                )Proceeds
      from sale of undeveloped leasehold
                
                
                15
                
                
                
                -
                
                
                
                70,290Investment
      in uranium properties
                
                
                -
                
                
                
                -
                
                
                
                (5,673
                )Net
      cash provided by (used in) investing activities
                
                
                15
                
                
                
                (3,777
                )
                
                
                (96,725
                )Cash
      flows from financing activitiesProceeds
      of stockholder loans
                
                
                -
                
                
                
                -
                
                
                
                50Proceeds
      from subscription receivable
                
                
                19,977
                
                
                
                103
                
                
                
                55,784Loan
      proceeds
                
                
                -
                
                
                
                -
                
                
                
                146,000Loan
      repayment
                
                
                (6,000
                )
                
                
                -
                
                
                
                (66,000
                )Proceeds
      from sale of common stock
                
                
                -
                
                
                
                -
                
                
                
                649,342Proceeds
      from sale of preferred stock
                
                
                -
                
                
                
                -
                
                
                
                1,000Net
      cash provided by (used in) financing activities
                
                
                13,977
                
                
                
                103
                
                
                
                786,176Net
      increase (decrease) in cash and cash equivalents
                
                
                5,169
                
                
                
                (18,288
                )
                
                
                5,480Cash and cash
      equivalents, beginning of period
                
                
                311
                
                
                
                18,680
                
                
                
                -Cash and cash
      equivalents, end of period
                
                $
                5,480
                
                
                $
                392
                
                
                $
                5,480





(Continued)





See
accompanying notes to condensed financial statements.


9





ROYAL
ENERGY RESOURCES, INC.


(A
Development Stage Company)


Condensed
Statements of Cash Flows, Continued


Three
Months Ended November 30, 2010 and 2009, and


from
inception (July 22, 2005) through November 30, 2010


(Unaudited)





From inceptionJuly 22, 2005Three months ended
                
                
                throughNovember 30,
                
                
                November 30,2010
                
                
                2009
                
                
                2010Supplemental
      cash flow informationCash
      paid for interest
                
                $
                3,753
                
                
                $
                3,000
                
                
                $
                27,128Cash
      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 rescission agreement
                
                
                -
                
                
                
                200,000
                
                
                
                200,000Common
      stock issued for participation in drilling program
                
                
                -
                
                
                
                -
                
                
                
                6,000Common
      stock issued for stock subscription receivables
                
                
                140,000
                
                
                
                -
                
                
                
                583,922Accounts
      receivable exchanged for accounts payable
                
                
                14,578
                
                
                
                -
                
                
                
                14,578Drilling
      prepayment transferred to accounts receivable
                
                
                28,079
                
                
                
                -
                
                
                
                28,079Common
      stock cancelled for rescinded drilling program
                
                
                1,000
                
                
                
                -
                
                
                
                1,000





See
accompanying notes to condensed financial statements.


10





ROYAL
ENERGY RESOURCES, INC.


(A
Development Stage Company)





NOTES TO
FINANCIAL STATEMENTS





November
30, 2010


(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 Financial Accounting Standards Board
Topic 915.





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, 2010.





In
preparing the accompanying unaudited condensed consolidated financial
statements, the Company has reviewed, as determined necessary by the Company's
management, events that have occurred after November 30, 2010, up until the
issuance of the financial statements.




11





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.





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 had advanced additional funds to participate in three
re-works.  Two wells began initial sales in November
2008.  All workover attempts were unsuccessful and the properties were
abandoned during fiscal 2010.  All proven properties were sold
effective October 1, 2010.





The
Company is currently pursuing gold, silver, copper and rare earth metals mining
concessions in Romania, Bulgaria and Canada and mining leases in the United
States.  If successful, the Company plans to concentrate its efforts
to develop these properties.





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 previously acquired 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 the
next year. The Company, which has been in the development stage since its
inception, March 22, 1999, has accumulated a net loss of $2,953,659 ($28,995 in
a prior development stage) through November 30, 2010, and incurred losses of
$47,809 for the three 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.


12




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.  During 2008,
the Company revised its business plan, rescinded its real estate purchase and
began investing in energy leases and oil and gas drilling
prospects.  However, while energy prices have improved 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.





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 leases is recognized in accordance with the
provisions of full cost accounting.





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





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





Stock
option plans





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





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


13




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 $6,335 and $6,350 at November 30, 2010
and August 31, 2010, respectively in unproved property costs that have not been
evaluated and are not being amortized.  As properties are evaluated,
the related costs would be transferred to proven oil and natural gas properties
using full cost accounting.  Amortization in the amount of $256 was
recorded during the three months ended November 30, 2009 and none was recorded
in the 2010 period.





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 a consultant to the Company.





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 of non-oil and gas long-lived
assets have been recorded as of November 30, 2010.





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.


14




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 November 30, 2010 and August 31, 2010, 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 a
consultant.  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.  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





RER is
required to report both basic earnings per share, which is based on the
weighted-average number of common shares outstanding, and diluted earnings per
share, which is based on the weighted-average number of common shares
outstanding plus all potential dilutive shares outstanding. At November 30, 2010
and 2009, there were no common stock equivalents. Accordingly, basic and diluted
earnings per share are the same for all periods presented.




15




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





The fair
value of a liability for an asset retirement obligation is required to be
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made, and that the associated retirement costs be capitalized
as part of the carrying amount of the long-lived asset.  The Company
determines its asset retirement obligation by calculating the present value of
the estimated cash flows related to the liability.  Periodic accretion
of the discount of the estimated liability would be recorded in the statement of
operations.  At November 30, 2010 and August 31, 2010, the Company had
no working interests from which they would have had a plugging or abandoning
liability.





Recent
accounting pronouncements





Below is
a listing of the most recent accounting standards and their effect on the
Company.


16





In
January 2010, the FASB (Financial Accounting Standards Board) issued Accounting
Standards Update 2010-03 (ASU 2010-03), Extractive Activities—Oil and Gas (Topic
932): Oil and Gas Reserve Estimation and Disclosures.  This amendment
to Topic 932 has improved the reserve estimation and disclosure requirements by
(1) updating the reserve estimation requirements for changes in practice and
technology that have occurred over the last several decades and (2) expanding
the disclosure requirements for equity method investments.  This is
effective for annual reporting periods ending on or after December 31,
2009.  However, an entity that becomes subject to the disclosures
because of the change to the definition oil- and gas- producing activities may
elect to provide those disclosures in annual periods beginning after December
31, 2009.  Early adoption is not permitted.  The Company
adopted the provisions of ASU 2010-03 on August 31, 2010 which did not have a
material effect on the financial position, results of operations or cash flows
of the Company.




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





MINING





The
Company is currently pursuing gold, silver, copper and rare earth metals mining
concessions in Romania, Bulgaria and Canada and mining leases in the United
States.  If successful, the Company plans to concentrate its efforts
to develop these properties.





UNDEVELOPED
LEASEHOLD NOT BEING AMORTIZED





The
Company has been the successful bidder in United States Government auctions to
purchase certain oil and gas lease rights.  The oil and gas leases
currently comprise approximately 3,400 acres in Weston, Goshen, Niobrara,
Converse, Campbell, Freemont, Laramie, Sublette and Platt Counties, Wyoming as
of November 30, 2010 and August 31, 2010, respectively.  In addition,
the Company holds the lease for uranium rights on approximately 1,000 acres in
Wyoming as of November 30, 2010 and August 31, 2010, 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 accounted for using the
full cost method of accounting.


17





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 were completed in September and October
2008 and the third well was abandoned in 2010.  During 2009, the
Company advanced an additional $42,000, net, to apply toward workover of three
additional wells.  All workover attempts were unsuccessful and the
properties were abandoned in 2010.  All proven reserves were sold
effective October 1, 2010 and the net proceeds was included in accounts
receivable at August 31, 2010.  The cost in excess of proceeds of
$19,308 was included in asset impairment at August 31, 2010.





Prepaid
drilling costs includes $28,583 at August 31, 2010.  Upon sale of the
proved properties, discussed above, the $28,079 balance in prepaid drilling
costs was transferred to accounts receivable.




3
            CONVERTIBLE
      NOTES PAYABLE





The
Company has a loan with an individual in the original amount of $140,000, with
interest payable monthly at 15% and which was extended to January 1, 2010 and
revised to be convertible into common stock at a conversion price to be
reasonably agreed upon by the parties.  The loan is currently past due
and has a balance of $80,000 at November 30, 2010 and August 31,
2010.  The Company issued 21,000,000 shares of the Company's common
stock to a group of individuals who agreed to repay the balance of the $80,000
loan.  The sale of the shares is being account for as a stock
subscription until the note is repaid.





On April
13, 2010, the Company issued a convertible debenture in the amount of
$6,000.  The debenture bears interest at the rate of $10% per annum,
was due on September 13, 2010, is convertible into the Company's common stock at
a conversion rate of 65% of the lowest closing bid price of the common stock
during the immediately preceding 30 trading days and there is no pre-payment
penalty.  Accordingly, at issuance, $2,100 of the proceeds was
assigned to the conversion feature.  The discount was amortized over
the five-month term of the note.





Face
      amount of the debenture
                  
                  $
                  6,000Unamortized
      balance of the intrinsic value of the conversion
    feature
                  
                  
                  -Carrying
      value of the debenture
                  
                  $
                  6,000





The
debenture was repaid in September 2010.




18





4
            STOCKHOLDERS’
      EQUITY





Common
stock


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.  The
amendment became effective on December 12, 2007, upon filing with the Delaware
secretary of state.  At November 30, 2010 and August 31, 2010,
72,613,731 and 39,713,731 shares were issued and outstanding,
respectively.





Series A preferred
stock


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





Stock option
plan


The Royal
Energy Resources, Inc. 2008 Stock Option Plan (“Plan”) was filed on June 27,
2008 and reserves 4,000,000 shares for Awards under the Plan, of which up to
3,000,000 may be designated as Incentive Stock Options.  The Company’s
Compensation Committee is designated to administer the Plan at the direction of
the Board of Directors.  No options are outstanding under the Plan at
November 30, 2010.





Consulting and financial
services agreements


The
Company has entered into various consulting and financial services agreements as
well as a new loan agreement.  The cost associated with the agreements is
being amortized over the period of the agreements.  The unamortized
balance of the agreements was $10,952 and $28,809 at November 30, 2010 and
August 31, 2010, respectively.





Transactions during the
period ended November 30, 2010


On
September 28, 2010, the Company issued 21,000,000 shares to a group of
individuals who agreed to pay $80,000 to retire the Company's note
payable.  This obligation will be accounted for as a subscription
receivable by the Company until the note is paid.





On
November 30, 2010, the Company's CEO acquired 12,000,000 shares of the Company's
common stock for a stock subscription receivable of $59,880 and cash of
$120.





Effective
November 30, 2010, the 100,000 shares which the Company had issued for first
right of refusal to participate in a drilling program were returned when the
originally proposed drilling program was cancelled.  The shares were
returned to the transfer agent and retired.


19




5
            STOCK
      SUBSCRIPTION RECEIVABLE





The
officers and directors of the Company have acquired common stock from the
Company pursuant to note agreements, summarized as follows.





Original
                          
                          
                          Interest
                          
                          
                          Balance
                          
                          
                          BalanceName
                          
                          Shares
                          
                          
                          Balance
                          
                          
                          Rate
                          
                          
                          11/30/2010
                          
                          
                          8/31/2010Jacob
      Roth
                          
                          
                          31,050,000
                          
                          
                          $
                          473,865
                          
                          
                          
                          2-5
                          %
                          
                          $
                          431,771
                          
                          
                          $
                          391,749Frimet
      Taub
                          
                          
                          600,000
                          
                          
                          
                          29,937
                          
                          
                          
                          2
                          %
                          
                          
                          29,937
                          
                          
                          
                          29,937461,708
                          
                          
                          
                          421,686Accrued
      interest
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          3,924
                          
                          
                          
                          654Related
      party total
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          465,632
                          
                          
                          
                          422,340Debt
      retirement
                          
                          
                          21,000,000
                          
                          
                          
                          80,000
                          
                          
                          
                          0
                          %
                          
                          
                          80,000
                          
                          
                          
                          -$
                          545,632
                          
                          
                          $
                          422,340





6
            RELATED
      PARTY TRANSACTIONS





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





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





The
President and Chief Executive Officer of the Company was paid approximately
$2,575 and $4,100 for office and travel expense reimbursements during the three
month periods ended November 30, 2010 and 2009, respectively.





See Note
5 above regarding stock subscription receivables.




7
            SUBSEQUENT
      EVENT





The
Company is forming a Romanian subsidiary to be used to acquire and develop
possible gold, silver and copper mining concessions in
Romania.




20





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.





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 3,400 acres of property located in Weston,
Goshen, Niobrara, Converse, Campbell, Freemont, Laramie, Sublette and Platt
County Wyoming.  The Company also holds leases for the uranium rights
on approximately 1,000 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 and
have sold the royalty interest in one transaction.  No exploration
activities have yet taken place.  The Company has received proceeds of
$70,275 from these transactions.





The
Company is currently pursuing gold, silver, copper and rare earth metals mining
concessions in Romania, Bulgaria and Canada and mining leases in the United
States.  If successful, the Company plans to concentrate its efforts
to develop these properties.





Going
Concern





The
Company has not established sources of revenues sufficient to fund the
development of business, projected operating expenses and commitments for the
next year. The Company, which has been in the development stage since its
inception, March 22, 1999, has accumulated a net loss of $2,953,659 ($28,995 in
a prior development stage) through November 30, 2010, and incurred losses of
$47,809 for the three 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.  During 2008,
the Company revised its business plan, rescinded its real estate purchase and
began investing in energy leases and oil and gas drilling
prospects.  However, while energy prices have improved 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.


21




COMPARISON
OF THREE MONTHS ENDED NOVEMBER 30, 2010 AND 2009





We had
revenue from oil and gas production of $2,045 during the three months ended
November 30, 2009.  The Company sold its producing oil properties
effective October 1, 2010 and had no revenue during the 2010
quarter.





Non-cash
compensation amounted to $17,857 in fiscal 2010 as compared to $178,419 in
fiscal 2009.  Non-cash compensation is from the amortization of the
calculated value of common shares issued for consulting
agreements.  (Note 4).





During
the three-month period in fiscal 2010, selling, general and administrative
expenses amounted to $28,964 as compared to $56,149 in the year earlier
period.  Decreases are primarily due to a decrease in cash consulting
fees and lower professional services.





During
the three-month period in fiscal 2010, we recognized interest expense of $3753
and recorded interest income in the amount of $3,269 from related
parties.  During the three-month period in fiscal 2009, we recognized
a loss of $719 from commodities trading, recognized interest expense of $3,000
and recorded interest income in the amount of $1,243 from related
parties.




OFF-BALANCE
SHEET ARRANGEMENTS





None.




22





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 November 30, 2010.  Based on that review and evaluation,
which included inquiries made to certain consultants 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 November 30, 2010, including
any corrective actions with regard to significant deficiencies and material
weaknesses.




23


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 November 30, 2010, the Company issued 21,000,000 shares
of its common stock, valued at $80,000 to a group of individuals who agreed to
pay off the Company's convertible note payable.  This amount is
included in stock subscription receivable.  In addition, the Company
sold 12,000,000 shares to its Chief Executive Officer for $120 in cash and a
note in the amount of $59,880.





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 1350 Section 302 of the Sarbanes-Oxley Act
      of 2002Exhibit
      32
                      Certification
      pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act
      of
2002




24


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:  January
      5, 2011By:  /s/
              Jacob RothPresident,
      Chief Executive Officer andChief
      Financial Officer




25