UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q








T QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED MARCH 31, 2010








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


For
the transition period
from                                                                                     
to





Commission
File Number: 000-27739











Royal Quantum Group,
Inc.




(Exact
name of small business issuer as specified in its charter)





Nevada
            90-0315909(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)





Suite #145, 251 MidPark Blvd S.E. Calgary, AB
      Canada T2X 1S3(Address
      of principal executive offices)





(403) 288-4321(Issuer’s
      Telephone Number)


Indicate
by check mark whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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.TYes £
No





Indicate
by check mark whether the registrant is a large accelerated file, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer £
            Accelerated
      filer £Non-accelerated
      filer £  (Do
      not check if a smaller reporting company)
            Smaller
      reporting company T





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





APPLICABLE
ONLY TO CORPORATE ISSUERS




State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practical date.  As of May 7, 2010 there were
49,636,338 shares of the issuer's $.001 par value common stock issued and
outstanding.




1









PART
I - FINANCIAL INFORMATION





Item 1.  Financial
Statements




ROYAL QUANTUM GROUP, INC.CONDENSED BALANCE
    SHEETSMarch
      31,
                
                
                December
      31,2010
                
                
                2009(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                192,762
                
                
                $
                12,022Accounts
      receivable
                
                
                83,317
                
                
                
                31,851Total
      current assets
                
                
                276,079
                
                
                
                43,873Property
      and equipment:Furniture
      and fixtures
                
                
                1,851
                
                
                
                1,851Less:
      accumulated depreciation
                
                
                (1,388
                )
                
                
                (1,295
                )Total
      property and equipment, net
                
                
                463
                
                
                
                556Other
      assets:Proved
      oil and gas properties, full cost method
                
                
                293,207
                
                
                
                255,868Less:
      accumulated depletion
                
                
                (24,128
                )
                
                
                (5,657
                )Unproved
      oil and gas properties
                
                
                30,474
                
                
                
                27,056Total
      other assets
                
                
                299,553
                
                
                
                277,267Total
      assets
                
                $
                576,095
                
                
                $
                321,696The
      accompanying notes are an integral part of these financial
      statements






2




ROYAL QUANTUM GROUP, INC.CONDENSED BALANCE
    SHEETSMarch
      31,
              
              
              December
      31,2010
              
              
              2009(Unaudited)LIABILITIES
      & STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
              
              $
              104,609
              
              
              $
              113,160Royalties
      due stockholders
              
              
              74,044
              
              
              
              21,568Related
      party payables
              
              
              206,455
              
              
              
              192,485Notes
      payable
              
              
              325,136
              
              
              
              309,648Stockholder
      loans
              
              
              19,845
              
              
              
              19,845Total
      current liabilities
              
              
              730,089
              
              
              
              656,706Long-term
      liabilities:Asset
      retirement obligation
              
              
              10,980
              
              
              
              10,980Total
      long-term liabilities
              
              
              10,980
              
              
              
              10,980Total
      liabilities
              
              
              741,069
              
              
              
              667,686Stockholders'
      Deficit:Preferred
      stock, par value $.001authorized
      10,000,000 sharesno
      shares issued at March 31, 2010 and
              
              
              -
              
              
              
              -December
      31, 2009Common
      stock, par value $.001Issued
      49,636,338 shares at March 31, 2010and
      48,980,338 shares at December 31, 2009
              
              
              49,636
              
              
              
              48,980Paid-in
      capital
              
              
              5,044,203
              
              
              
              4,824,482Accumulated
      deficit
              
              
              (5,249,064
              )
              
              
              (5,219,452
              )Other
      comprehensive loss
              
              
              (9,749
              )
              
              
              -Total
      stockholders' deficit
              
              
              (164,974
              )
              
              
              (345,990
              )Total
      liabilities and stockholders' deficit
              
              $
              576,095
              
              
              $
              321,696The
      accompanying notes are an integral part of these financial
      statements






3




ROYAL QUANTUM GROUP, INC.CONDENSED STATEMENTS OF
      OPERATIONSFor
      the three months endedMarch
      31,2010
              
              
              2009(Unaudited)
              
              
              (Unaudited)Oil
      revenue
              
              $
              135,597
              
              
              $
              -Operating
      expensesProduction
      costs
              
              
              31,450
              
              
              
              -Royalty
      expense
              
              
              74,933
              
              
              
              -Consulting
      fees
              
              
              45,345
              
              
              
              49,650General
      & administrative
              
              
              7,317
              
              
              
              6,864Total
      operating expenses
              
              
              (159,045
              )
              
              
              (56,514
              )Loss
      from operations
              
              
              (23,448
              )
              
              
              (56,514
              )Other
      income (expenses)Interest
      expense
              
              
              (6,164
              )
              
              
              (7,144
              )Total
      other income (expense)
              
              
              (6,164
              )
              
              
              (7,144
              )Net
      loss
              
              $
              (29,612
              )
              
              $
              (63,658
              )Loss
      per share - Basic and diluted
              
              $
              (0.00
              )
              
              $
              (0.00
              )Weighted
      average shares outstanding
              
              
              49,296,060
              
              
              
              48,020,338The
      accompanying notes are an integral part of these financial
      statements






4




ROYAL QUANTUM GROUP, INC.CONDENSED STATEMENTS OF CASH
      FLOWSFor
      the three months endedMarch
      31,2010
              
              
              2009(Unaudited)
              
              
              (Unaudited)CASH FLOWS FROM OPERATING
      ACTIVITIES:Net
      Loss
              
              $
              (29,612
              )
              
              $
              (63,658
              )Adjustments
      to reconcile net income (loss) tonet
      cash provided (used in) operating activities:Depreciation
              
              
              93
              
              
              
              93Depletion
              
              
              18,471
              
              
              
              -Increase
      (decrease) in accounts receivable
              
              
              (51,466
              )
              
              
              -Increase
      (decrease) in interest on notes payable
              
              
              6,164
              
              
              
              7,144Increase
      (decrease) in accounts payable
              
              
              (8,551
              )
              
              
              (4,758
              )Increase
      (decrease) in royalties due stockholders
              
              
              52,476
              
              
              
              -Increase
      (decrease) in related party accounts payable
              
              
              14,017
              
              
              
              18,758Net
      cash provided (used in) operating activities
              
              
              1,592
              
              
              
              (42,421
              )CASH FLOWS FROM INVESTING
      ACTIVITIES:Acquisition
      of proven oil and gas property interests
              
              
              (99,954
              )
              
              
              -Investment
      in unproven oil and gas property
              
              
              (20,427
              )
              
              
              (1
              )Net
      cash (used in) investing activities
              
              
              (120,381
              )
              
              
              (1
              )CASH FLOWS FROM FINANCING
      ACTIVITIES:Proceeds
      from sale of units consisting of common stockand
      oil and gas royalties
              
              
              300,000
              
              
              
              -Payment
      on stockholders loans
              
              
              -
              
              
              
              80,000Net
      cash provided by financing activities
              
              
              300,000
              
              
              
              80,000Effect
      of exchange rates on cash
              
              
              (471
              )
              
              
              565Net
      increase in cash and cash equivalents
              
              
              180,740
              
              
              
              38,143Cash
      and cash equivalents - beginning of period
              
              
              12,022
              
              
              
              90,363Cash
      and cash equivalents - end of period
              
              $
              192,762
              
              
              $
              128,506SUPPLEMENTAL DISCLOSURE OF CASH FLOW
      INFORMATION:Cash
      paid during the year for:Interest
              
              $
              -
              
              
              $
              -Income
      taxes
              
              $
              -
              
              
              $
              -SUPPLEMENTAL DISCLOSURE OF NON-CASH
      INVESTINGAND FINANCING ACTIVITIES:Issuance
      of participating units for services rendered inconnection
      with private offerings (See Notes 3 and 7)
              
              $
              28,000
              
              
              $
              -The
      accompanying notes are an integral part of these financial
      statements


5
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  
 NOTE
1 – ORGANIZATION AND BASIS OF PRESENTATION
 
 Royal
Quantum Group, Inc. (“the Company “) was incorporated under the laws of the
State of Nevada on October 22, 1996 under the name PSM Corp.  The
Company changed its emphasis to the exploration and development of natural
resources and on November 23, 2005 changed its name to Royal Quantum Group,
Inc.
 
 Interim Financial
Statements
 
 Royal
Quantum Group, Inc.’s interim financial statements are unaudited. They contain
all necessary adjustments (consisting only of normal recurring adjustments) for
a fair statement of the referenced interim period results.  These
interim period results do not indicate expected full-year results or results for
future quarters/periods, due to several factors, including price volatility of
crude oil and natural gas, price volatility of commodity derivatives, volatility
of interest rates, estimates of reserves, drilling risks, geological risks,
transportation restrictions, timing of acquisitions, product demand, market
competition, interruption(s) in production, our ability to obtain additional
capital, and the success of proposed enhanced oil recovery work (EOR). These
interim financial statements should be read in conjunction with the audited
financial statements and related notes included in Royal Quantum Group, Inc.’s
Form 10-K dated December 31, 2009.
 
 The
accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
(“GAAP”). Management has made certain estimates and assumptions that affect
reported amounts in the financial statements and disclosures of
contingencies.  Actual results may differ from those estimates. The
Company has made assumptions in valuing its oil and natural gas reserves, which
may affect the amounts at which oil and natural gas properties are
recorded.   The Company has also computed the components of the
investments units sold in its private offerings using assumptions such as
volatility, expected life and the risk-free interest rate (See Note
7).
 
 Going
Concern
 
 The
Company’s financial statements have been prepared on a going concern basis which
contemplates the realization of assets and the liquidation of liabilities in the
ordinary course of business.  The Company has incurred substantial
losses from operations and has a working capital deficit, which history and
circumstance raise substantial doubt as to the Company’s ability to continue as
a going concern. The Company had a net loss of $29,612 for the three months
ended March 31, 2010 and an accumulated deficit at March 31, 2010 of
$5,249,064.  The Company has raised sufficient funds through the
private sale of participating units to acquire working interests in four oil and
gas wells. Three of the wells were placed in production during the quarter ended
March 31, 2010. Total gross revenue generated from these three wells during the
three month period amounted to $135,597. The fourth well is currently being
drilled. Although the Company has been successful in raising the necessary funds
to acquire these working interests, and has been able to generate net revenue
from these wells, there is no assurance that these wells will continue to
generate positive cash flow. Currently the net revenue generated from these
wells is not sufficient to fund all of the Company’s operating costs. The
Company is seeking to raise additional funds to acquire other oil and gas
properties; however, there is no assurance that the necessary funds will be
raised or even if the funds are raised, that the working interest acquired in
the future will generate sufficient revenue to assist in the financing of the
Company’s operations.  Until such funding is obtained and/or positive
results from planned property development materialize, doubt about its ability
to continue as a going concern may remain.
 
  6
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
 
 Cash and Cash
Equivalents
 
 For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents to the extent the funds are not being held for investment
purposes.
 
 Use of
Estimates
 
 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 disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
 
 Accounts
Receivable
 
 Accounts
receivable are reported at the customer’s outstanding balances less any
allowance for doubtful accounts.  Interest is not accrued on overdue
accounts receivable.
 
 Allowance for Doubtful
Accounts
 
 An
allowance for doubtful accounts on accounts receivable is charged to operations
in amounts sufficient to maintain the allowance for uncollectible accounts at a
level management believes is adequate to cover any probable
losses.  Management determines the adequacy of the allowance based on
historical write-off percentages and information collected from individual
customers.  Accounts receivable are charged off against the allowance
when collectibility is determined to be permanently
impaired.  Management has determined that as of March 31, 2010, no
allowance is required.
 
 Revenue
Recognition
 
 Oil and
gas production revenues are recognized at the point of sale.
 
  7
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  Oil and Gas
Properties
 
 The
Company uses the full cost method of accounting under which all costs incurred
in the acquisition, exploration and development of oil and natural gas reserves,
including costs related to unsuccessful wells and estimated future site
restoration and abandonment, are capitalized until such time as the aggregate of
such costs net of accumulated depletion and oil and natural gas related deferred
income taxes, on a country-by-country basis, equals the sum of 1) the
discounted present value (at 10%), using prices as of the end of each reporting
period on a constant basis, of the Company’s estimated future net cash flows
from estimated production of proved oil and natural gas reserves as determined
by independent petroleum consultants, less estimated future expenditures to be
incurred in developing and producing the proved reserves but excluding future
cash outflows associated with settling asset retirement obligations accrued on
the balance sheet; plus 2) the cost of major development projects and
unproven properties not subject to depletion, if any; plus 3) the lower of
cost or estimated fair value of unproven properties included in costs subject to
depletion; less 4) related income tax effects.  If net capitalized
costs exceed this limit, the excess is expensed unless subsequent market price
changes eliminate or reduce the indicated write-down in accordance with U.S. SEC
Staff Accounting Bulletin (“SAB”) Topic 12D.  Depletion is computed using
the units-of-production method whereby capitalized costs, net of estimated
salvage values, plus estimated future costs to develop proved reserves and
satisfy asset retirement obligations, are amortized over the total
estimated
 
 Property and
Equipment
 
 Property
and equipment are stated at cost, less accumulated depreciation. Depreciation is
provided over the five year estimated useful life of the assets computed on the
straight-line method.
 
 Gains and
losses resulting from sales and dispositions of property and equipment are
included in current operations. Maintenance and repairs are charged to
operations as incurred. Depreciation expense for the three months ended March
31, 2010 and 2009 amounted $93 and $93, respectively.
 
 Foreign Currency
Translation
 
 The
Company's primary functional currency is the U.S. dollar.  For foreign
operations whose functional currency is the local foreign currency, balance
sheet accounts are translated at exchange rates in effect at the end of the year
and income statement accounts are translated at average exchange rates for the
period. Translation gains and losses are included as a separate component of
stockholders’ deficit.
 
 Concentrations of Credit
Risk
 
 The
Company’s revenue is dependent upon the successful efforts of the respective
well’s operator. Currently production from the Company’s three wells is sold to
one customer.
 
  8
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  Loss Per Share of Common
Stock
 
 The Company reports earnings (loss) per
share in accordance with Accounting Standards Codification “ASC” Topic 260-10,"Earnings per
Share."Basic earnings
(loss) per share is computed by dividing income (loss) available to common
shareholders by the weighted average number of common shares available. Diluted
earnings (loss) per share is computed similar to basic earnings (loss) per share
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive. Diluted
earnings (loss) per share has not been presented since the effect of the assumed
conversion of warrants and debt to purchase common shares would have an
anti-dilutive effect. Potential common shares as of March 31, 2010 that have
been excluded from the computation of diluted net loss per share include
warrants to purchase 5,476,000 shares of the Company’s common stock and Unit
holders’ option to convert their respective oil revenue interests into a total
628,000 shares of the Company’s common stock. Potential common shares as of
March 31, 2009 that have been excluded from the computation of diluted net loss
per share include 2,400,000 warrants. If such shares were included in
diluted EPS, they would have resulted in weighted-average common shares of
54,463,227 and 49,848,338 for the three months ended March 31, 2010 and 2009,
respectively.
  
 Asset Retirement
Obligations
 
 The
Surface Mining Control and Reclamation Act of 1977 and similar state statutes
require mine properties to be restored in accordance with specified standards.
Accounting Standards Codification (“ASC”) Topic 410-20, formerly Statement of
Financial Accounting Standards No. 143 (“SFAS No. 143”) requires recognition of
an asset retirement obligation (“ARO”) for eventual reclamation of disturbed
acreage remaining after mining has been completed. The Company records its
reclamation obligations on a permit-by-permit basis using requirements as
determined by the Office of Surface Mining of the U.S. Department of the
Interior (“OSM”). The liability is calculated based upon the reclamation
activities remaining after coal removal ceases, assuming that reclamation
activities have been contemporaneous within state and federal guidelines during
mining. A liability is recorded for the estimated future cost that a third party
would incur to perform the required reclamation and mine closure discounted at
the Company’s credit-adjusted risk-free rate. A corresponding increase in the
asset carrying value of mineral rights is also recorded. The ARO asset is
amortized on the units-of-production method over the proven and probable
reserves associated with that permit.
 
 Long-Lived
Assets
 
 The
Company accounts for its long-lived assets in accordance with ASC No. 360,
“Property, Plant and
Equipment.” ASC No. 360 requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
historical cost carrying value of an asset may no longer be
appropriate.  The Company assesses recoverability of the carrying
value of an asset by estimating the future net cash flows expected to result
from the asset, including eventual disposition.  If the future net
cash flows are less than the carrying value of the asset, an impairment loss is
recorded equal to the difference between the asset’s carrying value and fair
value or disposable value. As of March 31, 2010, the Company does not believe
there has been any impairment of its long-lived assets.
 
  9
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  Fair Value of Financial
Instruments
 
 Pursuant
to ASC No. 820, “Fair Value
Measurements and Disclosures”, the Company is required to estimate the
fair value of all financial instruments included on its balance sheet as of
March 31, 2010. The Company’s financial instruments consist of cash, accounts
receivables, payables, and other obligations.  The Company considers
the carrying value of such amounts in the financial statements to approximate
their fair value.
 
 Income
Taxes
 
 The
Company accounts for its income taxes under the provisions of ASC No. 740
”Income Taxes” (formerly Statement of Financial Accounting Standards 109). The
method of accounting for income taxes under ASC No. 740 is an asset and
liability method. The asset and liability method requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
temporary differences between tax bases and financial reporting bases of other
assets and   liabilities.
 
 Recent Accounting
Pronouncements
 
 In March
2010, the FASB (Financial Accounting Standards Board) issued Accounting
Standards Update 2010-11 (ASU 2010-11), “Derivatives and Hedging (Topic 815):
Scope Exception Related to Embedded Credit Derivatives.”  The amendments in
this Update are effective for each reporting entity at the beginning of its
first fiscal quarter beginning after June 15, 2010.  Early adoption is
permitted at the beginning of each entity’s first fiscal quarter beginning after
issuance of this Update.  The Company does not expect the provisions of ASU
2010-11 to have a material effect on the financial position, results of
operations or cash flows of the Company.
 
 In
February 2010, the FASB Accounting Standards Update 2010-10 (ASU 2010-10),
“Consolidation (Topic 810): Amendments for Certain Investment Funds.”  The
amendments in this Update are effective as of the beginning of a reporting
entity’s first annual period that begins after November 15, 2009 and for interim
periods within that first reporting period. Early application is not
permitted.  The Company’s adoption of provisions of ASU 2010-10 did not
have a material effect on the financial position, results of operations or cash
flows.
 
 In
February 2010, the FASB issued ASU No. 2010-09 “Subsequent Events (ASC Topic
855) “Amendments to Certain Recognition and Disclosure Requirements” (“ASU No.
2010-09”). ASU No. 2010-09 requires an entity that is an SEC filer to evaluate
subsequent events through the date that the financial statements are issued and
removes the requirement for an SEC filer to disclose a date, in both issued and
revised financial statements, through which the filer had evaluated subsequent
events. The adoption did not have an impact on the Company’s financial position
and results of operations.
 
 In
January 2010, the Financial Accounting Standards Board (“FASB”) issued
Accounting Standards Update (“ASU”) No. 2010-06, “Improving Disclosures
about Fair Value Measurements.” ASU No. 2010-06 amends FASB Accounting
Standards Codification (“ASC”) 820 and clarifies and provides additional
disclosure requirements related to recurring and non-recurring fair value
measurements and employers’ disclosures about postretirement benefit plan
assets. This ASU is effective for interim and annual reporting periods beginning
after December 15, 2009. The adoption of ASU 2010-06 did not have a
material impact on the Company’s financial statements.
 
  10
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  NOTE 3 - INVESTMENT IN OIL
& GAS PROPERTY
 
 During
the quarter ended June 30, 2009, the Company acquired a 28.80% working interest
in the Gleason #4-16 well in Oklahoma. The Company raised a total of $180,000
for the drilling and completion of the Gleason #4-16 well through the issuance
of 72 units.  Each of the 72 units was priced at $2,500 per unit
totaling $180,000 cash and consisted of 5,000 restricted common shares, a pro
rata share of 60% of the net revenue generated from the production of the well,
and warrants to purchase 10,000 shares of the Company’s common stock at $0.25
per share with an expiration date of November 15, 2010. The unit holder also has
the option to surrender their pro rata interest in the well back to the Company
in exchange for 5,000 restricted common shares per unit surrendered for a period
of 36 months from the date of receiving their first revenue check. During 2009,
the Company capitalized a total of $167,260 in acquisition and exploration costs
relating to the Gleason #4-16 well.
 
 Santeo
Financial Corporation  (a related party) agreed to forgive $15,000 of
debt owed by the Company in exchange for a 4% interest in the Company’s share of
the net revenue received from the Gleason #4-16 well.  During 2009,
the $15,000 was written off and recorded as additional paid in
capital.
 
 During
the quarter ended September 30, 2009, the Company acquired a 20% working
interest in the Bond #1-18 well in Oklahoma.  The Company raised a
total of $137,500 for the drilling and completion of the Bond #1-18 through the
issuance of 55 units priced at $2,500 per unit.  Each unit consists of
10,000 restricted common shares, a pro rata share of 60% of the net revenue
generated from the production of the well, and warrants to purchase 20,000
shares of the Company’s common stock at $0.25 per share with an expiration date
of March 8, 2011. Each unit holder was granted the option to surrender their pro
rata interest in the revenue from the well back to the Company in exchange for
5,000 restricted common shares per unit surrendered. This option is exercisable
for a period of 36 months from the date the investor receives the first revenue
check. The Company issued a total of 550,000 shares and 1,100,000 options
related to the private placement.  A consulting fee in connection with
offering was paid through the issuance of 55 units. The Company capitalized a
total of $77,628 in acquisition and exploration costs relating to the Bond #1-18
well.
 
 In
January 2010, the Company acquired a 20% working interest in the Bond #2-18 well
in Oklahoma.  The Company raised a total of $150,000 for the drilling
and completion of the Bond #2-18 well through the issuance of 60
units.  Each of the 60 units was priced at $2,500 per unit totaling
$150,000 cash and consisted of 5,000 restricted common shares, a pro rata share
of 60% of the net revenue generated from the production of the well, and
warrants to purchase 10,000 shares of the Company’s common stock at $0.25 per
share with an expiration date of July 2011. Each unit holder was granted the
option to surrender their pro rata interest in the revenue from the well back to
the Company in exchange for 5,000 restricted common shares per unit surrendered.
This option is exercisable for a period of 36 months from the date that the
investor receives the first revenue check. Of the $150,000 received, the Company
allocated $36,412 towards the value of the investors’ 60% interest in the
Company’s share of the well’s net revenue and credited this amount against the
$99,954 it paid and capitalized towards the drilling cost of the well. A
consulting fee in connection with offering was paid through the issuance of 5.6
units. The capitalized cost of the well was further reduced by the Consultant’s
allocated share in the well’s net revenue of $3,400.
 
  11
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  In March
2010, the company raised a total of $150,000 for the drilling and completion of
the Sattler #1 well through the issuance of 60 units.  Each of the 60
units was priced at $2,500 per unit totaling $150,000 cash and consisted of
5,000 restricted common shares, a pro rata share of 60% of the net revenue
generated from the production of the well, and warrants to purchase 10,000
shares of the Company’s common stock at $0.25 per share with an expiration date
of September 2011. Each unit holder was granted the option to surrender their
pro rata interest in the revenue from the well back to the company in exchange
for 5,000 restricted common shares per unit surrendered. This option is
exercisable for a period of 36 months from the date the investor receives the
first revenue check. Of the $150,000 received, the Company allocated $36,412
towards the value of the investors’ 60% interest in the Company’s share of the
well’s net revenue and credited this amount against the $47,483 it has currently
paid and capitalized towards the drilling cost of the well. A consulting fee in
connection with offering was paid through the issuance of 5.6 units. The
capitalized cost of the well was further reduced by the Consultant’s allocated
share in the well’s net revenue of $3,400.
 
 As of
March 31, 2010, the Company accrued an asset retirement obligation of $10,980
that was included in the capitalized cost of the oil and gas properties.
Depletion expense for the three months ended March 31, 2010 and 2009 amounted to
$18,471 and $0, respectively.
 
 NOTE 4 - RELATED PARTY
TRANSACTIONS
 
 The
Company has entered into a month-to-month lease agreement with Trio Gold for an
office in Calgary, Alberta, Canada. Trio Gold’s President is the father of Ron
Ruskowsky, the President and CEO of the Company.  This lease can be
canceled on one month’s written notice. The current lease requires rental
payments of approximately $450 per month plus applicable taxes.  For
the three months ended March 31, 2010, the Company incurred rent expense of
$1,817 and $590, respectively.
 
 The
Company’s President provides services through a consulting agreement that the
Company has with Santeo Financial for $15,000 a month. The $15,000 monthly fee
is accrued by the Company and is reduced by amounts actually paid. As of March
31, 2010, the  Company owed Santeo Financial $193,193. Consulting fees
expensed during the three months ended March 31, 2010 and 2009 amounted to
$45,000 and $45,000, respectively. Ron Ruskowsky owns a controlling interest in
Santeo Financial.
 
 As of
March 31, 2010, the Company owed Ron Ruskowsky $2,844 for operating expenses he
incurred on behalf of the Company.
 
 As of
March 31, 2010, the Company owed Roger Janssen, an officer and director of the
Company, $1,345 for services previously performed.
 
 As of
March 31, 2010, the Company owed Phil Van Angren, an officer and director of the
Company, $9,073 for consulting services previously performed.
 
 As of
March 31, 2010, certain shareholders have advanced the Company a total of
$19,845 that is payable on demand and is non-interest bearing.
 
 NOTE 5 – NOTES
PAYABLE
 
 The
Company has a note payable to Integrated Business Concepts, Inc. that is due
upon demand and is assessed interest at an annual rate of 12%.  As of
March 31, 2010, the balance due including accrued interest amounted to $325,136.
Interest accrued and charged to operations for the three months ended March 31,
2010 and 2009 amounted to $6,164 and $7,144 respectively.
 
  12
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  NOTE 6 – INCOME
TAXES
 
 The
Company accounts for income taxes under ASC No. 740 (ASC 740).  This
statement mandates the liability method of accounting for deferred income taxes
and permits the recognition of deferred tax assets subject to an ongoing
assessment of realizability.
 
 As of
March 31, 2010, the Company had estimated federal net operating loss
carryforwards totaling approximately $5,261,000 which can be used to offset
future federal income taxes.  The federal net operating loss
carryforwards expire at various dates through 2030.  Deferred tax
assets resulting from the net operating losses are reduced by a valuation
allowance, when, in the opinion of management, utilization is not reasonably
assured.  At March 31, 2010, the Company’s gross deferred tax asset
totaled $1,315,250. This amount was reduced 100% by a valuation allowance,
making the net deferred tax asset $0.
 
 The
components of the Company’s income tax provision for the three months ended
March 31, 2010 and 2009 amounted to:
 
 March
      31,
              
              
              March
      31,2010
              
              
              2009Current
      income tax expense
              
              $
              -
              
              
              $
              -Deferred
      income tax benefit
              
              
              (10,500
              )
              
              
              (16,000
              )Change
      in valuation allowance
              
              
              10,500
              
              
              
              16,000$
              -
              
              
              $
              -
 
 NOTE 7 - COMMON STOCK AND
WARRANTS
 
 As
discussed in Note 3, during January 2010, the Company received a total of
$150,000 through the issuance of 60 participating units. Each unit is sold for
$2,500 and consisted of 5,000 restricted shares of the Company’s common stock, a
warrant to purchase 10,000 shares of the Company’s common stock at $.0.25 per
share, expiring 18 months from date of issuance, a pro rata interest in 60% of
the total revenue interest that the Company owns in the Bond #2-18 well, and an
option to convert the unit holder’s pro rata share in the well revenue into
5,000 shares of the Company’s common stock expiring 36 months after the first
revenue check is received by the unit holder. The Company valued the four
components of each unit separately.  In the valuation of the common
shares issued and the pro rata interest in oil revenue, the Company’s used the
trading price of the Company’s common shares on the date of issuance. The common
stock warrant and the option to convert the oil revenue interest into shares of
the Company’s common stock were valued using the Black-Scholes Option Model
using a risk free interest rate ranging from .89% to 1.60%, with volatility
ranging from 186% to 208%. Of the $150,000 received, $36,412 was credited
allocated against the payments made towards the Company’s well costs. The
remaining $113,588 was credited to equity.
 
  13
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  As
discussed in Note 3, during March 2010, the Company received a total of $150,000
through the issuance of 60 participating units. Each unit is sold for $2,500 and
consisted of 5,000 restricted shares of the Company’s common stock, a warrant to
purchase 10,000 shares of the Company’s common stock at $.0.25 per share,
expiring 18 months from date of issuance, a pro rata interest in 60% of the
total revenue interest that the Company owns in the Sattler #1 well, and an
option to convert the unit holder’s pro rata share in the well revenue into
5,000 shares of the Company’s common stock expiring 36 months after the first
revenue check is received by the unit holder. The Company valued the four
components of each unit separately.  In the valuation of the common
shares issued and the pro rata interest in oil revenue, the Company’s used the
trading price of the Company’s common shares on the date of issuance. The common
stock warrant and the option to convert the oil revenue interest into shares of
common shares were valued using the Black-Scholes Option Model using a risk free
interest rate ranging from .95% to 1.69%, with volatility ranging from 186% to
208%. Of the $150,000 received, $36,412 was credited allocated against the
payments made towards the Company’s well costs. The remaining $113,588 was
credited to equity.
 
 During
the three months ended March 31 2010, the Company paid a consultant 12.8
participating units in consideration for services rendered in connection with
the offerings, Of the $28,000 fee, $7,399 was credited against the payments made
towards the Company’s well costs.
 
 As
indicated, the Company during the three months ended March 31, 2010, issued
warrants to purchase 1,312,000 common shares at $0.25 per share. The warrants
expire 18 months from the date of issuance.
 
 The
following table sets forth common share purchase warrants outstanding as of
March 31, 2010:
  Warrants
      Outstanding
                
                
                Weighted
      Average Exercise PriceBalance,
      December 31, 2009
                
                
                4,220,000
                
                
                $
                0.23Warrants
      granted
                
                
                1,312,000
                
                
                $
                0.25Warrants
      expired
                
                
                -
                
                
                $
                -Balance,
      March 31, 2010
                
                
                5,532,000
                
                
                $
                0.23
  NOTE 8. FAIR
VALUE
 
 The
Company’s financial instruments consist principally related party payables,
stockholder loans and notes payable. The Company believes all of the financial
instruments’ recorded values approximate fair market value because of their
nature and respective durations.
 
 The
Company complies with the provisions of ASC 820, “Fair Value Measurements and
Disclosures” (“ASC 820”), previously referred to as SFAS No. 157.  ASC
820 defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements required under other
accounting pronouncements. ASC 820-10-35, “Fair Value Measurements and
Disclosures - Subsequent Measurement” (“ASC 820-10-35”), clarifies that fair
value is an exit price, representing the amount that would be received from the
sale of an asset or paid to transfer a liability in an orderly transaction
between market participants. ASC 820-10-35 also requires that a fair value
measurement reflect the assumptions market participants would use in pricing an
asset or liability based on the best information available. Assumptions include
the risks inherent in a particular valuation technique (such as a pricing model)
and/or the risks inherent in the inputs to the model.  The Company
also follows ASC 825 “Interim Disclosures about Fair Value of Financial
Instruments”, previously referred to as FAS 107-1 to expand required
disclosures.
  14
 ROYAL
QUANTUM GROUP, INC.
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED MARCH 31, 2010 and 2009
  ASC
820-10-35 establishes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or
liabilities (level 1 measurements) and the lowest priority to unobservable
inputs (level 3 measurements). The three levels of the fair value hierarchy
under ASC 820-10-35 are described below:
 
 Level 1.
Valuations based on quoted prices in active markets for identical assets or
liabilities that an entity has the ability to access.
 
 Level 2.
Valuations based on quoted prices for similar assets or liabilities, quoted
prices for identical assets or liabilities in markets that are not active, or
other inputs that are observable or can be corroborated by observable data for
substantially the full term of the assets or liabilities.
 
 Level 3.
Valuations based on inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or
liabilities.
 
 The
Company utilizes the best available information in measuring fair value. The
following table summarizes, by level within the fair value hierarchy, the
financial assets and liabilities recorded at fair value on a recurring basis as
of March 31, 2010:
 
 March
      31 2010Fair
      Value MeasurementsLevel 1
              
              
              Level 2
              
              
              Level 3
              
              
              Total Fair ValueLiabilitiesRelated
      parties payable
              
              
              -
              
              
              $
              206,455
              
              
              
              -
              
              
              $
              206,455Note
      payable
              
              
              -
              
              
              $
              325,136
              
              
              
              -
              
              
              $
              325,136Stockholder
      loan
              
              
              -
              
              
              $
              19,845
              
              
              
              -
              
              
              $
              19,845


15


Item 2.  Plan of
Operation





This
following information specifies certain forward-looking statements of management
of the company. Forward-looking statements are statements that estimate the
happening of future events and are not based on historical fact. Forward-looking
statements may be identified by the use of forward-looking terminology, such as
“may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”,
“probable”, “possible”, “should”, “continue”, or similar terms, variations of
those terms or the negative of those terms. The forward-looking statements
specified in the following information have been compiled by our management on
the basis of assumptions made by management and considered by management to be
reasonable. Our future operating results, however, are impossible to predict and
no representation, guaranty, or warranty is to be inferred from those
forward-looking statements.





The
assumptions used for purposes of the forward-looking statements specified in the
following information represent estimates of future events and are subject to
uncertainty as to possible changes in economic, legislative, industry, and other
circumstances. As a result, the identification and interpretation of data and
other information and their use in developing and selecting assumptions from and
among reasonable alternatives require the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially from
anticipated or projected results, and, accordingly, no opinion is expressed on
the achievability of those forward-looking statements. We cannot guaranty that
any of the assumptions relating to the forward-looking statements specified in
the following information are accurate, and we assume no obligation to update
any such forward-looking statements.





Critical
Accounting Policies and Estimates





The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. In consultation with our Board of Directors, we have
identified the following accounting policies that it believes are key to an
understanding of its financial statements. These are important accounting
policies that require management’s most difficult, subjective
judgments.





Revenue
Recognition





Oil and
gas production revenues are recognized at the point of sale.





Oil and Gas
Properties





The
Company uses the full cost method of accounting under which all costs incurred
in the acquisition, exploration and development of oil and natural gas reserves,
including costs related to unsuccessful wells and estimated future site
restoration and abandonment, are capitalized until such time as the aggregate of
such costs net of accumulated depletion and oil and natural gas related deferred
income taxes, on a country-by-country basis, equals the sum of 1) the
discounted present value (at 10%), using prices as of the end of each reporting
period on a constant basis, of the Company’s estimated future net cash flows
from estimated production of proved oil and natural gas reserves as determined
by independent petroleum consultants, less estimated future expenditures to be
incurred in developing and producing the proved reserves but excluding future
cash outflows associated with settling asset retirement obligations accrued on
the balance sheet; plus 2) the cost of major development projects and
unproven properties not subject to depletion, if any; plus 3) the lower of
cost or estimated fair value of unproven properties included in costs subject to
depletion; less 4) related income tax effects.  If net capitalized
costs exceed this limit, the excess is expensed unless subsequent market price
changes eliminate or reduce the indicated write-down in accordance with U.S. SEC
Staff Accounting Bulletin (“SAB”) Topic 12D.  Depletion is computed using
the units-of-production method whereby capitalized costs, net of estimated
salvage values, plus estimated future costs to develop proved reserves and
satisfy asset retirement obligations, are amortized over the total
estimated





16


Foreign Currency
Translation





The
Company's primary functional currency is the U.S. dollar.  For foreign
operations whose functional currency is the local foreign currency, balance
sheet accounts are translated at exchange rates in effect at the end of the year
and income statement accounts are translated at average exchange rates for the
period. Translation gains and losses are included as a separate component of
stockholders’ deficit.





Asset Retirement
Obligations





The
Surface Mining Control and Reclamation Act of 1977 and similar state statutes
require mine properties to be restored in accordance with specified standards.
Accounting Standards Codification (“ASC”) Topic 410-20, formerly Statement of
Financial Accounting Standards No. 143 (“SFAS No. 143”) requires recognition of
an asset retirement obligation (“ARO”) for eventual reclamation of disturbed
acreage remaining after mining has been completed. The Company records its
reclamation obligations on a permit-by-permit basis using requirements as
determined by the Office of Surface Mining of the U.S. Department of the
Interior (“OSM”). The liability is calculated based upon the reclamation
activities remaining after coal removal ceases, assuming that reclamation
activities have been contemporaneous within state and federal guidelines during
mining. A liability is recorded for the estimated future cost that a third party
would incur to perform the required reclamation and mine closure discounted at
the Company’s credit-adjusted risk-free rate. A corresponding increase in the
asset carrying value of mineral rights is also recorded. The ARO asset is
amortized on the units-of-production method over the proven and probable
reserves associated with that permit.





Fair Value
Measurement







The
Company adopted ACS Topic 820-10, formerly Statement of Financial Accounting
Standard No. 157, Fair Value Measurements (“Topic 820-10”), at the beginning of
fiscal year 2009 to measure the fair value of certain of its financial assets
and liabilities required to be measured on a recurring basis. The adoption of
Topic 820-10 did not impact the Company’s consolidated financial position or
results of operations. Topic 820-10 establishes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). Topic 820-10
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants on
the measurement date. A fair value measurement assumes that the transaction to
sell the asset or transfer the liability occurs in the principal market for the
asset or liability. The three levels of the fair value hierarchy under Topic
820-10 are described below: Level 1. Valuations based on quoted prices in active
markets for identical assets or liabilities that an entity has the ability to
access.






The
Company has no Level 1 assets or liabilities.






Level 2. Valuations based on
quoted prices for similar assets or liabilities, quoted prices for identical
assets or liabilities in markets that are not active, or other inputs that are
observable or can be corroborated by observable data for substantially the full
term of the assets or liabilities.






The
Company has no Level 2 assets. The Company’s Level 2 liabilities consist of
notes payable, convertible debentures and a derivative warrant liability. The
Company determines the fair value of notes payable and convertible debentures
based on the effective yields of similar obligations. The Company determines the
fair value of its derivative warrant liability based upon the trading prices of
its common stock on the date of issuance and when applicable, on the last day of
the quarter. The Company uses the Black-Scholes Option Model in valuing the fair
value of its derivative warrant liability.




Level 3. Valuations based on
inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. The Company has no
Level 3 assets or liabilities.





Overview .Royal
Quantum Group Inc. is a public company trading on the OTCBB market under the
symbol RYQG.  Royal Quantum is focused on the acquisition, exploration
and development of oil and gas and mineral properties located within favorable
geo-political climates.





17


During
the three months ended March 31, 2009, the Company received $80,000 on a
subscription receivable on a previous issuance  of the Company’’s
common stock.





During
the three month period ending March 31, 2010 the company raised $150,000 for the
drilling of the Bond #2-18.  The company acquired a 25% interest in
this well with 60% of the revenue received from this well being distributed
proportionately to the investors.  The company issued 300,000 common
shares relating to this financing.  The company also agreed to pay a
10% commission to a 3rd
party on the portion of the funds raised by the 3rd
party relating to the Bond #2-18 well.  This commission totaled
$14,000 which was converted to a proportionate interest in the well along with
28,000 shares.





During
the period ending March 31, 2010 the company raised $150,000 for the drilling of
the Sattler #1-18.  The company acquired a 25% interest in this well
with 60% of the revenue received from this well being distributed
proportionately to the investors.  The company issued 300,000 shares
relating to this financing.  The company also agreed to pay a 10%
commission to a 3rd
party on the portion of the funds raised by the 3rd
party relating to the Sattler #1-18 well.  This commission totaled
$14,000 which was converted to a proportionate interest in the well along with
28,000 shares.





Liquidity and Capital
Resources.We had cash of $192,762 and accounts
receivable of $83,317 as of March 31, 2010, all of which comprised our total
current assets. As of the three month period ended March 31, 2010, we also had
property and equipment of $463 represented by furniture and fixtures of $1,851
less accumulated depreciation of $1,388. The decrease in total fixed assets is
due solely to depreciation.  We also had $293,207 of oil & gas
Properties. Therefore, at March 31, 2010, we had total assets of
$576,095.





At March
31, 2010, we had $730,089 in total current liabilities, which was represented by
$104,609 in accounts payable, $74,044 due to certain shareholders on their
interest in our oil and gas net revenue, $206,455 due to related parties,
$325,136  in notes payable, and $19,845 in shareholder loans and we
accrued $10,980 on our asset recovery obligations related to our oil and gas
properties. Therefore, at March 31, 2010 we had total liabilities of $741,069.
We had no other long term liabilities, commitments or
contingencies.  Other than anticipated explorations costs associated
with the mineral and oil interests that we acquire and anticipated increases in
the legal and accounting costs of being a public company, we are not aware of
any other known trends, events or uncertainties which may affect our future
liquidity.





Results
of Operations.





Revenues and Gross Profit
(Loss).We had revenue of $135,597 and associated production
and royalty costs of $106,383 for the three month period ended March 31, 2010 as
compared to no revenue or production and associated costs for the three month
period ended March 31, 2009.  Therefore for the three months ended
March 31, 2010, our gross profit from our oil gas operations was
$29,214.  We had no gross profits from operations during the three
months ended March 31, 2009.





Operating Expenses and Net Loss.We had a loss from operations of $23,448 for the three month period ended
March 31, 2010, as compared to a loss from operations of $56,514 for the three
month period ended March 31, 2009. For the three months ended March 31, 2010,
our operating expenses were comprised of consulting fees of $45,345 of which
$45,000 pertains to services rendered by our President through a corporation he
controls and, general and administrative, expenses of $7,317.  Our
operating expenses during the three months ended March 31, 2009 consisted of
consulting fees rendered by related parties of $49,650 and general and
administrative expenses of $6,864.





Our other
expenses included interest expense of $6,164 which we accrued on a loan during
the three months ended March 31, 2010 as compared to interest expense of $7,144
that we accrued on the same loan during the previous year’s three month
period.





Our Plan of Operation for the Next
Twelve Months. Our focus is to acquire oil and gas, mineral and resource
properties for exploration and development with the intent to bring the projects
to feasibility at which time we will either contract out the operations or joint
venture the project to qualified interested parties.





We had
cash of $192,762 as of March 31, 2010. In the opinion of management, our
available funds will not satisfy our working capital requirements for the next
twelve months.


18


In March
2010 the company closed a private placement unit funding of 60 units totaling
$150,000 for a 25% participation in the Sattler #1-18 well and for working
capital.  60% of the company’s net revenue received from the Sattler
#1-18 is allocated proportionally to the unit holders.  Each of the 60
units was priced at $2,500 per unit for gross proceeds totaling $150,000 and
consisted of 5,000 restricted common shares and 10,000 share purchase options at
$0.25 per share with an expiration date of July 15, 2011. The Company issued a
total of 300,000 shares and 600,000 options related to the private
placement.  The unit holder also has the option to surrender their
interest in the well back to the company in exchange for 5,000 restricted common
shares per unit surrendered for a period of 36 months from the date of receipt
of the first revenue cheque paid to the unit holders.  The company
paid a commission of $14,000 relating to the financing to a 3rd
party.  The $14,000 was converted to a proportionate interest in the
private placement, resulting in the issuance of an additional 28,000 restricted
shares and 56,000 options.





In
January 2010 the company closed a private placement unit funding of 60 units
totaling $150,000 for a 25% participation in the Bond #2-18 well and for working
capital.  60% of the company’s net revenue received from the Bond
#2-18 is allocated proportionally to the unit holders.  Each of the 60
units was priced at $2,500 per unit for gross proceeds totaling $150,000 and
consisted of 5,000 restricted common shares and 10,000 share purchase options at
$0.25 per share with an expiration date of July 15, 2011. The Company issued a
total of 300,000 shares and 600,000 options related to the private
placement.  The unit holder also has the option to surrender their
interest in the well back to the company in exchange for 5,000 restricted common
shares per unit surrendered for a period of 36 months from the date of receipt
of the first revenue cheque paid to the unit holders.  The company
paid a commission of $14,000 relating to the financing to a 3rd
party.  The $14,000 was converted to a proportionate interest in the
private placement, resulting in the issuance of an additional 28,000 restricted
shares and 56,000 options.





The
company intends to continue to raise additional capital for participation in
additional oil and gas projects.





Our
forecast for the period for which our financial resources will be adequate to
support our operations involves risks and uncertainties and actual results could
fail as a result of a number of factors. We will need to raise additional
capital to expand our operations to the point at which we are able to operate
profitably. Other than anticipated explorations costs associated with the
resource and mineral interests that we acquire and anticipated increases in the
legal and accounting costs of being a public company, we are not aware of any
other known trends, events or uncertainties, which may affect our future
liquidity.





In the
event that we experience a shortfall in our capital, we intend to pursue capital
through public or private financing as well as borrowings and other sources,
such as our officers, directors and principal shareholders. We cannot guaranty
that additional funding will be available on favorable terms, if at
all.  If adequate funds are not available, then our ability to expand
our operations may be significantly hindered. If adequate funds are not
available, we believe that our officers, directors and principal shareholders
will contribute funds to pay for our expenses to achieve our objectives over the
next twelve months.





Our
belief that our officers, directors and principal shareholders will pay our
expenses is based on the fact that our officers, directors and principal
shareholders collectively own approximately 44% of our outstanding common stock.
We believe that our officers, directors and principal shareholders will continue
to pay our expenses as long as they maintain their ownership of our common
stock.





We are
not currently conducting any research and development activities.  We
do not anticipate conducting such activities in the near future. We do not
anticipate that we will purchase or sell any significant equipment. In the event
that we expand our customer base, then we may need to hire additional employees
or independent contractors as well as purchase or lease additional
equipment.





Off-Balance Sheet
Arrangements.We have no off-balance sheet
arrangements.





19


Item 3. Quantitative and
Qualitative Disclosures about Market Risk





Not
applicable.





Item 4. Controls and
Procedures





Evaluation of disclosure controls and
procedures. We maintain controls and procedures designed to ensure that
information required to be disclosed in the reports that we file or submit under
the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Based upon their evaluation of those
controls and procedures performed as of March 31, 2010, the date of this report,
our chief executive officer and the principal financial officer concluded that
our disclosure controls and procedures were effective.





Item 4(T). Controls and
Procedures.





Changes in internal controls.There were no changes in our internal control over financial reporting
that occurred during the fiscal quarter covered by this report that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.








20


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.





In
connection with two private placements of participation units that occurred
during the three months ended March 31, 2010, the Company received a total of
$300,000 and issued a total of 600,000 shares of its common stock. The Company
used these funds to acquire interests to two oil and gas
properties.





All sales
were issued as exempted transactions under Section 4(2) of the Securities Act of
1933 and are subject to Rule 144 of the Securities Act of 1933. The recipient(s)
of our securities took them for investment purposes without a view to
distribution. Furthermore, they had access to information concerning our Company
and our business prospects; there was no general solicitation or advertising for
the purchase of our securities; and the securities are restricted pursuant to
Rule 144.





Item 3.  Defaults
Upon Senior Securities





None.





Item
4.  Submission of Matters to Vote of Security
Holders





None.





Item 5.  Other
Information





None.





Item
6.  Exhibits







31. Rule 13a-14(a)/15d-14(a) Certifications.


32.
Section 1350 Certifications.




21


SIGNATURES





In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.





Royal
      Quantum Group, Inc.a
      Nevada corporationMay
      24, 2010
            By:
            /s/
      Ron RuskowskyRon
      RuskowskyIts:
            Principal
      executive officerPrincipal
      accounting officerPresident,
      CEO and a directorMay
      24, 2010
            By:
            /s/
      Roger JanssenRoger
      JanssenIts:
            Vice-President,
      Secretary and a director