UNITED
      STATES
              SECURITIES
      AND EXCHANGE COMMISSION
              Washington,
      D.C. 20549
              
              FORM
      10-Q








x
            QUARTERLY REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
      PERIOD ENDED September 30,
2009








oTRANSITION 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.                  x   Yes o 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 o
            Accelerated
      filer oNon-accelerated
      filer  o     (Do
      not check if a smaller reporting company)
            Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


o Yes x 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 October 23, 2009 there were
48,980,338 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.(A
      Development Stage Company)BALANCE
      SHEETS(Unaudited)
            
            
            (Audited)September
      30,
            
            
            December
      31,ASSETS
            
            2009
            
            
            2008Current
      Assets:Cash
      & Cash Equivalents
            
            $
            125,616
            
            
            $
            90,363Accounts
      receivable
            
            
            9,255
            
            
            
            -Total
      Current Assets
            
            
            134,871
            
            
            
            90,363Fixed
      Assets:Furniture
      & Fixtures
            
            
            1,851
            
            
            
            1,851Less:
      Accumulated Depreciation
            
            
            (1,203
            )
            
            
            (925
            )Total
      Fixed Assets
            
            
            648
            
            
            
            926Other
      Assets:Intangible
      Assets
            
            
            -
            
            
            
            1Oil
      & Gas Properties,full cost method
            
            
            167,260
            
            
            
            -Less:
      Accumulated Depletion
            
            
            (5,387
            )
            
            
            -Total
      Other Assets
            
            
            161,873
            
            
            
            1Total
      Assets
            
            $
            297,392
            
            
            $
            91,290LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      Payable
            
            $
            93,157
            
            
            $
            86,082Notes
      Payable
            
            
            294,166
            
            
            
            235,755Related
      Party Payables
            
            
            146,323
            
            
            
            98,262Shareholder
      Loans
            
            
            19,845
            
            
            
            19,845Total
      Current Liabilities
            
            
            553,491
            
            
            
            439,944Total
      Liabilities
            
            
            553,491
            
            
            
            439,944Stockholders'
      Equity:Common
      Stock, Par value $.001Authorized
      500,000,000 sharesIssued
      48,980,338 shares at September 30,2009and
      48,020,338 shares at Dec 31, 2008
            
            
            48,980
            
            
            
            48,020Paid-in
      Capital
            
            
            4,824,482
            
            
            
            4,480,442Deficit
      Accumulated During theDevelopment
      Stage
            
            
            (5,129,561
            )
            
            
            (4,877,116
            )Total
      Stockholders' Equity
            
            
            (256,099
            )
            
            
            (348,654
            )Total
      Liabilities and Stockholders' Equity
            
            $
            297,392
            
            
            $
            91,290The
      accompanying notes are an integral part of the financial
      statements






2




ROYAL QUANTUM GROUP, INC.(A Development Stage
    Company)STATEMENTS OF
    OPERATIONS(Unaudited)CumulativesinceAugust
      23,For
      the three months
            
            
            For
      the nine months
            
            
            2002ended
            
            
            ended
            
            
            inception
      ofSeptember
      30,
            
            
            September
      30,
            
            
            development2009
            
            
            2008
            
            
            2009
            
            
            2008
            
            
            stageRevenues
            
            $
            6,755
            
            
            $
            -
            
            
            $
            6,755
            
            
            $
            -
            
            
            $
            6,755Cost
      of Goods Sold
            
            
            (10,196
            )
            
            
            -
            
            
            
            (10,196
            )
            
            
            -
            
            
            
            (10,196
            )Gross
      Profit
            
            
            (3,441
            )
            
            
            -
            
            
            
            (3,441
            )
            
            
            -
            
            
            
            (3,441
            )ExpensesConsulting
      Fees
            
            
            58,174
            
            
            
            35,130
            
            
            
            153,595
            
            
            
            185,938
            
            
            
            1,201,108Compensation
      Expense
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            273,790Exploration
      Expense
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            475,949General
      & Administrative
            
            
            8,964
            
            
            
            16,370
            
            
            
            37,477
            
            
            
            51,262
            
            
            
            515,453Loss
      from Operations
            
            
            (70,579
            )
            
            
            (51,500
            )
            
            
            (194,513
            )
            
            
            (237,200
            )
            
            
            (2,469,741
            )Other
      Income (Expenses)Write-down
      of Assets
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (157,986
            )Foreign
      currency exchange gain (loss)
            
            
            (20,563
            )
            
            
            10,599
            
            
            
            (35,811
            )
            
            
            18,499
            
            
            
            (18,678
            )Interest
      (Expense)
            
            
            (7,600
            )
            
            
            (58,016
            )
            
            
            (22,121
            )
            
            
            (148,649
            )
            
            
            (695,900
            )Interest
      Income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            263Forgiveness
      of debt
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            17,500
            
            
            
            46,520Total
      Other Income (Expense)
            
            
            (28,163
            )
            
            
            (47,417
            )
            
            
            (57,932
            )
            
            
            (112,650
            )
            
            
            (825,781
            )Net
      Loss from Continuing Operations
            
            $
            (98,742
            )
            
            $
            (98,917
            )
            
            $
            (252,445
            )
            
            $
            (349,850
            )
            
            $
            (3,295,522
            )Discontinued
      OperationsLoss
      from operation of discontinued component
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,967,294
            )Gain
      pn disposal net of tax effect of $0
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            133,255Net
      Income (Loss) from Discontinued Operations
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,834,039
            )Net
      Loss
            
            $
            (98,742
            )
            
            $
            (98,917
            )
            
            $
            (252,445
            )
            
            $
            (349,850
            )
            
            $
            (5,129,561
            )Basic
      and Diluted Loss Per ShareContinuing
      Operations
            
            
            0.00
            
            
            
            0.00
            
            
            
            (0.01
            )
            
            
            (0.01
            )Loss
      per share
            
            
            0.00
            
            
            
            0.00
            
            
            
            (0.01
            )
            
            
            (0.01
            )Weighted
      Average Shares Outstanding
            
            
            48,510,773
            
            
            
            44,487,729
            
            
            
            48,246,272
            
            
            
            41,737,291The
      accompanying notes are an integral part of the financial
      statements






3




ROYAL QUANTUM GROUP, INC.(A Development Stage
    Company)STATEMENTS OF CASH
    FLOWS(Unaudited)CumulativesinceAugust
      23,For
      the nine months
            
            
            2002ended
            
            
            inception
      ofSeptember
      30,
            
            
            development2009
            
            
            2008
            
            
            stageCASH FLOWS FROM OPERATING
      ACTIVITIES:Net
      Loss
            
            $
            (252,445
            )
            
            $
            (349,850
            )
            
            $
            (5,129,561
            )Net
      Income/(Loss)from Discontinued Operations
            
            
            -
            
            
            
            -
            
            
            
            1,578,681Adjustments
      to reconcile net income (loss) tonet
      cash provided (used in) operating activities:Depreciation
            
            
            278
            
            
            
            278
            
            
            
            1,203Depletion
            
            
            5,387
            
            
            
            -
            
            
            
            5,387Write-down
      of mineral property
            
            
            -
            
            
            
            -
            
            
            
            475,949Write-down
      of assets
            
            
            1
            
            
            
            -
            
            
            
            10,001Stock
      issued for interest
            
            
            -
            
            
            
            125,000
            
            
            
            600,000Stock
      issued for start up costs
            
            
            -
            
            
            
            -
            
            
            
            12,600Stock
      issued for services
            
            
            12,500
            
            
            
            -
            
            
            
            656,890Forgiveness
      of debt
            
            
            -
            
            
            
            (17,500
            )
            
            
            (46,520
            )Foreign
      currency exchange loss (gain)
            
            
            35,811
            
            
            
            (18,499
            )
            
            
            18,678(Increase)
      decrease in accounts receivable
            
            
            (9,255
            )
            
            
            -
            
            
            
            (9,255
            )Increase
      (decrease) in interest on notes payable
            
            
            22,121
            
            
            
            23,649
            
            
            
            89,214Increase
      (decrease) in accounts payable
            
            
            7,554
            
            
            
            6,888
            
            
            
            343,399Increase
      (decrease) in related party accounts payable
            
            
            63,061
            
            
            
            (36,235
            )
            
            
            123,681Net
      cash provided (used in) continuing activities
            
            
            (114,987
            )
            
            
            (266,269
            )
            
            
            (1,269,653
            )Net
      cash provided (used in) discontinuing activities
            
            
            -
            
            
            
            -
            
            
            
            386,515Net
      cash provided by (used in) operating activities
            
            
            (114,987
            )
            
            
            (266,269
            )
            
            
            (883,138
            )CASH FLOWS FROM INVESTING
      ACTIVITIES:Investment
      in Mineral Property
            
            
            -
            
            
            
            -
            
            
            
            (10,000
            )Investment
      in Oil Property
            
            
            (167,260
            )
            
            
            (418,727
            )
            
            
            (584,459
            )Purchase
      of fixed assets
            
            
            -
            
            
            
            -
            
            
            
            (1,851
            )Net
      cash provided by (used in) investing activities
            
            
            (167,260
            )
            
            
            (418,727
            )
            
            
            (596,310
            )CASH FLOWS FROM FINANCING
      ACTIVITIES:Proceeds
      from shareholder loans
            
            
            -
            
            
            
            -
            
            
            
            136,027Payment
      on shareholder loans
            
            
            -
            
            
            
            (6,000
            )
            
            
            (88,182
            )Proceeds
      from notes payable
            
            
            -
            
            
            
            500,000
            
            
            
            685,795Contributed
      capital
            
            
            -
            
            
            
            -
            
            
            
            2,842Stock
      issued in exchange for cash
            
            
            317,500
            
            
            
            352,000
            
            
            
            868,582Net
      cash provided by (used in) financing activities
            
            
            317,500
            
            
            
            846,000
            
            
            
            1,605,064Net
      (Decrease) increase in Cash and Cash Equivalents
            
            
            35,253
            
            
            
            161,004
            
            
            
            125,616Cash
      and Cash Equivalents at Beginning of Period
            
            
            90,363
            
            
            
            3,448
            
            
            
            -Cash
      and Cash Equivalents at End of Period
            
            $
            125,616
            
            
            $
            164,452
            
            
            $
            125,616SUPPLEMENTAL DISCLOSURE OF CASH
      FLOW INFORMATION:Cash
      paid during the year for:Interest
            
            $
            -
            
            
            $
            -
            
            
            $
            12Income
      taxes
            
            $
            -
            
            
            $
            -
            
            
            $
            -SUPPLEMENTAL DISCLOSURE OF
      NON-CASH INVESTING AND FINANCING ACTIVITIESStock
      issued in plan of reorganization
            
            $
            -
            
            
            $
            -
            
            
            $
            858Stock
      issued in asset acquisition
            
            $
            -
            
            
            $
            -
            
            
            $
            2,243,000Stock
      issued for services
            
            $
            12,500
            
            
            $
            -
            
            
            $
            606,890Stock
      issued for investment in oil property
            
            $
            -
            
            
            $
            58,750
            
            
            $
            58,750Stock
      issued for cancellation of debt
            
            $
            -
            
            
            $
            500,000
            
            
            $
            674,700Related
      Party Payable converted to paid in capital
            
            $
            15,000
            
            
            
            -
            
            
            $
            15,000Shareholder
      loans converted to paid in capital
            
            $
            -
            
            
            $
            -
            
            
            $
            3,000Stock
      issued for Accounts Payable
            
            $
            -
            
            
            $
            32,500
            
            
            $
            52,500The
      accompanying notes are an integral part of the financial
      statements






4




NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 This summary of accounting policies for
Royal Quantum Group, Inc. (the “Company”) is presented to assist in
understanding the Company's financial statements.  The accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial
statements.
 
 Interim Financial
Statements
 
 The
unaudited financial statements as of September 30, 2009 and the three and nine
months then ended, reflect, in the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to fairly state the
financial position and results of the operations for the three and nine months
then ended.  Operating results for interim periods are not necessarily
indicative of the results which can be expected for full years.
 
 Nature of Operations and
Going Concern
 
 The accompanying financial statements
have been prepared on the basis of accounting principles applicable to a “going
concern”, which assume that the Company will continue in operation for at least
one year and will be able to realize its assets and discharge its liabilities in
the normal course of operations.
 
 Several conditions and events cast
doubt about the Company’s ability to continue as a “going
concern”.  The Company has incurred net losses of approximately
$5,100,000 for the period from August 23, 2002 (inception of development stage)
to September 30, 2009 has a liquidity problem, and as of September 30, 2009 has
minimal sources of revenue.  In the interim, shareholders of the
Company have committed to meeting any shortfall of operational cash
flow.  In addition the company may require increasing equity and debt
financing in order to finance its business activities on an ongoing
basis.
 
 These financial statements do not
reflect adjustments that would be necessary if the Company were unable to
continue as a “going concern”.  While management believes that the
actions already taken or planned, will mitigate the adverse conditions and
events which raise doubt about the validity of the “going concern” assumption
used in preparing these financial statements, there can be no assurance that
these actions will be successful.
 
 If the
Company were unable to continue as a “going concern”, then substantial
adjustments would be necessary to the carrying values of assets, the reported
amounts of its liabilities, the reported expenses, and the balance sheet
classifications used.
 
  5
  NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Organization and Basis of
Presentation
 
 The Company was incorporated under the
laws of the State of Nevada on October 22, 1996 under the name PSM
Corp.  The Company ceased all operating activities during the period
from October 22, 1996 to July 9, 1999 and was considered dormant. On July 9,
1999, the Company obtained a Certificate of renewal from the State of
Nevada.
 
 On October 3, 2002, the Company changed
its name to Platinum SuperYachts, Inc. in anticipation of a merger with
SuperYachts Holdings, Inc. (a Nevada Corporation that was incorporated on August
23, 2002).  On November 15, 2002, the shareholders of the Platinum
SuperYachts, Inc. completed a stock exchange agreement with SuperYachts
Holdings, Inc. dated August 8, 2002.  The merger was accounted for as
a reverse merger, with SuperYachts Holdings being treated as the acquiring
entity for financial reporting purposes.
 
 For financial reporting purposes,
Platinum SuperYachts, Inc. was considered a new reporting entity on November 15,
2002
 
 On November 23, 2005 holders of a
majority of the Company’s common stock approved an Amendment to change the name
of the Company to Royal Quantum Group, Inc., to increase the number of shares of
common stock the Company is authorized to issue to 500,000,000 and to authorize
the Company to issue up to 10,000,000 shares of preferred stock.
 
 As of
September 30, 2009, the Company is in the development stage.
 
 Nature of
Business
 
 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 resource
and mineral properties located within favorable geo-political
climates.
  6
  NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 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.
 
 Depreciation and
Amortization
 
 Fixed
assets are recorded at cost and depreciated using the straight-line method over
the estimated useful lives of the assets which range from three to five
years.  Fixed assets consisted of the following at September 30, 2009
and December 31, 2008:
 
 September
      30,
              
              
              December
      31,2009
              
              
              2008Furniture
      & Fixtures
              
              $
              1,851
              
              
              $
              1,851 -Less
      accumulated depreciation
              
              
              (1,203
              )
              
              
              (925
              )Total
              
              $
              648
              
              
              $
              926
 
 Maintenance and repairs are charged to
operations; betterments are capitalized.  The cost of property sold or
otherwise disposed of and the accumulated depreciation thereon is eliminated
from the property and related accumulated depreciation accounts, and any
resulting gain or loss is credited or charged to income.
 
 Total depreciation expense for the nine
months ended September 30, 2009 and the year end December 31 2008 was $278 and
$370 respectively.
  7
  NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Intangible
Assets
 
 The
Company has adopted the Financial Accounting Standards Board SFAS No., 142,
“Goodwill and Other Intangible Assets.”  SFAS 142 requires, among
other things, that companies no longer amortize goodwill, but instead test
goodwill for impairment at least annually.  In addition, SFAS 142
requires that the Company identify reporting units for the purposes of assessing
potential future impairments of goodwill, reassess the useful lives of other
existing recognized intangible assets, and cease amortization of intangible
assets with an indefinite useful life.  An intangible asset with an
indefinite useful life should be tested for impairment in accordance with the
guidance in SFAS 142.
 
 Intangible
Assets consisted of the following at September 30, 2009 and December 31,
2008:
 
 September
      30
              
              
              December
      31,Intangible
      Asset
              
              2009
              
              
              2008
              
              Amortization
      PeriodE-Learning
      System
              
              $
              -
              
              
              $
              1
              
              IndefiniteLess
      accumulated amortization
              
              
              -
              
              
              
              -Total
              
              $
              -
              
              
              $
              1
 
 Total amortization expense for the nine
months ended September 30, 2009 and December 31, 2008 was $0 and $0
respectively.  During the second quarter of 2009, the company
determined not to pursue the E-learning system and expensed the impaired
asset.
 
 Pervasiveness of
Estimates
 
 The preparation of financial statements
in conformity with generally accepted accounting principles required 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.
 
 Foreign Currency
Translation
 
 The Company's primary functional
currency is the U.S. dollar.  However, the Company has a few
transactions in Canada. Transaction gains and losses are included in
income.
  8
  NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Concentrations of Credit
Risk
 
 The Company has no significant
off-balance-sheet concentrations of credit risk such as foreign exchange
contracts, options contracts or other foreign hedging arrangements. The Company
had cash and cash equivalents in the amount of $125,616 and $90,363 as of
September 30, 2009 and December 31, 2008.
 
 Earnings (Loss) per
Share
 
 Basic loss per share has been computed
by dividing the loss for the period applicable to the common stockholders by the
weighted average number of common shares outstanding during the
years.  Diluted loss per common share for the nine months ended
September 30, 2009 and 2008 are not presented as it would be
anti-dilutive.  At September 30, 2009 and 2008, the total number of
potentially dilutive common stock equivalents was 1,820,000 and 0,
respectively.
 
 Stock Compensation for
Non-Employees
 
 Effective June 1, 2006, the company
adopted the provisions of SFAS No. 123 (R) requiring employee equity awards to
be accounted for under the fair value method. Accordingly, share-based
compensation is measured at grant date, based on the fair value of the award.
Prior to June 1, 2006, the company accounted for awards granted to employees
under its equity incentive plans under the intrinsic value method prescribed by
Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued
to Employees” (APB 25), and related interpretations, and provided the required
pro forma disclosures prescribed by SFAS No. 123, “Accounting for Stock-Based
Compensation” (SFAS No. 123), as amended. No stock options were granted to
employees during the years ended December 31, 2006, and 2005 and accordingly, no
compensation expense was recognized under APB No. 25 for the years ended
December 31, 2007, and 2006. In addition, no compensation expense is required to
be recognized under provisions of SFAS No. 123 (R) with respect to
employees.  Under the modified prospective method of adoption for SFAS
No. 123 (R), the compensation cost recognized by the company beginning on June
1, 2006 includes (a) compensation cost for all equity incentive awards granted
prior to, but not vested as of June 1, 2006, based on the grant-dated fair value
estimated in accordance with the original provisions of SFAS No. 123, and (b)
compensation cost for all equity incentive awards granted subsequent to June 1,
2006, based on the grant-date fair value estimated in accordance with the
provisions of SFAS No, 123 (R). The company uses the straight-line attribution
method to recognize share-based compensation costs over the service period of
the award. Upon exercise, cancellation, forfeiture, or expiration of stock
options, or upon vesting or forfeiture of restricted stock units, deferred tax
assets for options and restricted stock units with multiple vesting dates are
eliminated for each vesting
  9
  NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Stock Compensation for
Non-Employees (Continued)
 
 period on
a first-in, first-out basis as if each vesting period was a separate award. To
calculate the excess tax benefits available for use in offsetting future tax
shortfalls as of the dated of implementation, the company followed the
alternative transition method discussed in FASB Staff Position No. 123
(R)-3.  During the periods ended December 31, 2008 and 2007, no stock
options were granted to non-employees. Accordingly, no stock-based compensation
expense was recognized for new stock option grants in the Statement of
Operations and Comprehensive Loss at December 31, 2008 and 2007.
 
 Financial
Instruments
 
 The Company’s financial instruments, as
defined under SFAS No. 107, Disclosure about Fair Value of Financial
Instruments, include its cash and cash equivalents, accounts payable and accrued
liabilities. Except as otherwise noted, it is management’s opinion that the
Company is not exposed to significant interest or credit risks arising from
these financial instruments.  The fair value of these financial
instruments approximates their carrying values due to the short-term maturities
of these instruments.
 
 Income
Taxes
 
 The Company accounts for income taxes
under the provisions of SFAS No.109, “Accounting for Income
Taxes.”  SFAS No.109 requires recognition of deferred income tax
assets and liabilities for the expected future income tax consequences, based on
enacted tax laws, of temporary differences between the financial reporting and
tax bases of assets and liabilities.
 
 Recent Accounting
Standards
 
 In
February 2007, the FASB issued SFAS no, 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS 159”).  SFAS 159
provides companies with an option to report selected financials assets and
liabilities at fair value.  The objective of SFAS 159 is to reduce
both complexity in accounting for financial instruments and the volatility in
earnings caused by measuring related assets and liabilities
differently.  Generally accepted accounting principles have required
different measurement attributes for different assets and liabilities that can
create artificial volatility in earnings.  The FASB has indicated it
believes that SFAS 159 helps to mitigate this type of accounting-induced
volatility by enabling companies to report related assets and liabilities at
fair value, which would likely reduce the need for companies to comply with
detailed rules for hedge accounting.  SFAS 159 also establishes
presentation and
  10
  NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Recent Accounting Standards
(Continued)
 
 disclosure
requirements designed to facilitate comparisons between companies that choose
different measurement attributes for similar types of assets and
liabilities.  SFAS 159 does not eliminate disclosure requirements
included in other accounting standards, including requirements for disclosures
about fair value measurements included in SFAS 157 and SFA No. 107, “Disclosures
about Fair Value of Financial Instruments.” SFAS 159 is effective for the
Company as of the beginning of fiscal year 2009.  The adoption of this
pronouncement is not expected to have an impact on the Company’s financial
position, results of operations or cash flows.
 
 In
December 2007, the FASB issued No. 160, “Noncontrolling Interests in Financial
Statements, an amendment of ARB No. 51" (“SFAS 160").  SFAS 160 amends
ARB 51 to establish accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a
subsidiary.  It clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements.  This
Statement is effective for fiscal years beginning on or after December 15,
2008.  Early adoption is not permitted. Management is currently
evaluating the effects of this statement, but it is not expected to have any
impact on the Company’s financial statements.
 
 In December 2007, the FASB issued No.
141(R),  “Business Combinations” (“SFAS 141(R)”.  SFAS
141(R) provides companies with principles and requirements on how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, liabilities assumed, and any noncontrolling interest in the acquiree
as well as the recognition and measurement of goodwill acquired in a business
combination. SFAS 141(R) also requires certain disclosures to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. Acquisition costs associated with the business combination
will generally be expensed as incurred. SFAS 141(R) is effective for business
combinations occurring in fiscal years beginning after December 15, 2008, which
will require the Company to adopt these provisions for business combinations
occurring in fiscal 2009 and thereafter. Early adoption of SFAS 141(R) is not
permitted.  Management is currently evaluating the effects of this
statement, but it is not expected to have any impact on the Company’s financial
statements.
 
 In March 2008, the FASB issued No. 161,
“Disclosures about Derivative Instruments and Hedging Activities, an amendment
of FASB Statement No. 133.  (“SFAS 161").  SFAS 161 requires
enhanced disclosures about an entity's derivative and hedging activities and
thereby improves the transparency of financial reporting.  This
Statement is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged. This Statement encourages, but does not require, comparative
disclosures for earlier periods at initial adoption.  Management is
currently evaluating the effects of this statement, but it is not expected to
have any impact on the Company’s financial statements.
 
  11
  NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Oil and Gas
Properties
 
 The
Company follows the full cost method of accounting for its oil and gas
properties. Under this method, all costs associated with acquisition,
exploration, and development of oil and gas properties are capitalized. 
Such costs include land and lease acquisition costs, annual carrying charges of
non-producing properties, geological and geophysical costs, costs of drilling
and equipping productive and non-productive wells, asset retirement costs, and
direct exploration salaries and related benefits.  Capitalized costs are
categorized as being subject to amortization or not subject to
amortization.  The Company operates one cost center in the
U.S.A.  To date the Company has established an estimated 10,950 Bbls
of recoverable Oil from the Gleason #4-16 prospect and it is currently producing
at approximately 6 Bbls per day.  As of the date of this report
drilling of the Bond #1-18 well is underway.  The well is expected to
be drilled to a total depth of 5450 ft.
 
 The
capitalized costs of oil and gas properties are amortized on the
unit-of-production method using estimates of proved reserves as determined by
independent engineers.  Investments in unproved properties are not
amortized until proved reserves associated with projects can be determined or
until impairment occurs.  If the results of an assessment indicate that the
properties are impaired, the amount of the impairment is added to the
capitalized costs to be amortized.
 
 Depletion Expense for the Gleason #4-16
well was $5,387 for the period ending September 30, 2009.  The company
has not had an independent reserve evaluation done on the well as of this
reporting period.  Since it has just recently gone into production,
the lack of production history makes it difficult for a reserve evaluation to be
completed.
 
 The Company applies a ceiling test to
capitalized costs to ensure that such costs do not exceed estimated future net
revenues from production of proven reserves at year end market prices less
future production, administrative, financing, site restoration, and income tax
costs plus the lower of cost or estimated market value of unproved properties.
If capitalized costs are determined to exceed estimated future net revenues, a
write-down of carrying value is charged to depletion in the period.
 
 Proceeds
from the sale of oil and gas properties are recorded as a reduction of the
related capitalized costs without recognition of a gain or loss unless such
sales involve a significant change in the relationship between costs and the
value of proved reserves or the underlying value of unproved properties, in
which case a gain or loss is recognized.
 
 The Company is in the process of
exploring its unproved oil and natural gas properties and has not yet determined
whether these properties contain reserves that are economically recoverable. The
recoverability of amounts shown for oil and natural gas properties is dependent
upon the discovery of economically recoverable reserves, confirmation of the
Company’s interest in the underlying oil and gas leases, the ability of the
Company to obtain necessary financing to complete their exploration and
development and future profitable production or sufficient proceeds from the
disposition thereof.
  12
  NOTE 2 - INCOME
TAXES
 
 2008
              
              
              2007Net
      Operating Losses
              
              $
              4,250,000
              
              
              $
              3,963,988Accrued
      Consulting Fees
              
              
              33,000
              
              
              
              39,251Valuation
      Allowance
              
              
              (4,283,000
              )
              
              
              (4,003,239
              )$
              -
              
              
              $
              -
 As of December 31, 2008, the Company
had a net operating loss carry forward for income tax reporting purposes of
approximately $12,510,000 that may be offset against future taxable income
through 2025.  Current tax laws limit the amount of loss available to
be offset against future taxable income when a substantial change in ownership
occurs.  Therefore, the amount available to offset future taxable
income may be limited.  No tax benefit has been reported in the
financial statements, because the Company believes there is a 50% or greater
chance the carry forwards will expire unused.  Accordingly, the
potential tax benefits of the loss carried forwards are offset by a valuation
allowance of the same amount.
 
 The
provision for income taxes differ from the amount computed using the federal US
statutory income tax rate as follows:
 2008
              
              
              2007Provision
      (Benefit) at US Statutory Rate
              
              $
              (413,854
              )
              
              $
              (141,145
              )Stock
      Compensation / Interest
              
              
              127,500
              
              
              
              -Excess
      Capital Losses over Capital Gains
              
              
              (3,400
              )
              
              
              -Accrued
      Consulting Fees
              
              
              7,421
              
              
              
              -Depreciation
      and other
              
              
              2,572
              
              
              
              (75
              )Increase
      (Decrease) in Valuation Allowance
              
              
              279,761
              
              
              
              141,220$
              -
              
              
              $
              -
 
 The Company evaluates its valuation
allowance requirements based on projected future operations.  When
circumstances change and causes a change in management’s judgment about the
recoverability of deferred tax assets, the impact of the change on the valuation
is reflected in current income.
 
 NOTE 3 - DEVELOPMENT STAGE
COMPANY/GOING CONCERN
 
 The Company has not commenced its
intended principal operations and as is common with a development stage company,
the Company has had recurring losses.  Continuation of the Company as
a going concern is dependent upon obtaining the additional working capital
necessary to be successful in its planned activity, and the management of the
Company has developed a strategy, which it believes will accomplish this
objective through additional equity funding and long term financing, which will
enable the Company to operate for the coming year.
 
  13
  NOTE 4- INVESTMENT IN OIL
& GAS PROPERTY
 
 In
January of 2008 the company acquired an option to purchase a 6,000 acre Oil
& Gas property located in the state of Ohio.  The
closing date of the transaction was extended to July 31, 2008 and was subject to
financing.Pursuant
to the agreement, the Company paid the seller $325,000 in cash and issued
125,000 shares of stock valued at $58,750 for the acquisition and extension of
the agreement.  The Company had capitalized a total of $475,949
related to this property.
 
 In October 2008, the company issued
notice to the landowner of the Ohio Oil & Gas property of its intent to not
pursue the acquisition of the project.  The company has also issued a
demand letter to the land owner for the return of the $300,000 paid in June for
the extension.  No response has been received from the land owner to
date; the company will continue to pursue the return of the
funds.  Since the entire amount is deemed abandoned on December 31,
2008, $475,949 has been written off as an exploration expense.
 
 During the period ending June 30, 2009
the company acquired 36% in the drilling and development of the Gleason #4-16
well located in Oklahoma, USA. The company capitalized $135,785 for the drilling
of the well during this period.  The well has now been completed and is on
production.
 
 During the period ending September 30,
2009 the company raised $137,500 for the drilling of its next well, the
Bond.  The company will acquire a 25% interest in this well with 60%
of the revenue received from this well being distributed proportionately to the
investors.  The company issued 550,000 shares relating to this
financing.  The company has 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 well.  This commission totaled $12,500
which was in turn converted to an interest in the well.  The company
elected to not dilute the investor’s portion of the interest in the well but to
dilute the companies remaining interest in the well after paying the investors
portion.  Thus the breakdown of the potential revenue from the
company’s 25% interest in the Bond well will be as follows: 60% to the
investors, 35% to the company and the remaining 5% will be allocated to the
3rd
party as per the terms of the commission agreement.  As per the terms
of the commission agreement the company also issued 50,000 shares valued at
$12,500 to the 3rd
party for consulting expenses related to the Bond financing.
 
 NOTE 5 – INVESTMENT IN
MINERAL PROPERTY
 
 In May 2007, we entered into a Purchase
Agreement (“Agreement”) with U3, LLC (“U3”) to acquire a 100% interest in 1,540
acres that consist of 77 claims of prospective uranium property located adjacent
to the Sheep Mountain Mine in Fremont County, Central Wyoming, approximately 90
miles southwest of Casper, Wyoming.  We paid $10,000 to U3 when we
executed the Agreement on May 28, 2007. However, we later agreed with U3 not to
continue to acquire the claims, due to delays in receiving WMC numbers on the
claims, and we have requested U3 return the $10,000 as per the agreement
terms.  The company did not issue any shares pursuant to this
agreement and as of the date of this report has not received the
$10,000.  After numerous attempts to collect on the $10,000, the
company has written the debt off as bad debt expense.
  14
  NOTE 6 - LEASE
AGREEMENT
 
 The company has entered into a
month-to-month lease agreement for an office in Calgary, Alberta,
Canada.  This lease can be canceled on one month’s written notice. The
current lease requires rental payments of approximately $450(Canadian Dollars
per month plus applicable taxes after consolidating leased space.  The
new monthly rate is effective as of May 1, 2009. Prior to October 1, 2007, the
lease was approximately $4,854 per month plus applicable taxes. For the year
ended December 31, 2008 and 2007 the Company had $3,000 and $14,879 respectively
in rent expense.
 
 During
2008, the Lessor wrote off the entire balance owed to them through March 31,
2008.  The company has recorded $29,025 in forgiveness of debt as of
December 31, 2008.
 
 NOTE 7 - UNCERTAIN TAX
POSITIONS
 
 Effective January 1, 2007, the Company
adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (“FIN
48”). FIN 48 prescribes a recognition threshold and a measurement attribute for
the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax
position must be more-likely-than-not to be sustained upon examination by taxing
authorities. The adoption of the provisions of FIN 48 did not have a material
impact on the company’s condensed consolidated financial position and results of
operations. At January 1, 2007, the company had no liability for unrecognized
tax benefits and no accrual for the payment of related interest and penalties.
The Company did not record a cumulative effect adjustment relating to the
adoption of FIN 48.
 
 Interest
costs related to unrecognized tax benefits are classified as “Interest expense,
net” in the accompanying condensed consolidated statements of operations.
Penalties, if any, would be recognized as a component of “Selling, general and
administrative expenses”. The Company recognized $0 of interest and penalties
expense related to unrecognized tax benefits during 2007. In many cases the
company’s uncertain tax positions are related to tax years that remain subject
to examination by relevant tax authorities. With few exceptions, the company is
generally no longer subject to U.S. federal, state, local or non-U.S. income tax
examinations by tax authorities for years before 2004. The following describes
the open tax years, by major tax jurisdiction, as of December 31,
2007:
 United
      States (a)
              
              2004
      - Present
 
 (a)
Includes federal as well as state or similar local jurisdictions, as
applicable.
 
  15
  NOTE 8 - RELATED PARTY
TRANSACTIONS
 
 As of September 30, 2009 and December
31, 2008, the Company owed Santeo Financial $135,906 and $89,353 respectfully
for consulting services.  Ron Ruskowsky, President and CEO of the
Company is an affiliate of Santeo Financial.  Currently the Company
has an agreement with Santeo Financial whereby Santeo Financial provides
consulting services in exchange the Company agrees to pay a consultant fee of
$15,000 per month.  In April, Santeo Financial Corporation 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
Well.  The $15,000 was written off of the payable and booked as
additional paid in capital.
 
 As of September 30, 2009 and December
31, 2008, the Company owed Phil Van Angeren, an officer and director of the
Company, $9,072 and $7,564 respectfully for consulting services performed as the
Exploration Manager.
 
 As of September 30, 2009 and December
31, 2008 the Company owed Roger Janssen, an officer and director of the Company
$1,345 for incurred expenses.
 
 As of September 30, 2009 and December
31, 2008, shareholders have advanced the Company $19,845, payable on demand and
do not carry an interest rate.  This transaction has been recorded in
the accompanying financial statements as Shareholder loans.
 
 NOTE 9 - COMMON STOCK AND
WARRANTS
 
 In September 2009 the company closed a
unit funding at 55 units totaling $137,500.  The Company has a 25%
participation in the Bond #1-18 well, with 60% of the company’s net revenue
received being allocated proportionally to the unit holders.  The
funds were raised via a unit private placement.  Each of the 55 units
was priced at $2,500 per unit totaling $137,500  and consisted of
10,000 restricted common shares and 20,000 share purchase options at $0.25 per
share with an expiration date of March 10, 2011. The Company issued a total of
550,000 shares and 1,100,000 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 10,000 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 issued 50,000 shares valued at $12,500 for consulting expense, related
to the Bond financing, to a 3rdparty.  The $12,500 was
converted to a 5% interest in the Bond #1-18 well.
 
 In May 2009 the company closed its
intended unit funding at 72 units totaling $180,000.  The Company has
a 36% participation in the Gleason #4-16 well, with 67% of the company’s net
revenue received being allocated proportionally to the unit
holders.  The funds were raised via a unit private
placement.  Each of the 72 units was priced at $2,500 per unit
totaling $180,000 cash and consisted of 5,000 restricted common shares and
10,000 share purchase options at $0.25 per share with an expiration date of
November 15, 2010. The Company issued a total of 360,000 shares and 720,000
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.
  16
  NOTE 9 - COMMON STOCK AND
WARRANTS (Continued)
 
 In June 2008 the company received a
loan of $500,000 from a private investor.  The loan carried an
interest rate of 15% and was due and payable on or before July 31,
2008.  The terms of the note allow for a 1% per week penalty up to a
maximum of 10%.  As part of the agreement, 6,250,000 shares were
placed into escrow for security.  The Lender had the right at his sole
discretion, to convert any unpaid debt, along with any interest due, into
free-trading common stock of the Company at a conversion price of forth cents
($0.40) per share.  The funds from this loan were used for the Ohio
Property Extension payment, payment for a third party engineering evaluation of
the Ohio Property and working capital.  In September 2008 the company
issued 6,250,000 shares held in escrow as satisfaction for the $500,000 note due
plus interest of $75,000 and penalties of $50,000 to a private investor at a
value of ten cents ($0.10) per share.  The market value of the shares
was sixteen cents ($0.16) the date the loan was satisfied resulting in
additional interest booked on the financial statements of $375,000 at December
31, 2008.
 
 In May 2008, the Company issued 580,000
shares in a private placement for $0.25 per Unit.  Each Unit entitled
the holder to acquire 1 common share of the company’s stock at $0.25 per share
and one share purchase warrant, entitling the holder to purchase one share at a
price of $0.40 for a period of 12 months from closing of the private placement,
resulting in the Company receiving $145,000 in cash.  The shares were
issued in a transaction which the Company believes satisfies the requirements of
the Regulation S exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933. The Company used those funds for
working capital.
 
 In April of 2008 the Company issued
100,000 shares in a private placement for $.25 per share which resulted in the
Company receiving $25,000 in cash.  The shares were issued in a
transaction which the Company believes satisfies the requirements of the
Regulation S exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933. The Company used those funds for
working capital.
 
 In April of 2008 the Company issued
125,000 shares of restricted stock recorded at $0.47 per share along with a
$25,000 cash payment in consideration for an extension on the Anderson Oil &
Gas property to May 30, 2008
 
 In March of 2008 we issued 50,000
shares to M2 Law in settlement of outstanding legal invoices totaling $50,000.
The shares were recorded at $0.65 per share for a value of $32,500 and the
difference of $17,500 was booked as forgiveness of debt.
 
 In March 2008, the Company issued
1,820,000 shares in a private placement for $0.10 per Unit.  Each Unit
entitled the holder to acquire 1 common share of the company’s stock at $0.10
per share and one share purchase warrant, entitling the holder to purchase one
share at a price of $0.15 for a period of 18 months from closing of the private
placement, resulting in the company receiving $182,000 in cash.  The
shares were issued in a transaction which the Company believes satisfies the
requirements of the Regulation S exemption from the registration and prospectus
delivery requirements of the Securities Act of 1933. The Company used those
funds for working capital.
 
  17
  NOTE 9 - COMMON STOCK AND
WARRANTS (Continued)
 
 On June 26, 2007 the Company
issued 333,333 shares of common stock to Randall Lanham in total satisfaction of
legal fees in the amount of $20,000.
 
 On May 9, 2007 the company issued
500,000 shares to Phil van Angeren as compensation for his assuming the position
of Exploration Manager of the Corporation. These shares have been valued at the
market price of $0.29.  Compensation expense of $145,000 has been
booked on the accompanying Statement of Operations.
 
 In February 2007, the Company issued
2,653,640 shares in a private placement for $.05 per share which resulted in the
Company receiving $132,682 in cash.  The shares were issued in a
transaction which the Company believes satisfies the requirements of the
Regulation S exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933. The Company is using those funds for
working capital.
 
 NOTE 10 – NOTES
PAYABLE
 
 The Company has a note payable with
Integrated Business Concepts, Inc. that is due upon demand and carries and
interest rate of 12%.  As of September 30, 2009 the amount owing on
the notes is $294,166 which consists of principal in the amount of $199,469 and
interest of $94,697.
 
 NOTE 11 – SUBSEQUENT
EVENTS
 
 As of the date of this report
drilling of the Bond #1-18 well is underway.  The well is expected to
be drilled to a total depth of 5450 ft.
  18




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 Policy and
Estimates.Our Management's Discussion and Analysis of Financial
Condition and Results of Operations section discusses our 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 management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. On an on-going basis, management evaluates its estimates and
judgments, including those related to revenue recognition, accrued expenses,
financing operations, and contingencies and litigation. Management bases its
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. The most
significant accounting estimates inherent in the preparation of our financial
statements include estimates as to the appropriate carrying value of certain
assets and liabilities which are not readily apparent from other
sources.





These
accounting policies are described at relevant sections in this discussion and
analysis and in the notes to the financial statements included in our Quarterly
Report on Form 10-Q for the period ended September 30, 2009.





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.





In
February 2007 and in reliance on the exemption from registration under
Regulation S, we sold 2,653,640 shares at $0.05 for a total of $132,682. We used
those funds for working capital.





19


On May 9,
2007 we issued 500,000 shares to Phil van Angeren as compensation for his
assuming the position of Exploration Manager of the Corporation. These shares
have been valued at the market price of $0.29.  Compensation expense
of $145,000 has been booked on the accompanying Statement of
Operations.





In May
2007, we entered into a Purchase Agreement (“Agreement”) with U3, LLC (“U3”) to
acquire a 100% interest in 1,540 acres that consist of 77 claims of prospective
uranium property located adjacent to the Sheep Mountain Mine in Fremont County,
Central Wyoming, approximately 90 miles southwest of Casper,
Wyoming.  We paid $10,000 to U3 when we executed the Agreement on May
28, 2007. However, we later agreed with U3 not to continue to acquire the
claims, due to delays in receiving WMC numbers on the claims, and we have
requested U3 return the $10,000 as per the agreement terms.  We did
not issue any shares pursuant to this Agreement and as of the date of this
report have also not received the $10,000.





On June
26, 2007, we issued 333,333 shares of common stock to Randall Lanham in total
satisfaction of legal fees in the amount of $20,000.





In
January of 2008 the company acquired an option to purchase a 6,000 acre Oil
& Gas property located in the state of Ohio. The closing date of
the transaction was extended to July 31, 2008 and was subject to
financing.





In
February of 2008 the company signed an agreement with First Diversified
Financial Services (FDFS) and Launchpad Capital to assist the company in
securing the necessary capital for the Anderson Oil and Gas project
acquisition.  The agreement required payment of USD $100,000 to FDFS
as well as 3% of any cash received and 2% of any debt financing completed as a
result of FDFS’s efforts.  Launchpad Capital was to receive a fee of
3.5% of the debt and/or equity portion of the funding received by the company as
a result of their efforts.





In March
2008, the Company issued 1,820,000 shares in a private placement for $0.10 per
Unit.  Each Unit entitled the holder to acquire 1 common share of the
company’s stock at $0.10 per share and one share purchase warrant, entitling the
holder to purchase one share at a price of $0.15 for a period of 18 months from
closing of the private placement, resulting in the Company receiving $182,000 in
cash.  The shares were issued in a transaction which the Company
believes satisfies the requirements of the Regulation S exemption from the
registration and prospectus delivery requirements of the Securities Act of 1933.
The Company used those funds for working capital.





In April
of 2008 we issued 125,000 shares of restricted stock recorded at $0.47 per share
along with a $25,000 cash payment in consideration for an extension on the
Anderson Oil & Gas property to May 30, 2008.





In March
of 2008 we issued 50,000 shares to M2 Law in settlement of outstanding legal
invoices totaling $50,000. The shares were recorded at $0.65 per share for a
value of $32,500 and the difference of $17,500 was booked as forgiveness of
debt.





In April
of 2008 the company issued 100,000 shares in a private placement for $.25 per
share which resulted in the Company receiving $25,000 in cash.  The
shares were issued in a transaction which the Company believes satisfies the
requirements of the Regulation S exemption from the registration and prospectus
delivery requirements of the Securities Act of 1933. The Company used those
funds for working capital.





In May
2008, the Company issued 580,000 shares in a private placement for $0.25 per
Unit.  Each Unit entitled the holder to acquire 1 common share of the
company’s stock at $0.25 per share and one share purchase warrant, entitling the
holder to purchase one share at a price of $0.40 for a period of 12 months from
closing of the private placement, resulting in the Company receiving $145,000 in
cash.  The shares were issued in a transaction which the Company
believes satisfies the requirements of the Regulation S exemption from the
registration and prospectus delivery requirements of the Securities Act of 1933.
The Company used those funds for working capital.





20


In June
2008 the company received a loan of $500,000 from a private
investor.  The loan carried an interest rate of 15% and was due and
payable on or before July 31, 2008.  The terms of the note allow for a
1% per week penalty up to a maximum of 10% at which time the note and all
outstanding interest and penalties will be converted into 6,250,000 shares of
the company’s stock. The Lender had the right at his sole discretion, to convert
any unpaid debt, along with any interest due, into free-trading common stock of
the Company at a conversion price of forty cents ($0.40) per share. The funds
from this loan were used for the Ohio Property Extension payment, payment for a
third party engineering evaluation of the Ohio Property and working
capital.





In June
2008 we paid $300,000 in consideration for an extension on the Ohio Oil &
Gas property to July 31, 2008.





In
September 2008 the company issued 6,250,000 shares as settlement for a note
($500,000), interest ($75,000) and penalties ($50,000) totaling $625,000 from a
private lender.





In
October 2008, the company issued notice to the landowner on the Ohio Oil &
Gas property of its intent to not pursue the acquisition of the
project.  The company has also issued a demand letter to the land
owner for the return of the $300,000 paid in June for the
extension.  No response has been received from the land owner to date,
the company will continue to pursue the return of the funds.  Since
the entire amount is deemed abandoned on December 31, 2008, $475,949 has been
written off as an exploration expense.





In April
2009, the company extended the expiration of its Series B warrants to May 8,
2010.





In April
2009, Santeo Financial Corporation 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.  The $15,000 was written off of
the payable and booked as additional paid in capital.





During
the period ending June 30, 2009 the company acquired 36% in the drilling and
development of the Gleason #4-16 well located in Oklahoma, USA. The company
capitalized $135,785 for the drilling of the well during this period.  The
well has been completed and is on production.





In August
2009, the company extended the expiration of its Series A Warrants to September
25, 2010.





During
the period ending September 30, 2009 the company raised $137,500 for the
drilling of its next well, the Bond.  The company will acquire a 25%
interest in this well with 60% of the revenue received from this well being
distributed proportionately to the investors.  The company issued
550,000 shares relating to this financing.  The company has 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 well.  This commission totaled $12,500
which was in turn converted to an interest in the well.  The company
elected to not dilute the investor’s portion of the interest in the well but to
dilute the companies remaining interest in the well after paying the investors
portion.  Thus the breakdown of the potential revenue from the
company’s 25% interest in the Bond well will be as follows: 60% to the
investors, 35% to the company and the remaining 5% will be allocated to the
3rd
party as per the terms of the commission agreement.  .





Liquidity and Capital
Resources.We had cash of $125,616 and accounts
receivable of $9,255 as of September 30, 2009, all of which comprised our total
current assets. As of the nine month period ended September 30, 2009, we also
had fixed assets of $648 represented by furniture and fixtures of $1,851 less
accumulated depreciation of $1,203. The decrease in total fixed assets is due
solely to depreciation.  We also had $161,873 of Oil & Gas
Property and Deferred Expenditures. Therefore, for the nine month period ended
September 30, 2009, we had total assets of $297,392





For the
nine month period ended September 30, 2009, we had $553,491 in total current
liabilities, which was represented by $93,157 in accounts payable, $294,166 in
notes payable, $146,323 in related party accounts payable and $19,845 in
shareholder loans.  Therefore, for the nine months ended September 30,
2009 we had total liabilities of $553,491. 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.





21


Results
of Operations.





Revenues and Gross Profit
(Loss).We had revenue of $6,755 and associated costs of
$10,196 for the nine month period ended September 30, 2009 as compared to no
revenue and associated costs  for the nine month period ended
September 30, 2008. Therefore, for the nine period ended September 30,2009, we
had a loss before other expenses of $3,441.





Operating Expenses and Net Loss.We had a loss from operations of $194,513 for the nine month period ended
September 30, 2009, as compared to a loss from operations of $237,200 for the
nine month period ended September 30, 2008. For the nine month period ended
September 30, 2009, our operating expenses were comprised of general and
administrative expenses of $37,477 and consulting fees in the amount of
$153,595. We also had $22,121 in interest expense and a $35,811 foreign currency
exchange loss. Therefore, our net loss for the nine month period ending
September 30, 2009 was $252,445 as compared to a net loss of $349,850 for the
nine month period ended September 30, 2008.





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 $125,616 as of September 30, 2009. In the opinion of management, our
available funds will not satisfy our working capital requirements for the next
twelve months.





In
September 2009 the company closed a unit funding at 55 units totaling
$137,500.  The Company has a 25% participation in the Bond #1-18 well,
with 60% of the company’s net revenue received being allocated proportionally to
the unit holders.  The funds were raised via a unit private
placement.  Each of the 55 units was priced at $2,500 per unit
totaling $137,500 cash and consisted of 10,000 restricted common shares and
20,000 share purchase options at $0.25 per share with an expiration date of
March 10, 2011. The Company issued a total of 550,000 shares and 1,100,000
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 10,000 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 $12,500 relating to
the financing to a 3rd
party.  The $12,500 was converted to a 5% interest in the company’s
share of the net revenue received from the Bond #1-18 well.





In May
2009 the company closed its intended unit funding at 72 units totaling
$180,000.  The Company has a 36% participation in the Gleason #4-16
well, with 67% of the company’s net revenue received being allocated
proportionally to the unit holders.  The funds were raised via a unit
private placement.  Each of the 72 units was priced at $2,500 per unit
totaling $180,000 cash and consisted of 5,000 restricted common shares and
10,000 share purchase options at $0.25 per share with an expiration date of
November 15, 2010.  The Company issued a total of 360,000 shares and
720,000 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 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.





22


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 44.7% 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.








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 September 30, 2009, 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.





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.





None.


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.




24


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 corporationNovember
      20, 2009
              By:
              /s/ Ron RuskowskyRon
      RuskowskyIts:
              Principal
      executive officerPrincipal
      accounting officerPresident,
      CEO and a directorNovember
      20, 2009
              By:
              /s/ Roger JanssenRoger
      JanssenIts:
              Vice-President,
      Secretary and a director