U.S. SECURITIES AND EXCHANGE
COMMISSION
 Washington,
D.C. 20549
 
 FORM 10-K
 
 ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
ACT OF 1934
 
 For
the fiscal year ended December 31, 2008
 Commission
file number: 000-27739
 
 ROYAL
QUANTUM GROUP, INC.
 (Exact
name of registrant as specified in its charter)
 
 Nevada
              
              77-0517966(State
      of incorporation)
              
              (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
 (Registrant’s
telephone number, including area code)
 
 Securities
registered pursuant to Section 12(b) of the Exchange Act:
 None
 
 Securities
registered pursuant to Section 12(g) of the Exchange Act:
 Common
Stock, Par Value $0.001
 
 Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes  x No
 ̈
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.   x
  1
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large
      accelerated filer  ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
                (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).  Yes   ̈ No x
 
 State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity as of a specified
date within the past 60 days.  (See definition of affiliate in Rule
12b-2 of the Exchange Act.)  As of February 15, 2009, approximately
$1,062,013.
 
 State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date.  As of February 5, 2009, there were
48,020,338 shares of the issuer’s $.001 par value common stock issued and
outstanding.
 
 Documents
Incorporated By Reference:  None
  2
 
 
 PART
I
 
 Item 1. Description of
Business.
 
 Our Background.  The
Company was incorporated in Nevada in October, 1996, under the name PSM CORP,
and was formed for the purpose of either merging with or acquiring an operating
company with an operating history and assets.  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 January 11, 2000, the company
changed its name to Mentor On Call, Inc.
 
 On
September 30, 2002, we entered into a Share Exchange Agreement with SuperYachts
Holdings, Inc., a private Nevada corporation (“SuperYachts Holdings”), and its
stockholders, to acquire 100% of the issued and outstanding shares of
SuperYachts Holdings.  In consideration for acquiring all of
SuperYachts Holdings’ issued and outstanding shares, we agreed to issue its
stockholders 15,000,000 shares of our common stock.  Effective as of
October 1, 2002, the Company’s name was changed to Platinum SuperYachts,
Inc.  At that point, our business direction included yacht building,
sales, re-sales and yacht services, such as supplies, maintenance, and delivery
as well as full-scale contracted care of yachts.  The core business
was intended to be the building of yachts in excess of 80 to 200
feet.  We had planned to hire subcontractors on a per job basis for
the construction of the vessels.
 
 We were
not successful in the mega yacht industry due to two important
factors.  First, purchasers of yachts in the price range of our
products were not interested in building with a manufacturer that was relatively
new in the industry.  The preference of the mega yacht buyer is to
work with a builder that has a history in the business with product available
for the client to view.  Second, we were unable to close a financing
large enough to allow the company to build a spec yacht.  The ability
to have a spec yacht available to show our clients the high quality
craftsmanship of which we were capable would have significantly increased our
ability to sell the product.  As the share price of the Company’s
common stock began to decrease, we were faced with the problem of significant
shareholder dilution to secure a funding necessary to build a spec
product.  Management did not feel it was in the best interest of the
shareholders to attempt a multi-million dollar financing while faced with such a
low share price.  Accordingly, we sold all of the Company’s assets
related to the yacht business back to the former stockholders of PR Marine Inc.
on September 29, 2005 in exchange for the former stockholders of PR Marine Inc.
agreeing to cancel all of their outstanding shares of the
Company.  After completing the sale of the assets related to the yacht
business we changed the name of the Company to Royal Quantum Group on January
10, 2006.
 
 Our 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 oil and gas and mineral properties located within favorable
geo-political climates.
 
 Our Properties.We
currently do not own any property, nor do we hold any mining claims or other
interests in any real 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.
 
 On July
18, 2007, the Agreement was amended to specify that we make the following
payments to U3 when the claim numbers (“WMC numbers”) were issued by the Bureau
of Land Management (“BLM”) on each claim, and on each of an additional 100
claims within a three-mile radius of the claims:
 
 ·
              $50,000
      on or before October 1, 2007;
 ·
              $50,000
      on or before  November 1,
2007;
 ·
              $50,000
      on or before December 1, 2007; and
 ·
              $70,000
      on or before January 15, 2008.
 
 The
Amendment also provided for a closing on or before September 3,
2007.
  3
 
 Pursuant
to the Agreement, we also agreed to issue 1,000,000 restricted shares of our
common stock to U3 when the claims were transferred to us, clear of any liens or
encumbrances.  In addition, we agreed to begin a $150,000 work program
on the Sheep Mountain Claim block before June 1, 2008, with the option to
undertake an additional $150,000 work program on the claims if we paid an
additional $200,000 in cash to U3 and issue an additional 500,000 restricted
shares of our common stock to U3. Provided we elect to continue on or before
June 1, 2009, we agreed to pay U3 a final $200,000 and issue an additional
1,250,000 restricted shares of our common stock to U3 and reserve a 2% NSR for
U3 on any production from the claims. The Agreement also provides that we will
register the shares we issued to U3 if we close a financing of more than
$1,000,000. If we drop the claims at any point, the claims are transferred back
to U3.
 
 However,
we later agreed with U3 not to continue to acquire the claims as outlined above,
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.  After numerous attempts to collect on the
$10,000, the company has written the debt off as bad debt expense.
 
 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 Companyused 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.
 
 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.
  4
 
 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 we issued 6,250,000 shares as satisfaction for the $500,000 note,
interest and penalties due to a private investor.
 
 In
October, 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.
 
 Our Competition.The
competition for acquiring mineral or oil and gas and resource properties for
exploration and development is intense. We may not be able to compete
successfully against current or future competitors. Our competitors vary in size
and in the scope and breadth of the services they can offer to potential merger
or acquisition candidates. We encounter competition from a variety of companies.
All of these mining companies are seeking properties of merit and availability
of funds. We will have to compete against such companies to acquire the funds to
develop any oil, gas or mineral claims. The availability of funds for
exploration is sometimes limited and we may find it difficult to compete with
larger and more well-known companies for capital. Even though we have the right
to the oil, gas or mineral resources on our claims there is no guarantee we will
be able to raise sufficient funds in the future to maintain the oil, gas or
mineral claims in good standing. Therefore, if we do not have sufficient funds
for exploration our claims might lapse and be claimed by other parties. We might
be forced to seek a joint venture partner to assist in the exploration of our
oil, gas or mineral claims. In this case, there is the possibility that we might
not be able to pay our proportionate share of the exploration costs and might be
diluted to an insignificant carried interest.
 
 The
exploration business is highly competitive and highly fragmented, dominated by
both large and small mining or oil and gas companies. Success will largely
depend on our ability to attract talent from the field and our ability to fund
our operations. There is no assurance that our operations and expansion plans
will be realized.
 
 Government Regulation. We are
subject to federal, state and local laws and regulations applied to businesses
generally, such as payroll taxes on the state and federal levels. In general,
our publications are not subject to particular regulatory requirements. We
believe that we are in conformity with all applicable laws in all relevant
jurisdictions. We may be prevented from operating if our activities are not in
compliance and must take action to comply with any federal, state, or local
regulation.
 
 We are
committed to complying with and, to our knowledge, are in compliance with all
governmental and environmental regulations. Permits from a variety of regulatory
authorities are required for many aspects of oil, gas or mine operation and
reclamation. We cannot predict the extent to which future legislation and
regulation could cause additional expense, capital expenditures, restrictions,
and delays in the exploration of our properties.
 
 Our
activities are not only subject to extensive federal, state and local
regulations controlling the mining of and exploration for mineral or oil and gas
properties, but also the possible effects of such activities upon the
environment. Future legislation and regulations could cause additional expense,
capital expenditures, restrictions and delays in the exploration of our
properties, the extent of which cannot be predicted. Permits may also be
required from a variety of regulatory authorities for many aspects of mine
operation and reclamation. In the context of environmental permitting, including
the approval of reclamation plans, we must comply with known standards, existing
laws and regulations that may entail greater or lesser costs and delays
depending on the nature of the activity to be permitted and how stringently the
regulations are implemented by the permitting authority. We are not presently
aware of any specific material environmental constraint affecting our properties
that would preclude the economic development or operation of any specific
property.
 
 It is
reasonable to expect that compliance with environmental regulations will
increase our costs. Such compliance may include feasibility studies on the
surface impact of our proposed exploration operations; costs associated with
minimizing surface impact; water treatment and protection; reclamation
activities, including rehabilitation of various sites; on-going efforts at
alleviating the mining impact on wildlife; and permits or bonds as may be
required to ensure our compliance with applicable regulations. It is possible
that the costs and delays associated with such compliance could become so
prohibitive that we may decide not to proceed with exploration on any of our
mineral or oil and gas properties.
  5
 
 We are
prepared to engage professionals, if necessary, to ensure regulatory compliance
but in the near term expect our activities to require minimal regulatory
oversight. If we expand the scope of our activities in the future it is
reasonable to expect expenditures on compliance to rise.
 
 Our Research and Development.We are not currently conducting any research and development activities
other than property explorations and assessments. We do not anticipate
conducting such activities in the near future. If we generate significant
revenues, we may expand our product line by entering into relationship
additional with third parties.
 
 Our Intellectual Property.We
do not presently own any patents, trademarks, licenses, concessions or
royalties.
 We own
the Internet domain name www.royalquantum.com. Under current domain name
registration practices, no one else can obtain an identical domain name, but
someone might obtain a similar name, or the identical name with a different
suffix, such as “.org”, or with a country designation. The regulation of domain
names in the United States and in foreign countries is subject to change, and we
could be unable to prevent third parties from acquiring domain names that
infringe or otherwise decrease the value of our domain names.
 
 Employees. As of February 15,
2009, we have no full-time employees and no part-time employees. We believe we
may need to hire three additional employees in the next twelve months. From
time-to-time, we anticipate that we may use the services of independent
contractors and consultants to support our expansion and business
development.
 
 Our
Facilities.  Royal Quantum has entered into a month-to-month
lease agreement for an office space in Calgary, Alberta, Canada.  This
lease can be canceled on one month’s written notice. The current lease requires
rental payments of approximately $250 ($250 Canadian Dollars) per month plus
applicable taxes.  We believe that our facilities are adequate for our
needs and that additional suitable space will be available on acceptable terms
as required. We do not own any real estate.  Our telephone number is
(403) 288-4321.
 
 Item 1A. Risk
Factors.
 
 Investing
in our common stock involves a high degree of risk. Any potential investor
should carefully consider the risks and uncertainties described below before
purchasing any shares of our common stock. The risks described below are those
we currently believe may materially affect us.
 
 Risks Related to our
Business:
 
 We
have a limited operating history upon which an evaluation of our prospects can
be made.
 
 We have
recently adopted our current business plan.  Our lack of operating
history in our current line of business makes an evaluation of our business and
prospects very difficult. Our prospects must be considered speculative,
considering the risks, expenses, and difficulties frequently encountered in the
establishment of a new business. We cannot be certain that our business will be
successful or that we will generate significant revenues and become
profitable.
 
 We
anticipate that we will need to raise additional capital to continue our
operations. Our failure to raise additional capital will significantly affect
our ability to fund our proposed activities.
 
 To
acquire properties for exploration and development, we will be required to raise
additional funds. We do not know if we will be able to acquire additional
financing. We anticipate that we will need to spend significant funds on
acquiring properties for exploration and development. Our failure to obtain
additional funds would significantly limit or eliminate our ability to fund
those activities.
  We have incurred a net loss since
inception and expect to incur net losses for the foreseeable
future.
  As of
December 31, 2008, our net loss since inception was $4,877,116. We expect to
incur significant operating and capital expenditures and, as a result, we expect
significant net losses in the future. We will need to generate significant
revenues to achieve and maintain profitability. We may not be able to generate
sufficient revenues to achieve profitable operations.
  6
  Our
future success is highly dependent on the ability of management to locate and
acquire mineral properties for exploration and development.
 
 The
nature of our operations is highly speculative and there is a consequent risk of
loss of your investment. The success of our plan of operation will depend to a
great extent on the mineral properties that we acquire. We cannot assure you
that we will be successful in acquiring properties for exploration and
development.
 
 The
costs to meet our reporting requirements as a public company subject to the
Exchange Act of ’34 are substantial and may result in us having insufficient
funds to operate our business.
 
 We will
incur ongoing expenses associated with professional fees for accounting and
legal expenses associated with being a public company. Those fees will be higher
if our business volume and activity increases.  Those obligations will
reduce our ability to fund our operations and may prevent us from meeting our
normal business obligations.
 
 Our
auditors have questioned our ability to continue operations as a “going
concern.” Investors may lose all of their investment if we are unable to
continue operations.
  We hope
to obtain revenues from future operations.  In the absence of
significant operations, we may seek to raise additional funds to meet our
working capital needs principally through the additional sales of our
securities.  However, we cannot guaranty that we will be able to
obtain sufficient additional funds when needed, or that such funds, if
available, will be obtainable on terms satisfactory to us. As a result, our
auditors believe that substantial doubt exists about our ability to continue
operations.
  Risks Related to Owning Our
Common Stock
  Our
officers, directors and principal shareholders own approximately 45% of our
outstanding shares of common stock, allowing these shareholders control matters
requiring approval of our shareholders.
 
 Our
officers, directors and principal shareholders beneficially own, in the
aggregate, approximately 45% of our outstanding shares of common
stock.  Our officers, directors and principal shareholders can control
matters requiring approval by our security holders, including the election of
directors.
  Our
common stock may be subject to penny stock regulations which may make it
difficult for investors to sell their stock.
  The
Securities and Exchange Commission has adopted rules that regulate broker-dealer
practices in connection with transactions in “penny stocks”.  Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).  The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from those rules, deliver a
standardized risk disclosure document prepared by the Commission, which
specifies information about penny stocks and the nature and significance of
risks of the penny stock market.  The broker-dealer also must provide
the customer with bid and offer quotations for the penny stock, the compensation
of the broker-dealer and salesperson in the transaction, and monthly account
statements indicating the market value of each penny stock held in the
customer's account.  In addition, the penny stock rules require that,
prior to a transaction in a penny stock not otherwise exempt from those rules,
the broker-dealer must make a special written determination that the penny stock
is a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction.  These disclosure requirements may have
the effect of reducing the trading activity in the secondary market for a stock
that becomes subject to the penny stock rules.  If our common stock
becomes subject to the penny stock rules, holders of our shares may have
difficulty selling those shares.
 
 Item 1B. Unresolved Staff
Comments
 
 There are
no unresolved staff comments.
  7
 
 Item 2. Description of
Property.
 
 Property held by us.As of
December 31, 2008 and 2007, we held no real property and do not presently own
any interests in real estate, mining or otherwise.
 
 Our
Facilities.  Royal Quantum has entered into a month-to-month
lease agreement for an office space in Calgary, Alberta, Canada.  This
lease can be canceled on one month’s written notice. The current lease requires
rental payments of approximately $250 ($250 Canadian Dollars) per month plus
applicable taxes. We believe that our facilities are adequate for our needs and
that additional suitable space will be available on acceptable terms as
required. We do not own any real estate.  Our telephone number is
(403) 288-4321.
 
 Item 3. Legal
Proceedings.
 
 There are
currently no legal actions pending against us nor are any legal actions
contemplated by us at this time.
 
 Item 4. Submission of
Matters to Vote of Security Holders.
 
 Not
applicable.
  PART
II
 
 Item 5. Market Price for
Common Equity and Related Stockholder Matters.
 
 Market Information.Our common stock is listed
on the OTC Bulletin Board under the symbol "RYQG". The quotations provided are
for the over the counter market which reflect interdealer prices without retail
mark-up, mark-down or commissions, and may not represent actual transactions.
The bid prices included below have been obtained from sources believed to be
reliable:
  Quarter
      ended:
              
              High
              
              LowDecember
      31, 2008
              
              0.035
              
              0.035September
      30, 2008
              
              0.08
              
              0.07June
      30, 2008
              
              0.07
              
              0.07March
      31, 2008
              
              0.52
              
              0.43December
      31, 2007
              
              0.115
              
              0.115September
      30, 2007
              
              0.19
              
              0.112June
      30, 2007
              
              0.27
              
              0.26March
      31, 2007
              
              0.21
              
              0.19
  Reports to Security Holders.We are a reporting company with the Securities and Exchange Commission,
or SEC.  The public may read and copy any materials filed with the
Securities and Exchange Commission at the Security and Exchange Commission’s
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public
may also obtain information on the operation of the Public Reference Room by
calling the Securities and Exchange Commission at 1-800-SEC-0330.  The
Securities and Exchange Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Securities and Exchange Commission.
The address of that site is http://www.sec.gov.
 
 We had
48,020,338 shares of common stock issued and outstanding as of December 31,
2008, which were held by approximately 94 shareholders.
  8
 
 There are
1,820,000 shares available to be purchased under option at $0.15/share until
September 25, 2009 pursuant to the private placement financing completed in
March of 2008.  There are 580,000 shares available to be purchased
under option at $0.40/share until May 8, 2009 pursuant to the private placement
financing completed in April 2008.  There are no outstanding options
or warrants to purchase, or securities convertible into, shares of our common
stock. There are no outstanding shares of our common stock that we have agreed
to register under the Securities Act for sale by security holders.
 
 Dividend Policy.We have not
paid a cash dividend on our common stock in the last two fiscal years.
Management anticipates that earnings, if any, will be retained to fund our
working capital needs and the implementation of our business plan. The payment
of any dividends is at the discretion of the Board of Directors.
 
 Equity Compensation Plan.We
do not have any securities authorized for issuance under any equity compensation
plan.  We also do not have an equity compensation plan.
 
 Recent Sales of Unregistered
Securities.There have been no sales of unregistered securities within
the last three (3) years which would be required to be disclosed pursuant to
Item 701 of Regulation S-B, except for the following:
 
 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.
 
 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.
  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 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.
  9
 
 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 companies 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
September 2008 we issued 6,250,000 shares as satisfaction for the $500,000 note
due to a private investor. This included interest and penalties.
 
 The
foregoing securities were offered and sold without registration under the
Securities Act to sophisticated investors who had access to all information that
would have been in a registration statement in reliance on the exemption
provided by Section 4(2) under the Securities Act and Regulation D
thereunder.
 
 Use of Proceeds of Registered
Securities.There were no sales or proceeds during the calendar year
ended December 31, 2008, for the sale of registered securities.
 
 Penny Stock
Regulation.  Shares of our common stock will probably be
subject to rules adopted the Securities and Exchange Commission that regulate
broker-dealer practices in connection with transactions in “penny
stocks”.  Penny stocks are generally equity securities with a price of
less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in those securities is provided by the
exchange or system).  The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from those rules,
deliver a standardized risk disclosure document prepared by the Securities and
Exchange Commission, which contains the following:
 
 ·
              a
      description of the nature and level of risk in the market for penny stocks
      in both public offerings and secondary
trading;
 ·
              a
      description of the broker’s or dealer’s duties to the customer and of the
      rights and remedies available to the customer with respect to violation to
      such duties or other requirements of securities’
  laws;
 ·
              a
      brief, clear, narrative description of a dealer market, including "bid"
      and "ask” prices for penny stocks and the significance of the spread
      between the "bid" and "ask" price;
 ·
              a
      toll-free telephone number for inquiries on disciplinary
      actions;
 ·
              definitions
      of significant terms in the disclosure document or in the conduct
      of  trading in penny stocks;
and
 ·
              such
      other information and is in such form (including language, type, size and
      format), as the Securities and Exchange Commission shall require by rule
      or regulation.
  Prior to
effecting any transaction in penny stock, the broker-dealer also must provide
the customer the following:
  ·
              the
      bid and offer quotations for the penny
stock;
 ·
              the
      compensation of the broker-dealer and its salesperson in the
      transaction;
 ·
              the
      number of shares to which such bid and ask prices apply, or other
      comparable information relating to the depth and liquidity of the market
      for such stock; and
 ·
              monthly
      account statements showing the market value of each penny stock held in
      the customer’s account.
 
 In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably
statement.  These disclosure requirements may have the effect of
reducing the trading activity in the secondary market for a stock that becomes
subject to the penny stock rules.  Holders of shares of our common
stock may have difficulty selling those shares because our common stock will
probably be subject to the penny stock rules.
 
 Purchases of Equity Securities.None during the period covered by this report.
  10
  Item
6.                      Selected Financial
Data
 
 Not
applicable to smaller reporting companies.
 
 Item 7. Management’s
Discussion and Analysis of Financial Condition or 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 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. No assurance can be given
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.
 
 Overview .Our
focus is to acquire near term cash flow producing mining projects for
exploration and development with the intent to bring the projects to
feasibility.
 
 As of
December 31, 2008, we are in the development stage and have not commenced our
planned principal operations. As a development stage company, we have had
recurring losses during this phase of operations. Management is currently
developing a plan to raise capital to develop the business plan. No commitments
to provide funding to the Company have been confirmed as of the date of this
report.
 
 Our
current focus is on the acquisition, exploration and development of mineral
resource properties located within favorable geo-political
climates.
  11
  For the year ended December
31, 2008 as compared to the year ended December 31, 2007.
 
 Results
of Operations.
 
 Revenues.The
Company had no revenue for the year ended December 31, 2008 or for the year
ended December 31, 2007.
 
 Operating Expenses and Net Loss.The Company’s net loss from operations of $777,139 for the year ended
December 31, 2008 was comprised of general and administrative expenses of
$63,254, consulting fees in the amount of $237,936, and exploration expenses of
$475.949. The Company also had $440,078 in total other expenses, including
$55,060 in foreign currency exchange gain, $531,658 net interest, $46,520 gain
from forgiveness of debt, and $10,000 write-down of assets. Therefore, the
Company’s net loss from continuing operations was $1,217,217.  As the
Company had no net income or loss from discontinued operations, its net loss for
the year ended December 31, 2008 was $1,217,217.  In comparison to the
year ended December 31, 2007,   The Company’s net loss from
operations of $351,623 was comprised of general and administrative expenses of
$85,820, consulting fees in the amount of $120,803 and compensation expense of
$145,000.  The Company also had $63,509 in total other expenses,
including $37,927 in foreign currency exchange loss and $25,582 represented by
net interest. Therefore, the Company’s net loss from continuing operations was
$415,132. As the Company had no net income or loss from discontinued operations,
its net loss for the year ended December 31, 2007 was $415,132.
 
 Liquidity and Capital
Resources.The Company had cash of $90,363 as of
December 31, 2008, as compared to $3,448 as of December 31, 2007.  As
of the year ended December 31, 2008, the Company also had fixed assets of $926,
represented by furniture and fixtures of $1,851 less accumulated depreciation of
$925 as compared to the year ended December 31, 2007, the Company had fixed
assets of $1,296, represented by furniture and fixtures of $1,851 less
accumulated depreciation of $555.  The Company also had $1 in
intangible assets and $10,000 in other assets for 2007.
 
 For the
year ended December 31, 2008, the Company had $439,944 in total current
liabilities, which was represented by $86,082 in accounts payable, $235,755 in
demand notes payable, $98,262 in related party accounts payable, and $19,845 in
shareholder loans.  This is in comparison to the year ended December
31, 2007, where the Company had $589,432 in total current liabilities, which was
represented by $184,342 in accounts payable, $259,157 in demand notes payable,
$120,088 in related party accounts payable, and $25,845 in shareholder
loans.
 
 The
Company had no long term liabilities, commitments or
contingencies.  For the year ended December 31, 2008, the Company had
total liabilities of $439,944.  This is in comparison to the year
ended December 31, 2007, where the Company had total liabilities of
$589,432.  The Company is not aware of any other known trends, events
or uncertainties which may affect its future liquidity.
 
 Our Plan of Operation for the Next
Twelve Months.   Our focus is to acquire oil and gas 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 $90,363 as of December 31, 2008. In the opinion of management, our
available funds will not satisfy our working capital requirements for the next
twelve months.
 
 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. Besides generating revenue from our
current operations, 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 increases in the legal and accounting costs of becoming 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. However, our officers, directors and principal shareholders
are not committed to contribute funds to pay for our expenses.
  12
 
 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 45% 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. However, our officers, directors and principal shareholders are not
committed to contribute additional capital.
  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 property interests or holdings, 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 7A. Quantitative and
Qualitative Disclosure About Market Risk
 
 Not
Applicable.
  13
 
 Item 8. Financial
Statements
   ROYAL
      QUANTUM GROUP, INC.(A
      Development Stage Company)CONSOLIDATED BALANCE
      SHEETS(Audited)
                
                
                (Audited)December
      31,
                
                
                December
      31,2008
                
                
                2007ASSETSCurrent
      Assets:Cash
      & Cash Equivalents
                
                $
                90,363
                
                
                $
                3,448Total
      Current Assets
                
                
                90,363
                
                
                
                3,448Fixed
      Assets:Furniture
      & Fixtures
                
                
                1,851
                
                
                
                1,851Less:
      Accumulated Depreciation
                
                
                (925
                )
                
                
                (555
                )Total
      Fixed Assets
                
                
                926
                
                
                
                1,296Other
      Assets:Intangible
      Assets
                
                
                1
                
                
                
                1Mineral
      Property & Deferred Expenditures
                
                
                0
                
                
                
                10,000Total
      Other Assets
                
                
                1
                
                
                
                10,001Total
      Assets
                
                $
                91,290
                
                
                $
                14,745LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      Payable
                
                $
                86,082
                
                
                $
                184,342Notes
      Payable
                
                
                235,755
                
                
                
                259,157Related
      Party Payables
                
                
                98,262
                
                
                
                120,088Shareholder
      Loans
                
                
                19,845
                
                
                
                25,845Total
      Current Liabilities
                
                
                439,944
                
                
                
                589,432Total
      Liabilities
                
                
                439,944
                
                
                
                589,432Stockholders'
      Equity:Common
      Stock, Par value $.001Authorized
      500,000,000 sharesIssued
      48,020,338 and 39,095,338Shares
      at December 31, 2008 and Dec 31, 2007
                
                
                48,020
                
                
                
                39,095Paid-in
      Capital
                
                
                4,480,442
                
                
                
                3,046,117Deficit
      Accumulated During theDevelopment
      Stage
                
                
                (4,877,116
                )
                
                
                (3,659,899
                )Total
      Stockholders' Equity
                
                
                (348,654
                )
                
                
                (574,687
                )Total
      Liabilities and Stockholders' Equity
                
                $
                91,290
                
                
                $
                14,745
 The
accompanying notes are an integral part of the financial
statements
  14
 
  ROYAL QUANTUM GROUP,
      INC.(A Development Stage
      Company)STATEMENTS OF
      OPERATIONSCumulativesinceAugust
      23,For
      the twelve months
                  
                  
                  2002ended
                  
                  
                  inception
      ofDecember
      31,
                  
                  
                  development2008
                  
                  
                  2007
                  
                  
                  stageRevenues
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  --
                  
                  
                  
                  -
                  
                  
                  
                  -ExpensesConsulting
      Fees
                  
                  
                  237,936
                  
                  
                  
                  120,803
                  
                  
                  
                  1,047,513Compensation
      Expense
                  
                  
                  -
                  
                  
                  
                  145,000
                  
                  
                  
                  273,790Exploration
      Expense
                  
                  
                  475,949
                  
                  
                  
                  -
                  
                  
                  
                  475,949General
      & Administrative
                  
                  
                  63,254
                  
                  
                  
                  85,820
                  
                  
                  
                  477,976Loss
      from Operations
                  
                  
                  (777,139
                  )
                  
                  
                  (351,623
                  )
                  
                  
                  (2,275,228
                  )Other
      Income (Expenses)Write-down
      of Assets
                  
                  
                  (10,000
                  )
                  
                  
                  -
                  
                  
                  
                  (157,986
                  )Foreign
      currency exchange gain (loss)
                  
                  
                  55,060
                  
                  
                  
                  (37,927
                  )
                  
                  
                  17,133Interest
      (Expense)
                  
                  
                  (531,658
                  )
                  
                  
                  (25,582
                  )
                  
                  
                  (673,779
                  )Interest
      Income
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  263Forgiveness
      of debt
                  
                  
                  46,520
                  
                  
                  
                  -
                  
                  
                  
                  46,520Total
      Other Income (Expense)
                  
                  
                  (440,078
                  )
                  
                  
                  (63,509
                  )
                  
                  
                  (767,849
                  )Net
      Loss from Continuing Operations
                  
                  $
                  (1,217,217
                  )
                  
                  $
                  (415,132
                  )
                  
                  $
                  (3,043,077
                  )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
                  
                  $
                  (1,217,217
                  )
                  
                  $
                  (415,132
                  )
                  
                  $
                  (4,877,116
                  )Basic
      and Diluted Loss Per ShareContinuing
      Operations
                  
                  
                  (0.03
                  )
                  
                  
                  (0.01
                  )Loss
      per share
                  
                  
                  (0.03
                  )
                  
                  
                  (0.01
                  )Weighted
      Average Shares Outstanding
                  
                  
                  43,316,636
                  
                  
                  
                  38,026,889
   The
accompanying notes are an integral part of the financial
statements
  15
  ROYAL QUANTUM GROUP,
      INC.(A Development Stage
      Company)STATEMENTS OF STOCKHOLDER'S
      EQUITYDeficitAccumulatedSince
      August23,
      2002Inception
      ofPaid-in
                  
                  
                  Retained
                  
                  
                  DevelopmentShares
                  
                  
                  Par
      Value
                  
                  
                  Capital
                  
                  
                  Deficit
                  
                  
                  StageBalance
      at August 23, 2002(Inception)
                  
                  
                  14,000,000
                  
                  
                  $
                  14,000
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Issued
      stock in an asset acquisitionagreement
                  
                  
                  10,000,000
                  
                  
                  
                  10,000
                  
                  
                  
                  2,233,000
                  
                  
                  
                  -
                  
                  
                  
                  -Issued
      stock in association withplan
      of reorganization
                  
                  
                  858,365
                  
                  
                  
                  858
                  
                  
                  
                  (72,260
                  )
                  
                  
                  -
                  
                  
                  
                  -Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (65,638
                  )Balance
      at December 31, 2002
                  
                  
                  24,858,365
                  
                  
                  $
                  24,858
                  
                  
                  $
                  2,160,740
                  
                  
                  $
                  -
                  
                  
                  $
                  (65,638
                  )Issued
      stock in association with privateplacement
                  
                  
                  10,000
                  
                  
                  
                  10
                  
                  
                  
                  14,990
                  
                  
                  
                  -
                  
                  
                  
                  -Issued
      stock in exchange for services
                  
                  
                  170,000
                  
                  
                  
                  170
                  
                  
                  
                  370,430
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (825,198
                  )Balance
      at December 31, 2003
                  
                  
                  25,038,365
                  
                  
                  $
                  25,038
                  
                  
                  $
                  2,546,160
                  
                  
                  $
                  -
                  
                  
                  $
                  (890,836
                  )Issued
      stock in exchange for cash
                  
                  
                  100,000
                  
                  
                  
                  100
                  
                  
                  
                  49,900
                  
                  
                  
                  -
                  
                  
                  
                  -Contributed
      capital
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,842
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,785,953
                  )Balance
      at December 31, 2004
                  
                  
                  25,138,365
                  
                  
                  $
                  25,138
                  
                  
                  $
                  2,598,902
                  
                  
                  $
                  -
                  
                  
                  $
                  (2,676,789
                  )Issued
      stockin exchange for services
                  
                  
                  8,164,118
                  
                  
                  
                  8,164
                  
                  
                  
                  120,627
                  
                  
                  
                  -
                  
                  
                  
                  -Issued
      stock for cancellation of debt
                  
                  
                  8,805,882
                  
                  
                  
                  8,806
                  
                  
                  
                  140,894
                  
                  
                  
                  -
                  
                  
                  
                  -Cancelled
      stock in connection
                  
                  
                  (9,000,000
                  )
                  
                  
                  (9,000
                  )
                  
                  
                  (234,000
                  )
                  
                  
                  -
                  
                  
                  
                  -with
      disposition of assetsNet
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (169,067
                  )Balance
      at December 31, 2005
                  
                  
                  33,108,365
                  
                  
                  $
                  33,108
                  
                  
                  $
                  2,626,423
                  
                  
                  $
                  -
                  
                  
                  $
                  (2,845,856
                  )Stock
      issued for purchase of X-treme
                  
                  
                  250,000
                  
                  
                  
                  250
                  
                  
                  
                  2,250
                  
                  
                  
                  -
                  
                  
                  
                  -Issued
      stock for cancellation of debt
                  
                  
                  2,500,000
                  
                  
                  
                  2,500
                  
                  
                  
                  122,500
                  
                  
                  
                  -
                  
                  
                  
                  -Stock
      cancelled on  X-treme rescission
                  
                  
                  (250,000
                  )
                  
                  
                  (250
                  )
                  
                  
                  (2,250
                  )
                  
                  
                  -
                  
                  
                  
                  -Contributed
      Capital
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  3,000
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (398,911
                  )Balance
      at December 31, 2006
                  
                  
                  35,608,365
                  
                  
                  $
                  35,608
                  
                  
                  $
                  2,751,923
                  
                  
                  $
                  -
                  
                  
                  $
                  (3,244,767
                  )Stock
      issued for cash
                  
                  
                  2,653,640
                  
                  
                  
                  2,654
                  
                  
                  
                  130,027
                  
                  
                  
                  -
                  
                  
                  
                  -Issued
      stock in exchange for accounts payable
                  
                  
                  333,333
                  
                  
                  
                  333
                  
                  
                  
                  19,667
                  
                  
                  
                  -
                  
                  
                  
                  -Issued
      stock in exchange for services
                  
                  
                  500,000
                  
                  
                  
                  500
                  
                  
                  
                  144,500
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (415,132
                  )Balance
      at December 31, 2007
                  
                  
                  39,095,338
                  
                  
                  $
                  39,095
                  
                  
                  $
                  3,046,117
                  
                  
                  $
                  -
                  
                  
                  $
                  (3,659,899
                  )Stock
      issued for cash
                  
                  
                  2,500,000
                  
                  
                  
                  2,500
                  
                  
                  
                  349,500
                  
                  
                  
                  -
                  
                  
                  
                  -Issued
      stock in exchange for accounts payable
                  
                  
                  50,000
                  
                  
                  
                  50
                  
                  
                  
                  32,450
                  
                  
                  
                  -
                  
                  
                  
                  -Issued
      stock in exchange for services
                  
                  
                  125,000
                  
                  
                  
                  125
                  
                  
                  
                  58,625
                  
                  
                  
                  -
                  
                  
                  
                  -Issued
      stock for cancellation of debt
                  
                  
                  6,250,000
                  
                  
                  
                  6,250
                  
                  
                  
                  993,750
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      Loss
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,217,217
                  )Balance
      at December 31, 2008
                  
                  
                  48,020,338
                  
                  
                  $
                  48,020
                  
                  
                  $
                  4,480,442
                  
                  
                  $
                  -
                  
                  
                  $
                  (4,877,116
                  )
   The
accompanying notes are an integral part of the financial statements
 16
  ROYAL QUANTUM GROUP,
      INC.(A Development Stage
      Company)STATEMENTS OF CASH
      FLOWSCumulativesinceAugust 23,For
      the twelve months
                  
                  
                  2002ended
                  
                  
                  inception
      ofDecember
      31,
                  
                  
                  development2008
                  
                  
                  2007
                  
                  
                  stageCASH FLOWS FROM
      OPERATING ACTIVITIES:Net
      Loss
                  
                  $
                  (1,217,217
                  )
                  
                  $
                  (415,132
                  )
                  
                  $
                  (4,877,116
                  )Net
      Income/(Loss)from Discontinued Operations
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1,578,681Adjustments
      to reconcile net income (loss) tonet
      cash provided (used in) operating activities:Depreciation
                  
                  
                  370
                  
                  
                  
                  370
                  
                  
                  
                  925Write
      Down of Mineral Property to Expense
                  
                  
                  475,949
                  
                  
                  
                  -
                  
                  
                  
                  475,949Write-down
      of assets
                  
                  
                  10,000
                  
                  
                  
                  -
                  
                  
                  
                  10,000Stock
      issued for interest
                  
                  
                  500,000
                  
                  
                  
                  -
                  
                  
                  
                  600,000Stock
      issued for start up costs
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  12,600Stock
      issued for services
                  
                  
                  -
                  
                  
                  
                  145,000
                  
                  
                  
                  644,390Forgiveness
      of debt
                  
                  
                  (46,520
                  )
                  
                  
                  -
                  
                  
                  
                  (46,520
                  )Foreign
      currency exchange loss (gain)
                  
                  
                  (55,060
                  )
                  
                  
                  37,927
                  
                  
                  
                  (17,133
                  )Increase
      (decrease) in interest on notes payable
                  
                  
                  31,658
                  
                  
                  
                  24,900
                  
                  
                  
                  67,093Increase
      (decrease) in accounts payable
                  
                  
                  (19,240
                  )
                  
                  
                  62,215
                  
                  
                  
                  335,845Increase
      (decrease) in related party accounts payable
                  
                  
                  (21,826
                  )
                  
                  
                  32,203
                  
                  
                  
                  60,620Net
      cash provided (used in) continuing activities
                  
                  
                  (341,886
                  )
                  
                  
                  (112,517
                  )
                  
                  
                  (1,154,666
                  )Net
      cash provided (used in) discontinuing activities
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  386,515Net
      cash provided by (used in) operating activities
                  
                  
                  (341,886
                  )
                  
                  
                  (112,517
                  )
                  
                  
                  (768,151
                  )CASH FLOWS FROM
      INVESTING ACTIVITIES:Investment
      in Mineral Property
                  
                  
                  -
                  
                  
                  
                  (10,000
                  )
                  
                  
                  (10,000
                  )Investment
      in Oil Property
                  
                  
                  (417,199
                  )
                  
                  
                  -
                  
                  
                  
                  (417,199
                  )Purchase
      of fixed assets
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,851
                  )Net
      cash provided by (used in) investing activities
                  
                  
                  (417,199
                  )
                  
                  
                  (10,000
                  )
                  
                  
                  (429,050
                  )CASH FLOWS FROM
      FINANCING ACTIVITIES:Proceeds
      from shareholder loans
                  
                  
                  -
                  
                  
                  
                  14,625
                  
                  
                  
                  136,027Payment
      on shareholder loans
                  
                  
                  (6,000
                  )
                  
                  
                  (21,682
                  )
                  
                  
                  (88,182
                  )Proceeds
      from notes payable
                  
                  
                  500,000
                  
                  
                  
                  -
                  
                  
                  
                  685,795Contributed
      capital
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,842Stock
      issued in exchange for cash
                  
                  
                  352,000
                  
                  
                  
                  132,682
                  
                  
                  
                  551,082Net
      cash provided by (used in) financing activities
                  
                  
                  846,000
                  
                  
                  
                  125,625
                  
                  
                  
                  1,287,564Net
      (Decrease) increase in Cash and Cash Equivalents
                  
                  
                  86,915
                  
                  
                  
                  3,108
                  
                  
                  
                  90,363Cash
      and Cash Equivalents at Beginning of Period
                  
                  
                  3,448
                  
                  
                  
                  340
                  
                  
                  
                  -Cash
      and Cash Equivalents at End of Period
                  
                  $
                  90,363
                  
                  
                  $
                  3,448
                  
                  
                  $
                  90,363SUPPLEMENTAL
      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
                  
                  $
                  -
                  
                  
                  $
                  145,000
                  
                  
                  $
                  594,390Stock
      issued for investment in oil property
                  
                  $
                  58,750
                  
                  
                  $
                  -
                  
                  
                  $
                  58,750Stock
      issued for cancellation of debt
                  
                  $
                  500,000
                  
                  
                  $
                  -
                  
                  
                  $
                  674,700Shareholder
      loans converted to paid in capital
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  3,000Stock
      issued for Accounts Payable
                  
                  $
                  32,500
                  
                  
                  $
                  20,000
                  
                  
                  $
                  52,500
   The
accompanying notes are an integral part of the financial
statements
  17
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
   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.
 
 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
$4,877,000 for the period from August 23, 2002 (inception of development stage)
to December 31, 2008, has a liquidity problem, and as of December 31, 2008 has
no 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.
 
 Reclassifications
 
 Certain
reclassifications have been made in the 2008 financial statements to conform
with the 2007 presentation.
 
 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
January 11, 2000, the company changed its name to Mentor On Call,
Inc.
  18
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Organization and Basis of
Presentation (Continued)
  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.  In connection with this
merger, SuperYachts Holdings issued 858,365 shares of common stock (100%) in
exchange for the assets and liabilities of the Platinum SuperYachts,
Inc.
 
 For financial reporting purposes,
Platinum SuperYachts, Inc. was considered a new reporting entity on November 15,
2002
 
 The merger was recorded as a
recapitalization.  In connection with this recapitalization, the
number of shares outstanding prior to the merger have been restated to their
post merger equivalents (increased from 1,400,000 shares to
14,000,000).  All references in the accompanying financial statements
to the number of Common shares and per-share amounts for 2002 have been restated
to reflect the equivalent number of post merger shares.
 
 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
December 31, 2008, 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.
  19
  ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 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 December 31, 2008
and December 31, 2007:
 
 December
      31,
                    
                    
                    December
      31,2008
                    
                    
                    2007Furniture
      & Fixtures
                    
                    $
                    1,851
                    
                    
                    $
                    1,851Less
      accumulated depreciation
                    
                    
                    (925
                    )
                    
                    
                    (555
                    )Total
                    
                    $
                    926
                    
                    
                    $
                    1,296
 
 Maintenance and repairs are charged to
operations; betterments are capitalized.  The cost of property sold or
otherwise disposed of and the accumulated depreciation thereon are 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
twelve months ended December 31, 2008 and 2007 was $370 and $370
respectively.
 
 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.
  20
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Intangible Assets
(Continued)
  Intangible
Assets consisted of the following at December 31, 2008 and December 31,
2007:
 
 December
      31,
                    
                    
                    December
      31,Intangible
      Asset
                    
                    2008
                    
                    
                    2007
                    
                    Amortization
      PeriodE-Learning
      System
                    
                    $
                    1
                    
                    
                    $
                    1
                    
                    IndefiniteLess
      accumulated amortization
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    1
                    
                    
                    $
                    1
 
 Total amortization expense for the
twelve months ended December 31, 2008 and December 31, 2007 was $0 and $0
respectively.
 
 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.
 
 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 $90,363 and $3,448 as of December 31, 2008 and 2007 all of which was fully
covered by federal depository insurance.
  21
  ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 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.  There were no common equivalent shares
outstanding at December 31, 2008 and 2007.
 
 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 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.
  22
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 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 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 orafter
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.
  23
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 1 - ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 
 Recent Accounting Standards
(Continued)
  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.
 
 NOTE 2 - INCOME
TAXES
 
 As of
December 31, 2008, the Company had a net operating loss carryforward for income
tax reporting purposes of approximately $12,510,000 that may be offset against
future taxable income through 2028.  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 carryforwards will expire
unused.  Accordingly, the potential tax benefits of the loss
carryforwards are offset by a valuation allowance of the same
amount.
  24
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 2 - INCOME TAXES
(Continued)
  2008
                    
                    
                    2007Net
      Operating Losses
                    
                    $
                    4,250,000
                    
                    
                    $
                    3,963,988Accrued
      Consulting Fees
                    
                    
                    33,000
                    
                    
                    
                    39,251Valuation
      Allowance
                    
                    
                    (4,283,000
                    )
                    
                    
                    (4,003,239
                    )$
                    -
                    
                    
                    $
                    -
 
 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.
  25
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 4 – INVESTMENT IN
MINERAL PROPERTY
 
 In May
2007, the company entered into a Purchase Agreement (“Agreement”) to acquire
from U3, LLC (“Seller”) 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 SW of Casper
Wyoming.  On May 28, 2007, we paid $10,000 to the Seller on the
execution of Agreement.
 
 On July
18, 2007, we executed an Amendment to the Agreement (“Amendment”) with the
Seller.  The Amendment revised the Agreement to provide that the
following payments be made to the Seller upon issuance of claim numbers (“WMC
numbers”) from the Bureau of Land Management (“BLM”) on each claim and the
issuance of WMC numbers from the BLM on each of an additional 100 claims within
a 3 mile radius of the claims:
 
 ·
                    $50,000
      on or before October 1, 2007;
 ·
                    $50,000
      on or before  November 1,
2007;
 ·
                    $50,000
      on or before December 1, 2007; and
 ·
                    $70,000
      on or before January 15, 2008.
 
 The
Amendment also provides that the closing shall be on or before September 3,
2007.
 
 Pursuant
to the Agreement, we also agreed to issue 1,000,000 restricted shares of our
common stock to the Seller upon transfer of claims to us, clear of any liens or
encumbrances.  In addition, we agreed to a $150,000 work program on
the Sheep Mountain Claim block before June 1, 2008. On or before June 1, 2008
and provided we elect to continue, we agreed to make an additional $200,000 cash
payment to the Seller, issue an additional 500,000 restricted shares of our
common stock to the Seller, and enter into an additional $150,000 work program
on the claims. On or before June 1, 2009, and provided we elect to continue, we
agreed to make a final $200,000 cash payment to the Seller and issue an
additional 1,250,000 restricted shares of our common stock issued to the Seller
and reserve a 2% NSR for Seller on any production from the claims. The Agreement
also provides that we will register the shares issued to the Seller if we close
a financing of more than $1,000,000. If we drop the claims at any point, the
claims are transferred back to the Seller.
 
 The
Company and U3 elected not to continue with the agreement to acquire the claims
as outlined due to delays in receiving WMC numbers on the claims, and the
Company has requested the return of the $10,000 from U3 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.
  26
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 5 - 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, 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.
 
 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 $250
($250 Canadian Dollars) per month plus applicable taxes effective October 1,
2007 after consolidating leased space.  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, Trio Gold 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, 2008, 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.
 
  27
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 7 - UNCERTAIN TAX
POSITIONS (Continued)
  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 2007and 2008. 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 2005. The
following describes the open tax years, by major tax jurisdiction, as of
December 31, 2008:
  United
      States (a)
                    
                    2005
      - Present
 
 (a)
Includes federal as well as state or similar local jurisdictions, as
applicable.
 
 NOTE 8 - RELATED PARTY
TRANSACTIONS
 
 As of
December 31, 2008 and 2007, the Company owed Santeo Financial $89,353 and
$118,743 respectively 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 $45,000 per month effective October 1,
2008.
 
 As of
December 31, 2008 and 2007, the Company owed Roger Janssen, an officer and
director of the Company, $1,345 and $1,345 respectively for services
performed.
 
 As of
December 31, 2008, the Company owed Phil Van Angren, an officer and director of
the Company, $7,564 for consulting services performed as the Exploration
Manager.
 
 As of
December 31, 2008 and 2007, shareholders have advanced the Company $19,845 and
$25,845, respectively, 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 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.
  28
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 9 - COMMON STOCK AND
WARRANTS (Continued)
 
 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.
 
 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 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.
 
 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.
  29
 ROYAL
QUANTUM GROUP, INC.
 (A
Development Stage Company)
 NOTES TO
FINANCIAL STATEMENTS
 FOR THE
YEAR DECEMBER, 2008 AND 2007
 NOTE 9 - COMMON STOCK AND
WARRANTS (Continued)
  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 December 31, 2008, the amount owing on the
notes is $235,755 which consists of principal in the amount of $174,838 and
interest of $60,917.
 30
 
 Item 9. Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosure.
 
 There
have been no changes in or disagreements with our accountants since our
formation required to be disclosed pursuant to Item 304 of Regulation
S-B.
 
 Item 9A(T)Controls and
Procedures.
 
 (a)
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 December 31,
2008, the date of this report, our chief executive officer and the principal
financial officer concluded that our disclosure controls and procedures were
effective.
 
 (b)
Changes in internal controls. There were no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of the evaluation of those controls by the chief
executive officer and principal financial officer.
 
 Our Chief
Executive Officer and our Chief Financial Officer are responsible for
establishing and maintaining adequate internal control over financial reporting.
 Internal control over financial reporting is defined in Rule 13a-15(f) and
15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process
designed by, or under the supervision of, our principal executive and principal
financial officers and effected by our board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:
 
 ●
              pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of our
      assets;
 
 ●
              provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of management and our
      directors; and
 
 ●
              provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statements.
  31
  Because
of its inherent limitations, our internal control over financial reporting may
not prevent or detect misstatements. Therefore, even those systems determined to
be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.  Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
 Our Chief
Executive Officer and our Chief Financial Officer assessed the effectiveness of
our internal control over financial reporting as of December 31, 2008.   In
making this assessment, management used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal
Control — Integrated Framework.
 
 Based on
our assessment, our Chief Executive Officer and our Chief Financial Officer
believe that, as of December 31, 2008, our internal control over financial
reporting is effective based on those criteria.
 
 This
report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
 Management's report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only management’s report in this
report.
  Item 9B. Other
Information.
  None.
  PART
III
 
 Item 10. Directors,
Executive Officers, and Corporate Governance.
 
 Executive Officers and
Directors. Directors are elected to serve until the next annual meeting
of stockholders and until their successors have been elected and qualified.
Officers are appointed to serve until the meeting of the Board of Directors
following the next annual meeting of stockholders and until their successors
have been elected and qualified.
  The
following table sets forth information regarding our executive officer and
directors.
 
 Name
              Age
              PositionRon
      Ruskowsky
                Suite
      #145, 251 MidPark Blvd S.E. Calgary, AB T2X 1S3 Canada
              41
              President,
      CEO and Principal Accounting Officer
                DirectorRoger
      Janssen
                Suite
      #145, 251 MidPark Blvd S.E. Calgary, ABT2X 1S3
                Canada
              45
              Vice-President,
      Secretary
                DirectorPhillip
      van Angeren
                Suite
      #145, 251 MidPark Blvd S.E. Calgary, ABT2X 1S3
                Canada
              52
              Exploration
      Manager, Director
 
 Ron Ruskowsky, President, CEO and
Principal Accounting Officer, Director.  Mr. Ruskowsky has a
diverse and strong background in corporate structure, management and finance. He
has been involved in all aspects of management from marketing to finance and
acquisitions in both public and private corporations for over 22
years.  Mr. Ruskowsky has been a director of the Company since October
1, 2002.
  32
 
 Roger Janssen, Vice-President,
Secretary, Director.  Mr. Janssen has over twenty one years of
experience in the manufacturing industry. For the past seventeen years he has
owned and operated his own business, which produces aeronautical and marine
components, in the greater Seattle area, with clients, including; Boeing,
Microsoft, Starbucks Corporation Precor and Eldec.  Mr. Janssen has
guided several manufacturing companies during their start up phase and has
traveled internationally as a manufacturing consultant. Mr. Janssen has been a
director of the company since October 1, 2002.
 
 Phil van Angeren, P.Geol. -
Exploration Manager,
Director. Mr. van Angeren is a graduate from McGill University with a
BSc. Honors degree in geology.  He has over 25 years of experience in
managing exploration and development programs in precious metals and oil and gas
throughout North and South America. Mr. van Angeren has been a director of the
company since May 2007.
 
 There are
no familial relationships between any of the Company’s directors and officers.
There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining any of our officers or directors from engaging in or continuing any
conduct, practice or employment in connection with the purchase or sale of
securities, or convicting such person of any felony or misdemeanor involving a
security, or any aspect of the securities business or of theft or of any felony.
Nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.
 
 Section 16(a) Beneficial Ownership
Reporting Compliance. We believe that our officers, directors, and
principal shareholders have filed all reports required to be filed on,
respectively, a Form 3 (Initial Statement of
Beneficial Ownership of Securities), a Form 4 (Statement of Changes of
Beneficial Ownership of Securities), or a Form 5 (Annual Statement of
Beneficial Ownership of Securities).
 
 CodeofEthics. We have not
adopted a corporate code of ethics that applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions in that our sole officer and
director serves in all the above capacities.
 
 Our
decision to not adopt such a code of ethics results from our having only two
officers working closely together managing the Company. We believe that as a
result of the limited interaction, which occurs having such a small management
team, eliminates the current need for such a code. Further, since the officers
also serve as directors there is no one to report violations of such a code
to.
 
 Nominating
Committee.The Company's entire Board participates in
consideration of director nominees. The Board will consider candidates who have
experience as a board member or senior officer of a company or who are generally
recognized in a relevant field as a well-regarded practitioner, faculty member
or senior government officer.  The Board will also evaluate whether
the candidates' skills and experience are complementary to the existing Board's
skills and experience as well as the Board's need for operational, management,
financial, international, technological or other expertise. The Board will
interview candidates that meet the criteria and then select nominees that Board
believes best suit the Company's needs.
 
 The Board
will consider qualified candidates suggested by stockholders for director
nominations. Stockholders can suggest qualified candidates for director
nominations by writing to the Company's Corporate Secretary, Roger Janssen, at
Suite #145, 251 MidPark Blvd S.E. Calgary, Alberta T2X 1S3 Canada. Submissions
that are received that meet the criteria described above will be forwarded to
the Board for further review and consideration. The Board will not evaluate
candidates proposed by stockholders any differently than other
candidates
 
 Audit Committee Financial
Expert.The Company’s board of directors does not have an
“audit committee financial expert,” within the meaning of such phrase under
applicable regulations of the Securities and Exchange Commission, serving on its
audit committee.  The board of directors believes that all members of
its audit committee are financially literate and experienced in business
matters, and that one or more members of the audit committee are capable of (I)
understanding generally accepted accounting principles (“GAAP”) and financial
statements, (ii) assessing the general application of GAAP principles in
connection with our accounting for estimates, accruals and reserves, (iii)
analyzing and evaluating our financial statements, (iv) understanding our
internal controls and procedures for financial reporting; and (v) understanding
audit committee functions, all of which are attributes of an audit committee
financial expert.  However, the board of directors believes that there
are not any audit committee members who has obtained these attributes through
the experience specified in the SEC’s definition of “audit committee financial
expert.”  Further, like many small companies, it is difficult for the
Company to attract and retain board members who qualify as “audit committee
financial experts,” as competition for these individuals is
significant.  The board believes that its current audit committee is
able to fulfill its role under SEC regulations despite not having a designated
“audit committee financial expert.”  We believe the cost related to
retaining a financial expert at this time is prohibitive. Further, because of
our start-up operations, we believe the services of a financial expert are not
warranted.
  33
 
 Audit Committee.  We
do not have an Audit Committee, our Board of Directors, performs some of the
same functions of an Audit Committee, such as: recommending a firm of
independent certified public accountants to audit the annual financial
statements; reviewing the independent auditors independence, the financial
statements and their audit report; and reviewing management's administration of
the system of internal accounting controls. The Company does not currently have
a written audit committee charter or similar document.
 
 Item 11. Executive
Compensation
 
 Summary Compensation
Table.  The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our
principal executive officer and our only other executive officer during the
years ending December 31, 2008 and 2007.
 
 Name
      and Principal Position
              Year
      Ended
              Salary
                $
              Bonus
                $
              Stock
      Awards
                $
              Option
      Awards
                $
              Non-Equity
      Incentive Plan Compensation
                $
              Nonqualified
      Deferred Compensation Earnings $
              All
      Other
                Compensation
                $
              Total
                $Ron
      Ruskowsky President and CEO, Director
              2008
              0
              0
              0
              0
              0
              0
              0
              02007
              0
              0
              0
              0
              0
              0
              0
              0Roger
      Janssen Vice-President and Secretary
              2007
              0
              0
              0
              0
              0
              0
              0
              02006
              0
              0
              0
              0
              0
              0
              0
              0
 
 Except as
set forth above, none of the Company's officers and/or directors currently
receives any compensation for their respective services rendered to the
Company.
 
 Stock Options/SAR Grants. No
grants of stock options or stock appreciation rights were made since our date of
incorporation in October 1996.
 
 Long-Term Incentive Plans. As
of December 31, 2008, we had no group life, health, hospitalization, or medical
reimbursement or relocation plans in effect. Further, we had no pension plans or
plans or agreements which provide compensation on the event of termination of
employment or change in control of us.
 
 Employment Contracts and Termination
of Employment.We do not anticipate that we will enter into any
employment contracts with any of our employees. We have no plans or arrangements
in respect of remuneration received or that may be received by our executive
officers to compensate such officers in the event of termination of employment
(as a result of resignation or retirement).
  34
 
 Outstanding Equity Awards at Fiscal
Year-end.As of the year ended December 31, 2008, the following named
executive officer had the following unexercised options, stock that has not
vested, and equity incentive plan awards:
 
 Option  Awards
              Stock
      AwardsName
              Number
      of Securities Underlying Unexercised Options
                #
      Exercisable
              #
      Un-
                exercisable
              Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Options
              Option
      Exercise Price
              Option
      Expiration
                Date
              Number
      of Shares or Units
                of
      Stock Not Vested
              Market
      Value of Shares or Units  Not
                Vested
              Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
      Not
                Vested
              Value
      of Unearned
                Shares,
      Units or Other Rights
                Not
      VestedRon
      Ruskowsky President, CEO, Principal Accounting Officer
              0
              0
              0
              0
              0
              0
              0
              0
              0Roger
      Janssen, Vice-President, Secretary
              0
              0
              0
              0
              0
              0
              0
              0
              0
   Director Compensation.Our
directors received the following compensation for their service as directors
during the fiscal year ended December 31, 2008:
 
 Name
              Fees
      Earned or Paid in Cash
              Stock
      Awards
                $
              Option
      Awards
                $
              Non-Equity
      Incentive Plan Compensation
                $
              Non-Qualified
      Deferred Compensation Earnings
                $
              All
      Other Compensation
                $
              Total
                $Ron
      Ruskowsky
              0
              0
              0
              0
              0
              0
              0Roger
      Janssen
              0
              0
              0
              0
              0
              0
              0Phil
      van Angeren
              0
              145,000(1)
              0
              0
              0
              0
              0
 (1)
              We
      issued Phil van Angeren 500,000 shares of common stock on May 9, 2007 as
      compensation for services rendered as a director and his agreement to
      serve as the Exploration Manager.
   Item 12. Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder
Matters.14
 
 The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of February 26, 2009 by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
 
 Title
      of Class
              Name
      and Address of Beneficial Owner
              Amount
      and Nature of Beneficial Owner
              Percent
      of ClassCommon
      Stock
              Ron
      Ruskowsky (1)
                Suite
      #145, 251 MidPark Blvd S.E. Calgary, Alberta T2X 1S3
                Canada
              18,470,000
      Shares
                President,
      CEO and Principal Accounting Officer, Director
              38.5
      %Common
      Stock
              Roger
      Janssen
                Suite
      #145, 251 MidPark Blvd S.E. Calgary, AB Alberta T2X 1S3
                Canada
              2,500,000
      Shares
                Secretary
      and Vice-President
                Director
              5.2
      %Common
      Stock
              Phil
      van Angeren
                Suite
      #145, 251 MidPark Blvd S.E. Calgary, AB Alberta T2X 1S3
                Canada
              500,000
      Shares
                Exploration
      Manager
                Director
              1.04%Common
      Stock
              All
      directors and named executive officers as a group
              21,470,000
              44.7%
      ( 2)
 (1)
              14,970,000
      shares are owned by Santeo, an entity affiliated with Mr.
      Ruskowsky.   Mr. Ruskowsky has sole voting and dispostive
      power over these shares.
 (2)
              Figures
      vary due to rounding
  35
 
 Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities.  In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
 
 Changes in
Control.Ourmanagement is not aware
of any arrangements which may result in “changes in control” as that term is
defined by the provisions of Item 403(c) of Regulation S-B.
 
 No Equity Compensation Plan.We do not have any securities authorized for issuance under any equity
compensation plan.  We also do not have an equity compensation
plan.
  Item 13. Certain
Relationships and Related Transactions, and Director
Independence.
 
 Related Party Transactions.Effective May 9, 2007, we issued 500,000 restricted shares to Phil van
Angeren, our Exploration Manager. These shares have been valued at the market
price of $0.29 per share.  Compensation expense of $145,000 has been
booked on the accompanying Statement of Operations.
 
 As of
December 31, 2008, we owed Roger Janssen $1,345 for services paid directly by
Mr. Janssen.
 
 As of
December 31, 2008 and December 31, 2007, we owed Santeo Financial $89,353 and
$118,743 respectively, for consulting services.  Ron Ruskowsky, our
President and CEO, is an affiliate of Santeo Financial.
 
 As of
December 31, 2008, the Company owed Phil Van Angren, an officer and director of
the Company, $7,564 for consulting services performed as the Exploration
Manager.
 
 Currently
we have an agreement with Santeo Financial whereby Santeo Financial provides
consulting services in exchange for which we pay a consultant fee of $15,000 per
month.
 
 As of
December 31, 2008 and December 31, 2007, shareholders have advanced us $19,845
and $25,845, respectively, payable on demand and do not carry an interest
rate.  This transaction has been recorded in the accompanying
financial statements as Shareholder loans.
 
 With
regard to any future related party transaction, we plan to fully disclose any
and all related party transactions, including, but not limited to, the
following:
 
 ·
              disclose
      such transactions in prospectuses where
  required;
 ·
              disclose
      in any and all filings with the Securities and Exchange Commission, where
      required;
 ·
              obtain
      disinterested directors consent;
and
 ·
              obtain
      shareholder consent where required.
 
 Director
Independence.Members of our Board of Directors are not
independent as that term is defined by defined in Rule 4200(a)(15) of the
Nasdaq Marketplace Rules.
 
 Item 14. Principal
Accountant Fees and Services.
 
 Audit Fees.The aggregate fees
billed in each of the fiscal years ended December 31, 2008 and 2007 for
professional services rendered by the principal accountant for the audit of our
annual financial statements and quarterly review of the financial statements
included in our Form 10-K or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years were $16,783 and $18,085, respectively.
  36
 
 Audit-Related Fees. For the
fiscal year ended December 31, 2008, there were no fees billed for services
reasonably related to the performance of the audit or review of the financial
statements outside of those fees disclosed above under “Audit
Fees.”
  Tax Fees.For the fiscal years
ended December 31, 2008 and December 31, 2007, our accountants rendered services
for tax compliance, tax advice, and tax planning work for which we paid $162 and
$130, respectively.
 
 All Other Fees.None.
 
 Pre-Approval Policies and Procedures.Prior to engaging our accountants to perform a particular service, our
board of directors obtains an estimate for the service to be performed. All of
the services described above were approved by the board of directors in
accordance with its procedures.
 
 Item 15.
Exhibits
 3.1           Rule
13a-14(a)/15d-14(a) Certification of Chief Executive Officer and Chief Financial
Officer
 3.2           Section
906 Certification by Chief Executive Officer and Chief Financial
Officer
 
 37
  SIGNATURES
  Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned in the
City of Calgary, Alberta, Canada, on March 30, 2009
  Royal
      Quantum Group, Inc.
                  a
      Nevada corporationBy:
                /s/   Ron
      RuskowskyRon
      Ruskowsky
                  Principal
      executive officer, Principal accounting officer
                    President,
      CEO and a director
  By:
                /s/ Roger
      JanssenRoger
      Janssen
                  Vice-President,
      Secretary and a director
  In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
 March
      30, 2009/s/
      Ron RuskowskyRon
      Ruskowsky
                  Director/s/
      Roger Janssen
                
                March
      30, 2009Roger
      Janssen
                  Director
    38