UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington. D.C. 20549


                                   FORM 10-QSB


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended April 30, 1997

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from______to_______

                         Commission file number 1-12835


                         GENERAL AMERICAN ROYALTY, INC.
             (Exact name of registrant as specified in its charter)


                  Delaware                                     75-2468002
         (State or other jurisdiction of                     (I.R.S. Employer
         incorporation or organization)                    Identification No.)

                          One Energy Square, Suite 717
                             4925 Greenville Avenue
                                  Dallas, Texas
                    (Address of principal executive offices)
                                      75206
                                   (Zip Code)
                                 (214) 361-8535
              (Registrants' telephone number, including area code)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  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___ No X

     As of April 30, 1997, there were 916,500 shares of the Registrant's  Common
Stock, par value $.001 per share, outstanding.

     Traditional Small Business Disclosure Format (check one):
 Yes____ No____

<PAGE>

                        PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                         GENERAL AMERICAN ROYALTY, INC.
                                 BALANCE SHEET

                                                      April 30,    
                                                          1997       October 31,
ASSETS                                                (Unaudited)        1996
                                                     -----------    -----------
Current assets:                                     
         Cash                                         $   14,301     $   37,916
         Accounts receivable-oil & gas                    25,998         29,608
         Accounts receivable-officers                      5,070          3,135
         Accounts receivable-other                         1,650          1,650
         Prepaid expenses                                  6,330          2,834
                                                          ------      ---------
           Total Current assets                           53,349         75,143
                                                          
Equipment, less accumulated depreciation of $142             984              -
Royalty interest in oil and gas properties, less
   accumulated depletion of $49,741 & $21,381
   respectively                                          517,455        545,815
Deferred financing, net of amortization of $83,846             -         25,154
Other assets, net of amortization of $125 & $100           4,085          3,929
                                                       ---------      ---------

Total Assets                                          $  575,873     $  650,041
                                                        ========       ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
         Accounts payable                             $   33,934     $   10,022
         Accounts payable-shareholder                          -          3,000
         Notes payable                                   200,000           -
         Notes payable to shareholder, current 
         portion                                               -         33,333
                                                        --------       --------
           Total Current liabilities                     233,934         46,355
                                                      
Notes payable to shareholder                                   -        136,667
                                                        --------       --------
          Total liabilities                              233,934        183,022
Stockholders' equity:
         Common stock, $.001 par value,
                  20,000,000 shares authorized,
                  916,500 & 910,000  outstanding,           
                  respectively                              917             910
         Preferred stock, $.001 par value,
                  5,000,000 shares authorized,
                  no shares issued or outstanding             -               -
         Additional paid-in capital                     630,212         598,219
         Accumulated deficit                           (289,190)       (132,110)
                                                      ---------       ---------
         Total stockholders' equity                     341,939         467,019
                                                      ---------       ---------

        Total liabilities and stockholders' equity   $  575,873      $  650,041
                                                      =========       =========

The accompanying notes are an integral part of the financial statements.

<PAGE>
                                  
                         GENERAL AMERICAN ROYALTY, INC.
                             STATEMENT OF OPERATIONS
                                   (Unaudited)

<TABLE>
<S>                                      <C>           <C>               <C>         <C>     
 
                                          Three Months Ended              Six Months Ended
                                                April 30,                      April 30,
                                             1997         1996             1997         1996
                                         ---------     ---------         ----------    --------
Revenues:                             
Oil and gas royalty income, net of
    severance and ad valorem taxes        $ 47,755     $  3,473          $  93,105      $ 3,473
                                           --------     --------          ---------      ------

Costs and expenses:
  General and administrative               102,097       13,245            186,219       22,661
  Amortization of deferred
    financing costs                              -            -             25,154            -
Depletion, depreciation  and
    amortization                            14,299        1,342             28,552        1,367
Interest Expense                             5,118            -             10,260            -
                                         ---------     ---------          --------       ------

Total costs and expenses                   121,514       14,587             250,185      24,028
                                          ---------    --------            ---------    -------

Net loss                                  $(73,759)   $ (11,114)          $(157,080)   $(20,555)
                                           ========    ========           =========    ========

Net loss per common share                  $  (.08)     $  (.01)            $  (.17)     $ (.03)
                                            ======       ======              ======      ======

Weighted average number of
 common shares outstanding                 911,055      760,160             910,505     746,310
                                          ========      =======             =======    ========                                    
</TABLE>








The accompanying notes are an integral part of the financial statements.

<PAGE>


                         GENERAL AMERICAN ROYALTY, INC.
                   STATEMENT OF CHANGES IN FINANCIAL POSITION
                                   (Unaudited)


                                                            Six Months Ended
                                                                 April 30,
                                                          1997            1996
                                                       --------        --------

Cash flows from operating activities:                  
         Net loss                                       $(157,080)     $(20,555)
         Adjustments to reconcile net
          loss to net cash used in
          operating  activities:
         Depletion, depreciation  and
          amortization                                     28,552         1,367
         Amortization of deferred financing costs          25,154             -
         Decrease (increase) in accounts receivable         1,675        (3,823)
         Increase in prepaid expe                          (3,497)       (1,500)
         Noncash payment of stock for
          services                                              -           508
         Increase in accounts payable                      20,912         2,666
         Increase in other assets                            (206)       (5,554)
                                                       ----------     ---------
Net cash used in operating activities                     (84,490)      (26,891)

Cash flows from investing activities:
         Purchase of equipment                             (1,125)            -
         Purchase of royalty and mineral interests              -      (158,000)
                                                       ----------     ---------
         Net cash used in investing activities             (1,125)     (158,000)

Cash flows from financing activities:
         Issuance of common stock                          32,000        42,710
         Proceeds from borrowings                         200,000       157,000
         Payments on borrowings                          (170,000)            -
                                                       ----------      --------
         Net cash provided by financing activities         62,000       199,710
                                                       ----------      --------

Net decrease in cash                                      (23,615)       14,819
Cash at beginning of period                                37,916             -
                                                       ----------      --------
Cash at end of period                                   $  14,301      $ 14,819
                                                        =========       =======


The accompanying notes are an integral part of the financial statements.




                                

<PAGE>


                         GENERAL AMERICAN ROYALTY, INC.
                        STATEMENT OF STOCKHOLDERS' EQUITY
                     For the six months ended April 30, 1997
                                   (Unaudited)


<TABLE>     
<S>                             <C>      <C>       <C>              <C>              <C>    

                                                   Additional                            Total
                                 Common Stock      Paid - In        Accumulated       Stockholders'
                                 Shares   Amount     Capital          Deficit              Equity
                                 ------   ------   ----------       -----------       ------------
Balance at October 31,             
   1996                         910,000   $ 910    $ 598,219        $ (132,110)       $ 467,019 

  Exercise of common stock
    warrants net of costs         6,500       7       31,993               -             32,000
     

  Net loss                            -       -            -          (157,080)        (157,080)
                                -------  ------    ---------        ----------        ---------        

Balance at April 30,1997        916,500  $  917    $ 630,212        $ (289,190)       $ 341,939
                                =======  ======    =========        ==========        =========
                                
</TABLE>


















The accompanying notes are an integral part of the financial statements.



<PAGE>

                         GENERAL AMERICAN ROYALTY, INC.
                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

The accompanying  unaudited financial  statements reflect the financial position
as of April 30,  1997 and the  results of  operations  and cash flows of General
American  Royalty,  Inc.  ("Company")  for the three and six month periods ended
April 30, 1997 and April 30, 1996. The financial  statements  have been prepared
in conformity  with generally  accepted  accounting  principles and contain such
adjustments as management feels are necessary to present fairly, in all material
aspects, the financial position and results of operations of the Company.

1.  Summary of Significant Accounting Policies:
-----------------------------------------------

The Company was  incorporated  on December  28, 1992 in the state of Delaware as
Hermes  Capital  Management,  Inc. and was inactive until it changed its name on
October 23, 1995 to General American Royalty, Inc. The Company is engaged in the
business  of  acquiring  and  managing  producing  crude  oil and  gas  royalty,
overriding royalty and mineral interests in Texas and New Mexico.

Restatement of Accounts
-----------------------

The  previously  filed  January 31, 1997  financial  statements  included in the
Company's  Form 10-SB  have been  restated  to 1)  increase  additional  paid-in
capital by $109,000 to reflect the value of common stock transferred to a lender
from the  Company's  president in  connection  with the  completion of July 1996
financing by the Company and 2) increase the loss from  operations for the three
months ended January 31, 1997 by $25,154 in deferred  financing  expenses and 3)
increase the accumulated deficit by $83,846 for the amortization  expense in the
prior year in connection with the transaction.

Royalty Interests in Oil and Gas Properties
-------------------------------------------

Costs  of  acquiring   interests  in  producing  royalty  interests,   including
evaluation  costs,  are capitalized and depleted on a straight line basis over a
period of 10 years,  since overall U.S.  proved reserves are about 8 to 10 times
overall  production.  The  Company  owns  a  large  number  of  interests  whose
acquisition costs are not individually significant. The Company annuaIly reviews
significant  properties for impairment  comparing estimated future cash flows to
the carrying  amount of the asset.  If  impairment  is  indicated,  the asset is
written down to its fair value based upon its expected  future  discounted  cash
flows.

Income Taxes
------------

The Company follows  Statement of Financial  Standards No. 109,  "Accounting for
Income Taxes," which requires the  recognition of deferred tax  liabilities  and
assets based on the difference between the financial statement and the tax basis
of assets  and  liabilities  using  enacted  tax rates in effect in the years in
which the differences are expected to reverse.

Use of Estimates
-----------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent assets and liabilities at the date of financial  statements,  and the
reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.

<PAGE>

                         GENERAL AMERICAN ROYALTY, INC.
                    NOTES TO FINANCIAL STATEMENTS, Continued
                                   (Unaudited)




2.  Notes Payable
-----------------

As of April 30,  1997 the Company  had a $200,000  note  payable to State Bank &
Trust Company,  Dallas. The loan was collateralized  with mortgages and deeds of
trust  on  certain  royalty  interests  in oil and gas  properties  owned by the
Company.

The loan required monthly  installments of $6,667 commencing June 21, 1997 and a
final payment of unpaid  principal on January 21, 1998, plus monthly interest at
a  fluctuating  rate per annum  equal to 2% in excess of the  corporate  rate of
interest published in the Wall Street Journal.  The loan was repaid in June 1997
(see Note 6).

3.  Stockholders Equity
-----------------------

As of April 30, 1997, 6,500 of the 90,000 warrants,  from the Company's  initial
offering,  were exercised.  The net proceeds to the Company from the exercise of
these  warrants was $32,000.  Subsequent to April 30, 1997 an  additional  5,000
warrants have been exercised netting the Company an additional $25,000 in equity
capital. The remaining 78,500 warrants expired on July 31, 1997.

4.  Related Party Transactions
------------------------------

As of April 30, 1997 the Company has accounts receivable for travel advances due
from one officer of approximately $5,070.

5.  Income Taxes:
-----------------

The Company has net loss carryforwards  which will begin to expire in 2011. None
of the benefit of the net  operating  loss has been  recognized in the financial
statements.

6.  Subsequent Event:
---------------------

On June 20, 1997, the Company entered into a $300,000  financing  agreement with
Eagle  Equity  Oil & Gas L.P.,  a Dallas  based  lender and  shareholder  of the
Company.  The Company has  collateralized  the loan with  mortgages and deeds of
trust on certain royalty  interests in crude oil and gas properties,  a personal
guarantee by James F. Smith,  President of the Company and a term life insurance
policy on Mr. Smith for $300,000.

The full  principal  amount of $300,000 plus any accrued  interest is payable on
December  31,  1997,  and bears  interest  at a 14% rate per annum.  Interest is
payable monthly commencing on July 20, 1997.

7.  Year-end Balance Sheet:
---------------------------

The  year-end  condensed  balance  sheet  was  derived  from  audited  financial
statements,  but does not include all disclosures required by generally accepted
accounting principles.

<PAGE>



                         GENERAL AMERICAN ROYALTY, INC.

                For the three and six months ended April 30, 1997



ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS


LIQUIDITY AND CAPITAL RESOURCES

     Sales of crude oil and natural  gas from  royalty  and  overriding  royalty
interests  have been the  Company's  principal  internal  source  of  liquidity.
Monthly sales have not reached a sufficient  level to cover  administrative  and
overhead expenses. Growth in the Company's sales is expected to be the result of
acquiring additional producing crude oil and natural gas royalty interests.

     The Company has completed  offerings of its equity  securities and incurred
bank debt  during  the past year as its  primary  sources of  external  capital.
Proceeds  from  these  financings  were used to  acquire  royalty  interests  in
producing crude oil and natural gas wells and for working  capital.  The Company
intends to direct its efforts and resources toward  developing  opportunities to
increase its crude oil and natural gas reserves.

     Specifically,  the Company  anticipates  that proceeds from the sale of its
equity  securities in public and private  offerings  will serve as the principal
source of capital for  acquisition of royalty  interests and retirement of debt.
In June  1997 the  Company  borrowed  $300,000  from an entity  controlled  by a
shareholder and used the proceeds to repay a $200,000 bank loan. Debt secured by
producing royalty interests will be a source of short term financing for royalty
acquisition activities.

     The Company's revenues are substantially  affected by prevailing prices for
natural  gas,  crude oil and  condensate.  These prices are affected by numerous
factors over which the Company has no control.  Historically  the energy markets
have been very  volatile,  and there  can be no  assurances  that  crude oil and
natural gas prices will not be subject to material fluctuations in the future. A
material or long term  decline in crude oil and gas prices could have an adverse
effect on the Company's financial position and results of operations,  affecting
the economic productivity of an indeterminable number of producing properties in
which the Company  has  royalty or  overriding  royalty  interests.  Natural gas
accounts for approximately 90% of the Company's crude oil and natural gas sales.



<PAGE>





RESULTS OF OPERATIONS

Three and Six Months Ended April 30, 1997 Compared
   to the Three and Six Months Ended  April 30, 1996

Revenues

         Revenues  for the three  months and six months ended April 30, 1997 are
significantly  higher than the same  periods in 1996 due to an increase in crude
oil and natural  gas sales that  resulted  from the  acquisition  of  additional
royalty and  overriding  royalty  interests.  The  acquired  interests  comprise
approximately  80 % of the  Company's  current  total  producing  reserves.  The
revenues  for periods in 1996  consisted of one month of  production  from fewer
wells.

Costs and Expenses

         General  and  Administrative   Expenses.   General  and  administrative
expenses ("G&A") increased from $13,245 and $22,661, respectively, for the three
and six months ended April 30, 1996 to $102,097 and $186,219 for the  comparable
periods  in 1997.  The  increase  in G&A  expenses  for 1997  resulted  from the
expansion of the  Company's  operational  activities  and the costs  incurred in
connection with becoming a publicly traded entity.

         Depletion,  Depreciation and Amortization.  Depletion, depreciation and
amortization ("DD&A"), increased to $14,299 and $28,552,  respectively,  for the
three and six  months  ended  April 30,  1997  compared  to $1,342  and  $1,367,
respectively for the comparable period in 1996. The increase is primarily due to
the  acquisition  of  additional   producing  royalty  and  overriding   royalty
interests.  The DD&A expense for the periods in 1996 was calculated based on one
month of production from interests in wells that comprise  approximately  20% of
the Company's reserves.

         Interest  expense.  The Company had not incurred  any interest  bearing
debt as of April 30,  1996.  The  interest  expense for the three and six months
ended April 30,  1997 was  incurred  on a $200,000  note  payable to a financial
institution.





<PAGE>









                           PART II - OTHER INFORMATION


ITEM 5 - OTHER INFORMATION

     On May 15, 1997, Ben C. Burkett, II resigned as a member of the registrants
board of directors.  His resignation was not a result of any disagreements  with
the registrant on any matters relating to the registrant's operations,  policies
or practices.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits.                                                      None.

(b)      Reports on Form 8-K.                                           None.




                                   SIGNATURES

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


                                            GENERAL AMERICAN ROYALTY, INC.
                                            ------------------------------
                                            (Registrant)




Date  August 12, 1997                      /s/ James F. Smith
     -------------------                   ------------------------------------
                                           James F. Smith
                                           President and Chief Executive Officer




Date  August 12, 1997                      /s/ Sam E. Nicholson
     -------------------                   ------------------------------------
                                           Sam E. Nicholson,
                                           Treasurer and Chief Financial Officer


<PAGE>