PINX:RYQGD Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[Missing Graphic Reference]
 FORM 10-Q
[Missing Graphic Reference]
 
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ______ to _______

Commission file number: 000-27739

ROYAL QUANTUM GROUP, INC.
 (Exact name of registrant as specified in its charter)

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


251 MidPark Blvd, Suite #145, S.E.Calgary,
ABCanadaT2X 1S3
(Address of principal executive offices)

(403) 288-4321
(Issuer's telephone number)

with a copy to:
Zouvas Law Group, P.C.
2368 Second Avenue
San Diego, CA 92101
Telephone (619) 688-1116
Facsimile: (619) 688-1716

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.
x Yes     o No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes     o No (Not required)

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.

Large Accelerated Filer              o                                                          Accelerated Filer                       o                          

Non-Accelerated Filer                  o                                                         Smaller Reporting Company    x



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

As of March 31, 2012, there were 52,784,272 shares of the registrant’s $0.001 par value common stock issued and outstanding.

 
 
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TABLE OF CONTENTS
  
     
PAGE
 
PART I
 
 
FINANCIAL INFORMATION
   
 
ITEM 1.
 
 
 
 
 
ITEM 2.
 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 
14 
 
ITEM 3.
 
 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 
16
 
ITEM 4.
 
 
CONTROLS AND PROCEDURES
 
 
16
 
 
PART II
 
 
 
OTHER INFORMATION
   
         
 
ITEM 1.
 
 
LEGAL PROCEEDINGS
 
 
17 
 
ITEM 1A.
   
RISK FACTORS
 
 
17 
 
ITEM 2.
 
 
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
 
17 
 
ITEM 3.
 
 
DEFAULTS UPON SENIOR SECURITIES
 
 
17 
 
ITEM 4.
 
 
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS [REMOVED AND RESERVED]
 
 
17
 
ITEM 5.
 
 
 
OTHER INFORMATION
 
 
17
 
ITEM 6.
 
 
 
 
18 

 
Special Note Regarding Forward-Looking Statements
 

 
Information included in this Form 10-Q contains forward-looking statements that may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Royal Quantum Group, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
 
 
*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "RYQG" refers to Royal Quantum Group, Inc.
 
 
 
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PART I - FINANCIAL INFORMATION
 
 
ITEM 1.                      FINANCIAL STATEMENTS


INDEX
 
Unaudited Condensed Balance Sheet as of March 31, 2011 and Audited Condensed Consolidated Balance Sheet as of December 31, 2011
 
F-1 to F-2
Unaudited Condensed Statement of Operations for the three Months Ended March 31, 2012 and 2011
 
F-3
Unaudited Condensed Statement of Cash Flows for the Three Months Ended March 31, 2012 and 2011
 
F-4
Notes to Condensed Financial Statements
F-5
 
 
 
 
 
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ROYAL QUANTUM GROUP
CONDENSED BALANCE SHEETS
FOR THE THREE MONTHS ENDING DECEMBER 31, 2011 AND MARCH 31, 2012

   
March 31,
   
December 31,
 
   
2012
   
2011
 
   
(Unaudited)
       
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 33,094     $ 42,890  
Accounts receivable
    64,696       61,486  
Prepaid Services
    3,000       -  
                 
Total current assets
    100,790       104,376  
                 
Property and equipment:
               
Furniture and fixtures
    1,851       1,851  
Less: accumulated depreciation
    (1,851 )     (1,851 )
                 
Total property and equipment, net
    -       -  
                 
Other assets:
               
Proved oil and gas properties, full cost method
    556,170       604,083  
Less: accumulated depletion
    (194,789 )     (223,447 )
Unproved oil and gas properties
    17,507       17,507  
Deferred offering costs
    -       98,357  
                 
Total other assets
    378,888       496,500  
                 
 Total assets
  $ 479,678     $ 600,876  
 
The accompanying notes to condensed financial statements are an integral part of these statements.
 
 
 
F - 1

 
 

ROYAL QUANTUM GROUP
CONDENSED BALANCE SHEETS
FOR THE THREE MONTHS ENDING MARCH 31, 2011 AND MARCH 31, 2012
 (Continued)



   
March 31,
   
December 31,
 
   
2012
   
2011
 
   
(Unaudited)
       
             
LIABILITIES & STOCKHOLDERS' DEFICIT
           
Current liabilities:
           
Accounts payable
  $ 127,525     $ 128,339  
Royalties due stockholders
    37,214       36,303  
Related party payables
    370,674       333,674  
Notes payable
    430,452       424,948  
Stockholder loans
    19,845       19,845  
                 
 Total current liabilities
    985,710       943,109  
                 
Long-term liabilities:
               
Asset retirement obligation
    11,725       11,725  
                 
 Total long-term liabilities
    11,725       11,725  
                 
      Total liabilities
    997,435       954,834  
                 
Stockholders' Deficit:
               
 Preferred stock, par value $.001
               
 authorized 10,000,000 shares
               
 no shares issued at March 31, 2012
               
 and December 31, 2011
    -       -  
 Common stock, par value $.001
               
  Issued 52,991,272 shares at March 31, 2012
               
  and 52,991,272 shares at December 31, 2011
    52,991       52,991  
Additional paid-in capital
    5,433,446       5,433,446  
Accumulated deficit
    (5,982,823 )     (5,812,024 )
Other comprehensive gain/(loss)
    (21,371 )     (28,371 )
 Total stockholders' deficit
    (517,757 )     (353,958 )
                 
      Total liabilities and stockholders' deficit
  $ 479,678     $ 600,876  
 
The accompanying notes to condensed financial statements are an integral part of these statements.
 

 

 
F - 2

 

 
ROYAL QUANTUM GROUP
CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDING MARCH 31, 2011 AND MARCH 31, 2012


   
For the three months
 
   
March 31,
 
   
2012
   
2011
 
   
(Unaudited)
   
(Unaudited)
 
             
Oil revenue
  $ 110,647     $ 86,860  
Operating expenses
               
Production costs
    36,342       40,523  
Royalty expense
    56,108       37,015  
Related party consulting fees
    45,000       45,000  
Related party rent expense
    3,986       3,150  
Professional fees
    122,603       13,441  
General & administrative
    4,932       5,391  
 
               
Total operating expenses
    (268,971 )     (144,520 )
                 
Loss from operations
    (158,324 )     (57,660 )
 
               
Other income (expenses)
               
Interest expense
    (12,475 )     (11,265 )
Total other income (expense)
    (12,475 )     (11,265 )
 
               
Net loss
  $ (170,799 )   $ (68,925 )
 
               
 
               
Loss per share - Basic and diluted
  $ (0.00 )   $ (0.00 )
 
               
Weighted average shares outstanding
    52,991,272       50,182,338  
 
The accompanying notes to condensed financial statements are an integral part of these statements.

 
 
F - 3

 
 
 
ROYAL QUANTUM GROUP
CONDENSED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDING MARCH 31, 2011 AND MARCH 31, 2012

   
For the three months ended
 
   
March 31,
 
   
2012
   
2011
 
   
(Unaudited)
   
(Unaudited)
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
  $ (170,799 )   $ (68,925 )
Adjustments to reconcile net income (loss) to
               
net cash provided by (used in) operating activities:
               
Depreciation
    -       93  
Depletion
    19,207       14,367  
(Increase) decrease in accounts receivable
    (3,210 )     (1,081 )
(Increase) decrease in prepaid services
    (3,000 )     -  
Decrease in deferred offered offering costs
    98,357       -  
Increase (decrease) in accrued interest on notes payable
    12,475       11,265  
Increase (decrease) in accounts payable
    (811 )     (52,280 )
Increase (decrease) in royalties due stockholders
    911       (22,359 )
Increase (decrease) in related party accounts payable
    37,000       17,813  
Net cash (used in) operating activities
    (9,870 )     (101,107 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Investment in oil and gas properties
    47       (14,825 )
Net cash (used in) investing activities
    47       (14,825 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from sale of units consisting of common stock and oil and gas
               
royalties
    -       -  
Net cash provided by financing activities
    -       -  
                 
Effect of exchange rates on cash
    27       1,104  
                 
Net increase (decrease) in cash and cash equivalents
    (9,796 )     (114,828 )
Cash and cash equivalents - beginning of period
    42,890       205,102  
Cash and cash equivalents - end of period
  $ 33,094     $ 90,274  
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid during the year for:
               
   Interest
  $ -     $ -  
   Income taxes
  $ -     $ -  
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
               
AND FINANCING ACTIVITIES:
               
                 
Value of stock based offering costs charged to expense
  $ 98,357     $ -  
    $ -     $ -  
The accompanying notes to condensed financial statements are an integral part of these statements.
 
 
 
F - 4

 
 

ROYAL QUANTUM GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Royal Quantum Group, Inc. (“the Company”) was incorporated under the laws of the State of Nevada on October 22, 1996 under the name PSM Corp.  The Company changed its emphasis to the exploration and development of natural resources and on November 23, 2005 changed its name to Royal Quantum Group, Inc.
 
Interim Financial Statements

Royal Quantum Group, Inc.’s interim financial statements are unaudited. They contain all necessary adjustments (consisting only of normal recurring adjustments) for a fair statement of the referenced interim period results.  These interim period results do not indicate expected full-year results or results for future quarters/periods, due to several factors, including price volatility of crude oil and natural gas, price volatility of commodity derivatives, volatility of interest rates, estimates of reserves, drilling risks, geological risks, transportation restrictions, timing of acquisitions, product demand, market competition, interruption(s) in production, our ability to obtain additional capital, and the success of proposed enhanced oil recovery work (EOR). These interim financial statements should be read in conjunction with the audited financial statements and related notes included in Royal Quantum Group, Inc.’s Form 10-K for the year ended December 31, 2011 filed with Commission on April 16, 2012.
 
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies.  Actual results may differ from those estimates. The Company has made assumptions in valuing its oil and natural gas reserves, which may affect the amounts at which oil and natural gas properties are recorded.   The Company has also computed the components of the investments units sold in its private offerings using assumptions such as volatility, expected life and the risk-free interest rate (See Note 7).

Going Concern

The Company’s financial statements have been prepared on a going concern basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business.  The Company has incurred substantial losses from operations and has a working capital deficit, which history and circumstance raise substantial doubt as to the Company’s ability to continue as a going concern. The Company had a net loss of $170,799 for the three months ended March 31, 2012 and an accumulated deficit at March 31, 2012 of $5,982,823.  The Company has raised sufficient funds through the private sale of participating units to acquire working interests in nine oil and gas wells. Seven of the wells are currently producing as of March 31, 2012.  Total gross revenue generated from these seven wells during the three months ended March 31, 2012 amounted to $110,647.  Although the Company has been successful in raising the necessary funds to acquire these working interests, and has been able to generate net revenue from these wells, there is no assurance that these wells will continue to generate positive cash flow. Currently the net revenue generated from these wells is not sufficient to fund all of the Company’s operating costs. The Company is seeking to raise additional funds to acquire other oil and gas properties; however, there is no assurance that the necessary funds will be raised or even if the funds are raised, that the working interest acquired in the future will generate sufficient revenue to assist in the financing of the Company’s operations.  Until such funding is obtained and/or positive results from planned property development materialize, doubt about its ability to continue as a going concern may remain.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.

Use of Estimates

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

Accounts Receivable

Accounts receivable are reported at the customer’s outstanding balances less any allowance for doubtful accounts.  Interest is not accrued on overdue accounts receivable.
 
 
 
F - 5

 

 
Allowance for Doubtful Accounts

An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses.  Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers.  Accounts receivable are charged off against the allowance when collectibility is determined to be permanently impaired.  Management has determined that as of March 31, 2012, no allowance was required.

Revenue Recognition

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

Oil and Gas Properties

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

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided over the five year estimated useful life of the assets computed on the straight-line method.

Gains and losses resulting from sales and dispositions of property and equipment are included in current operations. Maintenance and repairs are charged to operations as incurred. Depreciation expense for the three months ended March 31, 2012 and 2011 amounted $0 and $93, respectively.

Foreign Currency Translation

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

Concentrations of Credit Risk

The Company’s revenue is dependent upon the successful efforts of the respective well’s operator. Currently production from the Company’s seven wells is sold to one customer.

Loss per Share of Common Stock
 
The Company reports earnings (loss) per share in accordance with Accounting Standards Codification “ASC” Topic 260-10, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed conversion of warrants and debt to purchase common shares would have an anti-dilutive effect. Potential common shares as of March 31, 2012 that have been excluded from the computation of diluted net loss per share consist of (a) warrants to purchase 1,136,000 shares of the Company’s common stock and (b) Unit holders’ options to convert their respective oil revenue interests into a total 1,552,000 shares of the Company’s common stock.
 
 
 
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Asset Retirement Obligations

The Surface Mining Control and Reclamation Act of 1977 and similar state statutes require mine properties to be restored in accordance with specified standards. Accounting Standards Codification (“ASC”) Topic 410-20 requires recognition of an asset retirement obligation (“ARO”) for eventual reclamation of disturbed acreage remaining after mining has been completed. The Company records its reclamation obligations on a permit-by-permit basis using requirements as determined by the Office of Surface Mining of the U.S. Department of the Interior (“OSM”). The liability is calculated based upon the reclamation activities remaining after removal ceases, assuming that reclamation activities have been contemporaneous within state and federal guidelines during mining. A liability is recorded for the estimated future cost that a third party would incur to perform the required reclamation and mine closure discounted at the Company’s credit-adjusted risk-free rate. A corresponding increase in the asset carrying value of mineral rights is also recorded. The ARO asset is amortized on the units-of-production method over the proven and probable reserves associated with that permit.

Long-Lived Assets

The Company accounts for its long-lived assets in accordance with ASC No. 360, “Property, Plant and Equipment.” ASC No. 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate.  The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. As of March 31, 2012, the Company does not believe there has been any impairment of its long-lived assets.

Fair Value of Financial Instruments

Pursuant to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of March 31, 2012. The Company’s financial instruments consist of cash, accounts receivables, payables, and other obligations.  The Company considers the carrying value of such amounts in the financial statements to approximate their fair value.

Income Taxes

The Company accounts for its income taxes under the provisions of ASC No. 740 “Income Taxes”. The method of accounting for income taxes under ASC No. 740 is an asset and liability method. The asset and liability method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and   liabilities.

Recent Accounting Pronouncements

In May 2011, FASB issued ASU 2011-04 “Fair Value Measurement (Topic 820).” The amendments in ASU 2011-04 change the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendments include (1) those that clarify the Board's intent about the application of existing fair value measurement and disclosure requirements and (2) those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. In addition, to improve consistency in application across jurisdictions some changes in wording are necessary to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way (for example, using the word shall rather than should to describe the requirements in U.S. GAAP). The amendments that clarify the Board's intent about the application of  existing fair value measurement and disclosure requirements include (a) the application of the highest and best use and valuation premise concepts, (b) measuring the fair value of an instrument classified in a reporting entity's shareholders' equity, and (c) disclosures about fair value measurements that clarify that a reporting entity should disclose quantitative information about the unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy. The amendments in this Update that change a particular principle or requirement for measuring fair value or disclosing information about fair value measurements include (a) measuring the fair value of financial instruments that are managed within a portfolio, (b) application of premiums and discounts in a fair value measurement, and (c) additional disclosures about fair value measurements that expand the disclosures about fair value measurements. The amendments in ASU 2011-04 are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. Management does not expect the adoption of ASU 2011-04 to have a material effect on the Company’s financial position, results of operations or cash flows.

In June 2011, FASB issued ASU 2011-05 “Comprehensive Income (Topic 220).”  Under the amendments in this Update, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. In a single continuous statement, the entity is required to present the components of net income and total net income, the components of other comprehensive income and a total for other comprehensive income, along with the total of comprehensive income in that statement. In the two-statement approach, an entity is required to present components of net income and total net income in the statement of net income. The statement of other comprehensive income should immediately follow the statement of net income and include the components of other comprehensive income and a total for other comprehensive income, along with a total for comprehensive income.  The amendments in this Update should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. The amendments do not require any transition disclosures.  Management does not expect the adoption of ASU 2011-05 to have a material effect on the Company’s financial position, results of operations or cash flows.
 
 
 
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In December 2011, FASB issued ASU 2011-12 “Comprehensive Income (Topic 220).”  In order to defer only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments, the paragraphs in this Update supersede certain pending paragraphs in Update 2011-05. The amendments are being made to allow the Board time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While the Board is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before Update 2011-05.All other requirements in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011.  Management does not expect the adoption of ASU 2011-11 to have a material effect on the Company’s financial position, results of operations or cash flows.

NOTE 3 - INVESTMENT IN OIL & GAS PROPERTY

As of March 31, 2012, the Company’s accrued asset retirement obligation totaled $11,725 and this amount was included in the capitalized cost of the oil and gas properties. Depletion expense is included in production expense as reflected in the accompanying condensed statements of operations. Depletion expense for the three months ended March 31, 2012 and 2011 amounted to $19,207 and $14,367, respectively. During the three months ended March 31, 2012, the Company determined that its interest in the Bond #3 well was commercially unproductive and was abandoned. The well’s cost basis of $47,866 was charged against accumulated depletion pursuant to ASC Topic 932-360-40 “Extractive Activities.”

NOTE 4 - RELATED PARTY TRANSACTIONS

The Company has entered into a month-to-month lease agreement with Trio Gold for an office in Calgary, Alberta, Canada. Trio Gold’s President is the father of Ron Ruskowsky, the President and CEO of the Company.  This lease can be canceled on one month’s written notice. The lease agreement was amended in February 2011 which increased rental payments from approximately $450 to $1,300 per month plus applicable taxes.  The Company incurred rent expense of $3,986 and $3,150 for the three months ended March 31, 2012 and 2011, respectively.

The Company’s President provides services through a consulting agreement that the Company has with Santeo Financial for $15,000 a month. The $15,000 monthly fee is accrued by the Company and is reduced by amounts actually paid. As of March 31, 2012, the Company owed Santeo Financial $365,693.  Consulting fees expensed during the three months ended March 31, 2012 and 2011 amounted to $45,000 and $45,000, respectively.  Mr. Ruskowsky owns a controlling interest in Santeo Financial.

As of March 31, 2012, the Company owed Roger Janssen, an officer and director of the Company, $1,345 for services previously performed.

As of March 31, 2012, the Company owed Phil Van Angren, an officer and director of the Company, $3,636 for consulting services previously performed.

As of March 31, 2012, certain shareholders have advanced the Company a total of $19,845 that is payable on demand and is non-interest bearing.

NOTE 5 – NOTES PAYABLE

The Company has a note payable to Integrated Business Concepts, Inc. that is due upon demand and is assessed interest at an annual rate of 12%.  As of March 31, 2012, the balance due including accrued interest amounted to $430,452.  Interest accrued and charged to operations for the three months ended March 31, 2012 and 2011 amounted to $12,475 and $11,265, respectively.

NOTE 6 – INCOME TAXES

Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
 
 
 
Page - 11

 
 
 
The effective tax rate on the net loss before income taxes differs from the U.S. statutory rate as follows:
 
   
March 31,
 
   
2012
 
2011
 
Current expense - Benefit
         
Federal
  $ -     $ -  
State
    -       -  
Total current expense (benefit)
    -       -  
                 
                 
Deferred Benefit
               
Federal
  $ -     $ -  
State
    -       -  
Total deferred benefit
    -       -  
                 
                 
U.S statutory rate
    34.00 %   $ 34.00 %
Less valuation allowance
    -34.00 %     -34.00 %
Effective tax rate
    0.00 %     0.00 %
                 
                 
                 
The significant components of deferred tax assets and liabilities are as follows:
 
                 
Deferred tax assets
               
Net operating losses
    1,360,950       1,091,095  
      1,360,950       1,091,095  
Less valuation allowance
    (1,360,950 )     (1,091,095 )
Deferred tax asset - net valuation allowance
  $ --     $ --  
 
The net change in the valuation allowance for 2012 was $(627).
 
At March 31, 2012, The Company has a net operating loss carryover of approximately $4,002,795 available to offset future income for income tax reporting purposes, which will expire in various years through 2032, if not previously utilized.
 
We adopted the provisions of ASC 740-10-50, formerly FIN 48, “Accounting for Uncertainty in Income Taxes.” We had no material unrecognized income tax assets or liabilities for the periods ended March 31, 2012 and 2011.
 
Our policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the year ended December 31, 2011 and 2010, there were no income tax, or related interest and penalty items in the income statement, or liability on the balance sheet. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are no longer subject to U.S. federal or state income tax examination by tax authorities for years before 2007. We are not currently involved in any income tax examinations.
 
NOTE 7 - COMMON STOCK AND WARRANTS

The following table sets forth common share purchase warrants outstanding as of March 31, 2012:

   
 
Warrants Outstanding
   
Weighted Average Exercise Price
 
Balance, December 31, 2011
    1,792,000     $ 0.25  
Warrants granted
    -     $ -  
Warrants expired
    (656,000 )   $ 0.25  
Balance, March 31, 2012
    1,136,000     $ 0.25  
                 
                 

 
 
Page - 12

 
 
 
NOTE 8 - FAIR VALUE

The Company’s financial instruments consist of principally related party payables, stockholder loans and notes payable. The Company believes all of the financial instruments’ recorded values approximate fair market value because of their nature and respective durations.

The Company complies with the provisions of ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”).  ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements required under other accounting pronouncements. ASC 820-10-35, “Fair Value Measurements and Disclosures - Subsequent Measurement” (“ASC 820-10-35”), clarifies that fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820-10-35 also requires that a fair value measurement reflect the assumptions market participants would use in pricing an asset or liability based on the best information available. Assumptions include the risks inherent in a particular valuation technique (such as a pricing model) and/or the risks inherent in the inputs to the model.  The Company also follows ASC 825 “Interim Disclosures about Fair Value of Financial Instruments”, previously referred to as FAS 107-1 to expand required disclosures.

ASC 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820-10-35 are described below:

Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

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

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

The Company utilizes the best available information in measuring fair value. The following table summarizes, by level within the fair value hierarchy, the financial assets and liabilities recorded at fair value on a recurring basis as of March 31, 2012:

 

 
March 31, 2012
Fair Value Measurements
 
 
             
    Level 1     Level 2     Level 3     Total Fair Value  
                         
 Liabilities                        
 Related party payables       -     $ 370,674       -     $ 370,674  
 Notes payable        -     $ 430,452       -     $ 430,452  
 Stockholder loans          -     $ 19,845       -     $ 19,845  
 

 
END NOTES TO FINANCIALS
 
 
 
Page - 13

 
 
 
ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 
The following Management's Discussion and Analysis should be read in conjunction with Royal Quantum Group, Inc.’s financial statements and the related notes thereto. The Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report on Form 10-Q. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report on Form 10-Q.
 
 
The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes and other financial data included elsewhere in this report. See also the notes to our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2011.
 
Critical Accounting Policies and Estimates

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

Revenue Recognition

The Company recognizes oil and gas revenue from its interest in producing wells as oil and gas is sold from those wells.

 Oil and Gas Properties

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

Foreign Currency Translation

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

Asset Retirement Obligations

The Company use Accounting Standards Codification (“ASC”) Topic 410-20, Asset Retirement Obligations, which established accounting standards for recognition and measurement of a liability for an asset retirement obligation (“ARO”) and the associated asset retirement costs. The provisions of ASC Topic 410-20 apply to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal operation of a long-lived asset. ASC Topic 410-20 also requires companies to recognize a liability for the fair value of a legal obligation to perform asset retirement activities that are conditional on a future event, if the amount can be reasonably estimated.
 
 
 
Page - 14

 

 
Fair Value Measurement

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

Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. The Company has no Level 1 assets or liabilities.

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

The Company has no Level 2 assets. The Company’s Level 2 liabilities consist of related party payables, notes payable, and stockholder loans. Due to the short-term nature of related party payables and stockholders loans, the fair values of these instruments approximate their respective carrying values. The Company determines the fair value of notes payable based on the effective yields of similar obligations.

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

Liquidity and Capital Resources.

For the Three Months Ended March 31, 2012
 
During the three months ended March 31, 2012, net cash used in the Company’s operating activities totaled $9,870. Net cash provided by investing activities during the three month period ended March 31, 2012 totaled $47 and consisted of a refund based upon the final accounting on the development of the Chuck#1 property. During the three month period ended March 31, 2012, the Company had a currency exchange net loss of $27 on funds held in Canadian currency. For the three month period ended March 31, 2012, the Company’s cash balance decreased during the year by $9,796.
 
At March 31, 2012, the Company had cash of $33,094, accounts receivable of $64,696 and prepaid services of $3,000 that comprised the Company’s total current assets totaling $100,790. The Company’s property and equipment at March 31, 2012 had a net book value of $0, consisting of furniture and fixtures with a cost basis of $1,851 net of accumulated depreciation of $1,851. The Company also had accumulated net capitalized costs of oil & gas properties totaling $378,888 at March 31, 2012, while the Company’s total assets at March 31, 2012 were $ 479,678. The decrease in the cost bases of the Company’s oil and gas property was due to depletion of $19,207.  During the three months ended March 31, 2012, the Company determined that the Bond #3 well was commercially unproductive and the well was abandoned. The well’s remaining unamortized cost basis of $47,866 was charged against accumulated amortization.

At March 31, 2012, the Company had total current liabilities totaling $985,710 consisting of $127,525 in accounts payable, $37,214 due certain shareholders on their interest in the Company’s oil and gas net revenue, $370,674 due to related parties, $430,452 in notes payable, and $19,845 in shareholder loans. Additionally, the Company’s long term debt at March 31, 2012 included $11,725 on the Company’s accrued asset recovery obligations relating to its oil and gas properties. Therefore, at March 31, 2012, the Company had total liabilities of $997,435. The Company had no other long term liabilities, commitments or contingencies. Other than anticipated explorations costs associated with the mineral and oil interests that the Company acquired and the anticipated increases in the legal and accounting costs associated with being a public company, Company management is not aware of any other known trends, events or uncertainties which may affect the Company’s future liquidity.

At March 31, 2012, the Company had a stockholders’ deficit totaling $479,678.

RESULTS OF OPERATIONS

For the Three Months Ended March 31, 2012 versus March 31, 2011
 
 
 
Page - 15

 

 
Revenues and Gross Profit (Loss)

The Company’s revenue for the three months ended March 31, 2012 was $110,647 with associated production and royalty costs of $92,450 as compared to March 31, 2011 revenue totaling $86,860 and with production and royalty costs for the year of $77,538. The Company’s gross profit from oil and gas operations for the three months ended March 31, 2012 and 2011 before other operating expenses amounted to $18,197 and $9,322, respectively. The Company’s incurred other administrative expenses for the three months ended March 31, 2012 included related party consulting fees of $45,000, related party rent of $3,986, professional fees of $122,603, which included the charge off of costs associated with an abandoned offering totaling $98,357. The $98,357 was the value assigned to 2,400,000 shares of common stock issued relating to the offering.  Other general and administrative expenses for the three months ended March 31, 2012 amounted to $4,932.

During the three months ended March 31, 2011, the Company’s incurred administrative expenses including related party consulting fees of $45,000, related party rent of $3,150, professional fees of $13,441 and other general and administrative expenses of $5,391. Related party consulting expense for each year consists of fees accrued to a company wholly owned by the Company’s President for services he renders to the Company. The Company’s loss from operations for the three months ended on March 31, 2012 was $158,324 compared to the Company’s loss from operations for the three months ended on March 31, 2011 of $57,660.
 
 
Other expenses consist of accrued interest on notes payable amounting to $12,475 for the three months ended on March 31, 2012 and $11,265 for the three months ended on March 31, 2011. The Company’s net loss for the three months ended on March 31, 2012 was $170,799 compared to $68,925 net loss for the three months ended on March 31, 2011.

The Company’s Plan of Operation for the Next Twelve Months.

The Company’s focus is to acquire oil and gas, mineral and resources properties for exploration and development with the intent to bring the projects to feasibility at which time the Company will either contract out the operations or form joint venture with qualified interested parties to complete the projects. The Company intends to continue to raise additional capital for participation in additional oil and gas projects.

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

In the event that the Company experiences a shortfall in capital, the Company intends to pursue opportunities to raise funds through public or private financing as well as through borrowings and via other resources, such as the Company’s officers, directors and principal shareholders. The Company cannot guaranty that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then the Company’s ability to expand operations may be significantly hindered. If adequate funds are not available, the Company believes that the Company’s officers, directors and principal shareholders will contribute funds to pay for the Company’s expenses to achieve the Company’s objectives over the next twelve months.

The Company’s belief that the Company’s officers, directors and principal shareholders will pay the Company’s expenses is based on the fact that the Company’s officers, directors and principal shareholders collectively own approximately 43% of the Company’s outstanding common stock and will likely continue to pay the Company’s expenses as long as they maintain their ownership of the Company’s common stock, so long as they do not incur financial hardship.

The Company is not currently conducting any research and development activities and management does not anticipate conducting such activities in the near future. Management does not anticipate future purchases or sales of any significant equipment. In the event that the Company’s customer base expands, then management may need to hire additional employees or independent contractors as well as purchase or lease additional equipment.

ITEM 3.                      QUANTITATIVE AND QUALITATATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4.                      CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act").
 
 
 
Page - 16

 

 
Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of March 31, 2012.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

    Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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.

Changes In Internal Control and Financial Reporting
 
Our management, including our chief executive officer and chief financial officer, has also evaluated our internal control over financial reporting, and there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1.                      LEGAL PROCEEDINGS

None.

ITEM 1A.                   RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2.                      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

1.  
Quarterly Issuances:
 
During the quarter, we did not issue any unregistered securities other than as previously disclosed.

2.  
Subsequent Issuances:
Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.

ITEM 3.                      DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.                      SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

Removed and Reserved

ITEM 5.                      OTHER INFORMATION

None.
 
 
 
Page - 17

 

 

Item 6. Exhibits

 
 
 
Page - 18

 
 

SIGNATURES

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

Royal Quantum Group, Inc.
a Nevada corporation

May 15, 2012
By:
/S/ Ron Ruskowsky
   
Ron Ruskowsky
 
Its:
Principal executive officer
   
Principal accounting officer
   
President, CEO and a director
     
     
May 15, 2012
By:
/s/ Roger Janssen
   
Roger Janssen
 
Its:
Vice-President, Secretary and a director

 
 
 
Page - 19

 
 
 
Exhibit 31.01
 
 
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14
 
I, Ron Ruskowsky, certify that:
 
            1.           I have reviewed this quarterly report on Form 10-Q of Royal Quantum Group, Inc.;

2.
    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 



Date: May 15, 2012
/s/ Ron Ruskowsky
 
By: Ron Ruskowsky
Its: Principal Executive Officer
      Principal Accountant Officer
      President, CEO and a Director
   
 
Page - 20

 
 
 
Exhibit 31.02
 
 
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14
 
I, Ron Ruskowsky, certify that:
 
            1.           I have reviewed this quarterly report on Form 10-Q of Royal Quantum Group, Inc.;

2.
    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 



Date: May 15, 2012
/s/ Ron Ruskowsky
 
By: Ron Ruskowsky
Its: Principal Executive Officer
      Principal Accountant Officer
      President, CEO and a Director 
 
 
 
Page - 21

 
 
 
Exhibit 32.01

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Royal Quantum Group, Inc. Resources, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ron Ruskowsky, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
 
(1)        The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)        The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
 
 



/s/ Ron Ruskowsky
 
By: Ron Ruskowsky
Its:  Principal Executive Officer
       Principal Accountant Officer
       President, CEO and a Director
 
Dated: May 15, 2012
 
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
 
 
 
Page - 22

 
 
 
Exhibit 32.02

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Quarterly Report of Royal Quantum Group, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ron Ruskowsky, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
 
(1)        The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)        The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
 
 



/s/ Ron Ruskowsky
 
By: Ron Ruskowsky
Its:  Principal Executive Officer
       Principal Accountant Officer
       President, CEO and a Director
 
Dated: May 15, 2012
 
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.


 
 
Page - 23

 

 


PINX:RYQGD Quarterly Report 10-Q Filling

PINX:RYQGD Stock - Get Quarterly Report SEC Filing of PINX:RYQGD stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

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PINX:RYQGD Quarterly Report 10-Q Filing - 3/31/2012
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