Note 7 to the quarterly financial statements to this Report (Item 1, Part I). We generated royalty revenue for the nine months ended September 30, 2014 of $1,461,322 compared to royalty revenue of $2,404,161 for the nine months ended September 30, 2013.

Since the beginning of 2011, we have received royalty checks totaling $9,736,592 through September 30, 2014 from wells operated by Continental Resources, Brigham Oil, and Oasis Petroleum. Typically, royalty checks from oil well operators can be delivered anytime between 60 to 150 days following the month of initial production. Following oil well production, the oil well operator will usually seek a division order title opinion from any attorney which would describe the ownership of the production. Following issuance of this opinion, the oil well operator will generally issue division orders which would set forth payments to the royalty holders. North Dakota law requires payment of 18% annual interest if royalty payments are not made within 150 days after oil or gas produced by the well is marketed. For additional information regarding the rights of royalty holders, see the “Royalty Owner Information Center” link found on the website for the North Dakota Petroleum Council, www.ndoil.org. To date, the Company has not received any payments of interest for royalty payments that have not been made within 150 days of oil or gas production.

Operating Expenses. Operating expenses fell sharply, $112,000, from the second quarter to the third quarter, driven by substantially lower legal and professional fees. However, year -to-date operating expenses are $251,000 higher than 2013. Consulting fees rose $406,000 due to one-time finder’s fees attributable to the Apollo mineral sale, and legal fees jumped $118,000. These increases were partially offset by substantially lower depletion expenses ($264,000) and stock–based compensation ($64,000). General and administrative expenses were $25,110 for the three months ended September 30, 2014 compared to $27,104 for the same period in 2013. Professional fees were $304,671 for the three months ended September 30, 2014 compared to $267,653 for the same period in 2013. General and administrative expenses were $73,457 for the nine months ended September 30, 2014 and $79,212 for the nine months ended September 30, 2013 due primarily to the absence of website and internet costs.

We recognized a $200,000 settlement expense pertaining to the Gillis v. Bakken Resources, Inc. case. We have established a $200,000 reserve as a current liability. A Memorandum of Understanding has been executed with the plaintiffs. The settlement is pending final court approval. Once a final approval is declared, the settlement will be paid. Currently, a final hearing to approval this settlement is scheduled for December 2, 2014.

Profit for the third quarter 2014 totaled $379,390 up from the loss of $789,000 in the second quarter 2014 and down from third quarter 2013, profit totaling $644,164. This quarter’s profit was heavily and materially impacted by the effects of restatements of revenue and direct costs attributable to the three forks formation well production issue described in Note 7, and also by the adjustment of accrued royalty revenue relative to the Athene mineral sale, also described in Note 7.

Our material financial obligations include our salaries paid to our three current employees, fees paid to outside consultants, public company reporting expenses, transfer agent fees, bank fees, and other recurring fees.

Liquidity and Capital Resources

As of September 30, 2014, the Company had cash of $7,396,974 compared to $8,880,288 as of June 30, 2014, of which $6,000,000 was reserved for a future acquisition of oil and gas properties. As of September 30, 2014, the company has expended $420,750 of the reserve to acquire the Big Willow lease. We expect that approximately $1,978,000 will be paid by the Company for income taxes owed as a result of the sale of the Greenfield mineral interests. The company has reserved $200,000 to settle the Gillis v. Bakken Resources, Inc. lawsuit. The plaintiffs have executed a memorandum of understanding. Final court approval is pending.

Our recent rate of use of cash in operations over the last three months has been approximately $137,544 per month compared to $174,517 per month during the three months ended June 30, 2014. The sharp reduction reflects lower professional fees attributable to the number of lawsuits in which the company is currently involved. As suits have been settled or dismissed, the company’s legal fees have fallen. Operating costs consist mainly of salaries, office rent and professional fees and is consistent with general operating cash used in prior quarters. Given our recent rate of use of cash in our operations, we believe we have sufficient capital to carry on operations for the next year. Our long term capital requirements and the adequacy of our available funds will depend on many factors, including the reporting company costs, public relations fees, and operating expenses, among others.

In the future, we anticipate we will be able to provide the necessary liquidity from royalty revenues related to sale of oil reserves of existing properties. No assurances, however, can be given that such royalties will continue to be received. As of September 30, 2014, the royalty revenues received have been sufficient to provide liquidity during the previous twelve months. If the Company does not generate sufficient revenues it will continue to finance operations through equity or debt financings.

We will continue to evaluate additional properties containing mineral rights that we may seek to acquire. With respect to transactions involving the acquisition of additional mineral rights or other business collaboration transactions, we may seek to issue shares of our common stock or other equity to finance part or all such acquisitions or transactions. To the extent that such acquisitions or transactions require cash payments, such payments will likely have a material impact on our liquidity.

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