AMERICAN ENERGY GROUP LTD - FORM 10-K

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EX-32.1 - CERTIFICATION - AMERICAN ENERGY GROUP LTD	aegg_ex321.htm
EX-31.1 - CERTIFICATION - AMERICAN ENERGY GROUP LTD	aegg_ex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934

FOR FISCAL YEAR ENDED JUNE 30, 2015

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ____________ TO ____________

Commission file number: 0-26402

THE AMERICAN ENERGY GROUP, LTD.

(Name of registrant as specified in its charter)

Nevada		87-0448843
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

20 Nod Hill Road Wilton, Connecticut		06897
(Address of principal executive offices)		(Zip code)

(Issuer’s telephone number 203/222-7315)

___________________________

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under section 12(g) of the Act:

Common Stock, Par Value $.001 Per Share

___________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the issuer was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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 Act). Yes o No x

The issuer had no revenues during the year ended June 30, 2015.

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity as of October 13, 2015, was $12,203,868.

As of October 13, 2015, the number of Common shares outstanding was 61,019,341

DOCUMENTS INCORPORATED BY REFERENCE – None

THE AMERICAN ENERGY GROUP, LTD.

INDEX TO FORM 10-K

PART 1		PAGE

Items 1 and 2.	Business and Properties		3

Item 1A.	Risk Factors		8

Item 1B.	Unresolved Staff Comments		14

Item 3.	Legal Proceedings		15

Item 4.	Mine Safety Disclosures		16

PART II

Item 5.	Market For Common Equity and Related Stockholder Matters and Issuer Purchase of Equity Securities		17

Item 6.	Selected Financial Data		18

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 7A	Quantitative and Qualitative Disclosures About Market Risk		22

Item 8.	Financial Statements and Supplementary Data		22

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		22

Item 9A	Controls and Procedures		23

Item 9B	Other Information		23

PART III

Item 10.	Directors, Executive Officers and Corporate Governance		24

Item 11.	Executive Compensation		25

Item 12.	Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters		26

Item 13.	Certain Relationships and Related Transactions, and Director Independence		27

Item 14.	Principal Accounting Fees and Services		27

PART IV

Item 15.	Exhibits and Financial Statement Schedules		28

SIGNATURES			29

PART I

ITEMS 1 AND 2 – BUSINESS AND PROPERTIES.

Overview

Until our 2002 bankruptcy filing, we were an independent oil and natural gas company engaged in the exploration, development, acquisition and production of crude oil and natural gas properties in the Texas gulf coast region of the United States and in the Jacobabad area of the Republic of Pakistan. We emerged from bankruptcy in January 2004 with two assets, a non-producing 18% gross production interest in the Yasin 2768-7 Block in Pakistan, and a non-producing working interest in an oil and gas lease in Galveston County, Texas. While the bankruptcy proceedings were pending, our producing oil and gas leases in Fort Bend County, Texas were foreclosed by a secured lender. Our non-producing Galveston County, Texas oil and gas lease rights were not affected by the foreclosure. In November 2003, we sold the capital stock of our then existing subsidiary, Hycarbex-American Energy, Inc., which held the exploration license in Pakistan, to Hydro Tur (Energy) Ltd., a company organized under the laws of the Republic of Turkey (“Hydro Tur”). We retained an 18.0% gross production interest in future production. We emerged from bankruptcy in January 2004 with these two assets intact and with our sole business being the maintenance and management of these assets. In October, 2009, we acquired from Hycarbex a two and one half percent (2-1/2%) working interest in each of the Sanjawi Block No. 3068-2 and the Zamzama North Block No. 2667-8, each of which is operated by Heritage Oil and Gas Limited. Under the terms of the acquisition agreement, the 2-1/2% working interests were to be “carried” by Hycarbex for the initial two (2) wells on the Sanjawi Block and the initial three (3) wells on the Zamzama North Block. The term “carried” means that the costs associated with work programs, seismic, road preparation, drillsite preparation, rig and equipment mobilization, drilling, reworking, testing, logging completion and governmental fees (except taxes on production) were to be borne entirely by Hycarbex. Infrastructure costs such as pipelines and surface facilities constructed after the first discovery well on each Block were not to be carried.

In December 2011, we initiated civil legal proceedings against Hycarbex and others in the High Court of Islamabad, Pakistan. Our pleadings with respect to the 2.5% carried working interest positions in the Sanjawi and Zamzama North concessions sought a registration of those interests with the Government of Pakistan and simultaneously sought the imposition of an injunction preventing the transfer of the working interest in those concessions until the registration can be effected, thereby protecting our interests. In our pleadings with respect to the Yasin concession and the right to receive 18% of the gross production revenues, our pleadings sought a referral to arbitration based upon ownership of, in effect, a 25% carried working interest to which is attributed 18% of gross production revenues and the right to receive pertinent records and data, the appointment of a receiver to both protect and cause disbursement of the 18% of gross revenues since the inception of production in April 2011, and the imposition of an injunction against the transfer of the working interest in the Yasin concession. The Court immediately issued two injunction orders preserving the status quo as to the Company’s interests in each of the Yasin, Sanjawi and Zamzama North petroleum concessions. On April 10, 2012, pursuant to the terms of a March 27, 2012, Islamabad High Court Order and the arbitration provisions contained within the Stock Purchase Agreement under which the Hycarbex stock was sold to Hydro Tur, we filed our claim with the International Chamber of Commerce (“ICC”) International Court of Arbitration. On April 15, 2015, the ICC Arbitration Tribunal rendered its Partial Final Award (“April 15, 2015 Arbitration Award”) in the pending arbitration proceedings which declared that the 2003 Stock Purchase Agreement between the Company, Hycarbex and Hydro-Tur is void ab initio and of no legal effect on account of the fraud and misrepresentations of Hycarbex, Hydro-Tur and Hycarbex-Asia and that the Company is the 100% owner of the common stock of Hycarbex relating back to the original Stock Purchase Agreement. In connection with its findings, the ICC Arbitration Tribunal ordered that the register of shareholders for Hycarbex be corrected to reflect the Company as the owner of 100% of the common stock of Hycarbex, that Hycarbex and Hycarbex-Asia take any and all steps necessary to effect the rectification of the register of shareholders of Hycarbex to reflect the Company as the owner of 100% of the common stock, and that Hycarbex and Hycarbex-Asia bear all costs of the arbitration proceedings, including the Company’s legal costs. The Award made certain of the pending actions in Pakistan moot due to the recovery of ownership of 100% of the stock of Hycarbex.

Acquisition of the Original Pakistan Concession and the 18% Production Interest in the Yasin Concession

In April 1995, our wholly owned subsidiary at the time, Hycarbex-American Energy, Inc., acquired an exploration license for the Jacobabad (2768-4) Block in the Sindh Province of the Middle Indus Basin of Pakistan, approximately 230 miles northeast of the port city of Karachi. At that time, our assets and the assets of our subsidiaries included both North American and Pakistan development properties. Original exploration efforts on the Jacobabad Block indicated the presence of commercially viable natural gas in the area, but a commercial well was not achieved. On August 11, 2001, Hycarbex was awarded a new exploration license on the Yasin (2768-7) Block. Hycarbex was, at the time, required to relinquish some of its Jacobabad Concession acreage. Due to management’s belief that the acreage held great potential based upon geologic analysis and gas shows which appeared in the drilling of the Jacobabad wells, Hycarbex negotiated a simultaneous surrender of some of the Jacobabad acreage while retaining the desired acreage as part of the new Yasin Concession. As indicated below, in the latter stages of our bankruptcy proceedings, we sold all of the stock of our Hycarbex subsidiary to Hydro Tur (Energy) Ltd. and received an 18% gross royalty in the future production from the Yasin Concession. That transaction was voided ab initio under the April 15, 2015 Arbitration Award and ownership of the Hycarbex entity was ordered to be reinstated to the Company.

Zamzama North and Sanjawi Working Interests

On October 29, 2009, we executed an agreement to acquire from Hycarbex a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan. Each concession block is non-producing and is currently operated by Heritage Oil and Gas Limited. Due to the rescission under the April 15, 2015 Arbitration Award of the 2003 transaction in which the stock of Hycarbex was sold to Hydro Tur, our position in these two concessions becomes that of our subsidiary, Hycarbex. Hycarbex owns a 20% working interest in each concession, 10% of which is carried as to exploration costs. Hycarbex likewise has the option to acquire an additional 10% working interest in each block.

Working Interests in other Pakistan-based Exploration Licenses

The April 15, 2015, Arbitration Award granted to us 100% ownership of the Hycarbex subsidiary. As a result, in addition to the Yasin, Zamzama North and Sanjawi exploration licenses, we now own through our subsidiary interests in two additional concessions. These interests are Block No. 2466-8 (Karachi), 851 square miles; and Block No. 3371-13 (Peshawar), 960 square miles. Hycarbex is the registered owner of a 95% working interest in the Karachi and Peshawar Exploration Blocks.

Galveston County, Texas Assets

In June 1997, we purchased the interests of Luck Petroleum Corporation (“Luck”) in two oil and gas leases in Galveston County, Texas. The leases are situated in an area of the Texas Gulf Coast which is productive in multiple zones or horizons and the leases themselves have produced commercial quantities of oil and gas from both shallow and mid-range zones. In 1986, Luck assigned these mid-range zones to Smith Energy, reserving for itself an “after-payout” 15% back-in working interest. Luck also limited the depths assigned to Smith Energy, thereby resulting in depths generally greater than 10,000 feet being entirely reserved to Luck, except for a small overriding royalty in the deep zones which was also conveyed to Smith Energy. We succeeded to the interests of Luck free of liens and encumbrances as a result of the 1997 purchase. With regard to the mid-range zones, once “payout” has occurred, as defined in the 1986 conveyance by Luck to Smith Energy, we were entitled to receive 15% of the monthly working interest production from the existing Smith Energy wells on the leases. The leases also include deep zones under the leases which were acquired from Luck in which we own 100% of the working interest.

We previously notified Smith Energy of our claim that the 15% interest in the mid-range zones had matured and filed a bankruptcy proceeding against Smith Energy to obtain an accounting. Smith Energy contested this assertion resulting in a dispute over relative rights of the parties. We dismissed the suit in the bankruptcy court with the intention of pursuing civil litigation against Smith Energy in the Texas state court system. However, on April 14, 2006, we entered into a Compromise Settlement Agreement with Smith Energy and Howard A. Smith, fully resolving the dispute without the need for further litigation. Under the settlement terms, we have agreed to relinquish our 15% back-in interest in the mid-range zones in exchange for Smith Energy’s overriding royalties in the deep zones, access to Smith Energy’s existing seismic data covering the leases, and a stipulation by Smith Energy that we can operate all wells drilled by us or our agents in the deep zones and, where needed, utilize existing Smith Energy roads, water injection wells, and other facilities.

Our management has explored some of the opportunities to realize value from these deep rights, including potential farmout or sale. The best course for these assets has not been determined, but the leases are held in force by third party production and, therefore, do not require development of these rights by a certain date.

Pakistan Activities and Additional Opportunities

Pakistan has a very large sedimentary area of 827,268 square kilometers (319,325 square miles). Most of this area remains virgin and unexplored. According to the Ministry of Petroleum and Natural Resources (“MPNR”), cumulative drilling within Pakistan has resulted in a very encouraging success ratio of 1:3.2. There have been 850 exploratory wells drilled through September 2013 and there have been 271 oil and gas fields discovered (62 oil and 209 gas and oil) through September, 2012. A total of 97 wells were drilled during the 2012-2013 year. According to the Ministry, oil production reached 76,277 barrels per day during 2012-2013 and gas production reached 4.259 billion cubic feet per day during 2011-12. The Pakistani government’s current liberal policies toward foreign investment and development of these resources have fostered a great deal of activity and opportunities to acquire exploration rights in these undeveloped areas. According to the Ministry, during the last three fiscal years of the Ministry, 32 concession agreements were signed.

Relevant Features of Pakistan Oil and Gas Laws

In Pakistan, exploration licenses are awarded directly by the office of the President. Under the current rules, the term of each concession is twenty five (25) years with the opportunity for a five (year) extension. The rules are silent as to extensions beyond 30 years, but recent aggressive efforts by the government to privatize the oil and gas industry have resulted in requests from potential private bidders to clarify the possibility of additional extensions if wells continue to produce. At the time of a concession award, the recipient is awarded a 95% working interest and the remaining 5% is awarded to the government-owned Government Holdings (Private) Limited (“GHPL”). A twelve and one half percent (12.5%) royalty is also retained by the government of Pakistan. The 5% working interest held by GHPL is a “carried interest” and thus does not share in the costs of drilling and completion of the wells. Production profits and gains (as determined by a 1979 Income Tax Ordinance) are subject to a forty percent (40%) income tax. The working interest owners (other than GHPL) are also required to pay the President a production bonus should the production achieve certain milestones. A bonus of $500,000 is the first threshold at commencement of Commercial Production, then $1,000,000 upon achieving 30 million barrels of oil equivalent (“BPOE”), then $1,500,000 upon achieving 60 million BPOE, then $3,000,000 upon achieving 80 million BPOE and finally $5,000,000 upon achieving 100 million BPOE. Under the concession agreement, the production bonuses are required to be expended upon infrastructure in the area. The term “Commercial Production” is defined as production of petroleum from a Commercial Discovery which ensures at least the recovery of all expenses attributable to the discovery within a reasonable time and the earning of a reasonable profit. The term Commercial Discovery refers to a discovery well which is declared by the operator, then verified by an appraisal well, with the concurrence of the Operating Committee and the government, and which would justify economic development. If the operator believes that an appraisal well is not justified, then the working interest owners have the right to seek Commercial Discovery status on a one-well basis. At such time as the operator achieves a Commercial Discovery, GHPL has the right to increase its 5% working interest up to a maximum of 25% in the discovery area by reimbursing to the operator out of GHPL’s share of production 5% of the costs of drilling and completion. Thereafter, GHPL must pay its proportionate share of all development costs. In the last several years, the government of Pakistan has not exercised its rights to increase its working interest when Commercial Discoveries occurred, but the option to do so is nevertheless included within each concession agreement.

The concession agreements contain acreage relinquishment provisions which require relinquishment of 20% of the undeveloped acreage at the end of the initial term of the license and an additional 30% of the undeveloped acreage at the end of the second renewal period. The area surrounding producing wells may be retained, as determined by the government at the time of relinquishment. However, there is no relinquishment requirement if upon the Commercial Discovery, the operator applies for and is granted a “Lease”. Such an application for Lease must be accompanied by a development plan disclosing how the operator intends to develop the acreage, equip the wells, and transport the resulting production. The Lease has a duration equivalent to the duration of the license.

Under the current rules, working interests can be transferred with the approval of the Government. There is, however, no existing registry for a non-cost bearing royalty carved from the working interest and transferred to a private party. Contracts which create such interests are legal and enforceable in Pakistan, just as in United States’ venues, under the Pakistan law titled: Specific Relief Act of 1887. The production interest assigned to us is free of the costs of development and exploration and thus does not have the financial exposure associated with a traditional working interest. However, title to the production interest is not registered similar to an interest in real estate as it would be in the United States. A production interest in Pakistan is dependent upon the viability of the concession to continue in force. Therefore, any future forfeiture or surrender of the concession will result in elimination of the American Energy interest.

Gas Pricing in Pakistan

The Oil and Gas Regulatory Authority (“OGRA”) is the agency with jurisdiction over wellhead and consumer gas pricing. According to the OGRA, the pricing is directly linked to the international prices for crude oil and furnace oil. Prices are based upon a baseline of 1,000 British Thermal Units (“BTU”). If the gas which is sold has a BTU content which is less than or greater than 1,000 BTUs, the negotiated price is proportionately decreased or increased, respectively. The gas prices for each producing concession are published by the OGRA and current pricing is now more favorable than the price applicable to the gas sold from the Haseeb No. 1 Well Extended Well Test.

Early Drilling Efforts on Concession Acreage

In the 1950’s, Burmah Oil Company (predecessor to Pakistan Petroleum Ltd. (“PPL”) drilled two wells on concession acreage to just over 5,800 feet, each of which indicated gas and oil. In the 1970’s, Amoco Oil drilled a 15,000 feet well which also demonstrated gas and oil. The seismic database acquired in 1995 with the original Jacobabad Concession was extremely limited, consisting of only a few old Amoco vibroseis lines. In 1997, Hycarbex shot 262 km of new 2-D date and acquired the P9222 2-D line running north-south, just outside the eastern boundary of the concession and this data was processed. The remaining Amoco vibroseis data and all the remaining ODGC 2-D lines (approximately 600 km) were not processed when acquired. Hycarbex originally drilled four exploratory wells on the Jacobabad concession. The first well was drilled in 1998 to a depth sufficient to test the primary producing zone in the region. This well found natural gas in several zones and a drill stem test confirmed the presence of high-quality gas before operations were suspended. At the time, equipment available on the well site was inadequate to deal with downhole problems. We believe that this well could be redrilled. The second well, drilled in a different portion of the concession, encountered mechanical problems and did not reach sufficient depth to test any targeted formations. The third well encountered large quantities of hydrogen sulfide and carbon dioxide, which appeared to be confined to a relatively small area around the wellbore. In July 2000, approximately 40km of new seismic was shot and processed, but the acreage comprising the concession was so vast that early drillsite selection still involved some degree of speculation. In 2001, Hycarbex drilled its fourth well which likewise indicated natural gas in the Sui Main and upper Chiltan formations, but did not result in a commercial completion.

The Haseeb No. 1 Well

The Haseeb No. 1 Well was drilled on the Yasin Concession by the Polish Oil and Gas Company for Hycarbex during March and April 2005 to a total depth of 4,945 feet (1,507 meters). The well is located approximately 9 miles from the Hassan No. 1 well drilled by PPL and 5.6 miles from the City of Shikapur in the Sindh Province. Open hole logs performed on the well demonstrated gas shows from 3,543 feet to 3,688 feet and a net pay thickness of 82 feet. The drill stem test conducted over a short duration on a one-half inch choke indicated a production rate form the Sui Main Limestone equivalent to approximately 7.3 MM cubic feet of 805 BTU gas per day. The gas was tested for carbon dioxide and water content and was found to have low levels of each, indicating a likelihood that processing will not be required prior to pipeline transmission.

In the fall of 2005, Hycarbex completed the acidization of the Haseeb No. 1. Post-treatment testing by Schlumberger Oilfield Services indicated an increase in the natural gas flow rate originally calculated at the time of the drill stem test at 7.3 million cubic feet per day. Schlumberger further concluded that the 10 million cubic feet rate could be potentially increased to as high as 25-28 million cubic feet per day if the existing production tubing is replaced with higher diameter production tubing and if the wellhead pressure is maintained at approximately 1,000 psi. The Yasin Concession has access to pipeline infrastructure. The 12-inch Quetta gas line runs NW-SE through the concession and connects to the 20-inch Sui-Karachi gas line. The Karachi-Muzaffargarh oil line also runs through the southern portion of the concession. The Haseeb #1 Well well was connected to the gas pipe line in September, 2010 and gas sales commenced to Sui Southern Gas Company under the Extended Well Test Gas Sales and Purchase Agreement covering the sale of gas from the Haseeb Gas Field on Yasin Block (2768-7) signed by the parties in December, 2009. In July, 2011, production into the line recommenced at a rate of approximately 3.5 million cubic feet of gas per day (MMCFD) and this rate gradually increased under the Extended Well Test to over ten (10) MMCFD. Recent formation water intrusion into the wellbore has rendered the well non-productive. After assuming control of Hycarbex personnel subsequent to the April 15, 2015 Arbitration Award, we are investigating possible workover activities which could restore or partially restore the production. However, as of the date of this report, the well is not producing gas into the pipeline.

Seismic Database

The efforts by Hycarbex to substantially expand the seismic database in 2004 and 2005 resulted in several miles of additional seismic being shot on the concession. Currently, Hycarbex has captured approximately 700 kilometers (435 miles) of high resolution 2D seismic raw data. This seismic raw data has been processed with the old seismic data using current techniques and has been analyzed by highly experienced geophysicists. The results have not only verified geologic structures with closure and high likelihood of gas productivity, but have also delineated drillsite locations which are likely to enhance drilling success. The technical staff at Hycarbex has identified at least ten (10) areas to date on the Yasin Concession which are recommended for drilling.

The Al-Ali No. 1 Well

Hycarbex drilled the Al-Ali No. 1 Well on the Yasin Concession in 2006. The drilling of Al-Ali #1 Well as an exploratory well was undertaken to fulfill the work obligations for the third contract year under the Concession License. While gas shows were encountered during drilling, the gas volumes, on preliminary analysis, did not appear to be commercially viable and the well was plugged.

The Yasin Exploratory Well No. 1

The Yasin Exploratory Well No. 1 was commenced in November, 2008. On September 28, 2009, Hycarbex announced the results of the drilling and its drilling analysis to date. After drilling to the Sui Main Limestone, which was only one of the target zones for the well, mechanical difficulties were encountered in the hole. The Sui Main Limestone showed strong intermittent gas during the drilling, but a steady flow was not achieved. Hycarbex spent several months attempting to resolve the mechanical difficulties and considering alternative remedial operations while simultaneously evaluating the geologic data obtained from the drilling. After evaluation, angular redrilling in the same wellbore and other remedial measures targeted at saving the wellbore were decided against because the preliminary data collected by Hycarbex indicates that the drilling placement was not at the optimum position on the producing structure.

Other Factors Affecting Pakistan Exploration Opportunities

With regard to Pakistan in-country opportunities, experts view Pakistan as a country with realistic potential for the discovery of large oil and gas reserves. Previously perceived as containing far less oil and gas potential than the Arabian Peninsula countries, Pakistan has never received the extensive exploration efforts required to fully explore the vast and numerous structures warranting such attention. However, in recent years, a significant number of well known international oil and gas operators have moved into Pakistan, and their efforts have met with a high degree of success. These operators include BP Amoco and Premier from the United Kingdom, BHP from Australia, China Oil from China, OMV from Austria, Petronas from Malasia, MOL from Hungary and Shell Oil from the Netherlands. A number of new commercial discoveries have been announced in recent years. There is also geological data which suggests nearly identical structures with those of the Arabian Peninsula. Of the 725 exploratory wells drilled through 2008 (15 of which have been offshore), an above-average number (i.e. 1:3.3) have succeeded and this degree of success supports the position that Pakistan is a good location in which to focus exploration efforts.

The MPNR openly states in its website that the agency felt a need to move toward a more liberalized and deregulated framework, with the government limiting its role to policy formulation and implementation. In its website under the section “Strategy to Achieve Mission”, the Ministry states that its strategies will include deregulation, liberalization and privatization of oil, gas and mineral sectors.

Exploration and production opportunities in Pakistan are attractive for a number of additional reasons. One such reason is high demand relative to the available supply. Domestic demand for natural gas greatly exceeds supply in Pakistan, and is expected to continue to do so for the foreseeable future. Pakistan is undergoing rapid economic growth. Energy represents a significant percentage of total Pakistani imports and the country currently imports over 80% of the oil it consumes, all at a significant cost.

In 2001, the Pakistan government launched a new Petroleum Exploration and Production Policy which offers efficient procedures complimented by a liberal policy framework for obtaining and developing concessions. This policy framework was further updated in 2007, 2009 and 2012. Operators conduct regular meetings with ministry officials but the regulatory involvement is relaxed and on a par with international standards. The licenses are granted directly by the President of Pakistan through his oil ministry officials. Foreign investors are permitted unrestricted expatriation of funds, including profits. The sales markets are unregulated and producers may sell to state marketing organizations or third parties. Current efforts are underway to get the market prices on a par with international prices. Energy Information Administration (EIA) reports, and Pakistani sources confirm, that future commercial discoveries will have a ready market at favorable pricing. Imports of goods, including vehicles and equipment is also simplistic, with no tariffs. The current exploration policy is published in its entirety at the website for the Ministry of Petroleum & Natural Resources, the internet address for which is www.mpnr.gov.pk.

Pakistan sits in a strategic location geographically. The Republic of China has been aggressive in identifying potential sources of energy, including Pakistan, to fuel its exploding industrial economy. Several extremely large pipeline projects are in the planning stages. The World Bank compares Pakistan’s economic energy intensity per GDP to its neighbors, China and India and rates Pakistan as the third fastest growing economy. Natural resources often provide a developing country with a significant portion of its hard currency reserves and therefore contribute to economic development in a material fashion. Pakistan’s government has demonstrated a strong commitment to economic development and is working cooperatively with the oil and gas industry to further this agenda. These cooperative efforts will accelerate foreign investment in Pakistan, accelerate the development of additional oil and gas reserves, and reduce Pakistan’s dependency upon imported sources of energy. Private investment is highly regarded as evidenced by the current efforts of Pakistan Petroleum Limited (PPL), which is state owned, to sell 51 percent of the company and to transfer management control to a strategic investor. (See discussion below regarding proposed changes to exploration rules to lengthen the terms of exploration licenses).

While the region has shown political instability and violence, including inside Pakistan’s borders, the Government of Pakistan has proven to be an ally on the war against global terrorism.

Office Facilities

Our principal executive offices are now located at 20 Nod Hill Road, Wilton, Connecticut. Subsequent to the end of the fiscal year, our prior office lease was terminated due to a rent payment default and the officers were relocated to the Wilton, Connecticut location. The current office space now contains approximately 1,000 square feet and are rent-free due to the owner of the property being the President and Chief Executive Officer of the Company. A formal lease has not been executed to cover the occupancy in the Wilton, Connecticut location, affording the Company the flexibility to relocate as it chooses.

Employees

As of June 30, 2015, we had two (2) full-time employees, which include the President, Pierce Onthank, and an administrative assistant in the corporate office. The Hycarbex subsidiary maintains approximately 20 in-country employees.

ITEM 1A-RISK FACTORS

Company-related Risks

An investment in our Common Stock involves a high degree of risk. You should carefully consider the risks described below before deciding to purchase shares of our Common Stock. If any of the events, contingencies, circumstances or conditions described in the risks below actually occur, our business, financial condition or results of third party operations upon which our royalty interests depend could be seriously harmed. The trading price of our Common Stock could, in turn, decline and you could lose all or part of your investment.

The Company’s limited history, prior bankruptcy proceedings, recent cessation of production and ongoing litigation with prior management of Hycarbex in Pakistan make an evaluation of us and our future extremely difficult, and profits are not assured.

The limited history in the oil and gas exploration business, our prior bankruptcy proceedings between June 2002 and January 2004, the fact that the only producing well operated by the Hycarbex subsidiary has experienced formation water intrusion and is currently non-producing and the continuing litigation with the prior management of Hycarbex make it very difficult for investors to evaluate our business and prospects. Each investor must consider our business and prospects in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. For our business plan to succeed, we must successfully undertake most of the following activities:

	*	Find and acquire rights in attractive oil and gas properties including the ability to successfully negotiate with foreign governments to obtain these rights;
	*	Develop or cause third parties to develop the oil and gas projects to a stage at which oil and gas are being produced in commercially viable quantities;
	*	Procure purchasers of commercial production of oil and gas;
	*	Comply with applicable laws and regulations;
	*	Identify and enter into binding agreements with suitable joint venture partners for future projects;
	*	Raise a sufficient amount of funds to continue acquisition, exploration and development programs;
	*	Implement and successfully execute its business strategy;
	*	Respond to competitive developments and market changes; and
	*	Attract, retain and motivate qualified personnel.

There can be no assurance that we will be successful in undertaking any or all of such activities. A failure to undertake successfully most, if not all, of the activities described above could materially and adversely affect our business, prospects, financial condition and results of operations. In addition, there can be no assurance that exploration and production activities, if any, will produce oil and gas in commercially viable quantities, if any at all. There can be no assurance that sales of oil and gas production will generate significant revenues for a sustained period or that we will be able to achieve or sustain profitability in any future period.

Cumulative voting is not available to stockholders.

Cumulative voting in the election of directors is expressly denied in our Articles of Incorporation. Accordingly, the holder or holders of a majority of the outstanding shares of our common stock may elect all of our Directors. Management's large percentage ownership of the outstanding common stock helps enable them to maintain their positions as such and thus control of our business and affairs.

The trading price of the common stock entails additional regulatory requirements, which may negatively affect such trading price.

The trading price of our common stock is below $5.00 per share. As a result of this price level, trading in our common stock is subject to the requirements of certain rules promulgated under the Exchange Act. These rules require additional disclosure by broker dealers in connection with any trades generally involving any non NASDAQ equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Such rules require the delivery, before any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith, and impose various sales practice requirements on broker dealers who sell penny stocks to persons other than established customers and accredited investors (generally institutions). For these types of transactions, the broker dealer must determine the suitability of the penny stock for the purchaser and receive the purchaser's written consent to the transaction before sale. The additional burdens imposed upon broker dealers by such requirements may discourage broker dealers from effecting transactions in our common stock. As a consequence, the market liquidity of our common stock could be severely affected or limited by these regulatory requirements.

The Company will incur significant costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as well as rules subsequently implemented by the SEC, have imposed various new requirements on public companies, including requiring changes in corporate governance practices. The Company’s management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase the Company’s legal and financial compliance costs and will make some activities more time-consuming and costly. For example, these new rules and regulations are expected to make it more difficult and more expensive to obtain director and officer liability insurance, and the Company may be required to incur substantial costs to maintain the same or similar coverage.

In addition, the Sarbanes-Oxley Act requires, among other things, that the Company maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, the Company must perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Compliance with Section 404 will require that the Company incur substantial accounting expense and expend significant management efforts. The Company currently does not have an internal audit group, and will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if the Company is unable to comply with the requirements of Section 404 in a timely manner, or if the independent registered public accounting firm identifies deficiencies in the Company’s internal controls over financial reporting that are deemed to be material weaknesses, the market price of the stock could decline, and the Company could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

Management controls a significant percentage of our current outstanding common stock and their interests may conflict with those of our shareholders.

As of June 30, 2015, the directors and executive officers and their respective affiliates collectively and beneficially owned approximately 17.2% of the outstanding common stock, including all warrants exercisable within 60 days. This concentration of voting control gives the Directors and executive officers and their respective affiliates substantial influence over any matters which require a shareholder vote, including, without limitation, the election of directors, even if their interests may conflict with those of other shareholders. It could also have the effect of delaying or preventing a change in control of or otherwise discouraging a potential acquirer from attempting to obtain control. This could have a material adverse effect on the market price of the common stock or prevent the shareholders from realizing a premium over the then prevailing market prices for their shares of common stock.

The Company is dependent on key personnel.

We depend to a large extent on the services of certain key management personnel, including R. Pierce Onthank, our President and Chief Executive Officer. The future loss of Mr. Onthank could adversely affect the implementation of the Company’s business plan. We do not maintain key-man life insurance with respect to any officer or director.

The Company’s revenues from production are derived from a single well and the well has ceased producing hydrocarbons.

The revenues previously accrued to us from the Yasin Block were derived from a single well, the Haseeb No. 1. Recent formation water instrusion at the well has caused production of hydrocarbons to cease. Management is exploring possible repairs to the well which may restore or partially restore production, but the success of such activities cannot be assured and a new well could be necessary to re-establish production from the Yasin Block.

The further development of the Yasin Block and development of the other Pakistan-based concessions will depend upon Hycarbex’s ability to secure a strategic development partner or its ability to sell selected assets.

The proceeds of stock sales and loans utilized to date to fund the administrative costs of the Company, including legal fees, are not sufficient to meet the anticipated costs of operating or developing the Pakistan-based assets owned by Hycarbex and the recent formation water intrusion into the Haseeb No. 1 Well may result in a well which will not generate production revenues in the future. The anticipated capital costs for re-establishing production from the Yasin concession block and for operating or developing the other Pakistan-based concessions can only be met by securing a strategic development partner and/or the sale of selected Hycarbex assets.

The favorable policies toward foreign investment in Pakistan oil and gas exploration could change.

Future governmental enactments or changes to existing policies could impact our ownership or asset value. The working interests held by our Hycarbex subsidiary and other interests which we will seek to acquire in other concession opportunities could be adversely affected by future regulatory and/or policy changes. Since the value of these interests is derived from the actual net proceeds of production, changes to the duration of the exploration license, applicable taxes or tariffs, or commodity purchase prices could significantly affect our interests in the region.

We may experience potential fluctuations in results of operations.

Our future revenues may be affected by a variety of factors, many of which are outside our control, including (a) the success of project results; (b) swings in availability of services needed to implement projects and the pricing of such services; (c) a volatile oil and gas pricing market which may make certain projects that we undertake uneconomic; (d) the ability to develop infrastructure to accommodate growth; (e) the ability to attract new independent producers with prospects in a timely and effective manner; and (f) the amount and timing of operating costs and capital expenditures relating to establishing our business operations and infrastructure. As a result of our limited operating history and the emerging nature of our business plan, it is difficult to forecast revenues or earnings accurately, which may fluctuate significantly from quarter to quarter.

The issuance of additional authorized shares of our common and preferred stock or the exercise of stock options and warrants may dilute our investors and adversely affect the market for our common stock.

We are authorized to issue 80,000,000 shares of our common stock. The 61,019,341 shares of our common stock issued and outstanding does not include shares reserved in anticipation of the exercise of options or warrants. As of June 30, 2015, we had outstanding warrants to purchase shares of our common stock and we have reserved shares of our common stock for issuance in connection with the potential exercise thereof. To the extent such options or warrants are exercised, the holders of our common stock will experience further dilution. In addition, in the event that any future financing should be in the form of, be convertible into or exchangeable for, equity securities, and upon the exercise of options and warrants, investors may experience additional dilution.

Possible or actual sales of a substantial number of shares of common stock by the selling stockholders in this offering could have a negative impact on the market price of our common stock. No prediction can be made as to the effect, if any, that sales of shares of common stock or the availability of such shares for sale will have on the market prices prevailing from time to time. Nevertheless, the possibility that substantial amounts of common stock may be sold in the public market would likely have a material adverse effect on prevailing market prices for the common stock and could impair our ability to raise capital through the sale of our equity securities.

The exercise of the outstanding convertible securities will reduce the percentage of common stock held by our stockholders. Further, the terms on which we could obtain additional capital during the life of the convertible securities may be adversely affected, and it should be expected that the holders of the convertible securities would exercise them at a time when we would be able to obtain equity capital on terms more favorable than those provided for by such convertible securities. As a result, any issuance of additional shares of common stock may cause our current stockholders to suffer significant dilution which may adversely affect the market.

In addition to our shares of common stock which may be issued without stockholder approval, we have 20,000,000 shares of authorized preferred stock, the terms of which may be fixed by our Board of Directors. We presently have no issued and outstanding shares of preferred stock and while we have no present plans to issue any shares of preferred stock, our Board of Directors has the authority, without stockholder approval, to create and issue one or more series of such preferred stock and to determine the voting, dividend and other rights of holders of such preferred stock. The issuance of any of such series of preferred stock may have an adverse effect on the holders of common stock.

The Company and the operators of projects in which it participates depend on industry vendors and may not be able to obtain adequate services.

Our third party oil and gas operators are largely dependent on industry vendors for our success. These contracted services include, but are not limited to, accounting, drilling, completion, workovers and reentries, geological evaluations, engineering, leasehold acquisition (landmen), operations, legal, investor relations/public relations, and prospect generation. We could be harmed if the operators of our projects fail to attract quality industry vendors to participate in the drilling of prospects or if industry vendors do not perform satisfactorily. We have little control over factors that influence the performance of such vendors.

The Company relies on third parties for production services and processing facilities.

The marketability of our production depends upon the proximity of our projects’ reserves to, and the capacity of, facilities and third party services, including oil and natural gas gathering systems, pipelines, trucking or terminal facilities, and processing facilities. The unavailability or lack of capacity of such services and facilities could result in the shut-in of producing wells or the delay or discontinuance of development plans for properties. A shut-in or delay or discontinuance could materially adversely affect our financial condition.

The Company’s Directors and Officers have limited liability and have rights to indemnification.

Our Articles of Incorporation and Bylaws provide, as permitted by governing Nevada law, that our directors and officers shall not be personally liable to the Company or any of its stockholders for monetary damages for breach of fiduciary duty as a director or officer, with certain exceptions. The Articles further provide that we will indemnify our directors and officers against expenses and liabilities they incur to defend, settle, or satisfy any civil litigation or criminal action brought against them on account of their being or having been its directors or officers unless, in such action, they are adjudged to have acted with gross negligence or willful misconduct.

The inclusion of these provisions in the Articles may have the effect of reducing the likelihood of derivative litigation against directors and officers, and may discourage or deter stockholders or management from bringing a lawsuit against directors and officers for breach of their duty of care, even though such an action, if successful, might otherwise have benefited us and our stockholders.

The Articles provide for the indemnification of our officers and directors, and the advancement to them of expenses in connection with any proceedings and claims. The Articles include related provisions meant to facilitate the indemnitee's receipt of such benefits. These provisions cover, among other things: (i) specification of the method of determining entitlement to indemnification and the selection of independent counsel that will in some cases make such determination, (ii) specification of certain time periods by which certain payments or determinations must be made and actions must be taken, and (iii) the establishment of certain presumptions in favor of an indemnitee.

General Risks of the Oil and Gas Business

Investment in the oil and gas business is risky.

Oil and gas exploration and development is an inherently speculative activity. There is no certain method to determine whether or not a given prospect will produce oil or gas or yield oil or gas in sufficient quantities and quality to result in commercial production. There is always the risk that development of a prospect may result in dry holes or in the discovery of oil or gas that is not commercially feasible to produce. There is no guarantee that a producing asset will continue to produce. Because of the high degree of risk involved, there can be no assurance that the Company will recover any portion of its investment or that its investment in oil and gas exploration activities will be profitable.

The oil and gas business is subject to drilling and operational hazards.

The oil and gas business involves a variety of operating risks, including:

	·	blowouts, cratering and explosions;
	·	mechanical and equipment problems;
	·	uncontrolled flows of oil and gas or well fluids;
	·	fires;
	·	marine hazards with respect to offshore operations;
	·	formations with abnormal pressures;
	·	pollution and other environmental risks; and
	·	natural disasters.

Any of these events could result in loss of human life, significant damage to property, environmental pollution, impairment of operations and substantial losses. Locating pipelines near populated areas, including residential areas, commercial business centers and industrial sites, could increase these risks. In accordance with customary industry practice, our operators will maintain insurance against some, but not all, of these risks and losses. The occurrence of any of these events not fully covered by insurance could have a material adverse effect on our financial position and the results of operations.

The Company will face fierce competition from other companies in the acquisition of development opportunities.

A large number of companies and individuals engage in drilling for gas and oil, and there is competition for the most desirable prospects. This is likewise the case in Pakistan where foreign investment is accelerating at a tremendous pace. We will encounter intense competition from other companies and other entities in the pursuit of quality prospects for investment. We may be competing with numerous gas and oil companies which may have financial resources significantly greater than ours.

Oil and gas properties are subject to unanticipated depletion.

The acquisition of oil and gas prospects is almost always based on available geologic and engineering data, the extent and quality of which vary in each case. Successful wells may deplete more rapidly than the available geological and engineering data originally indicated. Unanticipated depletion, if it occurs, would result in a lower return for the Company or a loss to the shareholders.

Oil and gas prices are volatile.

Our revenues, cash flow, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on the prices that we receive for oil and gas production. Declines in oil and gas prices may materially adversely affect our financial condition, liquidity, ability to obtain financing and operating results. Lower oil and gas prices also may reduce the amount of oil and gas that we can produce economically. High oil and gas prices could preclude acceptance of our business model. Depressed prices in the future would have a negative effect on our future financial results.

Historically, oil and gas prices and markets have been volatile, with prices fluctuating widely, and they are likely to continue to be volatile. Prices for oil and gas are subject to wide fluctuations in response to relatively minor changes in supply of and demand, market uncertainty and a variety of additional factors that are beyond our control. These factors include:

	·	the threat of global terrorism;
	·	regional political instability in areas where the exploratory wells are drilled;
	·	the available supply of oil;
	·	the level of consumer product demand;
	·	weather conditions;
	·	political conditions and policies in the greater oil producing regions, including the Middle East;
	·	the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls;
	·	the price of foreign imports;
	·	actions of governmental authorities;
	·	domestic and foreign governmental regulations;
	·	the price, availability and acceptance of alternative fuels; and
	·	overall economic conditions.

These factors and the volatile nature of the energy markets make it impossible to predict with any certainty future oil and gas prices. Our inability to respond appropriately to changes in these factors could negatively affect our profitability.

Terrorist attacks and continued hostilities in the Middle East or other sustained military campaigns may adversely impact the industry and us.

The terrorist attacks that took place in the United States on September 11, 2001, were unprecedented events that have created many economic and political uncertainties, some of which may materially adversely impact us. The long-term impact that terrorist attacks and the threat of terrorist attacks may have on the oil and gas business is not known at this time. Uncertainty surrounding continued hostilities in the Middle East or other sustained military campaigns may adversely impact us in unpredictable ways.

Political instability both internal and external to Pakistan could adversely affect drilling operations and gas marketing.

Pakistan is geographically positioned in a region which has experienced a great deal of political instability and violence. The current regime is viewed as pro-western, but a change in government in Pakistan, such as an Islamic fundamentalist government, could have many wide-ranging adverse effects upon the validity of existing exploration licenses and concession agreements and upon our ability to enforce our contractual agreements. Additionally, with or without such governmental changes, recurring incidents of violence could adversely affect oil and gas exploration and marketing operations which would, in turn, adversely affect our ability to receive royalty payments derived from those operations. Examples of regional conflicts, incidents and political unrest inside Pakistan’s borders include the following:

	·	the Kashmir region bordering India, Pakistan, Afghanistan and China, has been a continuing source of tension and armed conflict between India and Pakistan since 1947;

	·	Baluchistan Province tribesmen have previously attacked the Sui gas fields in Balochistan in Southwest Pakistan generally as a protest for more jobs and higher royalty payments; and

	·	Pakistan has experienced violence along its Afghanistan border as well as incidents of internal urban violence from fundamentalist militant Islamic groups who oppose governmental ties with the United States.

Continued incidents of political unrest and violence in the future could interrupt drilling operations and gas marketing of our projects.

The Company’s domestic assets are subject to domestic governmental regulations and hazards related to environmental issues.

Gas and oil operations in the United States are subject to extensive government regulation and to interruption or termination by governmental authorities on account of ecological and other considerations. The Environmental Protection Agency of the United States and the various state departments of environmental affairs closely regulate gas and oil production effects on air, water and surface resources. Furthermore, proposals concerning regulation and taxation of the gas and oil industry are constantly before Congress. It is impossible to predict future proposals that might be enacted into law and the effect they might have on the Company. Thus, restrictions on gas and oil activities, such as production restrictions, price controls, tax increases and pollution and environmental controls may have a material adverse effect on the Company.

Hazards in the drilling and/or the operation of gas and oil properties, such as accidental leakage or spillage, are sometimes encountered. Such hazards may cause substantial liabilities to third parties or governmental entities, the payment of which could reduce distributions or result in the loss of Company leases. Although it is anticipated that insurance will be obtained by third-party operators for the benefit of the Company, we may be subject to liability for pollution and other damages due to environmental events which cannot be insured against due to prohibitive premium costs, or for other reasons. Environmental regulatory matters also could increase substantially the cost of doing business, may cause delays in producing oil and gas or require the modification of operations in certain areas. Operations are subject to numerous stringent and complex laws and regulations at the federal, state and local levels governing the discharge of materials into the environment or otherwise relating to environmental protection. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial requirements, and the imposition of injunctions to force future compliance.

The Oil Pollution Act of 1990 (“OPA 90”) and its implementing regulations impose a variety of requirements related to the prevention of oil spills, and liability for damages resulting from such spills in United States waters. OPA 90 imposes strict joint and several liability on responsible parties for oil removal costs and a variety of public and private damages, including natural resource damages. While liability limits apply in some circumstances, a party cannot take advantage of liability limits if the spill was caused by gross negligence or willful misconduct or resulted from violation of a federal safety, construction or operation regulation. If a party fails to report a spill or to cooperate fully in a cleanup, liability limits likewise do not apply. Even if applicable, the liability limits for offshore facilities require the responsible party to pay all removal costs, plus up to $75 million in other damages. For onshore facilities, the total liability limit is $350 million. OPA 90 also requires a responsible party at an offshore facility to submit proof of its financial ability to cover environmental cleanup and restoration costs that could be incurred in connection with an oil spill.

The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), also known as the “Superfund” law, and analogous state laws impose strict, joint and several liability on certain classes of persons that are considered to have contributed to the release of a “hazardous substance” into the environment. These parties include the owner or operator of the site where the release occurred, and those that disposed or arranged for the disposal of hazardous substances found at the site. Responsible parties under CERCLA may be subject to joint and several liability for remediation costs at the site, and may also be liable for natural resource damages. Additionally, it is not uncommon for neighboring landowners and other third parties to file tort claims for personal injury and property damage allegedly caused by hazardous substances released into the environment.

State statutes and regulations require permits for drilling operations, drilling bonds and reports concerning operations. In addition, there are state statutes, rules and regulations governing conservation matters, including the unitization or pooling of oil and gas properties, establishment of maximum rates of production from oil and gas wells and the spacing, plugging and abandonment of such wells. Such statutes and regulations may limit the rate at which oil and gas could otherwise be produced from the Company’s properties and may restrict the number of wells that may be drilled on a particular lease or in a particular field.

ITEM 1B – UNRESOLVED STAFF COMMENTS

There were no unresolved staff comments as of June 30, 2015 or the date of this report.

ITEM 3 – LEGAL PROCEEDINGS

On March 27, 2012, the Islamabad High Court issued its final order (later clarified as to certain arbitration procedures by a clarification Order dated April 4, 2012). The Court directed the parties to proceed to arbitration in London, UK under the ICC Rules of Arbitration and further reaffirmed the continuation of the pending temporary injunctions against Hycarbex’s potential transfer of interests in the concessions prior to final resolution in the arbitration forum. Our application for the appointment of a receiver was neither granted nor denied, but was instead deferred by the Court to the arbitration forum. Hycarbex appealed the March 27, 2012 Order asserting that litigation should not have been initiated by American Energy without first going to arbitration, asserting that our claims to 18% of gross production revenues were premature (despite already having made some payments toward that production interest) because a “commercial discovery” had not yet been declared, and asserting that the injunctions had the effect of enjoining all of the working interest, not just a portion. American Energy countered with an appeal that the Court should reconsider the application for a receiver due to an existing arbitration rule which would prevent the arbitration forum from granting interim relief of that type, irrespective of the merits of such an application.

On April 10, 2012, pursuant to the terms of the March 27, 2012, Islamabad High Court Order, we filed our claim with the International Chamber of Commerce (“ICC”) International Court of Arbitration. In this claim, we are seeking an order which voids, ab initio, the original 2003 Stock Purchase Agreement under which Hycarbex’s parent company acquired the stock of Hycarbex (and thus the underlying Yasin concession owned by Hycarbex) and in conjunction therewith, seeks the recovery of any financial dividends or advances which may have been made by Hycarbex to its shareholders. Alternatively, our claim requests the declaration of a 25% carried working interest (and the in-country registration of same) to which is attributed 18% of gross production free of taxes and costs, plus the recovery from the respondents of all accrued, unpaid production revenues. The request in our arbitration claim for a voiding of the original Stock Purchase Agreement was based upon our assertions in the claim that Hydro Tur, Ltd., the original purchaser of the Hycarbex stock under the 2003 Stock Purchase Agreement, fraudulently misrepresented to American Energy certain matters. As indicated below, the Arbitration Tribunal agreed and made its April 15, 2015 Award on such basis.

In February, 2013, we filed an Application For Interim Relief with the ICC which was heard by the tribunal on June 13, 2013. By Order dated September 25, 2013, the ICC granted all requests made by the Company against Hycarbex American Energy, Inc. (“Hycarbex”), Hycarbex Asia Pte, Ltd. (“Hycarbex Asia”) and Hydro Tur, Ltd. (“Hydro Tur”) in its Application For Interim Relief filed with the ICC in February, 2013 and presented to the ICC in a hearing conducted June 13, 2013. By Order dated September 25, 2013, the ICC granted to the Company all requested relief and therein ordered Hycarbex, Hycarbex Asia and Hydro Tur to do the following within fourteen (14) days of the Order: (1) to produce to the Company the records of production and sales from the Yasin petroleum concession in Pakistan for the period August 2011 through the date of the Order and to continue to do so pending further order, (2) to pay to the Company 18% of all sales proceeds of hydrocarbons received by such parties between August 2011 through December 2012, (3) to pay to the Company 18% of all sales proceeds of hydrocarbons received by such parties between December 2012 and the date of the Order, and (4) to direct the purchaser of the hydrocarbons to pay direct to the Company 18% of all future sale proceeds during the pendency of the arbitration proceedings. The ICC further ordered that in the event that Hycarbex, Hycarbex Asia and Hydro Tur fail to produce to the Company the production and sales records for the period August 2011 through December 2012 within the fourteen (14) days following the Order, that such parties are ordered to pay to the Company $1,436,138 as an approximate interim amount pending the determination of actual sale proceeds from the actual records. The ICC further ordered that in the event that Hycarbex, Hycarbex Asia and Hydro Tur fail to produce to the Company the production and sales records for the period December 2012 through the date of the Order and continue to do so, that the arbitration tribunal will consider an application from the Company for a further Order as to an approximate interim monetary amount pending the determination of actual sales proceeds for such period. Subsequent to this ICC Order, Hycarbex produced certain sales records and other records of Hycarbex but Hycarbex and Hycarbex Asia failed to pay the ordered monetary sum. Hycarbex and Hycarbex Asia also requested a modification of the Order granting interim relief. The Order was not suspended by the ICC while this request was under consideration. By communication from the ICC dated February 4, 2014, the modification requested by Hycarbex and Hycarbex Asia was denied by the arbitration tribunal. The Liquidators for Hycarbex Asia appointed in 2013 in the pending insolvency proceedings for Hycarbex Asia in Singapore replaced their legal counsel and then requested a stay of the arbitration proceedings on February 12, 2014 from the English High Court of Justice, Chancery Division. However, this request for stay of the arbitration proceedings was promptly denied by the English Court and Hycarbex Asia was directed by the Court to pay to the Company costs of £40,000, which have been paid.

On February 17, 2014, the arbitration proceedings commenced before the 3-arbitrator tribunal with the first order of business being consideration of another request to the arbitration tribunal by the Liquidators of Hycarbex Asia for suspension of the proceeding or, in the alternative, a postponement to permit newly appointed legal counsel to prepare a proper defense to the Company’s claims in arbitration. A complete suspension was rejected by the Tribunal. The Liquidators voluntarily offered to pay interim costs of $50,000 toward the actual costs determined by the Tribunal as caused by the request. We opposed the postponement and indicated that any consideration of same must be conditioned upon protection of the disputed assets and adequate measures to assure payment to us of the monies due to us under the September 25, 2013 Order granting interim relief. The tribunal adjourned the final hearing on the merits until June 16, 2014, based upon Hycarbex Asia’s assertion that the change of counsel was necessitated by a conflict arising out of a divergence of the respective interests of Hycarbex Asia and the other Defendants. We were awarded the $50,000 in inconvenience costs offered by Hycarbex Asia, which have been paid, and given the opportunity to request an increase in that sum based upon actual costs incurred. The Tribunal further issued an interim Order dated February 25, 2014, requiring Hycarbex to produce to us all records of production from August 2011 forward, including any production which occurs after the date of the Order. The Order further required Hycarbex to produce any future notices of regulatory action or default received from the Government of Pakistan. The Order further ordered that the parties prepare a joint letter to Sui Southern Gas Company Limited (the purchaser of the gas from the Haseeb #1 Well) withdrawing Hycarbex’s October 8, 2013 instruction letter to Sui Southern Gas Company and further ordered that the joint letter direct Sui Southern Gas Company Limited to pay 18% of the gross production proceeds directly to the Company going forward. The Order further directed that the joint letter be submitted to Sui Southern Gas Company Limited within 7 days after agreement is reached on the form of the letter. The Company and Hycarbex Asia reached agreement as to the form of the letter during the second week of May, 2014, and the joint letter was submitted to Sui Southern Gas Company Limited. The Order further authorized our use of any documents and transcripts from the arbitration proceedings in any ancillary proceeding initiated by the Company in Pakistan.

In August, 2014, we initiated separate legal actions in Pakistan for an injunction against Sui Southern Gas Company Limited (“Sui Southern”) and Hycarbex-American Energy, Inc. (“Hycarbex”), respectively, in furtherance of the prior interim orders of the Arbitration Tribunal. The new action filed in the Sindh, Karachi High Court named as defendants Sui Southern, Hycarbex, its parent company, Hycarbex Asia Pte. Ltd. (“Hycarbex Asia”) and two additional pro forma defendants and requests an injunction against Sui Southern against payment to Hycarbex of 18% of the total proceeds of gas sales. The requested injunction was granted to us by the Karachi Court, but later vacated as premature as it pertains to the third party gas gatherer. However, we also filed in the Islamabad Court an action against Hycarbex, Hycarbex Asia and Hydro Tur as defendants and obtained injunctive relief against Hycarbex from interference with the Arbitration Tribunal-ordered notifications to Sui Southern to pay us directly our 18% of production, and injunctive relief requiring Hycarbex to escrow the 18% of production which would have been payable to the Company.

On April 15, 2015, the ICC Arbitration Tribunal rendered its Partial Final Award in the pending arbitration proceedings which declares that the November 9, 2003 Stock Purchase Agreement between the Company, Hycarbex and Hydro-Tur, which was amended on February 16, 2004, and December 15, 2009, is void ab initio and of no legal effect on account of the fraud and misrepresentations of Hycarbex, Hydro-Tur and Hycarbex-Asia and that the Company is thus the 100% owner of the common stock of Hycarbex relating back to the original Stock Purchase Agreement date of November 9, 2003. In connection with its findings, the ICC Arbitration Tribunal ordered that the register of shareholders for Hycarbex be corrected to reflect the Company as the owner of 100% of the common stock, that Hycarbex and Hycarbex-Asia take any and all steps necessary to effect the rectification of the register of shareholders of Hycarbex to reflect the Company as the owner of 100% of the common stock, and that Hycarbex and Hycarbex-Asia bear all costs of the arbitration proceedings, including the Company’s legal costs, which costs and fees are to be fixed by the ICC Arbitration Tribunal in a subsequent award after submission of the total costs and fees by AEGG. The ICC Arbitration Tribunal dismissed Hydro-Tur’s application for costs.

ITEM 4 – MINE SAFETY DISCLOSURES

None.

PART II

ITEM 5 – MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES

Our common stock is traded on the over-the-counter pink sheets (previously the over the counter bulletin board through February 22, 2011) under the symbol AEGG. The trading market began during the quarter ending December 31, 2004. The following table sets forth the quarterly high and low bid prices for each quarter for the five (5) most recent fiscal years. Such prices represent quotations between dealers, without dealer markup, markdown or commissions, and may not represent actual transactions.

Quarter	High		Low
September 30, 2010	$	0.85	$	0.64
December 31, 2010	$	1.04	$	0.60
March 31, 2011	$	0.71	$	0.45
September 30, 2011	$	0.57	$	0.12
December 31, 2011	$	0.25	$	0.05
March 31, 2012	$	0.40	$	0.13
June 30, 2012	$	0.25	$	0.10
September 30, 2012	$	0.17	$	0.15
December 31, 2012	$	0.15	$	0.11
March 31, 2013	$	0.15	$	0.12
June 30, 2013	$	0.14	$	0.14
September 30, 2013	$	0.35	$	0.14
December 31, 2013	$	0.39	$	0.25
March 31, 2014	$	0.30	$	0.16
June 30, 2014	$	0.33	$	0.18
September 30, 2014	$	0.29	$	0.15
December 31, 2014	$	0.16	$	0.09
March 31, 2015	$	0.20	$	0.08
June 30, 2015	$	0.21	$	0.08

As of June 30, 2015, the final trading day of the fiscal year, the closing price for shares of our common stock in the over-the-counter market, as reported by the OTC Pink Sheets, was $0.15. As of June 30, 2015, we had approximately 47 registered holders of our common stock (excluding holders in “street name”). As of June 30, 2015, there were 60,469,757 shares of common stock issued and outstanding and as of October 13, 2015, there were 61,019,341 shares of common stock issued and outstanding.

Dividend Policy

There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

	1.	We would not be able to pay our debts as they become due in the usual course of business; or

	2.	Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future. Our current policy is to retain any earnings in order to finance the expansion of our operations. Our Board of Directors will determine future declaration and payment of dividends, if any, in light of the then-current conditions they deem relevant and in accordance with the Nevada Revised Statutes.

Equity Compensation Plan Information

The following table sets forth all equity compensation plans as of June 30, 2014.

Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (c)
Equity compensation plans approved by security holders		-0-		-0-		-0-
Equity compensation plans not approved by security holders	3,650,000 Common		$	0.15		-0-
Total		-	$	0.15		-0-

Recent Sales of Unregistered Securities

During the fiscal year commencing July 1, 2014 and ending June 30, 2015, we sold 2,763,637 unregistered shares of Common Stock for a cash consideration of $431,000 which we used for general working capital, including attorneys’ fees incurred in the pending litigation with Hycarbex. We also issued 5,366,002 shares to directors for $50,000 in director fees and a $500,000 bonus to R. Pierce Onthank. We also issued 20,000 shares to an employee at a value of $2,600, 150,000 shares to our Pakistan counsel for legal fees of $27,500 and 1,103,240 shares to our domestic counsel for accrued legal fees of $250,460. Subsequent to the end of the fiscal year, we sold 549,584 shares of Common Stock for a cash consideration of $85,600.

ITEM 6 – SELECTED FINANCIAL DATA

The following table sets forth in dollars selected financial data regarding the Company as of and for each of the annual periods (each ending June 30) indicated. The following data should be read in conjunction with Items 7 and 8 herein.

	2015			2014			2013			2012			2011
Revenue
Oil and Gas Sales		-0-		$	1,108,163		$	1,217,553		$	849,980			-0-
General and Administrative Expenses
Legal and Professional		325,749			1,007,570			217,709			231,650			191,879
Depreciation and Amortization Expense		776			4,550			4,733			5,188			6,561
Bad Debt		3,095,351			-0-			-0-			-0-			-0-
General and Administrative		1,150,611			1,455,350			1,053,292			707,133			772,504
Total Expenses		4,572,487			2,467,470			1,275,734			943,971			970,944
Net Operating Income (Loss)		(4,572,487	)		(1,359,307	)		(58,181	)		(93,991	)		(970,944	)
Other Income and (Expense)
Warrant Settlements		(78,133	)		-0-			-0-			-0-			-0-
Taxes-Other		(11,328	)		(7,068	)		(8,381	)		(5,755	)		(5,220	)
Interest Expense		(46,215	)		(19,872	)		(12,857	)		(9,706	)		(15,620	)
Total Other Income and (Expense)		(135,676	)		(26,940	)		(21,238	)		(15,461	)		(20,840	)
Net Loss Before Federal Income Tax		(4,708,163	)		(1,386,247	)		(79,419	)		(109,452	)		(991,784	)
Federal Income Tax		-0-			-0-			-0-			-0-			-0-
Net Loss		(4,708,163	)		(1,386,247	)		(79,419	)		(109,452	)		(991,784	)
Basic Loss Per Common Share		(0.09	)		(0.03	)		(0.00	)		(0.00	)		(0.03	)
Weighted Average Number of Shares Outstanding		52,675,425			48,007,962			41,209,615			36,490,028			33,539,434

ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains statements about the future, sometimes referred to as “forward-looking” statements. Forward-looking statements are typically identified by the use of the words “believe,” “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “project,” “propose,” “plan,” “intend” and similar words and expressions. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that describe our future strategic plans, goals or objectives are also forward-looking statements.

Readers of this report are cautioned that any forward-looking statements, including those regarding the Company or its management’s current beliefs, expectations, anticipations, estimations, projections, proposals, plans or intentions, are not guarantees of future performance or results of events and involve risks and uncertainties, such as:

	·	The future results of drilling individual wells and other exploration and development activities;
	·	Future variations in well performance as compared to initial test data;
	·	Future events that may result in the need for additional capital;
	·	Fluctuations in prices for oil and gas;
	·	Future drilling and other exploration schedules and sequences for various wells and other activities;
	·	Uncertainties regarding future political, economic, regulatory, fiscal, taxation and other policies in Pakistan;
	·	Our future ability to raise necessary operating capital.

The forward-looking information is based on present circumstances and on our predictions respecting events that have not occurred, which may not occur or which may occur with different consequences from those now assumed or anticipated. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including the risk factors detailed in this report. The forward-looking statements included in this report are made only as of the date of this report. We are not obligated to update such forward-looking statements to reflect subsequent event or circumstances.

Overview

In November, 2003, we sold our Hycarbex-American Energy, Inc. (“Hycarbex”) subsidiary, which was the owner and operator of the Yasin 2768-7 Petroleum Concession Block in the Republic of Pakistan, to a foreign corporation. We retained in the sale an 18% overriding royalty interest in the Yasin Block. Drilling of the first well in Pakistan as to which our overriding royalty pertains, named the Haseeb No. 1 Well, was successfully completed by Hycarbex-American Energy, Inc. (“Hycarbex”), in the fourth quarter of the fiscal year ended June 30, 2005. A third party owned surface facility for the well was constructed for Hycarbex after well completion.

On October 29, 2009, we executed an agreement to acquire from Hycarbex a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan. Each of the 2-1/2% working interests was deemed “carried” by Hycarbex for the initial two (2) wells on the Sanjawi Block and the initial three (3) wells on the Zamzama North Block. The term “carried” means that the costs associated with work programs, seismic, road preparation, drillsite preparation, rig and equipment mobilization, drilling, reworking, testing, logging completion and governmental fees (except taxes on production) shall be borne entirely by Hycarbex. Infrastructure costs such as pipelines and surface facilities constructed after the first discovery well on each Block are not carried.

During September 2010, Hycarbex connected the Haseeb No. 1 Well to the Sui Southern Gas Company pine line, and commenced gas sales under an Extended Well Test but the production quickly ceased due to mechanical difficulties encountered in the commissioning of the surface facility owned by the third party. The production re-commenced into the pipe line in July, 2011, at the initial rate of 3.5 million cubic feet of gas per day (MMCFD) and in the fall of 2011, we received the initial two production revenue payments for Yasin production. In November, 2011, Hycarbex, the operator of the Yasin concession, suspended the monthly revenue payments in breach of its contractual payment obligations due to Hycarbex’s asserted financial difficulties and advised that it would continue to accrue the revenues to the Company until it resolved its financial difficulties. Hycarbex further breached its contractual obligations by refusing to provide to us detailed information regarding the production from the well and regarding the production revenues received from the sale of the produced hydrocarbons. Although the daily production rate later increased to over 10 million cubic feet per day under the Extended Well Test, in December, 2011, we elected to initiate legal proceedings to collect the unpaid production revenues being withheld by Hycarbex. During the non-payment period and the pendency of this litigation which continues as of the date of this report, we have sold shares to and obtained loans from private investors to generate the necessary working capital to maintain our administrative operations and pay outstanding legal fees.

The initial litigation was commenced in Pakistan, including the procuring of injunctions against Hycarbex in Pakistan preserving the status quo and prohibiting the transfer of the working interest owned by Hycarbex in the Yasin concession. In the spring of 2012, the Islamabad High Court issued its final order directing the parties to proceed to arbitration in London, UK under the ICC Rules of Arbitration. Despite a Pakistan-based appeal by the Hycarbex parties, the matter proceeded to arbitration before the ICC Arbitration Tribunal. Prior to the final hearing, the ICC Arbitration Tribunal ordered on an interim basis in September, 2013, that the Hycarbex parties produce production records, that they pay to us 18% of the proceeds of gas sales from August, 2011 through December, 2012 (i.e. $1,436,138), and that they direct Sui Southern Gas Company Limited to pay us directly as to our percentage of future gas sales. The Hycarbex parties failed to comply with the portion of the order which directed the payment of the $1,436,138. After several failed attempts by the Hycarbex parties to prevent the final arbitration hearing from moving forward, the final hearing was conducted in June, 2014. A decision was not rendered until April, 2015.

On April 15, 2015, the ICC Arbitration Tribunal rendered its Partial Final Award in the pending arbitration proceedings which declares that the November 9, 2003 Stock Purchase Agreement between the Company, Hycarbex and Hydro-Tur, which was amended on February 16, 2004, and December 15, 2009, is void ab initio and of no legal effect on account of the fraud and misrepresentations of Hycarbex, Hydro-Tur and Hycarbex-Asia and that the Company is thus the 100% owner of the common stock of Hycarbex relating back to the original Stock Purchase Agreement date of November 9, 2003. In connection with its findings, the ICC Arbitration Tribunal ordered that the register of shareholders for Hycarbex be corrected to reflect the Company as the owner of 100% of the common stock, that Hycarbex and Hycarbex-Asia take any and all steps necessary to effect the rectification of the register of shareholders of Hycarbex to reflect the Company as the owner of 100% of the common stock, and that Hycarbex and Hycarbex-Asia bear all costs of the arbitration proceedings, including the Company’s legal costs.

Subsequent to the April 15, 2015 Arbitration Award, we accomplished a complete change of management of Hycarbex in Nevis, West Indies, the country of domicile for Hycarbex, including the removal of Iftikhar A. Zahid as an officer and director, we obtained a Pakistan Board of Investment letter under which the Government of Pakistan acknowledges the change in management for Hycarbex, we opened new Hycarbex bank accounts in Pakistan, we opened a new Islamabad, Pakistan office, we took control of selected in-country personnel of Hycarbex (20 employees) who now report to new management, and we established with Sui Southern Gas Company Limited that Sui Southern’s personnel would recognize only the new management of Hycarbex in relation to the production from the Haseeb No. 1 Well, including payments for gas sales. The new management, as of the date of this report, consists of directors, R. Pierce Onthank, John Gebhardt and Shaheed Ahmed Khan. R. Pierce Onthank is the President of the subsidiary.

Despite significant progress in assuming complete control of the Hycarbex business in Pakistan, Hycarbex’s prior President, Iftikhar A. Zahid, has pursued litigation in Pakistan to obstruct our taking possession of the large number of files, records and technical data stored at the prior Islamabad, Hycarbex office. This prior office has been sealed by a local Islamabad magistrate pending the outcome of final hearings on the matter thereby preventing access to the prior office by either party. The magistrate’s order has been challenged by new Hycarbex management and as of the date of this report, we are awaiting a final hearing on the status of the closure and our access. In addition to continuing our litigation costs, the delays in obtaining access to the files, records and technical data have prevented the implementation of a business plan for the various Hycarbex assets. According to Government records and information obtained from Hycarbex personnel, these assets include working interests in five (5) large exploration blocks within Pakistan. These interests include: Block No. 2768-7 (Yasin), 673 square miles; Block No. 2667-8 (Zamzama North), 474 square miles; Block No. 3068-2 (Sanjawi), 871 square miles; Block No. 2466-8 (Karachi), 851 square miles; and Block No. 3371-13 (Peshawar), 960 square miles. Hycarbex is the registered owner of a 75% working interest in the Yasin Exploration Block, 95% working interest in the Karachi and Peshawar Exploration Blocks, 20% working interest in Zamzama North and Sanjawi Exploration Blocks, of which 10% is carried as to exploration costs with back-in rights to acquire an additional 10% working interest upon commercial discovery. The liabilities, if any, associated with these assets is unknown at this time due to the lack of access to the records contained within the prior Hycarbex office.

In late 2014, the Haseeb No. 1 Well experienced a formation water intrusion adversely affecting the production levels of the well and creating periods of non-productivity. We are exploring potential workover activities which could restore or partially restore the productivity of the well to its prior levels. There can be no assurance that such efforts will be successful. If unsuccessful, then a new well would be necessary to re-establish production from the Yasin concession.

We continue to maintain administrative operations using the proceeds of sales of our stock and loans. However, the anticipated future administrative costs, including legal costs, and the probable capital needs relating to operating or sharing in the development of the overseas Hycarbex assets will require that we also secure a strategic partner or that we sell selected assets or parts of assets. There can be no assurance that such efforts will be successful. If unsuccessful, the contractual provisions contained within the respective concession licenses for the Hycarbex assets which obligate the owner of the license to meet specified financial and development obligations could result in a forfeiture to the Government of certain of these assets.

Results of Operations

Our operations for the twelve months ended June 30, 2015 reflected a net operating loss of $4,572,487 as compared to a net operating loss of $1,359,307 for the twelve months ended June 30, 2014. The increase in net operating loss is due to $3,095,351 in bad debt on our books attributed to Hycarbex prior to obtaining ownership of Hycarbex under the April 15, 2015, Arbitration Award. The party which owed the debt, Hycarbex, is now a subsidiary based upon the Award. Litigation fees related to the Arbitration and the ongoing litigation disputes in Pakistan with former Hycarbex management diminished to approximately one third of the level for the period ending June 30, 2014.

Liquidity and Capital Resources

To date, we have funded our operations through private sale of securities and private loans. The 2011 re-connection to the marketing pipe line and resulting gas sales under the Extended Well Test were expected to provide future cash flow sufficient to meet the Company’s ongoing expenses because the level of production was sufficiently high to cause production revenues to exceed the Company’s monthly operating capital requirements. However, the illegal suspension of revenue payments by Hycarbex in late 2011 and the resulting litigation against Hycarbex and others which ensued resulted in the continuation of private securities sales and private loans to fund our administrative and legal obligations. The April 15, 2015 Arbitration Award had the effect of awarding to us 100% ownership of Hycarbex. The known Hycarbex assets include working interests in five large exploration blocks within Pakistan. These interests include: Block No. 2768-7 (Yasin), 673 square miles; Block No. 2667-8 (Zamzama North), 474 square miles; Block No. 3068-2 (Sanjawi), 871 square miles; Block No. 2466-8 (Karachi), 851 square miles; and Block No. 3371-13 (Peshawar), 960 square miles. Hycarbex is the registered owner of a 75% working interest in the Yasin Exploration Block, 95% working interest in the Karachi and Peshawar Exploration Blocks, 20% working interest in Zamzama North and Sanjawi Exploration Blocks, of which 10% is carried as to exploration costs with back-in rights to acquire an additional 10% working interest upon commercial discovery. The liabilities, if any, associated with these assets is unknown at this time due to the lack of access to the records contained within the prior Hycarbex office. The access rights are the subject of ongoing litigation in Pakistan. Subsequent to the Award we have established a new Hycarbex office in Pakistan, established new Hycarbex bank accounts, assumed control of the Hycarbex in-country personnel and obtained recognition from both the Pakistan Government and Sui Southern Gas Company Limited that our new Hycarbex management team is the lawful management going forward.

In late 2014, a formation water intrusion into the Haseeb No. 1 Well resulted in a decline in production, including periods of non-production. New Hycarbex management is exploring possible workover repairs which could restore or partially restore the well to its prior production levels, but there cannot be an assurance that such repair activities would be successful. If unsuccessful, a new well would be required to re-establish production on the Yasin concession block. While a new well would be substantially more expensive than workover repairs, a new well would entitle Hycarbex to receive a more favorable gas price under the current Government pricing policy of approximately $6/MCF.

Business Strategy and Prospects

The April 15, 2015 Arbitration Award restored to the Company the Hycarbex subsidiary it sold in 2003. The Hycarbex subsidiary in 2003 had a working interest in the Yasin concession block only, but now has working interests in five exploration licenses. With the recent decline in the production from the Haseeb No. 1 Well, which may be restored if workover operations are successful, the Company will endeavor to secure a strategic development partner and/or the sale of selected Hycarbex assets in order to meet the administrative and legal costs of both the Company and Hycarbex, as well as the exploration and development capital requirements associated with each Hycarbex asset. Management is optimistic that such strategic arrangements can be achieved based upon the expressed interest of potential development partners following the April 15, 2015 Arbitration Award. The securing of one or more strategic development partners and/or strategic asset sales is critical to the future success of the Company. (See Note 10 – Going Concern). Subsequent to June 30, 2015, the Company entered into a consulting agreement with Shaheed Ahmed Khan, an independent contractor to assist the Company’s re-acquired Hycarbex subsidiary as a regulatory and government liaison, formulate growth strategies and assist with international contractual and joint venture negotiations. Mr. Khan was likewise appointed as a director of Hycarbex.

Recent Pakistan Political Developments

Incidents of violence and political protest continue to occur within the country according to international news sources. These political events have not impacted our ownership of the overriding royalty or the ongoing business practices within the country, including oil and gas exploration, development and production by Hycarbex and other major operators doing business in Pakistan. We cannot predict the effect of future political events or political changes upon Hycarbex’s operations and our expectations of deriving revenues from our interests through the sale of gas into Pakistan’s pipeline infrastructure.

Galveston County, Texas Leases

We believe that the deeper zones which we currently hold may have development potential. We are exploring the various opportunities to realize value from these deep rights, including potential sale. We have not yet determined the best course for these assets. These leases are held in force by third party production and, therefore, the leases do not require development of these rights by a certain date.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements during the fiscal year ended June 30, 2015.

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are not exposed to market risk from changes in interest rates and commodity prices.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements required to be filed pursuant to this Item 7 begin on Page F-1 of this report. Such consolidated financial statements are hereby incorporated by reference into this Item 8. The Supplementary Data requirement as set forth in Item 302 of Regulation S-K is inapplicable to the Company.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There were no changes in or disagreements with accountants on accounting and financial disclosure for the year ended June 30, 2015.

ITEM 9A-CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is included in the reports that we file with the Securities and Exchange Commission.

There have been no material changes in internal control over financial reporting that occurred during the fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management assessed the effectiveness of our internal controls over financial reporting as of June 30, 2014. In making this assessment, management used the criteria set forth by the Commission of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework to identify the risks and control objectives related to the evaluation of our control environment. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of June 30, 2014.

Our independent registered public accounting firm, Pritchett, Siler & Hardy, P.C. has taken into consideration internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but has not expressed an opinion on the effectiveness of the Company’s internal control over financial reporting in its report below.

Inherent Limitations Over Internal Controls

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. 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.

ITEM 9B - OTHER INFORMATION

Subsequent to the end of the fiscal year we sold 549,584 unregistered Common shares for $85,600 which was and will be used for general working capital, including attorneys’ fees incurred in the pending litigation relating to the prior management of Hycarbex. Management does not expect to continue this course of raising capital through securities sales due to the limitation in the number of authorized shares. With the recent decline in the production from the Haseeb No. 1 well, management believes that the securing of a strategic development partner and/or the sale of selected Hycarbex assets will be necessary to meet our capital needs for future administrative expenses and legal fees and the anticipated operating and development capital costs associated with the Hycarbex assets.

PART III

ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The directors and executive officers of the Company at June 30, 2015, included the following persons, each of whom serves on the audit committee of the Company:

Name	Age	Position

R. Pierce Onthank	55	Director, President, CEO, CFO & Secretary-Treas.
John S. Gebhardt	68	Director

R. Pierce Onthank, age 55, serves as President, CEO, Secretary-Treasurer. Mr. Onthank has also served as our Director since 2003. Mr. Onthank received a BA in economics from Denison University in 1983. He served as the investment broker for the Company from 1998 until 2001. In addition to serving The American Energy Group, Ltd. as one of its prior investment bankers, Mr. Onthank has specialized in oil and gas investments for his previous clients. With over 20 years of experience in the securities business, Mr. Onthank has held senior positions in investment banking firms and has managed high yield net worth and institutional portfolios. Mr. Onthank began his career in the Merrill Lynch training program and subsequently was employed by Bear Stearns in 1985 where he became a limited partner in 1987. In 1988, he became a Senior Vice President at Drexel Burnham Lambert, where his primary responsibilities were to manage the private client group, which was involved in both public and private investments for individual and institutional accounts. Mr. Onthank served as a Senior Vice President at Paine Webber from 1990 to 1993. From 1993 to 1995, he was employed by Smith Barney Shearson where he managed the investments of institutional and individual clients. Before becoming a director and an executive officer of The American Energy Group, Ltd., he co-founded Crary Onthank & O’Neill, an investment banking company, in 1998.

John S. Gebhardt, age 68, became a member of the Board of Directors upon the April, 2011 retirement of Karl Welser. Mr. Gebhardt resides in Celebration, Florida. Mr. Gebhardt studied economics at both the Lubin School of Business at Pace University and the Stern School of Business at New York University. Mr. Gebhardt was previously employed as a Managing Director at Paine Webber in New York City from 1981 to 1998, and as a Managing Director at Knight Capital Markets in Purchase, New York from 1998 to 2001. Since 2001, Mr. Gebhardt has been self employed as a manager of securities portfolios for private clients and as a consultant to companies as to exchange listing matters. Mr. Gebhardt has also served on many civic and educational boards, including twelve years on the Byram Hills Board of Education, Armonk, New York, eleven years on the Board of the Westchester-Putnam School Boards Association, and two terms on the Board of Directors of the New York State School Boards Association.

Board of Directors

We held no physical meetings and four telephonic meetings of the Board of Directors during the fiscal year ended June 30, 2014, and the Board of Directors took action at Board meetings or by unanimous written consent twenty one (21) times during that period. Mr. Onthank and Mr. Gebhardt are our only Directors who are also our officers and/or operations executives. Mr. Onthank and Mr. Gebhardt serve upon the audit committee. There are not any other standing committees of the Board of Directors based on the size of our business.

We do not currently have a process for security holders to send communications to the Board of Directors. However, we welcome comments and questions from our shareholders. Shareholders can direct communications to our Chief Executive Officer, Pierce Onthank, at our executive offices, 20 Nod Hill Road, Wilson, Connecticut 06897. While we appreciate all comments from shareholders, we may not be able to individually respond to all communications. We attempt to address shareholder questions and concerns in our press releases and documents filed with the SEC so that all shareholders have access to information about the Company at the same time. Mr. Onthank collects and evaluates all shareholder communications. If the communication is directed to the Board of Directors generally or to a specific director, Mr. Onthank will disseminate the communications to the appropriate party at the next scheduled Board of Directors meeting. If the communication requires a more urgent response, Mr. Onthank will direct that communication to the appropriate executive officer. All communications addressed to our directors and executive officers will be reviewed by those parties unless the communication is clearly frivolous.

Nomination and/or Appointment of Directors

The Board of Directors has not adopted a formal policy with regard to the process to be used for identifying and evaluating nominees for director. The consideration of candidates nominated by directors is at the Board’s discretion. We believe this practice is adequate based on the size of our business and current Board member qualifications. Our Bylaws do not contain a specific procedure for nomination of persons to serve for election to the Board of Directors. Our Bylaws provide that the number of Directors shall be not less than two nor more than seven. Vacancies in the Board of Directors may be filled by a majority of remaining Directors.

Compensation of Directors

Our Directors are reimbursed for reasonable out-of-pocket expenses in connection with their services as members of the Board including attendance at Board of Director meetings, and may be granted options to purchase shares of our common stock at the discretion of our Board of Directors. Directors are given common stock remuneration for their services as our Directors.

Compliance with Section 16(A) of the Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires that our directors and executive officers and persons who beneficially own more than 10% of our common stock file with the Securities and Exchange Commission various reports as to their ownership of and activities relating to our common stock. Such reporting persons are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file. Our officers and directors are currently compliant with all filing requirements under Section 16(a) of the Securities Exchange Act of 1934.

Code of Ethics

In September 2004, we adopted a Code of Ethics that is applicable to all directors, officer and employees. A copy of the Code of Ethics may be obtained without charge by writing to: The American Energy Group, Ltd., 20 Nod Hill Road, Wilton, Connecticut 06897.

ITEM 11 - EXECUTIVE COMPENSATION

Summary Compensation Table

The following table reflects all forms of compensation for the fiscal years ended June 30, 2011, 2012, 2013, 2014 and 2015 for services provided by our executive officers and directors.

SUMMARY COMPENSATION TABLE
			ANNUAL COMPENSATION					LONG TERM COMPENSATION
								Awards			Payouts
Name	Title	Year	Salary		Bonus	Other Annual Comp-ensation		Restricted Stock Awarded		Options/ SARs Warrants (#)	LTIP payouts ($)	All Other Comp-ensation
R.Pierce Onthank	President, CEO and Sec. Treas.	2015	$	355,943	-0-		-0-	5,183,001	(3,4)-	-0-	-0-	-0-
		2014	$	360,000	-0-	$	20,662	233,631	(2)-	-0-	-0-	-0-
		2013	$	360,000	-0-	$	24,325	126,760	(1)-	-0-	-0-	-0-
		2012	$	350,785	-0-	-0-		-0-		-0-	-0-	-0-
		2011	$	240,000		$	29,673	-0-		-0-	-0-	-0-

John S. Gebhardt	Director	2015		-0-	-0-		-0-	183,001	(3)-	-0-	-0-	-0-
		2014	-0-		-0-	-0-		233,631	(2)-	-0-	-0-	-0-
		2013	-0-		-0-	-0-		176,760	(1)-	-0-	-0-	-0-
		2012	-0-		-0-	-0-		-0-		-0-	-0-	-0-

Notes to Summary Compensation Table:

	(1)	Directors Onthank and Gebhardt were issued restricted stock for each of the quarterly periods of the 2011-2012 year based upon a compensation value of $6,250 per quarter. Director Gebhardt also received 50,000 restricted shares for Board service prior to June 30, 2011.
	(2)	Directors Onthank and Gebhardt were issued restricted stock for the quarterly periods ending 9/30/12-3/31/14 based upon a compensation value of $6,250 per quarter.
	(3)	Directors Onthank and Gebhardt were issued restricted stock for the quarterly periods ending 6/30/14, 9/30/14, 12/31/14 and 3/31/15 based upon a compensation value of $6,250 per quarter.
	(4)	Director, President and CEO Onthank was issued 5,000,000 restricted shares as a bonus valued at $500,000.

Stock Option/SAR and Warrant Grants

During the fiscal year ended June 30, 2015 there were not any grants of warrants, stock options or SAR’s to executive officers or directors. There are currently no outstanding stock options or SAR’s.

Aggregated Option/SAR/Warrant Exercises In

Last Fiscal Year and FY-End Option/SAR Values

Name

Shares Acquired on Exercise (#)

Value Realized ($)

Number of Unexercised Underlying Options/SARs/ Warrants at FY end (#);

Exercisable/ Unexercisable

Value of Unexercised In-The-Money Options/SARs/ Warrants at FY end ($);

Exercisable/ Unexercisable

Pierce Onthank

-0-

0/0/3,250,000

$0/0/585,000

John S. Gebhardt

-0-

0/0/400,000

$0/0/72,000

There were no stock options, SAR’s or warrants exercised by any of our named executive officers during our most recent fiscal year ended June 30, 2014.

Long-Term Incentive Plans

We currently have no Long-Term Incentive Plans.

Employment contracts and change-in-control arrangements

There are no employment contracts or change-in-control agreements between us and our executive officers or directors.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of October 13, 2015, with respect to the beneficial ownership of shares of common stock by (i) each person known to us who owns beneficially more than 5% of the outstanding shares of common stock, (ii) each of our Directors, (iii) each of our Executive Officers and (iv) all of our Executive Officers and Directors as a group. Unless otherwise indicated, each stockholder has sole voting and investment power with respect to the shares shown. As of October 13, 2015, we had 61,019,341 shares of common stock issued and outstanding.

Name and address of beneficial owner	Title of Class of Stock	Number of Shares of Common Stock			Percentage of Common Stock⁽¹⁾
R. Pierce Onthank 20 Nod Hill Road Wilton, Connecticut 06897	Common stock		10,013,561	(1,2)	15.58	%(1,2)

John S. Gebhardt 509 Longmeadow Celebration, Florida 34747	Common stock		993,398	(1,3)	1.62	%(1,3)

All Officers and Directors as a group (total of two)	Common stock		11,006,959	(1)	17.20	%(1)

________________

(1)

Under Rule 13d-3 promulgated under the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on June 30, 2015. As of October 13, 2015 there were 61,019,341 shares of our common stock issued and outstanding disregarding shares which may be acquired upon exercise of outstanding warrants.

	(2)	Includes 3,250,000 shares issuable upon the exercise of warrants to purchase shares of common stock.

	(3)	Includes 400,000 shares issuable upon the exercise of warrants to purchase shares of common stock.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE

None of the following persons has any direct or indirect material interest in any transaction to which we were or are a party during the past two years, or in any proposed transaction to which we propose to be a party:

	(A)	any of our directors or executive officers;

	(B)	any nominee for election as one of our directors;

	(C)	any person who is known by us to beneficially own, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock; or

	(D)	any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons named in paragraph (A), (B) or (C) above.

ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES Audit Fees

Audit fees billed by the Company’s Principal Accountant were $36,000 during the year ended June 30, 2015. Audit fees billed by the Company’s Principal Accountant were $25,310 during the year ended June 30, 2014.

Audit Related Fees

There have been no audit related fees billed by the Company’s Principal Accountant as of the date of this report.

The Company’s audit committee is comprised solely of its Board of Directors.

Tax Fees

There have been no tax fees billed by the Company’s Principal Accountant as of the date of this report.

All Other Fees

There have been no other fees billed by the Company’s Principal Accountant as of the date of this report.

PART IV

ITEM 15 - EXHIBITS

The following documents are filed as Exhibits to this report:

Exhibit 31.1 – Certification by R. Pierce Onthank, President and Acting Chief Financial and Principal Accounting Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a);

Exhibit 32.1 – Certification by R. Pierce Onthank, President and Acting Chief Financial and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Section 1350(a) and

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE AMERICAN ENERGY GROUP, LTD.

DATED: October 13, 2015	By:	/s/ R. Pierce Onthank
		R. Pierce Onthank
		President, Secretary, Director
		Chief Financial Officer and Principal Accounting Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company in the capacities and on the dates indicated.


Date signed: October 13, 2015	By:	/s/ John S. Gebhardt
		John S. Gebhardt
		Director

C O N T E N T S

Report of Independent Registered Public Accounting Firm		F-2

Balance Sheets		F-3

Statements of Operations		F-4

Statements of Stockholders’ Equity		F-5

Statements of Cash Flows		F-8

Notes to the Financial Statements		F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

The American Energy Group, Ltd.

We have audited the accompanying balance sheets of The American Energy Group, Ltd. as of June 30, 2015 and 2014 and the related statements of operations, stockholders' equity and cash flows for the years then ended. The American Energy Group, Ltd.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The American Energy Group, Ltd. as of June 30, 2015 and 2014 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming The American Energy Group, Ltd. will continue as a going concern. As discussed in Note 9 to the financial statements, The American Energy Group, Ltd. has incurred losses and negative cash flows from operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Management’s plans in regards to these matters are also described in Note 10. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

PRITCHETT, SILER & HARDY, P.C.

Salt Lake City, Utah

October 13, 2015

F-2

THE AMERICAN ENERGY GROUP, LTD.

Balance Sheets

For the Years Ended June 30,

	2015			2014
Assets

Current Assets
Cash	$	24,999		$	11,814
Prepaid expenses		39,715			33,826

Total Current Assets		64,714			45,640

Property and Equipment
Office equipment		25,670			23,417
Accumulated depreciation		(22,702	)		(21,926	)

Net Property and Equipment		2,968			1,491

Other Assets
Investment in oil and gas working interest – related party		1,583,914			1,583,914
Oil and gas receivable		-			3,145,306
Security deposit		-			11,858

Total Other Assets		1,583,914			4,741,078

Total Assets	$	1,651,596		$	4,788,209

Liabilities and Stockholders’ Equity

Current Liabilities
Accounts payable	$	59,553		$	62,096
Note payable		32,935			26,401
Accrued liabilities		438,649			358,283
Notes payable – related party		825,000			-

Total Current Liabilities		1,356,137			446,780

Non-Current Liabilities
Notes payable – related party		-			650,000

Total Non-Current Liabilities		-			650,000

Total Liabilities		1,356,137			1,096,780

Stockholders’ Equity
Common stock, par value $0.001 per share; authorized 80,000,000 shares; 60,469,757 and 51,066,878 shares issued and outstanding, respectively		60,470			51,067
Capital in excess of par value		16,560,954			15,258,164
Preferred stock, 20,000,000 shares authorized (none issued)		-0-			-0-
Accumulated deficit		(16,325,965	)		(11,617,802	)

Total Stockholders’ Equity		295,459			3,691,429

Total Liabilities and Stockholders’ Equity	$	1,651,596		$	4,788,209

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

F-3

THE AMERICAN ENERGY GROUP, LTD.

Statements of Operations

For the Years Ended June 30,

	2015			2014

Revenue	$	-		$	1,108,163

General and Administrative Expenses
Legal and professional		325,749			1,007,570
Bad debts		3,095,351			-
Depreciation and amortization expense		776			4,550
General and administrative		1,150,611			763,683

Total Expenses		(4,572,487	)		1,775,803

Net Operating Income (Loss)		(4,572,487	)		(667,640	)

Other Income and (Expense)
Warrant settlements		(78,133	)		691,667
Interest expense		(46,215	)		(19,872	)
Other		(11,328	)		(7,068	)

Total Other Income and (Expense)		(135,676	)		(718,607	)

Net Loss before Federal Income Tax		(4,708,163	)		(1,386,247	)
Federal Income Tax		-			-

Net Loss	$	(4,708,163	)	$	(1,386,247	)

Basic Loss per Common Share	$	(0.09	)	$	(0.03	)

Weighted Average Number of Shares Outstanding		52,675,425			48,007,962

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

F-4

THE AMERICAN ENERGY GROUP, LTD.

Statements of Stockholders’ Equity

For the Period July 1, 2013 through June 30, 2014

	Common Stock				Capital in Excess		Accumulated
	Shares		Amount		of Par Value		Deficit			Totals

Balance June 30, 2013		45,242,949	$	45,243	$	13,560,821	$	(10,231,555	)	$	3,374,509

July 2013, new shares issued
for cash at $0.15 per share		500,000		500		74,500		-			75,000

September 2013, new shares issued
for cash at $0.15 per share		600,000		600		89,400		-			90,000

October 2013, new shares issued
for cash at $0.15 per share		700,000		700		104,300		-			105,000

November 2013, new shares issued
for cash at $0.20 per share		900,000		900		179,100		-			180,000

January 2014, new shares issued
for services rendered through
December, 2013 at $0.15 per share		20,000		20		2,980		-			3,000

February, 2014, new shares issued
for cash at $0.15 per share		1,166,667		1,167		173,833		-			175,000

February 2014, 2,333,334 warrants
in connection with debt issuance		-		-		361,667		-			361,667

April 2014, new shares issued
for payables incurred for directors
fees rendered through March 2014
at average $0.19 per share		467,262		467		87,033		-			87,500

April 2014, new shares issued
for services rendered through
March, 2014 at $0.30 per share		20,000		20		5,980		-			6,000

June 2014, new shares issued
for cash at $0.20 per share		1,450,000		1,450		288,550		-			290,000

June 2014, 1,500,000 warrants
in connection with debt issuance		-		-		330,000		-			330,000

Net (loss) for the year ended
June 30, 2014		-		-		-		(1,386,247	)		(1,386,247	)

Balance June 30, 2014		51,066,878	$	51,067	$	15,258,164	$	(11,617,802	)	$	3,691,429

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

F-5

THE AMERICAN ENERGY GROUP, LTD.

Statements of Stockholders’ Equity

For the Period July 1, 2014 through June 30, 2015

	Common Stock				Capital in Excess		Accumulated
	Shares		Amount		of Par Value		Deficit			Totals

Balance June 30, 2014		51,066,878	$	51,067	$	15,258,164	$	(11,617,802	)	$	3,691,429

July 2014, new shares issued
for cash at $0.20 per share		250,000		250		49,750		-			50,000

August 2014, new shares issued
for cash at $0.20 per share		650,000		650		129,350		-			130,000

August 2014, new shares issued
for services rendered through
July, 2014 at $0.20 per share		150,000		150		29,850		-			30,000

August 2014, new shares issued
for payables incurred for directors
fees rendered through July 2014
at average $0.33 per share		37,878		38		12,462		-			12,500

October, 2014, new shares issued
for cash at $0.15 per share		200,000		200		29,800		-			30,000

December, 2014, new shares issued
for cash at $0.13 per share		550,000		550		70,950		-			71,500

December 2014, new shares issued
for services rendered through
November, 2014 at $0.13 per share		20,000		20		2,580		-			2,600

December 2014, 500,000 warrants
in connection with debt issuance		-		-		33,486		-			33,486

January 2015, new shares issued
for cash at $0.11 per share		813,637		814		88,686		-			89,500

March 2015, new shares issued
for cash at $0.10 per share		300,000		300		29,700		-			30,000

March 2015, 1,000,000 warrants
in connection with debt issuance		-		-		44,647		-			44,647

April 2015, new shares issued
for payables incurred for directors
fees rendered through March 2015
at average $0.11 per share		328,124		328		37,172		-			37,500

April 2015, new shares issued for
directors bonus rendered through
March, 2015 at $0.10 per share		5,000,000		5,000		495,000		-			500,000

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

F-6

THE AMERICAN ENERGY GROUP, LTD.

Statements of Stockholders’ Equity

For the Period July 1, 2014 through June 30, 2015

	Common Stock				Capital in Excess		Accumulated
	Shares		Amount		of Par Value		Deficit			Totals

June 2015, new shares issued
for payables incurred for service
fees rendered through May 2015
at average $0.22 per share		1,103,240		1,103		249,357		-			250,460

Net (loss) for the year ended
June 30, 2015		-		-		-		(4,708,163	)		(4,708,163	)

Balance June 30, 2015		60,469,757	$	60,470	$	16,560,954	$	(16,325,965	)	$	295,459

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

F-7

THE AMERICAN ENERGY GROUP, LTD.

Statements of Cash Flows

For the Years Ended June 30,

	2015			2014

Cash Flows From Operating Activities
Net loss	$	(4,708,163	)	$	(1,386,247	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		776			4,550
Warrant expense		78,133			691,667
Common stock issued for services		833,060			46,500
Loss on impairment of assets		-			8,369
Changes in operating assets and liabilities
(Increase) decrease in oil and gas sales receivable		3,145,306			(1,108,163	)
(Increase) decrease in prepaid expenses		(5,889	)		-
(Increase) decrease in security deposits		11,858			4,454
Increase (decrease) in accounts payable		(2,543	)		2,413
Increase (decrease) sublease security deposit		-			(13,200	)
Increase (decrease) in accrued expenses and other current liabilities		86,900			152,370

Net Cash Used In Operating Activities		(560,562	)		(1,597,287	)

Cash Flows From Investing Activities
Cash paid for equipment acquisitions		(2,253	)		-

Net Cash Provided By (Used In) Investing Activities		(2,253	)		-

Cash Flows From Financing Activities
Proceeds from the issuance of debt		175,000			650,000
Cash received from stock issuances		401,000			915,000

Net Cash Provided By Financing Activities		576,000			1,565,000

Net Increase (Decrease) in Cash		13,185			(32,287	)

Cash and Cash Equivalents, Beginning of Year		11,814			44,101

Cash and Cash Equivalents, End of Year	$	24,999		$	11,814

Cash Paid For:
Interest	$	8,607		$	12,708
Taxes	$	-		$	-

Non-Cash Financing Activities:

Common stock issued in satisfaction of accounts payable and accrued expenses	$	302,960		$	50,000
Common stock issued for services rendered	$	530,100		$	46,500

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

F-8

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 1 - Organization and Summary of Significant Accounting Policies

a. Organization

The American Energy Group, Ltd. (the Company) was incorporated in the State of Nevada on July 21, 1987 as Dimension Industries, Inc. Since incorporation, the Company has had several name changes including DIM, Inc. and Belize-American Corp. Internationale with the name change to The American Energy Group, Ltd. effective November 18, 1994. The Company’s authorized common stock, par value $0.001 is 80,000,000 shares. The Company’s authorized preferred stock, par value $0.001, is 20,000,000 shares. There is no preferred stock issued and outstanding.

During the year ended June 30, 1995, the Company incorporated additional subsidiaries including American Energy-Deckers Prairie, Inc., The American Energy Operating Corp., Tomball American Energy, Inc., Cypress-American Energy, Inc., Dayton North Field-American Energy, Inc. and Nash Dome Field-American Energy, Inc. In addition, in May 1995, the Company acquired all of the issued and outstanding common stock of Hycarbex, Inc. (Hycarbex), a Texas corporation, in exchange for 120,000 shares of common stock of the Company, a 1% overriding royalty on the Pakistan Project (see Note 2) and a future $200,000 production payment if certain conditions are met. The acquisition was accounted for as a pooling-of-interests on the date of the acquisition. The fair value of the assets and liabilities assumed approximated the fair value of the 120,000 shares issued of $60,000 as of the date of the acquisition. Accordingly, book value of the assets and liabilities assumed was $60,000. In April 1995, the name of that company was changed to Hycarbex-American Energy, Inc. The Company and its subsidiaries were principally in the business of acquisition, exploration, development and production of oil and gas properties.

On June 28, 2002, the Company was placed into involuntary Chapter 7 bankruptcy by three creditors, including Georg von Canal, an officer and director who was then involved in litigation with the Company to invalidate an attempt to remove him from his management positions. The bankruptcy filing followed an unsuccessful effort by management to resolve both the litigation and the need for a substantial cash infusion through a stock sale to a German-based investor which would have simultaneously resulted in a restructure of management. Shortly after this bankruptcy filing, the secured creditor holding a first lien on the Company’s only producing oil and gas leases in Fort Bend County, Texas, sought permission from the bankruptcy court to foreclose on those assets. The Company responded by converting the Chapter 7 bankruptcy proceedings to a Chapter 11 reorganization proceeding. The Company obtained approval of a plan of reorganization in September 2002, but the secured creditor was nevertheless permitted to foreclose upon the Fort Bend County oil and gas leases. Subsequent to the approval of the foreclosure of the oil and gas producing properties, the Company abandoned the remaining oil and gas properties except for one lease in southeast Texas. For the year ended June 30, 2003, the Company recognized a loss of $13,040,120 on the foreclosure and abandonment of the oil and gas properties and the sale of the fixed assets.

On October 26, 2003, the Company sold its wholly-owned subsidiary, Hycarbex-American Energy, Inc., for an 18% overriding royalty interest in the Exploration License No. 2768-7 dated August 11, 2001, of the Yasin Exploration Block. During the year ended June 30, 2015, the Company was awarded 100% of the stock of Hycarbex in the final decision of the ICC Tribunal on April 15, 2015, voiding the previous sale of the Hycarbex subsidiary, more fully discussed in Note 9 to these financial statements.

On January 29, 2004, the Company was released from bankruptcy. Pursuant to the plan, all of the existing 66,318,037 shares of common stock and 41,499 shares of preferred stock were cancelled. The Company issued 18,898,518 new shares of common stock to creditors. Also, the Company adopted the provisions for fresh-start reporting. Accordingly, the accumulated deficit accumulated through January 29, 2004 has been eliminated. The Company is considered to have a fresh-start due to the cancellation of the prior shareholders’ common stock and the subsequent issuance of common stock to creditors, the new shareholders.

F-9

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 1 - Organization and Summary of Significant Accounting Policies (continued)

a. Organization (continued)

On April 14, 2005, the Company’s wholly owned inactive subsidiary, The American Energy Operating Corp. (AEOC) filed for voluntary bankruptcy liquidation. On July 24, 2006, The American Energy Operating Corp. received a final decree from the United States Bankruptcy Court – Southern District of Texas that the Company’s estate had been fully administered and that the Chapter 7 was closed. The Company no longer has any subsidiaries.

These financial statements do not include the consolidation of its recently re-acquired wholly owned subsidiary, Hycarbex American Energy, Inc as the Company had not yet received full access to the historical financial records, nor full control of its operations, as of June 30, 2015.

b. Accounting Methods

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end.

c. Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

d. Property and Equipment and Depreciation

Property and equipment are stated at cost. Depreciation on drilling and related equipment, vehicles and office equipment is provided using the straight-line method over expected useful lives of five to ten years. For the years ended June 30, 2015 and 2014, the Company incurred total depreciation of $776 and $4,550, respectively.

e. Basic Loss Per Share of Common Stock

	For the Year Ended June 30, 2015			For the Year Ended June 30, 2014

Loss (numerator)	$	(4,708,163	)	$	(1,386,247	)

Shares (denominator)		52,675,425			48,007,962

Per Share Amount	$	(0.09	)	$	(0.03	)

The basic loss per share of common stock is based on the weighted average number of shares issued and outstanding during the period of the financial statements. Stock warrants convertible into 10,193,334 and 8,693,334 shares of common stock for the years ended June 30, 2015 and 2014, respectively, are not included in the basic calculation because their inclusion would be antidilutive, thereby reducing the net loss per common share.

f. 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 the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-10

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 1 - Organization and Summary of Significant Accounting Policies (continued)

g. Long Lived Assets

All long lived assets are evaluated for impairment per FASB ASC 360 whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Any impairment in value is recognized as an expense in the period when the impairment occurs. During the year ended June 30, 2015, the Company had no impairments.

h. Oil and Gas Sales Receivable and Revenue Recognition

Prior to the year ended June 30, 2015, the Company recognized revenue in accordance with SEC SAB 104 which stipulates that pervasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collection is reasonably assured. Prior to the year ended June 30, 2015, our revenue was derived exclusively from an overriding royalty interest. The Company recognized royalty revenues when production had occurred and royalties were due and payable under its contract with Hycarbex (Note 9 – Other Contingencies). During the year ended June 30, 2015, the Company was awarded 100% of the stock of our previously wholly owned Hycarbex subsidiary. Our prior oil and gas receivable earned through our ownership of the 18% overriding royalty interest in the Yasin Concession was due from Hycarbex and was not collected prior to our successful litigation results and being awarded 100% of the actual stock of the Hycarbex entity. Upon re-acquisition of the Hycarbex subsidiary, the previously recognized oil and gas receivable was written off. Future oil and gas revenues will continue to be recorded in accordance with SEC SAB 104, upon obtaining full control of the entity.

i. Concentrations

The Company’s revenue and receivable is derived solely from its overriding royalty interest in the Yasin Concession which is located in the country of Pakistan.

j. Equity Securities

Equity securities issued for services rendered have been accounted for at the fair market value of the securities on the date of issuance.

k. Income Taxes

The Company accounts for corporate income taxes in accordance with FASB ASC 740-10 “Income Taxes”. FASB ASC 740-10 requires an asset and liability approach for financial accounting and reporting for income tax purposes.

The tax provision (benefit) for the year-ended June 30, 2015 and the year ended June 30, 2014 consisted of the following:

	2015		2014
Current:
Federal	$	-	$	-
State		-		-
Deferred
Federal		-		-
State		-		-
Total tax provision (benefit)	$	-	$	-

Deferred income taxes reflect the net tax effects of net operating losses and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Net operating loss carryovers of the Company will begin expiring in the year ended June 30, 2019. The Company’s total deferred tax liabilities, deferred tax assets, and deferred tax asset valuation allowances at June 30, 2015 and June 30, 2014 are as follows:

F-11

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

k. Income Taxes (continued)

	2015			2014
Net Operating Losses:
Federal	$	(52,495,386	)	$	(47,865,356	)
State		-			-
Total net operating losses	$	(52,495,386	)	$	(47,865,356	)

Deferred Tax Provision:
Total tax provision (benefit)		(17,848,431	)		(16,274,221	)
Less valuation allowance		17,848,431			16,274,221

Deferred tax asset	$	-		$	-

The reconciliation of income tax computed at statutory rates of income tax benefits is as follows:

	2015			2014
Expense (benefit) at federal statutory rate	$	(1,574,210	)	$	(236,157	)
State tax effects		-			-
Non deductible expenses		-			-
Deferred tax asset valuation allowance		1,574,210			236,157
Income tax provision (benefit)	$	-		$	-

The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10 (Prior authoritative literature: Financial Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48)). FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with prior literature FASB Statement No. 109, Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10.

At the adoption date of July 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of June 30, 2015, the Company had no accrued interest or penalties.

The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2015, 2014 and 2013.

l. Fair Value of Financial Instruments

On January 1, 2008, the Company adopted FASB ASC 820-10-50, “Fair Value Measurements. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

F-12

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

l. Fair Value of Financial Instruments (continued)

	·	Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
	·	Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
	·	Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The carrying value of the promissory notes approximates fair value because negotiated terms and conditions are consistent with current market rates as of June 30, 2015.

m. Concentration of Credit Risk

Financial instruments which subject the Company to concentrations of credit risk include cash and cash equivalents. The Company maintains its cash and cash equivalents with major financial institutions selected based on management’s assessment of the banks’ financial stability. Balances occasionally exceed the $250,000 federal deposit insurance limit. The Company has not experienced any losses on deposits.

n. Restoration, Removal and Environmental Liabilities

The Company is subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefit are expensed.

Liabilities for expenditures of a noncapital nature are recorded when environmental assessments and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments for the liability or component are fixed or reliably determinable. As of June 30, 2015, the Company believes it has no such liabilities.

o. New Accounting Pronouncements

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ ("ASC") is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. We have reviewed the FASB issued Accounting Standards Update ("ASU") accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

F-13

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 2 - Oil and Gas Properties

The Company owns an interest in two oil and gas leases located in Southeast Texas. The Company is exploring various opportunities to realize value from these interests, including potential farmout or sale. The Company intends to adopt the full cost method of accounting for oil and gas properties in the event that the Company develops their interests in these leases. As of June 30, 2015, the Company does not have any proved reserves as defined under FASB ASC 932-235-50 (formerly SFAS No. 69) and has not incurred any costs associated with the development of these oil and gas properties and had not received any oil and gas revenue from these leases. The carrying value of these leases is $0.

Subsequent to the year ended June 30, 2015, the Company was awarded 100% of the stock of its previously wholly owned subsidiary, Hycarebex American Energy, Inc. Prior to the year ended June 30, 2015, the Company held an 18% gross royalty interest in the Yasin Concession in Pakistan, which was received in exchange for the original sale of Hycarbex. As of June 30, 2015 and 2014, the Company had earned approximately $3,749,355 and $3,145,271, respectively, but not yet received payment for all royalties earned from their interest in this concession. Revenues to have been derived from this interest were overriding in nature and there were no future financial obligations or commitments required of the Company to secure this royalty interest.

The Company has not yet received full access to the historical financial and property records of Hycarbex since receiving the judgment award of the ICC subsequent to the year ended June 30, 2015. Oil and Gas properties currently determined to be owned by Hycarbex include working interests in five (5) large exploration blocks within Pakistan. These interests include: Block No. 2768-7 (Yasin), 673 square miles; Block No. 2667-8 (Zamzama North), 474 square miles; Block No. 3068-2 (Sanjawi), 871 square miles; Block No. 2466-8 (Karachi), 851 square miles; and Block No. 3371-13 (Peshawar), 960 square miles. Hycarbex is the registered owner of a 75% working interest in the Yasin Exploration Block, 95% working interest in the Karachi and Peshawar Exploration Blocks, 20% working interest in Zamzama North and Sanjawi Exploration Blocks, of which 10% is carried as to exploration costs with back-in rights to acquire an additional 10% working interest upon commercial discovery.

Note 3 – Notes Payable – Related Party

During the years ended June 30, 2015 and 2014, the Company borrowed $175,000 and $650,000, respectively, from a current shareholder. Interest on these notes accrues at 5% and is payable in full at maturity. The notes mature in February of 2016. The Company has accrued interest expense of $35,708 and $7,164 during the years ended June 30, 2015 and June 30, 2014, respectively, on these notes. The oil and gas properties in Southeast Texas serve as collateral on these notes.

Note 4 – Lease Commitments

During the year ended June 30, 2015, the Company entered into a lease for office space with an original lease term of 5 years. Monthly payments due on the new lease range from $6,203 per month at inception and increase to $6,174 per month on the last year of the lease. Minimum future lease payments under this lease were as follows:

Year ended June 30, 2016	$	71,823
Year ended June 30, 2017		72,557
Year ended June 30, 2018		73,290
Year ended June 30, 2019		74,024
Year ended June 30, 2020		6,174

Total obligation under operating lease	$	297,868

During the years ended June 30, 2015 and 2014, the Company incurred net rental expense of $55,205 and $57,600, respectively.

F-14

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 4 – Lease Commitments (continued)

Subsequent to the year ended June 30, 2015, the Company has terminated the lease and has vacated the lease space. A formal release of future obligations under this lease has been requested but has not been received as of the date of these financial statements.

Note 5 - Common Stock

During July 2013, the Company issued 500,000 shares of common stock for cash in the amount of $75,000.

During September 2013, the Company issued 600,000 shares of common stock for cash in the amount of $90,000.

During October 2013, the Company issued 700,000 shares of common stock for cash in the amount of $105,000.

During November 2013, the Company issued 900,000 shares of common stock for cash in the amount of $180,000.

During January 2014, the Company issued 20,000 shares of common stock for services in the amount of $3,000.

During February 2014, the Company issued 1,166,667 shares of common stock for cash in the amount of $175,000.

During April 2014, the Company issued 467,262 shares of common stock for payment of director fees in the amount of $87,500.

During April 2014, the Company issued 20,000 shares of common stock for services in the amount of $6,000.

During June 2014, the Company issued 1,450,000 shares of common stock for cash in the amount of $290,000.

During July 2014, the Company issued 250,000 shares of common stock for cash in the amount of $50,000.

During August 2014, the Company issued 150,000 shares of common stock for services in the amount of $27,500.

During August 2014, the Company issued 650,000 shares of common stock for cash in the amount of $160,000.

During August 2014, the Company issued 37,878 shares of common stock for payment of director’s fees payable of $12,500.

During October 2014, the Company issued 200,000 shares of common stock for cash in the amount of $30,000.

During December 2014, the Company issued 550,000 shares of common stock for cash in the amount of $71,500.

During December 2014, the Company issued 20,000 shares of common stock for services in the amount of $2,600.

F-15

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 5 - Common Stock (continued)

During January 2015, the Company issued 813,637 shares of common stock for cash in the amount of $89,500.

During March 2015, the Company issued 300,000 shares of common stock for cash in the amount of $30,000.

During April 2015, the Company issued 328,124 shares of common stock for payment of director’s fees payable of $37,500.

During April 2015, the Company issued 5,000,000 shares of common stock for a director’s bonus payment of $500,000.

During June 2015, the Company issued 1,103,240 shares of common stock for payment of legal fees payable of $250,460.

Note 6 - Common Stock Warrants

Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB ASC 480-10 “Share Based Payment” using the modified-prospective-transition method. Under this transition method, total compensation cost recognized in the statement of operations for the years ended June 30, 2007 and 2006 includes compensation costs for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of FASB ASC 480-10, and compensation costs for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of FASB ASC 480-10. The Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model.

During the year ended June 30, 2014, the Company issued 2,333,334 warrants at an exercise price of $0.15 per share and 1,500,000 warrants at an exercise price of $0.20 per share in connection with the financing addressed in Note 3. The Company reported $691,667 of expense during the year ended June 30, 2014 related to these warrant issuances. The expense of these warrants was calculated using the Black-Scholes option pricing model using the following assumptions:

Dividend yield		0%
Expected volatility		2.03% – 2.12%
Risk free interest		0.31% - 0.40%
Expected life		2 years

During the year ended June 30, 2015, the Company issued 1,500,000 warrants in connection with the financing addressed in Note 3, of which 1,000,000 can be purchased at $0.10 per share and 500,000 at $0.15 per share. The Company reported $78,133 of expense during the year ended June 30, 2015 related to these warrant issuances. The expense of these warrants was calculated using the Black-Scholes option pricing model using the following assumptions:

Dividend yield		0%
Expected volatility		1.18%
Risk free interest		.50%
Expected life		1 year

F-16

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 6 - Common Stock Warrants (continued)

A summary of the status of the Company’s stock warrants as of June 30, 2015 and 2014 is presented below:

	Stock Warrants		Exercise Price		Weighted Ave. Exercise Price

Outstanding and Exercisable, June 30, 2013		4,860,000	$	0.75-1.50	$	0.35

Granted		3,833,334	$	0.15-0.20	$	0.17
Expired/Canceled		-		-		-
Exercised		-		-		-

Outstanding and Exercisable, June 30, 2014		8,693,334	$	0.15-1.50	$	0.28

Granted		1,500,000	$	0.10-0.15	$	0.12
Expired/Canceled		-		-		-
Exercised		-		-		-

Outstanding and Exercisable, June 30, 2015		10,193,334	$	0.10–1.50	$	0.24

A summary of outstanding stock warrants at June 30, 2015 follows:

Number of		Remaining				Weighted
Common Stock		Contracted		Exercise		Ave Exer.
Equivalents	Expir. Date	Life (Years)		Price		Price

50,000	October, 2015		.250	$	0.15	$	0.15
210,000	September, 2015		.250	$	0.15	$	0.15
500,000	December 2015		.500	$	0.75	$	0.75
500,000	December 2015		.500	$	0.15	$	0.15
250,000	December 2015		.500	$	1.00	$	1.00
250,000	December 2015		.500	$	0.15	$	0.15
250,000	December 2015		.500	$	1.50	$	1.50
250,000	December 2015		.500	$	0.15	$	0.15
2,333,334	February 2016		.750	$	0.15	$	0.15
1,500,000	June 2016		1.000	$	0.20	$	0.20
2,600,000	May 2018		2.000	$	0.15	$	0.15
500,000	February 2016		.750	$	0.15	$	0.15
1,000,000	February 2016		.750	$	0.10	$	0.10

Note 7 – Investment in Oil and Gas Working Interest – Related Party

On October 29, 2009, the Company executed an agreement to acquire from Hycarbex – American Energy, Inc. (Hycarbex), a related party, a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan. In exchange for the working interest, the Company issued (1) 2,000,000 shares of common stock to Hycarbex, (2) 100,000 warrants with a three year duration to purchase an additional 100,000 shares at $1.75 per share and (3) $100,000 in cash. In addition, the purchase agreement requires Hycarbex to transfer $50,000 per month of the funds remaining in escrowed funds reserved for acquisitions to the Company until such time as the Company has received $200,000 in royalty payments from the Haseeb Exploratory Well No. 1. Once the Company has received $200,000 of royalty payments from the Haseeb Exploratory Well No. 1, any remaining balance in the funds reserved for acquisitions will be forfeited to Hycarbex for additional consideration of the acquisition of the oil and gas working interests. As of June 30, 2015, the Company has not received any royalty payments and the entire $392,500 held by Hycarbex was returned to the Company.

F-17

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 7 – Investment in Oil and Gas Working Interest – Related Party (continued)

Subsequent to the year ended June 30, 2015, the Company was awarded 100% of the stock of Hycarbex, more fully disclosed in Footnote 9 to these financial statements.

The Company has the option to convert the two and one half percent working interests described above to a one and one half percent gross royalty working interest at any time. As of June 30, 2015 and 2014, the Company has capitalized $1,583,914 related to these working interests.

Note 8 – Subsequent Events

Management has determined that there are no other subsequent events to disclose other than the following:

Subsequent to June 30, 2015 the Company has established a new office in Islamabad, Pakistan and has assumed control of the desired employees of the Hycarbex subsidiary. The Company is currently involved in efforts through appropriate legal channels to obtain full control and access to all of all of the historical financial and operational records of the Hycarbex subsidiary.

Subsequent to June 30, 2015, the Company issued an additional 233,334 common shares at $0.15 for a total of $35,000. In addition, the Company issued an additional 316,250 common shares at $0.16 for a total of $51,500.

Subsequent to June 30, 2015, the Company entered into a loan transaction with an institutional investor for the borrowing of $200,000 with interest at 5% and a maturity date of February 5, 2016. This loan includes the issuance to the lender of two million warrants to purchase the Company’s common stock at $0.20 / share on or before February 5, 2020.

Subsequent to June 30, 2015 the Company entered into a second loan transaction with a private individual for the borrowing of $200,000 with interest at 5% and a maturity date of September 22, 2018. No warrants were issued in connection with this loan.

Subsequent to June 30, 2015, the Company entered into a consulting agreement with an independent contractor to assist the Company’s re-acquired Hycarbex subsidiary as a regulatory and government liaison, formulate growth strategies and assist with international contractual and joint venture negotiations. Under the terms of the agreement the Company agrees to pay the consultant $6,250 per month on a month to month basis and will also pay the consultant 2,000,000 shares of the Company’s stock after a six month period.

Note 9 – Other Contingencies

Litigation

F-18

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 9– Other Contingencies (continued)

Litigation (continued)

F-19

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Note 9– Other Contingencies (continued)

Litigation (continued)

F-20

THE AMERICAN ENERGY GROUP, LTD

Notes to the Financial Statements

June 30, 2015 and 2014

Foreign Operations

Note 10 – Going Concern

The Company’s financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments related to the recoverability of assets or classification of liabilities that might be necessary should the Company be unable to continue as a going concern. At June 30, 2015, in addition to the Company’s current liabilities exceeding its current assets, it has recorded negative cash flows from operations and net losses in this year and prior fiscal years. The preceding circumstances combine to raise substantial doubt about the Company’s ability to continue as a going concern. Management expects to continue to be successful in future capital raises, if necessary, to continue operations until current oil and gas receivables are collected.

F-21

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AMERICAN ENERGY GROUP LTD Reports

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