UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the

quarterly period ended September 30, 2014.

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the

transition period from

Commission file number: 000-29321

ALLIED RESOURCES, INC.

(Exact name of registrant as specified in its charter)

Nevada

000-31390

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

1403 East 900 South, Salt Lake City, Utah 84105

(Address of principal executive offices) (Zip Code)

(801) 582-9609

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or

15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that

the registrant was required to file such reports), and (2) has been subject to such filing requirements for the

past 90 days. Yes þ 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 þ No o

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 þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest

practicable date. The number of shares outstanding of the issuer’s common stock, $0.001 par value (the only

class of voting stock), at November 14, 2014, was 5,653,011.

TABLE OF CONTENTS

PART 1- FINANCIAL INFORMATION

Item1.

Financial Statements:

Balance Sheets as of

September 30, 2014 (Unaudited) and December 31, 2013 (audited)

Unaudited Condensed Statements of Operations for the

three and nine month periods ended September 30, 2014 and September 30, 2013

Unaudited Condensed Statements of Cash Flows for the

nine month periods ended September 30, 2014 and September 30, 2013

Condensed Notes to Unaudited Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of

Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART II-OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Other Information

Exhibits

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

As used herein, the terms “Allied,” “we,” “our,” “us,” “it,” and “its” refer to Allied Resources, Inc., a

Nevada corporation, unless otherwise indicated. In the opinion of management, the accompanying

unaudited financial statements included in this Form 10-Q reflect all adjustments (consisting only of

normal recurring accruals) necessary for a fair presentation of the results of operations for the periods

presented. The results of operations for the periods presented are not necessarily indicative of the results

to be expected for the full year.

ALLIED RESOURCES, INC.

BALANCE SHEETS

September 30,

December 31,

2014

2013

ASSETS

(Unaudited)

(Audited)

Current assets:

Cash

1,357,913

1,390,041

Accounts receivable

85,595

41,800

Total current assets

1,443,508

1,431,841

Oil and gas properties (proven), net (successful

efforts method)

628,575

665,560

Deposits

704,701

Total assets

2,776,784

2,802,102

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

24,793

12,857

Total current liabilities

24,793

12,857

Asset retirement obligation

220,908

213,001

Total liabilities

245,701

225,858

Commitments and contingencies

Stockholders' equity:

Common stock, $.001 par value; 50,000,000 shares

authorized, 5,653,011 issued and outstanding

5,653

Additional paid-in capital

9,916,458

Accumulated deficit

(7,391,028)

(7,345,867)

Total stockholders' equity

2,531,083

2,576,244

Total liabilities and stockholders' equity

2,776,784

2,802,102

The accompanying notes are an integral part of these financial statements

ALLIED RESOURCES, INC.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30,

2014

2013

2014

2013

Oil and gas revenues

158,417

231,715

424,862

482,494

Operating expenses:

Production costs

89,340

99,981

269,809

255,276

Depletion and amortization

12,514

26,681

36,985

49,941

General and administrative expenses

49,690

48,667

164,882

178,671

151,544

175,329

471,676

483,888

Income (loss) from operations

6,873

56,386

(46,814)

(1,394)

Interest income

571

620

1,653

2,742

Income (loss) before provision for

income taxes

7,444

57,006

(45,161)

1,348

Provision for income taxes

Net income (loss)

7,444

57,006

(45,161)

1,348

Income (loss) per common share -

basic and diluted

0.01

(0.01)

Weighted average common shares -

Basic

5,653,000

Diluted

5,675,000

5,664,000

5,653,000

5,669,000

The accompanying notes are an integral part of these financial statements

ALLIED RESOURCES, INC.

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2014 and 2013

2014

2013

Cash flows from operating activities:

Net income (loss)

(45,161)

1,348

Adjustments to reconcile net income (loss) to net

cash provided by (used in) operating activities:

Depletion and amortization

36,985

49,941

Stock option compensation expense

19,315

Accretion expense

7,907

7,534

Increase in:

Accounts receivable

(43,795)

(24,683)

Increase (decrease) in:

Accounts payable

11,936

(15,664)

Net cash provided by (used in) operating activities

(32,128)

37,791

Cash flows from investing activities:

Cash flows from financing activities:

Net increase (decrease) in cash

(32,128)

37,791

Cash, beginning of period

1,390,041

1,323,032

Cash, end of period

1,357,913

1,360,823

The accompanying notes are an integral part of these financial statements

ALLIED RESOURCES, INC.

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

September 30, 2014

Note 1 – Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared by management in

accordance with the instructions in Form 10-Q and, therefore, do not include all information and

footnotes required by generally accepted accounting principles and should, therefore, be read in

conjunction with Allied’s Form 10-K for the year ended December 31, 2013, filed with the Securities and

Exchange Commission. These statements do include all normal recurring adjustments which Allied

believes necessary for a fair presentation of the statements. The interim operations are not necessarily

indicative of the results to be expected for the full year ended December 31, 2014.

Note 2 – Additional Footnotes Included By Reference

There has been no material change in the information disclosed in the notes to the financial statements

included in Allied’s Form 10-K for the year ended December 31, 2013, filed with the Securities and

Exchange Commission. Therefore, those footnotes are included herein by reference.

Note 3 – Subsequent Events

Allied evaluated its September 30, 2014, financial statements for subsequent events through the date the

financial statements were issued. Allied is not aware of any subsequent events which would require

recognition or disclosure in the financial statements.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other

parts of this quarterly report contain forward-looking statements that involve risks and uncertainties.

Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,”

“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future

performance and our actual results may differ significantly from the results discussed in the forward-

looking statements. Factors that might cause such differences include but are not limited to those

discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future

Results and Financial Condition below. The following discussion should be read in conjunction with our

financial statements and notes thereto included in this report. Our fiscal year end is December 31. All

information presented herein is based on the three and nine month periods ended September 30, 2014 and

September 30, 2013.

ALLIED

Allied is an independent oil and natural gas producer involved in the exploration, development,

production and sale of oil and gas derived from properties located in Calhoun and Ritchie Counties, West

Virginia, and Goliad, Edwards and Jackson Counties, Texas.

Discussion and Analysis

General

Allied seeks to acquire additional oil and gas producing properties and to implement improved production

practices on existing wells to increase production and expand reserves where practicable. Allied believes

that it can achieve production growth while expanding reserves through improved exploitation of its

existing inventory of wells by disposing of non-productive wells and enhancing producing wells. An

evaluation for this objective of our existing portfolio of oil and gas properties is constantly under

consideration. Allied also intends to expand non-operated interests and explore opportunities for

operating interests in additional oil or gas producing properties.

Recovery from producing wells is consistently evaluated to consider cost-efficient work-over methods

designed to improve the performance of the wells. When considering the drilling of new wells, we

conduct a geological review of the prospective area, in cooperation with the responsible independent

operator, to determine the potential for oil and gas. Our own consultants then review available

geophysical data (generally seismic and gravity data) and opine as to the prospect for success. In the event

that our evaluation of available geophysical data indicates that the target has significant accumulations of

oil and gas, we then consider the economic feasibility of drilling. The presence of oil and gas for any

specific target cannot guarantee economic recovery. Production depends on many factors including

drilling and completion costs, the distance to pipelines and pipeline pressure, current energy prices,

accessibility to the site, and whether the project is developmental or solely a wildcat prospect.

Allied is prone to significant risks and uncertainties certain of which can have an immediate impact on

its efforts to realize positive net cash flow and deter future prospects of production growth. Historically,

Allied has not been able to generate sufficient cash flow from operations to sustain operations and fund

necessary exploration or development costs. Therefore, there can be no assurance that the wells currently

producing will provide sufficient cash flows to sustain operations. Should Allied be unable to generate

sufficient cash flow from existing properties, it may have to sell properties or interests in such properties,

or seek debt or equity financing to maintain operations.

Allied’s financial condition, results of operations and the carrying value of its oil and natural gas

properties depends primarily upon the prices it receives for oil and natural gas production and the quantity

of that production. Oil and natural gas prices historically have been volatile and are likely to continue to

be volatile in the future. Price volatility can have an immediate effect on Allied’s available cash flow

which can in turn impact the availability of net cash flow for future capital expenditures. A drop in oil and

natural gas prices can also incur a write down of the carrying value of our properties as can a decrease in

production. Allied’s future success will depend on oil and natural gas prices and production quantities.

Since production leads to the depletion of oil and gas reserves, Allied’s ability to develop or acquire

additional economically recoverable oil and gas reserves is vital. Unless Allied can secure additional

reserves of oil and gas, current production will continue to decline, which decline is likely to lead to

further reductions in revenue.

West Virginia Well Information

Allied owns varying interests in a total of 145 wells in West Virginia on several leases held by an

independent operator. Some leases contain multiple wells. All the wells in which we have an interest are

situated on developed acreage spread over 3,400 acres in Ritchie and Calhoun Counties. Depth of the

producing intervals varies from 1,730 ft to 5,472 ft. Many of our wells are situated on the same leases and

as such share production equipment in order to minimize lease operating costs.

Our working interest is defined as interest in oil and gas that includes responsibility for all drilling,

developing, and operating costs varying from 18.75% to 75%. Our net revenue interest is defined as that

portion of oil and gas production revenue after deduction of royalties, varying from 15.00% to 65.625%.

Texas Well Information

Allied owns varying interests in a total of 10 wells in Texas on four leases held by independent operators.

All the wells in which we have an interest are situated on developed acreage spread over 2,510 acres in

Goliad, Edwards and Jackson Counties. Depth of the producing intervals varies from 7,600 ft to 9,600 ft.

Our working interest is defined as interest in oil and gas that includes responsibility for all drilling,

developing, and operating costs varying from 3.73% to 21%. Our net revenue interest is defined as that

portion of oil and gas production revenue after deduction of royalties, varying from 3.9388% to 12.75%.

Exploration, Development and Operations

Allied intends to purchase non-operated oil and gas producing properties, acquire oil and gas leases that it

can operate and implement improved production efficiencies on existing wells. Our criteria for purchasing

oil and gas producing properties is defined by short term returns on investment, long term growth in

revenue, and development potential, while our criteria for acquiring oil and gas leases is predicated on a

proven record of historical production and our own capacity to operate any given field. The recent fall in

oil prices has increased the number of opportunities available to us but our relatively limited cash position

and the low prices currently paid for natural gas continues to sway us away from prospective drilling

activity. We do however continue to seek out prospective oil producing properties that meet our

acquisition criteria for a price that is consistent with competing forecasts for energy prices going forward

into a traditionally volatile market.

We are further considering future prospects for exploration of the virtually untapped Marcellus and Utica

shale formations that underlie Allied’s oil and gas interests in West Virginia, particularly in Ritchie

County. The Marcellus and Utica shale structures have formed under much of Pennsylvania, Ohio, New

York, West Virginia and adjacent states to become a prospectively major reservoir for natural gas

recovery. Drilling by other operators in Ritchie County has indicated successful rates of recovery and our

own open-hole well logs indicate the presence of potentially productive Marcellus shale at a depth of

6,000 feet. However, since exploration of the Marcellus and Utica shale in our area is relatively recent no

natural gas reserves underlying our interests have been determined. Our future plans for exploring these

shale formations are further tempered by the high risk/reward ratio of exploratory drilling in the near term

based on anticipated pricing for natural gas over the next five years.

Results of Operations

During the period from January 1, 2014 through September 30, 2014, Allied was engaged in evaluating

operated and non-operated acquisition opportunities in New Mexico and Texas, examining the operating

efficiencies of existing wells, and overseeing the operation of its oil and gas assets by independent

operators. The operation and maintenance of Allied’s oil and gas operations is wholly dependent on the

services provided by five different independent operators. While the services provided by these operators

have proven adequate, the fact that Allied is dependent on the operations of third parties to maintain its

operations and produce revenue does impact its own ability to realize a net profit.

For the nine months ended September 30, 2014, Allied realized a net loss due primarily to an increase in

production expenses, the decline in energy prices and depletion over that period. Allied believes that the

immediate key to its ability to return to profitability is that energy prices rise and production increases.

Should oil and gas prices rise, production increase and expenses remain relatively consistent, Allied

believes that it will be able to return to net profits in future periods.

NINE MONTHS ENDED SEPTEMBER 30

2014

2013

CHANGE # CHANGE %

AVERAGE DAILY PRODUCTION

Oil (bbls/day)

14%

Natural gas (mcf/day)

267

257

Barrels of oil equivalent (boe/day)

PROFITABILITY

Petroleum and natural gas revenue

424,862 $

482,494

(57,632)

-12%

Net Revenue

424,862

482,494

(57,632)

-12%

Production and operating costs

269,809

255,276

14,533

Field netback

155,053

227,218

(72,165)

-32%

G&A

164,882

178,671

(13,789)

-8%

Net cash flow from operations

(9,829)

48,547

(58,376)

-120%

Depletion, depreciation and other charges

36,985

49,941

(12,956)

-26%

Future income taxes

Net loss from operations

(46,814) $

(1,394)

(45,420)

-3,258%

PROFITABILITY PER BOE

Oil and gas revenue (average selling price)

29.64

35.47

(5.83)

-16%

Production and operating costs

18.82

18.76

.06

Field netback ($/boe)

10.82

16.70

(5.88)

-35%

Net loss ($/boe)

(3.27)

(0.10)

(3.17)

-3,088%

Cash flow from operations ($/boe)

(0.69)

3.57

(4.26)

-119%

Revenue

Revenue for the three month period ended September 30, 2014, decreased to $158,417 from $231,715 for

the comparable period ended September 30, 2013, a decrease of 32%. The decrease in revenue over the

comparable three month periods can be attributed to decreases in energy prices paid over the period.

Revenue for the nine month period ended September 30, 2014, decreased to $424,862 from $482,494 for

the comparable period ended September 30, 2013, a decrease of 12%. The decrease in revenue over the

comparable nine month periods can also be attributed to decreases in energy prices paid over the period.

Allied believes that revenue will increase over near term future periods subject to the volatility associated

with energy pricing.

Net Income/Losses

Net income for the three month period ended September 30, 2014, decreased to $7,444 as compared to net

income of $57,006 for the three month period ended September 30, 2013, a decrease of 87%. The

decrease in net income over the comparable three month periods can be attributed to the decrease in oil

and gas revenues and the increase in general and administrative expenses offset by the decrease in

production costs and depletion.

Net losses for the nine month period ended September 30, 2014, were $45,161 as compared to net income

of $1,348 for the nine month period ended September 30, 2013. The transition in net losses from net

income over the comparable nine month periods can also be attributed to the decrease in oil and gas

revenues and the increase in production costs offset by decreases in general and administrative expenses

and depletion.

Allied expects to return to net income in future periods as revenues are expected to increase with higher

pricing for natural gas products, and increased productivity in the field while operating expenses are

expected to remain relatively consistent.

Operating Expenses

General and administrative expenses for the three month period ended September 30, 2014, increased to

$49,690 from $48,667 for the comparable three month period ended September 30, 2013, an increase of

2%. The increase in general administrative expenses over the comparable three month periods can be

attributed to personnel costs.

General and administrative expenses for the nine month period ended September 30, 2014, decreased to

$164,882 from $178,671 for the comparable nine month period ended September 30, 2013, a decrease of

8%. The decrease in general and administrative expenses over the comparable nine month periods can be

attributed to operating efficiencies.

Allied expects that general and administrative expenses will remain relatively consistent in future periods.

Depletion expenses for the three month periods ended September 30, 2014, and September 30, 2013 were

$12,514 and $26,681 respectively, a decrease of 53%. Depletion expenses for the nine month periods

ended September 30, 2014 and September 30, 2013 were $36,985 and $49,941, a decrease of 26%.

Depletion expenses are expected to continue to decrease in relation to the value attributed to aging oil and

gas assets.

Production costs for the three month periods ended September 30, 2014, and September 30, 2013 were

$89,340 and $99,981 respectively, a decrease of 11%. Production costs for the nine month periods ended

September 30, 2014 and September 30, 2013 were $269,809 and $255,276 respectively, an increase of

6%. Production costs include the cost of maintaining the wells, severance taxes, miscellaneous expenses

for soap, solvent, gasoline or electricity and expenses such as those incurred in swabbing, dozer work or

rig time. The decrease in production costs over the three month comparable periods can be attributed to a

decrease in expenses in work over costs while the overall increase in production costs over the

comparable nine month periods can be attributed to the increase in production and work over costs

associated with producing wells. Allied expects that production costs will continue to increase over future

periods as existing wells age and require more vigorous maintenance.

Income Tax Expense

As of December 31, 2013, Allied has net operating loss (NOL) carry forwards of approximately

$2,155,000. Should substantial changes in our ownership occur there would be an annual limitation of the

amount of NOL carry forward which could be utilized. The ultimate realization of these carry forwards is

due, in part, on the tax law in effect at the time and future events, which cannot be determined. During the

year ended December 31, 2013 a valuation allowance was recorded against this net operating loss carried

forward.

Capital Expenditures

Allied made no capital expenditures on property or equipment for the nine months ended September 30,

2014 or 2013.

Liquidity and Capital Resources

Allied had a working capital surplus of $1,418,715 as of September 30, 2014, funding its cash needs since

inception with revenues generated from operations, debt instruments and private equity placements.

Existing working capital and anticipated cash flow are expected to be sufficient to fund operations over

the next twelve months.

Current assets as of September 30, 2014 were $1,443,508 which consisted of $1,357,913 in cash and

$85,595 in accounts receivable. Total assets were $2,776,784 which consisted of current assets, proven oil

and gas properties of $628,575 and deposits of $704,701.

Current liabilities as of September 30, 2014 were $24,793 which consisted of accounts payable. Total

liabilities were $245,701 which consisted of current liabilities and an asset retirement obligation of

$220,908.

Stockholders’ equity as of September 30, 2014 was $2,531,083.

Net cash used in operating activities for the nine month period ended September 30, 2014 was $32,128 as

compared to net cash provided by operating activities of $37,791 for the nine month period ended

September 30, 2013. Net cash used in operating activities in the current period can be attributed primarily

to a number of items that are book expense items which do not affect the total amount relative to actual

cash used including depletion and amortization, and accretion expense. Balance sheet accounts that

actually affect cash, but are not income statement related items that are added or deducted to arrive at net

cash used in operations, include accounts receivable and accounts payable. Allied expects to transition to

cash flow provided by operations in future periods as net losses are expected to decrease in the near term

with an increase in energy prices.

Cash flow used in investing activities for the nine month periods ended September 30, 2014 and

September 30, 2013 was nil. Allied expects to use cash flow in investing activities over future periods as

it continues to evaluate existing wells, identify exploration opportunities and considers additional

acquisitions which activities will require investment.

Cash flow from financing activities for the nine month periods ended September 30, 2014 and September

30, 2013 was nil. Allied does not expect to realize cash flow from financing activities in the near term.

Allied has adopted a stock option plan pursuant to which it can grant up to 750,000 options to purchase

shares of its common stock to employees, directors, officers, consultants or advisors on the terms and

conditions set forth therein. As of September 30, 2014, 600,000 options with an exercise price of $0.35

had been granted, all of which have vested.

Allied has no lines of credit or other bank financing arrangements in place.

Allied had no commitments for future capital expenditures that were material at September 30, 2014.

Allied has no defined benefit plan or contractual commitment with any of its officers or directors except

each members participation in our stock option plan and an executive agreement with its sole executive

officer that provides for a monthly fee and participation in our stock option plan.

Allied has no current plans for the purchase or sale of any plant or equipment.

Allied has no current plans to make any changes in the number of employees.

Allied does not expect to pay cash dividends in the foreseeable future.

Off Balance Sheet Arrangements

As of September 30, 2014, Allied has no significant off-balance sheet arrangements that have or are

reasonably likely to have a current or future effect on our financial condition, changes in financial

condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources

that are material to stockholders.

Forward Looking Statements and Factors That May Affect Future Results and Financial Condition

The statements contained in the section titled Management’s Discussion and Analysis of Financial

Condition and Results of Operations, with the exception of historical facts, are forward looking

statements within the meaning of Section 27A of the Securities Act. We are ineligible to rely on the safe-

harbor provision of the Private Litigation Reform Act of 1995 for forward looking statements made in

this current report. Forward looking statements reflect our current expectations and beliefs regarding our

future results of operations, performance, and achievements. These statements are subject to risks and

uncertainties and are based upon assumptions and beliefs that may or may not materialize. These

statements include, but are not limited to, statements concerning:

§ our anticipated financial performance and business plan;

§ uncertainties related to production volumes of oil and gas;

§ the sufficiency of existing capital resources;

§ uncertainties related to future oil and gas prices;

§ uncertainties related the quantity of our reserves of oil and gas;

§ the volatility of the stock market and;

§ general economic conditions.

We wish to caution readers that our operating results are subject to various risks and uncertainties that

could cause our actual results to differ materially from those discussed or anticipated including the factors

set forth in the section entitled “Risk Factors” included elsewhere in this report. We also wish to advise

readers not to place any undue reliance on the forward looking statements contained in this report, which

reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update

or revise these forward looking statements to reflect new events or circumstances or any changes in our

beliefs or expectations, other than is required by law.

Critical Accounting Policies and Estimates

Accounting for Oil and Gas Property Costs. Allied (i) follows the successful efforts method of accounting

for the costs of its oil and gas properties, (ii) amortizes such costs using the units of production method

and (iii) evaluates its proven properties for impairment whenever events or changes in circumstances

indicate that their net book value may not be recoverable. Adverse changes in conditions (primarily gas

price declines) could result in permanent write-downs in the carrying value of oil and gas properties as

well as non-cash charges to operations that would not affect cash flows.

Estimates of Proved Oil and Gas Reserves. An independent petroleum engineer annually estimates

Allied’s proven reserves. Reserve engineering is a subjective process that is dependent upon the quality of

available data and the interpretation thereof. In addition, subsequent physical and economic factors such

as the results of drilling, testing, production and product prices may justify revision of such estimates.

Therefore, actual quantities, production timing, and the value of reserves may differ substantially from

estimates. A reduction in proved reserves would result in an increase in depreciation, depletion and

amortization expense.

Estimates of Asset Retirement Obligations. In accordance with ASC 410, Allied makes estimates of

future costs and the timing thereof in connection with recording its future obligations to plug and abandon

wells. Estimated abandonment dates will be revised in the future based on changes to related economic

lives, which vary with product prices and production costs. Estimated plugging costs may also be adjusted

to reflect changing industry experience. Increases in operating costs and decreases in product prices

would increase the estimated amount of the obligation and increase depreciation, depletion and

amortization expense. Cash flows would not be affected until costs to plug and abandon were actually

incurred.

Critical Accounting Policies

In Note 1 to the audited financial statements for the years ended December 31, 2013 and 2012, included

in our Form 10-K, Allied discusses those accounting policies that are considered to be significant in

determining the results of operations and its financial position. Allied believes that the accounting

principles utilized by it conform to accounting principles generally accepted in the United States.

The preparation of financial statements requires Allied’s management to make significant estimates and

judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature,

these judgments are subject to an inherent degree of uncertainty. On an on-going basis, Allied evaluates

estimates. Allied bases its estimates on historical experience and other facts and circumstances that are

believed to be reasonable, and the results form the basis for making judgments about the carrying value of

assets and liabilities. The actual results may differ from these estimates under different assumptions or

conditions.

Recent Accounting Pronouncements

In June 2014, the FASB released ASU 2014-10 - Accounting Standards Update 2014-10, Topic 915:

Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest

Entities Guidance in Topic 810, Consolidation. The amendments in this update eliminate the concept of a

development stage entity (DSE) from US GAAP. This change rescinds financial reporting requirements

that have historically applied by DSEs such as labeling financial statements as those of a DSE, providing

inception to date information in the statements of income, cash-flows and shareholder equity and certain

specific disclosures. This ASU has had no impact to the presentation of Allied’s financial statements.

In May 2014, the FASB released ASU 2014-9 - Accounting Standards Update 2014-9, Topic 606: Revenue

from Contracts with Customers that outlines a single comprehensive model for entities to use in accounting

for revenue arising from contracts with customers and supersedes most current revenue recognition

guidance, including industry-specific guidance. The guidance is based on the principle that an entity

should recognize revenue to depict the transfer of goods or services to customers in an amount that

reflects the consideration to which the entity expects to be entitled in exchange for those goods or

services. The guidance also requires additional disclosure about the nature, amount, timing and

uncertainty of revenue and cash flows arising from customer contracts, including significant judgments

and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the

option of using either a full retrospective or a modified retrospective approach for the adoption of the new

standard. This guidance becomes effective for annual reporting periods beginning after December 15,

2016 and early adoption is not permitted. Allied is currently assessing the impact that this standard will

have on its financial statements.

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future

effective dates are either not applicable or are not expected to be significant to the financial statements of

Allied.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK

Not required.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by Allied’s

management, with the participation of the chief executive officer and chief financial officer, of the

effectiveness of Allied’s disclosure controls and procedures (as defined in Rules 13a-15(e) of the

Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and procedures are designed to

ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is

recorded, processed, summarized, and reported within the time periods specified in the Commission’s

rules and forms and that such information is accumulated and communicated to management, including

the chief executive officer and chief financial officer, to allow timely decisions regarding required

disclosures.

Based on that evaluation, Allied’s management concluded, as of the end of the period covered by this

report, that Allied’s disclosure controls and procedures were effective in recording, processing,

summarizing, and reporting information required to be disclosed, within the time periods specified in the

Commission’s rules and forms, and that such information was accumulated and communicated to

management, including the chief executive officer and chief financial officer, to allow timely decisions

regarding required disclosures.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of

the Exchange Act) during the period ended September 30, 2014, that materially affected, or are

reasonably likely to materially affect, Allied’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 1A.

RISK FACTORS

Our future operating results are highly uncertain. Before deciding to invest in us or to maintain or increase

your investment, you should carefully consider the risks described below, in addition to the other

information contained in this quarterly report. If any of these risks actually occur, our business, financial

condition or results of operations could be seriously harmed. In that event, the market price for our

common stock could decline and you might lose all or part of your investment.

Risks Related to Allied’s Business

We have a history of significant operating losses, which losses may reoccur in the future.

Since our inception in 1979, our expenses have often exceeded our income, resulting in losses and an

accumulated deficit of $7,345,867 at December 31, 2013, which had increased to $7,391,028 at

September 30, 2014. We recorded a net loss of $45,161 for the nine month period ended September 30,

2014 and may continue to realize future net losses if revenues do not increase. Our expectation of

profitability depends on higher energy prices and increased production through exploration, development

or acquisition. Allied’s success in this continued endeavor can in no way be assured.

Oil and natural gas prices are volatile. Any substantial decrease in prices would adversely affect our

financial results.

Allied’s future financial condition, results of operations and the carrying value of our oil and natural gas

properties depend primarily upon the prices we receive for oil and natural gas production. Oil and natural

gas prices historically have been volatile and are likely to continue to be volatile in the future. Allied’s

cash flow from operations is highly dependent on the prices we receive for oil and natural gas. This price

volatility also affects the amount of Allied’s cash flow available for capital expenditures and our ability to

borrow money or raise additional capital. The prices for oil and natural gas are subject to a variety of

additional factors that are beyond our control. These factors include:

§ the level of consumer demand for oil and natural gas;

§ the domestic and foreign supply of oil and natural gas;

§ 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 oil and natural gas;

§ domestic governmental regulations and taxes;

§ the price and availability of alternative fuel sources;

§ weather conditions;

§ market uncertainty;

§ political conditions or hostilities in energy producing regions, including the Middle East; and

§ worldwide economic conditions.

These factors and the volatility of the energy markets generally make it extremely difficult to predict

future oil and natural gas price movements with any certainty. Declines in oil and natural gas prices

would not only reduce revenue, but could reduce the amount of oil and natural gas that Allied can

produce economically and, as a result, could have a material adverse effect on our financial condition,

results of operations and reserves. Should the oil and natural gas industry experience significant price

declines, Allied may, among other things, be unable to meet our financial obligations or make planned

expenditures.

Allied’s future performance depends on its ability to find or acquire additional oil or natural gas

reserves.

Unless Allied successfully replaces the reserves that it produces, defined reserves will decline, resulting in

a decrease in oil and natural gas production, that will produce lower revenues, in turn decreasing cash

flows from operations. Allied has historically obtained the majority of its reserves through acquisition.

The business of exploring for, developing or acquiring reserves is capital intensive. Allied may not be

able to obtain the necessary capital to acquire additional oil or natural gas reserves if cash flows from

operations are reduced, and access to external sources of capital is unavailable. Should Allied not make

significant capital expenditures to increase reserves it will not be able to maintain current production rates

and expenses will continue to exceed revenue.

Climate change legislation or regulations restricting emissions of “greenhouse gases” could result in

increased operating costs and reduced demand for the oil and natural gas that we produce.

On December 15, 2009, the U.S. Environmental Protection Agency (“EPA”) officially published its

findings that emissions of carbon dioxide, methane and other “greenhouse gases” present an

endangerment to human health and the environment because emissions of such gases are contributing to

warming of the Earth’s atmosphere and other climatic changes. These findings by the EPA allow the

agency to proceed with the adoption and implementation of regulations that would restrict emissions of

greenhouse gases under existing provisions of the federal Clean Air Act. In late September 2009, the EPA

had proposed two sets of regulations in anticipation of finalizing its findings that would require a

reduction in emissions of greenhouse gases from motor vehicles and that could also lead to the imposition

of greenhouse gas emission limitations in Clean Air Act permits for certain stationary sources. In

addition, on September 22, 2009, the EPA issued a final rule requiring the reporting of greenhouse gas

emissions from specified large greenhouse gas emission sources in the United States beginning in 2011

for emissions occurring in 2010. The adoption and implementation of any regulations over greenhouse

gases could require us to incur costs to reduce emissions of greenhouse gases associated with our

operations or could adversely affect demand for the oil and natural gas that we produce.

On June 26, 2009, the U.S. House of Representatives passed the “American Clean Energy and Security

Act of 2009,” or “ACESA,” which would establish an economy-wide cap-and-trade program to reduce

U.S. emissions of greenhouse gases including carbon dioxide and methane. ACESA would require a 17%

reduction in greenhouse gas emissions from 2005 levels by 2020 and just over an 80% reduction of such

emissions by 2050. Under this legislation, the EPA would issue a capped and steadily declining number

of tradable emissions allowances to certain major sources of greenhouse gas emissions so that such

sources could continue to emit greenhouse gases into the atmosphere. These allowances would be

expected to escalate significantly in cost over time. The net effect of ACESA will be to impose increasing

costs on the combustion of carbon-based fuels such as oil, refined petroleum products, and natural gas.

The U.S. Senate has begun work on its own legislation for restricting domestic greenhouse gas emissions

and the President Obama Administration has indicated its support of legislation to reduce greenhouse gas

emissions through an emission allowance system. Although it is not possible at this time to predict when

the Senate may act on climate change legislation or how any bill passed by the Senate would be

reconciled with ACESA, any future federal laws or implementing regulations that may be adopted to

address greenhouse gas emissions could adversely affect demand for the oil and natural gas that we

produce.

The results of our operations are wholly dependent on the production and maintenance efforts of

independent operators.

The operation and maintenance of our oil and natural gas operations is wholly dependent on independent

local operators. While the services provided by operators of our properties in the past have proven

adequate for the successful operation of our oil and natural gas wells, the fact that we are dependent on

operations of third parties to produce revenue from our assets could restrict our ability to continue

generating a net profit on operations.

Risks Related to the Company’s Stock

The market for our stock is limited and our stock price may be volatile.

The market for our common stock is limited due to low trading volumes and the small number of

brokerage firms acting as market makers. The average daily trading volume for our stock has varied

significantly from week to week and from month to month, and the trading volume often varies widely

from day to day. Due to these limitations there is volatility in the market price and tradability of our stock,

which may cause our shareholders difficulty in selling their shares in the market place.

Allied has not paid dividends to the shareholders of its common stock.

Allied has not paid any dividends to the shareholders of its common stock and has no intention of paying

dividends in the foreseeable future. Any future dividends would be at the discretion of our board of

directors and would depend on, among other things, future earnings, our operating and financial

condition, our capital requirements, and general business conditions.

Allied may require additional capital funding.

Allied may require additional funds, either through additional equity offerings or debt placements, in

order to expand our operations. Such additional capital may result in dilution to our current shareholders.

Further, our ability to meet short-term and long-term financial commitments will depend on future cash.

There can be no assurance that future income will generate sufficient funds to enable us to meet our

financial commitments.

If the market price of our common stock declines as our security holders sell their stock, selling

security holders or others may be encouraged to engage in short selling, depressing the market price.

The significant downward pressure on the price of the common stock as security holders sell material

amounts of common stock could encourage short sales by the selling security holders or others. Short

selling is the selling of a security that the seller does not own, or any sale that is completed by the delivery

of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower

amount than the price at which they sold it short. Significant short selling of Allied’s stock would create

an incentive for market participants to reduce the value of our common stock. If a significant market for

short selling in our common stock develops, the market price for our common stock could be significantly

depressed.

Allied’s common stock is currently deemed to be “penny stock”, which makes it more difficult for

investors to sell their shares.

Allied’s common stock is and will be subject to the “penny stock” rules adopted under section 15(g) of

the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the

NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or

that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for

three or more years). These rules require, among other things, that brokers who trade penny stock to

persons other than “established customers” complete certain documentation, make suitability inquiries of

investors and provide investors with certain information concerning trading in the security, including a

risk disclosure document and quote information under certain circumstances. Many brokers have decided

not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number

of broker-dealers willing to act as market makers in such securities is limited. If Allied remains subject to

the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for

Allied’s securities. If Allied’s securities are subject to the penny stock rules, investors will find it more

difficult to dispose of Allied’s securities.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS ON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page

22 of this Form 10-Q, and are incorporated herein by this reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized.

Allied Resources, Inc.

Date

/s/ Ruairidh Campbell

November 14, 2014

Ruairidh Campbell

Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director

INDEX TO EXHIBITS

Exhibit

Description

3.1*

Articles of Incorporation dated February 12, 2002 (incorporated by reference to the Form

10-SB/A filed on April 21, 2003).

3.2 *

Bylaws (incorporated by reference to the Form 10-SB/A filed on April 21, 2003).

10.1 *

Oil and Gas Well Operating Agreement between Allied and Allstate Energy Corporation

dated May 1, 1996 (incorporated by reference to the Form 10SB/A filed on April 21,

2003).

10.2 *

Amendments to Operating Agreements between Allied and Allstate Energy Corporation

dated May 10, 1996 (incorporated by reference to the Form 10SB/A filed on April 21,

2003).

10.3 *

Form Gas Purchase Agreement (incorporated by reference to the Form 10SB/A filed on

April 21, 2003).

10.4*

Consulting Agreement between Allied and Ruairidh Campbell dated July 1, 2008

(incorporated by reference to the Form 10-Q filed on November 14, 2008).

14 *

Code of Ethics adopted May 3, 2004 (incorporated by reference to the Form 10-KSB filed

on May 26, 2004).

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule

13a-14 of the Securities and Exchange Act of 1934 as amended, as adopted pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002 (attached).

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18

U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of

2002 (attached).

99.1 *

Allied Resources, Inc. 2008 Stock Option Plan (incorporated by reference to the Form 10-

Q filed on November 14, 2008).

99.2*

Reserve report from Sure Engineering, LLC (incorporated by reference to the Form 10-K

filed on April 15, 2013).

101. INS

XBRL Instance Document^†

101. PRE

XBRL Taxonomy Extension Presentation Linkbase^†

101. LAB

XBRL Taxonomy Extension Label Linkbase^†

101. DEF

XBRL Taxonomy Extension Label Linkbase^†

101. CAL

XBRL Taxonomy Extension Label Linkbase^†

101. SCH

XBRL Taxonomy Extension Schema^†

Incorporated by reference to previous filings of Allied.

^†

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed

“furnished” and not “filed” or part of a registration statement or prospectus for purposes

of Section 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed”

for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is

not subject to liability under these sections.

ALLIED RESOURCES INC 10-Q