Jayhawk Energy (JYHW) 10-Q 23 Dec 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Dec. 31, 2015shares
Document and Entity Information:
Entity Registrant Name	JayHawk Energy, Inc.
Document Type	10-Q
Document Period End Date	Dec. 31, 2015
Trading Symbol	jyhw
Amendment Flag	false
Entity Central Index Key	1,308,710
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding	199,725,629
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Entity Incorporation, State Country Name	Nevada
Entity Incorporation, Date of Incorporation	Apr. 5, 2004
Entity Information, Former Legal or Registered Name	Bella Trading Company, Inc
Entity Information, Date to Change Former Legal or Registered Name	Jun. 21, 2007

JAYHAWK ENERGY, INC. AND SUBSID

JAYHAWK ENERGY, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Interim period unaudited)(Year-end restated) - USD ($)		Dec. 31, 2015	Sep. 30, 2015
CURRENT ASSETS
Other current assets		$ 13,181	$ 13,342
TOTAL CURRENT ASSETS		13,181	13,342
PROPERTY AND EQUIPMENT
Unproved properties, net	[1]	181,096	185,523
NET PROPERTY AND EQUIPMENT		181,096	185,523
RECLAMATION BONDS		150,476	150,450
TOTAL ASSETS		344,753	349,315
CURRENT LIABILITIES
Checks issued and payable		172
Accounts payable		821,058	804,965
Due to working and royalty interests			472,993
Accrued interest related party		291,305	251,579
Other payables, interest and taxes accrued		89,827	89,014
Convertible line of credit related party	[2]	255,543	170,285
Convertible debentures related party, current portion	[3]	470,439	470,439
Current portion of promissory notes payable	[4]	89,957	264,582
TOTAL CURRENT LIABILITIES		2,018,301	2,523,857
LONG TERM LIABILITIES
Convertible debenture, net	[3]	63,333	53,333
Convertible debentures, related party, net	[3]	126,667	106,667
Promissory notes payable	[4]	12,631	42,293
Promissory note payable, related party	[4]	110,781	110,781
Warrant derivative liability	[5]	2,299	4,861
Asset retirement obligation		214,178	245,792
TOTAL LONG TERM LIABILITIES		529,889	563,727
TOTAL LIABILITIES		2,548,190	3,087,584
COMMITMENTS AND CONTINGENCIES	[6]	0	0
STOCKHOLDERS' DEFICIT
Preferred Stock, $.001 par value; 10,000,000 shares authorized, none issued and outstanding		0	0
Common Stock, $.001 par value; 200,000,000 shares authorized; 199,875,629 shares issued and outstanding	[7]	199,876	199,876
Additional paid in capital		25,752,725	24,801,020
Accumulated deficit		(28,156,038)	(27,739,165)
TOTAL STOCKHOLDERS' DEFICIT		(2,203,437)	(2,738,269)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$ 344,753	$ 349,315
[1]	Note 4
[2]	Note 7
[3]	Note 8
[4]	Note 10
[5]	Note 9
[6]	Note 16
[7]	Notes 12 and 18

Statement of Financial Position

Statement of Financial Position - Parenthetical - $ / shares	Dec. 31, 2015	Sep. 30, 2015
Statement of financial position
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	200,000,000	200,000,000
Common Stock, Shares Issued	1,998,756	1,998,756
Common Stock, Shares Outstanding	1,998,756	1,998,756

JAYHAWK ENERGY, INC. AND SUBSI4

JAYHAWK ENERGY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - USD ($)		3 Months Ended
		Dec. 31, 2015	Dec. 31, 2014
Income statement
REVENUE - Oil sales			$ 68,792
OPERATING EXPENSES
Production costs - oil		$ (643)	29,835
Production costs - natural gas		15,394	4,127
Depreciation, depletion and amortization		4,427	31,269
Accretion of asset retirement obligation		6,166	4,016
North Dakota reclamation costs			2,306
General and administrative		45,515	107,800
TOTAL OPERATING EXPENSES		70,859	179,353
OPERATING LOSS		(70,859)	(110,561)
OTHER INCOME (EXPENSE)
Interest expense		(4,500)	(37,485)
Interest expense, related parties		(39,727)
Amortization of debt discount		(30,000)	(30,000)
Loss on settlement of liabilities	[1]	(274,349)
Gain (loss) on change in fair value of conversion option derivative			432,018
Gain on change in fair value of warrant derivative		2,562	15,440
TOTAL OTHER INCOME (EXPENSE)		(346,014)	379,973
NET INCOME (LOSS) BEFORE INCOME TAX		(416,873)	269,412
Provision for income taxes		0	0
NET INCOME (LOSS)		$ (416,873)	$ 269,412
Basic and diluted loss per share		$ 0	$ 0
Basic weighted average numbers shares outstanding		199,875,629	80,375,841
[1]	Note 17

JAYHAWK ENERGY, INC. AND SUBSI5

JAYHAWK ENERGY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($)		3 Months Ended
		Dec. 31, 2015	Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$ (416,873)	$ 269,412
Adjustments to reconcile net loss to cash used by operating activities:
Depreciation, depletion and amortization		4,427	31,269
Accretion of asset retirement obligation		6,166	4,016
Amortization of debt discount		30,000	30,000
Gain on change in fair value of conversion option derivative			(432,018)
Gain on change in fair value of warrant derivative		(2,562)	(15,440)
Loss on settlement of liabilities	[1]	274,349
Change in operating assets and liabilities:
Trade accounts receivable			13,707
Prepaid expenses, and other current assets		161	934
Accounts payable		22,226	(31,728)
Due to working and royalty interest holders			(13,518)
Accrued interest, related party		39,727
Other payables, interest and taxes accrued		(2,096)	47,920
Asset retirement obligation for North Dakota reclamation		(37,780)
Net cash used by operating activities		(82,255)	(95,446)
CASH FLOWS FROM INVESTING ACTIVITIES:
Reclamation bonds		(26)	(24)
Net cash used by investing activities		(26)	(24)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on promissory notes		(3,149)
Change in checks issued and payable		172
Borrowings under convertible line of credit, related party		85,258
Net cash provided by financing activities		82,281
Net increase (decrease) in cash			(95,470)
CASH AT BEGINNING OF PERIOD			177,260
CASH AT END OF PERIOD			$ 81,790
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Working interest and royalty holders due assigned for warrants		471,669
Promissory note assigned for warrants		$ 198,229
[1]	Note 17

Note 1 - Organization and Descr

Note 1 - Organization and Description of Business	3 Months Ended
	Dec. 31, 2015
Notes
Note 1 - Organization and Description of Business	NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS JayHawk Energy, Inc. (the “Company” or “JayHawk”) and its wholly owned subsidiary, Jayhawk Gas Transportation Company, are engaged in the acquisition, exploration, development, production and sale of natural gas, crude oil and natural gas liquids primarily from conventional reservoirs within North America. The Company incorporated in Colorado on April 5, 2004 as Bella Trading Company, Inc. During the third quarter ending June 30, 2007, the Company changed management and entered the oil and gas business, and ceased all activity in retail jewelry. On June 21, 2007, the Company changed its name to JayHawk Energy, Inc. Since then, the Company has devoted its efforts principally to the raising of capital, organizational infrastructure development, the acquisition of oil and gas properties and exploration activities in Kansas and North Dakota. The Company also formed a wholly owned subsidiary to transport natural gas in Kansas called JayHawk Gas Transportation Corporation. On September 1, 2015, the Company disposed of all its interests, tangible or intangible, in and to the assets held or owned by the Company in the State of North Dakota. The disposition of the Company’s North Dakota assets was completed through an asset assignment to a related party. On October 8, 2015, the Company filed Articles of Domestication and corresponding Articles of Incorporation with the Secretary of State for the State of Nevada. Effective October 8, 2015, the Company’s state of organization was moved from Colorado to Nevada. On October 22, 2015, the Company, in conjunction with its domestication to the State of Nevada, filed Articles of Dissolution in the State of Colorado. The Company's strategy is to increase shareholder value through strategic acquisition and development of oil and gas properties, primarily in North America. As of December 31, 2015, JayHawk Energy remains an early stage oil and gas exploration company. The Company's immediate business plan is to focus its efforts on identifying oil and gas assets for future acquisition and development. The Company is actively focused on shifting to a liquids-rich development focus, primarily in established oil and gas producing regions of North America. The Company's main priority will be given to projects with near term cash flow potential and proven, producing oil and gas reserves. Future acquisition and development activities will be determined by the Company's ability to access sources of sufficient funding.

Note 2 - Summary of Significant

Note 2 - Summary of Significant Accounting Policies	3 Months Ended
	Dec. 31, 2015
Notes
Note 2 - Summary of Significant Accounting Policies	NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three months ended December 31, 2015 are not necessarily indicative of the results that may be expected for the full year ending September 30, 2016. For further information, refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended September 30, 2015. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary JayHawk Gas Transportation Company after elimination of the intercompany accounts and transactions. Going Concern As shown in the accompanying consolidated financial statements, the Company has incurred operating losses since inception. As of December 31, 2015, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $28,156,038 and a net loss of $416,873 for the three months ended December 31, 2015, and as of that date the Company's current liabilities exceeded its current assets by $2,005,120. Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, to locate profitable energy properties and generate revenue from current and planned business operations, and control costs. The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining additional commercial production. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the settlement of liabilities should the Company be unable to continue as a going concern. Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the respective reporting periods. Significant areas requiring the use of management assumptions and estimates relate to asset impairments, asset retirement obligations, stock-based compensation, income taxes and derivatives. Actual results may differ from these estimates and assumptions which could have a material effect on the Company's reported financial position and results of operations. Income or Loss Per Common Share Basic earnings per share ("EPS") is computed as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. The potential dilutive effect of convertible and outstanding securities as of December 31, 2015 and 2014 would be as follows: December 31, 2015 December 31, 2014 Stock options 1,150,000 4,000,000 Convertible debt 136,665,840 110,028,675 Convertible line of credit 112,515,136 - Warrants 149,979,550 3,777,778 TOTAL POSSIBLE DILUTION 400,310,526 117,806,453 At December 31, 2015, the effect of the Company's common stock equivalents would have been anti-dilutive. At December 31, 2014, the effect of the Company’s stock options added 1,560,976 common stock equivalents to the diluted weighted average shares outstanding figure, which affected earnings per share by $Nil; other potentially dilutive items would have been anti-dilutive. Revenue and Cost Recognition The Company uses the sales method of accounting for oil and gas revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes the Company may be entitled to, based on the Company's individual interest in the property. Periodically, imbalances between production and nomination volumes can occur for various reasons. In cases where imbalances have occurred, a production imbalance receivable or liability will be recorded when determined. Costs associated with production are expensed in the period in which they are incurred. Cash Equivalents The Company considers all highly liquid instruments purchased with maturity of three months or less when acquired to be cash equivalents. Reclassifications Certain reclassifications have been made to the 2014 financial statements to conform to the 2015 presentation. These reclassifications have no effect on net loss, total assets or accumulated deficit as previously reported. See Note 18 regarding revision of financial statements. New Accounting Pronouncements In August 2014, the FASB issued ASU No. 2014-15—Presentation of Financial Statements—Going Concern. The guidance requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). If conditions or events exist that raise substantial doubt about an entity’s ability to continue as a going concern, the guidance requires disclosure in the financial statements. The guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company plans to adopt this standard effective October 1, 2017 and anticipates the adoption will have minimal impact on the financial statements because the Company currently discloses the information required.

Note 3 - Fair Value of Financia

Note 3 - Fair Value of Financial Instruments	3 Months Ended
	Dec. 31, 2015
Notes
Note 3 - Fair Value of Financial Instruments	NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying values of cash and cash equivalents, reclamation bonds, and promissory notes payable approximate fair value due to their limited time to maturity or ability to immediately convert them to cash in the normal course. The approximate fair value of the convertible debentures and convertible line of credit and accrued interest related to the debentures and line of credit based upon the number of shares into which the debentures are convertible is $982,081 using the current market price per share of stock at December 31, 2015. The table below sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2015 and September 30, 2015, respectively, and the fair value calculation input hierarchy that the Company has determined has applied to each asset and liability category. December 31, 2015 September 30, 2015 Input Hierarchy Level Liabilities: Warrant derivative liability $ 2,299 $ 4,861 Level 2

Note 4 - Unproved Properties an

Note 4 - Unproved Properties and Impairment	3 Months Ended
	Dec. 31, 2015
Notes
Note 4 - Unproved Properties and Impairment	NOTE 4 – UNPROVED PROPERTIES AND IMPAIRMENT The total of the Company's investment in unproved properties and equipment at December 31, 2015 and September 30, 2015, consists of the following capitalized costs respectively: December 31, 2015 September 30, 2015 UNPROVED AND DEVELOPED PROPERTIES Kansas Girard Project Field equipment – Jayhawk Gas Transport Company $ 2,605,871 $ 2,605,871 Field equipment – Girard 579,027 579,027 Capitalized drilling costs 684,696 684,696 Subtotal 3,869,594 3,869,594 Less accumulated impairments (2,432,086) (2,432,087) Less accumulated depreciation, depletion and amortization (1,256,412) (1,251,984) TOTAL UNPROVED PROPERTIES $ 181,096 $ 185,523 The Company’s Kansas properties are currently not producing. Management intends to evaluate the prospects of returning to production during the subsequent fiscal year and determine the economic viability of the project thereafter.

Note 5 - Proved Properties and

Note 5 - Proved Properties and Impairment	3 Months Ended
	Dec. 31, 2015
Notes
Note 5 - Proved Properties and Impairment	NOTE 5 – PROVED PROPERTIES AND IMPAIRMENT During the year ended September 30, 2015, management scrapped certain capitalized drilling costs and equipment associated with the Jenks and Knudsen wells in Crosby, North Dakota. The Company determined the costs associated with completing the necessary engineering, road improvements and purchase of additional equipment to construct a disposal well exceeded the future benefits of said well. The Company has plugged both the Jenks and Knudsen well bores. The loss on write-off of $11,527 was charged to operations as “Loss on leases and equipment”. Effective September 1, 2015, the Company entered into an Assignment, Bill of Sale and Conveyance (the “Assignment”) with Vast Holdings, LLC (“Vast Holdings”), a related party at September 30, 2015. The Assignment sells and assigns to Vast Holdings, in consideration of ten dollars ($10.00), all of the Company’s right, title, interest and estate, real or personal, movable or immovable, tangible or intangible, in and to the assets held or owned by the Company in the State of North Dakota, including but not limited to: oil, gas and/or mineral leases, fee mineral interests, leasehold estates, mineral interests, royalty interests, overriding royalty interests, reversionary interests, net profits interests, and other similar rights, estates and interests and other agreements, the oil, gas, and other hydrocarbons produced from or attributable to the assets and all units, wells, equipment, contracts, and records. Vast Holdings did not assume various liabilities associated with the North Dakota assets, including, but not limited to, working and royalty interests payable and liabilities associated with reclamation of the North Dakota properties. Vast Holdings is a wholly owned subsidiary of Vast Exploration, LLC. Vast Exploration is a controlling shareholder of the Company, the contract operator of the Company’s oil and gas properties and an affiliate of Vast Petroleum Corp., an entity that entered into a joint development agreement for the Company’s oil and gas operations in Kansas in May 2014. The Assignment was made in lieu of foreclosure of certain Company debt obligations and the Company determined ten dollars was appropriate monetary consideration.

Note 6 - Reclamation Bonds

Note 6 - Reclamation Bonds	3 Months Ended
	Dec. 31, 2015
Notes
Note 6 - Reclamation Bonds	NOTE 6 – RECLAMATION BONDS Reclamation bonds consists of various deposits and reclamation bonds. Detail is disclosed in the following table: December 31, 2015 September 30, 2015 Reclamation bonds $ 150,476 $ 150,450 TOTAL RECLAMATION BONDS $ 150,476 $ 150,450

Note 7 - Convertible Line of Cr

Note 7 - Convertible Line of Credit Related Party	3 Months Ended
	Dec. 31, 2015
Notes
Note 7 - Convertible Line of Credit Related Party	NOTE 7 – CONVERTIBLE LINE OF CREDIT RELATED PARTY On June 30, 2015, the Company entered into a revolving credit loan agreement (“Loan”) with Vast Exploration, LLC (the “Lender” or “Vast Exploration”). The Loan permits the Company to borrow up to $100,000 with an interest rate equal to 1.5% per month of the unpaid principal balance on the loan. The Company is required to pay principal on demand or, if not sooner demanded, then on or before June 30, 2016. The Company is required to pay interest on demand or, if not sooner demanded, then on the 1st day of each month, commencing August 1, 2015. After demand, interest on the outstanding balance of the Loan will accrue at a rate equal to 2% per month. Vast Exploration has the right, at any time after the date of the Loan, at its election, to convert all or part of the Loan into shares of fully paid and non-assessable shares of common stock of the Company at a conversion price of the lesser of 1) $0.005 per share or 2) 50% of the average of the three lowest trades during the twenty-five previous trading days preceding a conversion. On August 6, 2015, the Company entered into a Line of Credit Modification Agreement with Vast Exploration (“Modification Agreement”). The Modification Agreement adjusts the maximum principal balance that may be borrowed from $100,000 to $150,000. At its sole discretion, Vast Exploration may increase the maximum principal balance beyond $150,000. On September 25, 2015, the Company entered into a Second Line of Credit Modification Agreement with Vast Exploration (“Second Modification Agreement”). The Second Modification Agreement amends the conversion price in the Loan to a non-variable conversion price of $0.005 per share of common stock. Advances related to reclamation of North Dakota properties (Note 16) may be converted at a non-variable conversion price of $0.0025 per share of common stock. As of December 31, 2015, the Loan balance was $255,543. The balance of accrued interest on the Loan at December 31, 2015 was $25,744 and is included in “accrued interest, related party”. The balance of the Loan and accrued interest thereon was convertible to 112,515,136 shares of the Company’s common stock based on the amended conversion price.

Note 8 - Convertible Debentures

Note 8 - Convertible Debentures	3 Months Ended
	Dec. 31, 2015
Notes
Note 8 - Convertible Debentures	NOTE 8 – CONVERTIBLE DEBENTURES The Company’s related party convertible debentures and accrued interest consist of the following: December 31, 2015 September 30, 2015 2010 Vast Exploration – 18% default interest rate, currently in default $ 470,439 $ 470,439 2014 Vast Exploration – 10% interest, due on June 3, 2019 400,000 400,000 Total principal 870,439 870,439 Unamortized discount (273,333) (293,333) conver Subtotal 597,106 577,106 Less current portion (470,439) (470,439) Long term portion $ 126,667 $ 106,667 Accrued interest payable – related party $ 264,165 $ 232,599 Number of shares of common stock into which the notes are convertible 113,460,360 110,303,800 The Company’s non-related party convertible debentures and accrued interest consist of the following: December 31, 2015 September 30, 2015 2014 Convertible debenture - 10% interest, due on June 3, 2019 $ 200,000 $ 200,000 Unamortized discount (136,667) (146,667) Subtotal 63,333 53,333 Less current portion - - Long term portion $ 63,333 $ 53,333 Accrued interest payable $ 32,055 $ 27,014 Number of shares of common stock into which the notes are convertible 23,205,480 22,701,370 The non-related party debentures are collateralized by all Company assets located in the State of Kansas and all of the Company’s rights in JayHawk Gas Transportation Corporation, a wholly owned subsidiary. As of December 31, 2015, there remains a total of $410,000 of unamortized discount on the issuance of the 2014 convertible debentures. At December 31, 2015, principal payments on the convertible debentures are due as follows: Related party Non-related party Total Year ending December 31, 2016 $ 470,439 $ - $ 470,439 Year ending December 31, 2017 - - - Year ending December 31, 2018 - - - Year ending December 31, 2019 400,000 200,000 600,000 TOTAL CONVERTIBLE DEBENTURES $ 870,439 $ 200,000 $ 1,070,439

Note 9 - Derivative Liabilities

Note 9 - Derivative Liabilities	3 Months Ended
	Dec. 31, 2015
Notes
Note 9 - Derivative Liabilities	NOTE 9 – DERIVATIVE LIABILITIES Conversion Options Derivative The Company had convertible debentures which contained provisions allowing holders of the debentures to convert outstanding debt to shares of the Company's common stock (Note 8). The debentures contained anti-dilution provisions which call for the debt conversion and warrant exercise prices to be reduced based on future issues of debt or equity with more favorable provisions. Management has determined that these provisions cause the conversion options and warrants to require derivative liability accounting. As such, management valued them at fair value at the date of issuance. During the year ended September 30, 2015, the Company entered into a modification agreement with the holders of the convertible debentures. The modification agreement changed the conversion price to $0.01 per common share and specifically eliminated provisions of the debentures requiring conversion derivative accounting. The fair value of the derivative liability on that date of $1,244,472 was charged to ‘additional paid-in capital’. Warrant Derivative Stock purchase warrants were also issued with the convertible debentures (Note 8). Provisions contained within these warrants require the warrants to be accounted for as derivatives. At December 31, 2015 and September 30, 2015, respectively, the fair value of warrant derivative liability was estimated using the Black-Scholes option pricing model using the following weighted average assumptions: December 31, 2015 September 30, 2015 Stock price $ 0.0040 $ 0.0076 Risk-free interest rate 0.65% 0.56% Expected term 1.13 years 1.88 years Expected volatility 274.50% 274.3% Fair value of warrant derivative units $0.0023 $0.0106 Below is detail of the change in warrant derivative liability balance for three months ended December 31, 2015 and 2014, respectively: Three months ended December 31, 2015 2014 Beginning balance $ 4,861 $ 24,697 Net change in fair value of warrant derivative liability (2,562) (15,440) Ending balance $ 2,299 $ 9,257

Note 10 - Promissory Notes

Note 10 - Promissory Notes	3 Months Ended
	Dec. 31, 2015
Notes
Note 10 - Promissory Notes	NOTE 10 – PROMISSORY NOTES On July 12, 2014, the Company entered into a promissory note for $46,642 with a working interest partner. The Company was scheduled to make seven monthly payments in the amount of $2,500 and subsequently make ten monthly payments in the amount of $2,914. At December 31, 2015, the balance due on the note was $31,642. The Company is currently in default on the terms of the promissory note. The balance of $31,642 is included under “Current portion of promissory notes payable” at December 31, 2015. On January 27, 2015, the Company entered into a promissory note for $189,790 with a working interest partner which included past due amounts of $175,425 and additional interest of $14,364 which was recognized as expense. The Company was scheduled to make nineteen monthly payments in the amount of $9,542 and subsequently make one monthly payment in the amount of $19,016. The note bore interest at 6% per annum. On November 3, 2015, the Company granted 39,645,872 Warrants to Vast Exploration, LLC and/or assigns pursuant to the Warrant Purchase Agreement. (Note 14) The Warrants were granted in consideration of Vast Exploration’s assumption of the January 27, 2015 Promissory Note, totaling approximately $ 198,229 balance on the promissory note at the date of assignment (Note 14). On February 12, 2015, the Company entered into a promissory note for $49,696 with a vendor which included accounts payable of $34,162 and additional interest of $15,534 which was recognized as expense. The Company was scheduled to make one payment of $5,000, thirty-eight monthly payments in the amount of $1,500 and subsequently make one monthly payments in the amount of $1,378. The note bears interest at 8% per annum. The note is currently in default. At December 31, 2015, the balance due on the note was $37,790 and is included under “Current portion of promissory notes payable”. On August 28, 2015, the Company entered into a promissory note for $37,892 as settlement of payable to a service provider. The Company is scheduled to make twenty-four monthly payments in the amount of $1,579. The note is non-interest bearing. At December 31, 2015, the balance due on the note was $33,156. The Company’s non-related party promissory notes and accrued interest consist of the following: December 31, 2015 September 30, 2015 July 2014 working interest note – 0% interest rate, currently in default $ 31,642 $ 31,642 January 2015 working interest note – 6% interest rate - 201,139 February 2015 vendor note – 8% interest rate, currently in default 37,790 37,790 August 2015 vendor note – 0% interest rate 33,156 36,304 Total principal 102,588 306,875 Less current portion (89,957) (264,582) Long term portion $ 12,631 $ 42,293 Accrued interest payable – promissory notes, non-related party $ 772 $ - On October 1, 2015, the Company entered into a separation agreement with an executive which included provisions referencing execution of a promissory note in consideration of accrued compensation at September 30, 2015 in the amount of $110,781. The promissory note was subsequently executed on or about December 1, 2015. The former Company officer was appointed to the Board of Directors, therefore is classified as a related party. The note accrues interest at 5% per annum with monthly interest-only payments through September 30, 2016. The Company is scheduled to make twenty-four monthly payments beginning no later than October 31, 2016. As of December 31, 2015, the accrued interest on the note is $1,396. In the event of default, the note bears interest at 18%. At December 31, 2015, principal payments on these notes are due as follows: Related party Non-related party Total Current portion, December 31, 2016 $ - 89,957 $ 89,957 Year ending December 31, 2017 51,107 12,631 63,738 Year ending December 31, 2018 53,722 - 53,722 Year ending December 31, 2019 5,952 - 5,952 TOTAL PROMISSORY NOTES $ 110,781 $ 102,588 $ 213,369

Note 11. Asset Retirement Oblig

Note 11. Asset Retirement Obligations	3 Months Ended
	Dec. 31, 2015
Notes
Note 11. Asset Retirement Obligations	NOTE 11 - ASSET RETIREMENT OBLIGATIONS The Company has identified asset retirement obligations at the Girard, Kansas and Crosby, North Dakota operating sites. These retirement obligations are determined based on the estimated cost to comply with abandonment regulations established by the Kansas Corporation Commission and the State of North Dakota. The Company's engineers have estimated the cost, to comply with these regulations. These estimates have been projected out to the anticipated retirement date 6 to 15 years in the future, at an assumed inflation rate of 1.5 percent. These amounts were discounted back at an assumed interest rate of 10 percent, to arrive at a net present value of the obligation. During the year ended September 30, 2015, with respect to its Kansas properties, the Company revised its estimate to include additional well bores not previously considered to be subject to remediation exposure for the Company. The increase in present value liability was added to the Company’s Asset Retirement Obligation Asset which shall be amortized over the remaining useful life of the Kansas asset. The Company revised its estimate on the remaining Kansas Asset Retirement Obligation to $112,311 as of September 30, 2015. During the quarters ended December 31, 2015 and 2014, the obligation increased by accretion expense of $6,166 and $4,016 respectively. The Company expended $37,780 of reclamation work related to asset retirement obligation in North Dakota during the three months ended December 31, 2015 which reduced the obligation balance. The Company conveyed ownership of all rights in its North Dakota properties to Vast Exploration, LLC (Note 5) but maintained responsibility for reclamation and asset retirement obligation for the Jenks and Knudsen well sites. As of December 31, 2015, a pending complaint from the State of North Dakota remained in effect, and consequently, the Company could be held liable for additional remediation and asset retirement obligations on the Jenks and Knudsen leases (Note 16).

Note 12 - Common Stock

Note 12 - Common Stock	3 Months Ended
	Dec. 31, 2015
Notes
Note 12 - Common Stock	NOTE 12 – COMMON STOCK On April 30, 2015, Vast Exploration presented the Company with a written Notice of Conversion of four of the Convertible Debentures into the Company's common stock. Vast Exploration, LLC converted $828,211 of the principal balance and $359,287 of accrued interest of the debentures for a total conversion of $1,187,498. The conversion price was $0.01 per share. The Company issued 118,749,788 shares of its common stock. As a result of the issuance, Vast Exploration became the majority shareholder of the Company. On June 8, 2015, the Company issued 600,000 shares of its common stock with a fair value of $6,000 to certain directors of the Company and the former Chief Executive Officer in consideration for accrued board fees and accrued compensation of $284,750. The Company obtained forbearance agreements with the parties and recognized a gain on settlement of liabilities of $300,190. On September 30, 2015, the Company issued 150,000 shares of its common stock with a fair value of $1,500 to a related party in consideration for termination of a lease agreement and settlement of liabilities of $17,113. There have been no issuances of shares of common stock for the three months ended December 31, 2015.

Note 13 - Stock Based Compensat

Note 13 - Stock Based Compensation	3 Months Ended
	Dec. 31, 2015
Notes
Note 13 - Stock Based Compensation	NOTE 13 – STOCK BASED COMPENSATION The Company’s board of directors approved a stock and option plan on August 11, 2009 (the “Plan”). The purpose of the Plan is to provide employees and consultants of the Corporation and its Subsidiaries with an increased incentive to make significant and extraordinary contributions to the long-term performance and growth of the Corporation and its Subsidiaries, to join the interests of employees and consultants with the interests of the shareholders of the Corporation, and to facilitate attracting and retaining employees and consultants of exceptional ability. The total number of shares available for grant under the terms of the Plan is 4,000,000. The number of shares subject to the Plan and any outstanding awards will be adjusted appropriately by the Board of Directors if the Company’s common stock is affected through a reorganization, merger, consolidation, recapitalization, restructuring, reclassification dividend (other than quarterly cash dividends) or other distribution, stock split, spin-off or sale of substantially all of the Company’s assets. The Company recognizes compensation expense straight-line over the vesting term. Historically, the Company has issued new shares to satisfy exercises of stock options and the Company expects to issue new shares to satisfy any future exercises of stock options. The following table reflects the summary of changes during the periods ended September 30, 2015 and December 31, 2015: Number of shares under options Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Balance outstanding and exercisable, September 30, 2014 4,000,000 $ 0.01 $ - Issued - - - Exercised - - - Forfeited (600,000) (0.01) - Balance outstanding and exercisable, September 30, 2015 3,400,000 $ 0.01 $ - Issued - - - Exercised - - - Forfeited (2,250,000) (0.01) - Balance outstanding and exercisable, December 31, 2016 1,150,000 $ 0.01 $ - At December 31, 2015, all 1,150,000 options outstanding are fully vested, and have a weighted average remaining term of 2.78 years. During the three months ended December 31, 2015, 2,250,000 held by two former members of the Company’s Board of Directors were forfeited as a result of their resignations from the Board. As of December 31, 2015, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. The Company recognized no compensation cost related to options vested during the three months ended December 31, 2015 and 2014, respectively.

Note 14 -warrants

Note 14 -warrants	3 Months Ended
	Dec. 31, 2015
Notes
Note 14 -warrants	NOTE 14 –WARRANTS On April 17, 2015, the Company granted, to four institutional investors, warrants to purchase up to an aggregate of 15,000,000 shares of the Company’s common stock in consideration of the investors waiving the Company’s prior defaults under the Convertible Debentures. In addition to transactions discussed in Notes 5, 7, and 8, the Warrants give the holders thereof the right to purchase common stock of the Company at the purchase price of $0.001 per share and expire on March 17, 2020. The fair value of the warrants issued was $167,441 was charged to financing costs. Warrants Issued in Exchange for Settlement of Liabilities by Related Party On September 25, 2015, the Company executed a Warrant Purchase Agreement pursuant to which the Company plans to issue and sell securities. The terms of the Purchase Agreement allow a purchaser to receive a credit for its subscription for securities if the purchaser assumes certain accrued and/or contingent liabilities of the Company. The exercise price for the securities is $0.0050 per share for securities issued in exchange for the satisfaction of an assumed debt. The exercise price for the securities is $0.0025 per share for securities issued in exchange for the satisfaction of any assumed North Dakota reclamation liability. The securities are subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Company’s common stock that occur after the date of the Purchase Agreement. Each purchaser is required to deliver to the Company, prior to the issuance of securities, the following: (a) immediately available funds sufficient to satisfy or otherwise terminate a given liability; or (b) a “receipt of funds and release of claims” executed by a creditor of the Company, or other evidence, in a form satisfactory to the Company in its sole discretion, of the satisfaction of an assumed debt or North Dakota reclamation liability by the purchaser. On October 8, 2015, the Company granted 94,333,678 Warrants to Vast Exploration, LLC pursuant to the Warrant Purchase Agreement. The Warrants were granted in consideration of Vast Exploration’s assumption of certain Company liabilities totaling approximately $471,668. The warrants may be exercised any time after October 8, 2015 until the close of business on October 7, 2020 for On November 3, 2015, the Company granted 39,645,872 Warrants to Vast Exploration, LLC and/or assigns pursuant to the Warrant Purchase Agreement. The Warrants were granted in consideration of Vast Exploration’s elimination of certain Company liabilities totaling approximately $198,229. The warrants may be exercised any time after November 3, 2015 until the close of business on November 3, 2020 for $0.005 per share. A summary of activity of the Company's share purchase and broker warrants outstanding at December 31, 2015 is presented as follows: Broker Warrants Weighted Average Exercise Price Share Purchase Warrants Weighted Average Exercise Price Balance outstanding, September 30, 2014 1,000,000 $ 0.06 2,777,778 $ 0.05 Forfeited or expired - (2,777,778) (0.05) Exercised - - - - Granted - - 15,000,000 0.001 Balance outstanding, September 30, 2015 1,000,000 $ 0.06 15,000,000 $ 0.001 Forfeited or expired - Exercised - - - - Granted - - 133,979,550 0.005 Balance outstanding, December 31, 2015 1,000,000 $ 0.06 148,979,550 $ 0.005 The following table reflects the composition of the Company’s outstanding warrants as of December 31, 2015: Issuance date Number of warrants Exercise price Expiration date Remaining life (years) February 15, 2012 1,000,000 $0.06 February 15, 2017 1.13 April 16, 2015 15,000,000 $0.001 March 17, 2020 4.21 October 8, 2015 94,333,678 $0.005 October 8, 2020 4.77 November 3, 2015 39,645,872 $0.005 November 3, 2020 4.85 Balance outstanding, December 31, 2015 149,979,550 $0.005 (a) 4.70 (a) – Weighted average

Note 15 - Related Party Transac

Note 15 - Related Party Transactions	3 Months Ended
	Dec. 31, 2015
Notes
Note 15 - Related Party Transactions	NOTE 15 – RELATED PARTY TRANSACTIONS In addition to transactions discussed in Notes 5, 7, 10 and 12, the Company had the following transactions with related parties: On or about December 1, 2011, the Company entered into a four-year lease with Marlin Property Management, LLC, an entity owned by the spouse of the Company’s former President/CEO and member of the board of directors. Under the terms of the lease the Company is required to pay $2,500 per month for office space in Coeur d’Alene, Idaho. For the years ended September 30, 2015 and 2014, the Company paid $15,000 and $15,000 respectively. The balance due to the related party including common area expenses as of December 31, 2015 and September 30, 2015 was $Nil because the lease was terminated. On April 17, 2015, the Board of Directors appointed the Chief Executive Officer and Manager of Vast Exploration, LLC as a director of the Company to fill a vacancy on the Board and in connection with Vast Exploration, LLC’s acquisition of certain Convertible Debentures from institutional investors (Note 8). The Chief Executive Officer and Manager of Vast Exploration, LLC was appointed as the Chairman of the Board of Directors of the Company. On July 8, 2015, the Company executed a Contract Operating Agreement (the “Operating Agreement”) with Vast Exploration, effective as of January 1, 2015. Under the terms of the Operating Agreement, Vast Exploration became the “operator of record” for all of the Company’s properties and is responsible for the operation of the Company’s oil and gas properties, which includes handling routine operations, major operations, reporting services and other miscellaneous services. The Company paid Vast Exploration a monthly fee for services in the amount of $20,000. The Company remained responsible for all fees, expenses and taxes related to its properties and has agreed to reimburse Vast Exploration for any fees, expenses or taxes advanced on the Company’s behalf. The Company has the right to audit the books, records and invoices maintained by Vast Exploration in its operation of the Company properties. The term of the Operating Agreement is two years from the effective date. The Operating Agreement automatically renewed for successive one year terms until the Company or Vast Exploration provide notice of non-renewal. The Operating Agreement includes mutual indemnities and waivers of consequential and punitive damages. The Operating Agreement also includes release and hold harmless provisions for the exclusive benefit of Vast Exploration. Finally, the Operating Agreement consents to and ratifies any operational services Vast Exploration has provided to the Company prior to the date the Operating Agreement was executed. Vast Exploration billed the Company $160,000 for the year ended September 30, 2015 which was charged to ‘production expense’ and subsequently billed to working interest partners for their pro-rata share of the expense. The North Dakota portion of the Operating Agreement terminated on or about August 31, 2015 with the conveyance of the asset to Vast Exploration, LLC. Vast Exploration is a controlling shareholder of the Company, the contract operator of the Company’s oil and gas properties and an affiliate of Vast Petroleum Corp. – an entity that entered into a joint development agreement for the Company’s oil and gas operations in Kansas in May 2014. Vast Petroleum Corp. was not a party to the Agreements. The Chairman of the Board of Directors for the Company, is the individual who possesses voting and dispositive authority on behalf of Vast Exploration. Acting in his capacity of Chairman of the Board of the Company, he recused himself from voting on the approval of the Contract Operating Agreement, which was subsequently approved by the remaining members of the Company’s Board of Directors. The accrued balance due to Vast Exploration related to the Contract Operating Agreement at December 31, 2015 is $5,000 which is included in “Other payables, interest and taxes accrued”.

Note 16 - Commitments and Conti

Note 16 - Commitments and Contingencies	3 Months Ended
	Dec. 31, 2015
Notes
Note 16 - Commitments and Contingencies	NOTE 16 – COMMITMENTS AND CONTINGENCIES On August 1, 2013, the North Dakota Industrial Commission (“NDIC”) submitted an administrative complaint to the State of North Dakota related to plugging and remediation of the Company’s Jenks #1 and Knudsen #1 wells in Crosby, ND. On February 18, 2014, the Company entered into a Consent Agreement with the State of North Dakota whereby the Company was required to finish reclamation work, by June 30, 2014, on the two waste water storage pits adjacent to the Jenks #1 and Knudsen #1 wells respectively. The Consent Agreement required the Company to plug the “production zone” of the Jenks #1 well. Once plugging was completed, the Company could then apply for a permit to convert the Jenks #1 well into a salt water disposal well. As a part of the Consent Agreement the Company agreed to pay a civil penalty of no less than $105,000, consisting of $25,000 due and payable upon execution of the Consent Agreement and a $16,000 installment payment per month for five successive months thereafter. If the Company failed to comply with the terms of the Consent Agreement, the Company would be subject to penalties of up to an additional $420,000 (over and above the $105,000 penalty agreed to in the Consent Agreement). The Company made the initial $25,000 payment and subsequently made each monthly payment with the final installment of $16,000 paid to the State of North Dakota on June 26, 2014. The Company made the final installment payment of $16,000 to the State of North Dakota on June 26, 2014. As of September 30, 2014, the Company had completed substantially all reclamation work and has paid all fines assessed. On July 10, 2014, the Company completed reclamation work on both the Jenks #1 and Knudsen #1 waste water storage pits. Although reclamation work was to have been completed by June 30, 2014, unseasonably heavy rains which saturated the soil and limited safe access to the site by heavy equipment delayed scheduled reclamation until such time as ground conditions improved. The Company also completed plugging of the ‘production zone’ on the Jenks #1 well and set a balance plug on the Knudsen #1 well bore. Due to JayHawk’s failure to timely submit a cost estimate for the final plugging, abandonment and reclamation of the Jenks #1 well and site, the NDIC, on January 28, 2015, pursuant to Commission Order No. 25588 ordered JayHawk to file a $120,000 bond covering the Jenks #1. The bond was a plugging and reclamation bond. On May 9, 2015, the Company received a copy of a Summons and Complaint filed by the State of North Dakota and the NDIC in the Northwest Judicial District Court of North Dakota alleging JayHawk had violated N.D.C.C. Chapter 38-08 by failing to post the $120,000 plugging and reclamation bond pursuant to Commission Order No. 25588. N.D.C.C. § 38-08-16 provides that anyone who violates a provision of N.D.C.C. Chapter 38-08, or any rule or regulation of the Commission is subject to a penalty of up to $12,500 for each offense, and each day’s violation is a separate offense. The Complaint’s prayer for relief requested that JayHawk be ordered to deposit $120,000 with the Bank of North Dakota to satisfy the Commission’s requirement for the plugging and reclamation bond on the Jenks #1 well. The NDIC also requested that JayHawk pay a fine of $12,500 per day beginning February 4, 2015, for failure to provide a plugging and reclamation bond on the Jenks #1. The Company subsequently met with the NDIC, which resulted in the NDIC staying the litigation subject to JayHawk’s immediate plugging, abandonment and reclamation of the Jenks #1. In September of 2015 the Company completed final plugging and abandonment of the Jenks #1 and completed a partial reclamation of the well and site. On February 12, 2015, the Company entered into a settlement agreement with the Staff of the Corporation Commission of the State of Kansas with respect to a Penalty Order served by the Company for failure to comply with certain portions of the Kansas Administrative Regulations. The Company was found in violation of failure to plug, return to service or temporarily abandon 71 wells and assessed a $7,100 penalty, of which $3,100 was payable immediately, a $2,000 payment due by April 1, 2015 and the final $2,000 payment by May 1, 2015. The Company has subsequently submitted 71 temporary abandonment applications, of which 71 applications were approved. The Company has up to one year to plug the wells, return them to service or file additional temporary abandonment applications.

Note 19 - Gain (Loss) On Settle

Note 19 - Gain (Loss) On Settlement of Liabilities	3 Months Ended
	Dec. 31, 2015
Notes
Note 19 - Gain (Loss) On Settlement of Liabilities	NOTE 17 – GAIN (LOSS) ON SETTLEMENT OF LIABILITIES On October 8, 2015, the Company granted 94,333,678 Warrants to Vast Exploration, LLC, pursuant to the Warrant Purchase Agreement. The Warrants were granted in consideration of Vast Exploration’s assumption of certain Company liabilities totaling approximately $471,668. On November 3, 2015, the Company granted 39,645,872 Warrants to Vast Exploration, LLC, pursuant to the Warrant Purchase Agreement. The Warrants were granted in consideration of Vast Exploration’s elimination of certain Company liabilities totaling approximately $198,229. On December 11, 2015, the Company recognized a gain on settlement of liabilities with a vendor in the amount of $7,459. Total loss on settlement of liabilities for the quarter ended December 31, 2015 was $ 274,349 .

Note 18 - Revision of Financial

Note 18 - Revision of Financial Statement	3 Months Ended
	Dec. 31, 2015
Notes
Note 18 - Revision of Financial Statement	NOTE 18 – REVISION OF FINANCIAL STATEMENT The Company has revised the September 30, 2015 consolidated financial statements to reverse the impact of a reverse stock split. Subsequent to issuance of the aforementioned financial statements, the Company decided to rescind the 100:1 reverse stock split that had previously approved by the majority shareholder. The consolidated balance sheet as of September 30, 2015, presented in these interim financial statements reflect the common stock and additional paid in capital subsequent to the recension of the reverse stock split. Disclosures pertaining to per share and shares of common stock have also been revised to reflect the recension. The previously issued financial statements have been revised as follows: Balance Sheet at September 30, 2015 As Previously Reported Revision As Revised Total assets $ 349,315 $ - $ 349,315 Total liabilities $ 3,087,584 - $ 3,087,584 Shareholders’ deficit Common stock 1,999 197,877 199,876 Additional paid in Capital 24,998,897 (197,877) 24,801,020 Accumulated deficit (27,739,165) - (27,739,165) Total shareholders’ deficit $ (2,738,269) $ - $ (2,738,269) Total liabilities and shareholders’ deficit $ 349,315 $ - $ 349,315

Note 20 - Subsequent Events

Note 20 - Subsequent Events	3 Months Ended
	Dec. 31, 2015
Notes
Note 20 - Subsequent Events	NOTE 19 – SUBSEQUENT EVENTS On June 30, 2016, Vast Exploration, LLC gave notice to the Company that the $150,000 Revolving Line of Credit Note (“Line of Credit”) entered between the parties on June 30, 2015 would not be renewed past the maturity date of the Line of Credit and that the final date for determining the principal and interest owed to Vast Exploration on the Line of Credit would be June 30, 2016. The balance of the Line of Credit was $255,543 as of December 31, 2015. The balance of the Line of Credit at June 30, 2016 was $380,014. On February 2, 2011, the Industrial Commission of the State of North Dakota filed a complaint against JayHawk Energy, Inc. (the “Company” or “JayHawk”) for violating North Dakota Administrative Code Section (NDAC) 43-02-03-19 by failing to reclaim wells within a reasonable time, not more than one year from the date a well is plugged, NDAC Section 43-02-03-17 by failing to have the required signs posted on site, NDAC 43-02-03-45 for failing to equip each flare with an automatic ignitor or a continuous burning pilot, and NDAC 43-02-05-49 by failing to properly seal oil tanks in the following wells in Divide County, North Dakota: Knudsen 1, Jenks 1, Arla Knudsen 1-28H and Landstrom 3-33H. In the complaint, the Commission requested JayHawk pay $100,000 in fines and pay $485 in costs and expenses incurred by the Commission. In lieu of a formal hearing on the complaint, the parties subsequently agreed to resolve all matters in the complaint. The complaint was dismissed without prejudice on August 29, 2016, and no balance was paid or is currently owed by JayHawk. On September 1, 2016, the Company entered into a Limited Liability Company Member Interest Purchase and Sale Agreement (“LLC Purchase Agreement”) with Vast Exploration, LLC, a related party. Pursuant to the terms of the LLC Purchase Agreement, Vast Exploration sold 100% of its membership interests in Vast Operations, LLC, a Nevada limited liability company, to the Company “as-is” and in consideration for $10.00 and the Company’s assumption of approximately $100,000 of Vast Operations, LLC’s liabilities. As a result of the purchase, Vast Operations, LLC became a wholly-owned subsidiary of JayHawk. Additionally, the Company indirectly acquired the contractual obligation to operate certain oil and gas assets in the state of North Dakota. On September 1, 2016, the Company entered into a Limited Liability Company Member Interest Purchase and Sale Agreement (“LLC Purchase Agreement”) with Vast Exploration, LLC, a related party. Pursuant to the terms of the LLC Purchase Agreement, Vast Exploration sold 100% of its membership interests in Vast Holdings, LLC, a Nevada limited liability company, to the Company “as-is” and in consideration for $10.00 and the Company’s indirect assumption of approximately $600,000 of Vast Holdings, LLC’s liabilities. As a result of the purchase, Vast Holdings, LLC became a wholly-owned subsidiary of the Company. Additionally, the Company indirectly acquired certain oil and gas assets in the state of North Dakota. On September 1, 2016, the Company entered into a Limited Liability Company Member Interest Purchase and Sale Agreement (“LLC Purchase Agreement”) with Vast Exploration, LLC, a related party. Pursuant to the terms of the Stock Purchase Agreement, Vast Exploration sold 100% of Vast Funding Corp., a Nevada corporation, evidenced by 100,000,000 shares of common stock to the Company “as-is” and in consideration for $10.00 and the indirect assumption of approximately $550,000 in Vast Funding Corp.’s liabilities. As a result of the purchase, Vast Funding Corp. became a wholly-owned subsidiary of the Company. Additionally, the Company indirectly acquired a funding vehicle for proving up certain oil and gas assets indirectly acquired through the acquisition of Vast Holdings, LLC. On September 20, 2016, the Company issued Convertible Promissory Notes to entities controlled by three affiliates of Vast Exploration, LLC, a related party, for services to the Company. The Convertible Promissory Notes have an aggregate principal balance of $19,500 with an interest rate of 5% per annum and a term of two years, maturing on September 20, 2018. The Convertible Promissory Notes are convertible at any time after the original issue date into a number of shares of the Company’s common stock, determined by dividing the amount to be converted by a conversion price of $0.0065 per share, or an aggregate of 3,000,000 shares. Upon the occurrence of a corporate re-organizational or re-capitalization event, the Convertible Promissory Notes shall automatically convert into shares of the Company’s common stock. On September 20, 2016, the Company issued a Convertible Promissory Note to an entity controlled by a related party in consideration for a reduction in amounts owed to the related party for legal services previously rendered to the Company. The Convertible Promissory Note has a principal balance of $6,500 with an interest rate of 5% per annum and a term of two years, maturing on September 20, 2018. The Convertible Promissory Note is convertible at any time after the original issue date into a number of shares of the Company’s common stock, determined by dividing the amount to be converted by a conversion price of $0.0065 per share, or an aggregate of 1,000,000 shares. Upon the occurrence of a corporate re-organizational or re-capitalization event, the Convertible Promissory Note shall automatically convert into shares of the Company’s common stock. On October 1, 2016, Vast Exploration, LLC gave advanced written notice to the Company of its intent to terminate that certain Contract Operating Agreement made effective between the parties on January 1, 2016. On November 11, 2016, the Company entered into a Settlement Agreement with a director of the Company. The purpose of the Settlement Agreement was to come to a resolution regarding certain outstanding dollar and equity amounts owed to the director for wages, consulting services rendered and change of control provisions related to his employment contract and to maintain an amicable working relationship moving forward. The Company agreed to provide the director with the following consideration: The Company will execute a convertible promissory note with a face value of $177,173 to the director and/or assigns; the note will have a term of four (4) years and an interest rate of null (0%) and includes certain interest penalties in the event a default occurs and is secured by a pledge of 350,000 shares of the Company’s common stock (“Note”). The Note is convertible into shares of the Company’s common stock at a rate equal to the lesser of: (a) the conversion rate provided to a plurality of investors in the Company’s first round of financing wherein the Company raises at least $300,000 following the completion of its contemplated 100:1 reverse split of its securities, or (b) the closing price on the first day of trading immediately following the Company’s 100:1 reverse split. The Note has an effective date of December 20, 2016 (“Effective Replacement Note Date”). Upon the occurrence of the Company having raised at least three million dollars ($3,000,000) in the aggregate through the sale of debt or equity securities of the Company, the director will have the option to have the remaining balance of the Note paid in full. In the event JayHawk Energy, Inc. makes a disposition of substantially all of its assets (including those held in subsidiaries) the holder of the Note shall have the option to foreclose on the Stock Pledge described above. The director will be granted 100,000 common stock purchase warrants (“Warrants”) in four (4) tranches based on attaining certain milestones. The Warrants will have a term of five (5) years and shall convert at $0.01 per common share. The Warrants will include a “cashless exercise” provision. The Company and the director may agree to adjust the amounts described above to effect the spirit of the Settlement Agreement. On December 9, 2016, the Company and the director agreed to modify the Settlement Agreement. The modification eliminated certain penalty provisions related to milestones and added an additional scope of work for additional consideration.

Note 2 - Summary of Significa25

Note 2 - Summary of Significant Accounting Policies: Basis of Presentation (Policies)	3 Months Ended
	Dec. 31, 2015
Policies
Basis of Presentation	Basis of Presentation The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three months ended December 31, 2015 are not necessarily indicative of the results that may be expected for the full year ending September 30, 2016. For further information, refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended September 30, 2015.

Note 2 - Summary of Significa26

Note 2 - Summary of Significant Accounting Policies: Principles of Consolidation (Policies)	3 Months Ended
	Dec. 31, 2015
Policies
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary JayHawk Gas Transportation Company after elimination of the intercompany accounts and transactions.

Note 2 - Summary of Significa27

Note 2 - Summary of Significant Accounting Policies: Going Concern (Policies)	3 Months Ended
	Dec. 31, 2015
Policies
Going Concern	Going Concern As shown in the accompanying consolidated financial statements, the Company has incurred operating losses since inception. As of December 31, 2015, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $28,156,038 and a net loss of $416,873 for the three months ended December 31, 2015, and as of that date the Company's current liabilities exceeded its current assets by $2,005,120. Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, to locate profitable energy properties and generate revenue from current and planned business operations, and control costs. The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining additional commercial production. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the settlement of liabilities should the Company be unable to continue as a going concern.

Note 2 - Summary of Significa28

Note 2 - Summary of Significant Accounting Policies: Use of Estimates (Policies)	3 Months Ended
	Dec. 31, 2015
Policies
Use of Estimates	Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the respective reporting periods. Significant areas requiring the use of management assumptions and estimates relate to asset impairments, asset retirement obligations, stock-based compensation, income taxes and derivatives. Actual results may differ from these estimates and assumptions which could have a material effect on the Company's reported financial position and results of operations.

Note 2 - Summary of Significa29

Note 2 - Summary of Significant Accounting Policies: Income Or Loss Per Common Share (Policies)	3 Months Ended
	Dec. 31, 2015
Policies
Income Or Loss Per Common Share	Income or Loss Per Common Share Basic earnings per share ("EPS") is computed as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. The potential dilutive effect of convertible and outstanding securities as of December 31, 2015 and 2014 would be as follows: December 31, 2015 December 31, 2014 Stock options 1,150,000 4,000,000 Convertible debt 136,665,840 110,028,675 Convertible line of credit 112,515,136 - Warrants 149,979,550 3,777,778 TOTAL POSSIBLE DILUTION 400,310,526 117,806,453 At December 31, 2015, the effect of the Company's common stock equivalents would have been anti-dilutive. At December 31, 2014, the effect of the Company’s stock options added 1,560,976 common stock equivalents to the diluted weighted average shares outstanding figure, which affected earnings per share by $Nil; other potentially dilutive items would have been anti-dilutive.

Note 2 - Summary of Significa30

Note 2 - Summary of Significant Accounting Policies: Revenue and Cost Recognition (Policies)	3 Months Ended
	Dec. 31, 2015
Policies
Revenue and Cost Recognition	Revenue and Cost Recognition The Company uses the sales method of accounting for oil and gas revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes the Company may be entitled to, based on the Company's individual interest in the property. Periodically, imbalances between production and nomination volumes can occur for various reasons. In cases where imbalances have occurred, a production imbalance receivable or liability will be recorded when determined. Costs associated with production are expensed in the period in which they are incurred.

Note 2 - Summary of Significa31

Note 2 - Summary of Significant Accounting Policies: Cash Equivalents (Policies)	3 Months Ended
	Dec. 31, 2015
Policies
Cash Equivalents	Cash Equivalents The Company considers all highly liquid instruments purchased with maturity of three months or less when acquired to be cash equivalents.

Note 2 - Summary of Significa32

Note 2 - Summary of Significant Accounting Policies: Reclassifications (Policies)	3 Months Ended
	Dec. 31, 2015
Policies
Reclassifications	Reclassifications Certain reclassifications have been made to the 2014 financial statements to conform to the 2015 presentation. These reclassifications have no effect on net loss, total assets or accumulated deficit as previously reported. See Note 18 regarding revision of financial statements.

Note 2 - Summary of Significa33

Note 2 - Summary of Significant Accounting Policies: New Accounting Pronouncements (Policies)	3 Months Ended
	Dec. 31, 2015
Policies
New Accounting Pronouncements	New Accounting Pronouncements In August 2014, the FASB issued ASU No. 2014-15—Presentation of Financial Statements—Going Concern. The guidance requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). If conditions or events exist that raise substantial doubt about an entity’s ability to continue as a going concern, the guidance requires disclosure in the financial statements. The guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company plans to adopt this standard effective October 1, 2017 and anticipates the adoption will have minimal impact on the financial statements because the Company currently discloses the information required.

Note 2 - Summary of Significa34

Note 2 - Summary of Significant Accounting Policies: Income Or Loss Per Common Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share	December 31, 2015 December 31, 2014 Stock options 1,150,000 4,000,000 Convertible debt 136,665,840 110,028,675 Convertible line of credit 112,515,136 - Warrants 149,979,550 3,777,778 TOTAL POSSIBLE DILUTION 400,310,526 117,806,453

Note 3 - Fair Value of Financ35

Note 3 - Fair Value of Financial Instruments: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	December 31, 2015 September 30, 2015 Input Hierarchy Level Liabilities: Warrant derivative liability $ 2,299 $ 4,861 Level 2

Note 4 - Unproved Properties 36

Note 4 - Unproved Properties and Impairment: Schedule of Unproved Properties and Impairment (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Unproved Properties and Impairment	December 31, 2015 September 30, 2015 UNPROVED AND DEVELOPED PROPERTIES Kansas Girard Project Field equipment – Jayhawk Gas Transport Company $ 2,605,871 $ 2,605,871 Field equipment – Girard 579,027 579,027 Capitalized drilling costs 684,696 684,696 Subtotal 3,869,594 3,869,594 Less accumulated impairments (2,432,086) (2,432,087) Less accumulated depreciation, depletion and amortization (1,256,412) (1,251,984) TOTAL UNPROVED PROPERTIES $ 181,096 $ 185,523

Note 6 - Reclamation Bonds_ Sch

Note 6 - Reclamation Bonds: Schedule of Other Assets, Noncurrent (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Other Assets, Noncurrent	December 31, 2015 September 30, 2015 Reclamation bonds $ 150,476 $ 150,450 TOTAL RECLAMATION BONDS $ 150,476 $ 150,450

Note 8 - Convertible Debentur38

Note 8 - Convertible Debentures: Schedule of Related Party Long Term Debt (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Related Party Long Term Debt	December 31, 2015 September 30, 2015 2010 Vast Exploration – 18% default interest rate, currently in default $ 470,439 $ 470,439 2014 Vast Exploration – 10% interest, due on June 3, 2019 400,000 400,000 Total principal 870,439 870,439 Unamortized discount (273,333) (293,333) conver Subtotal 597,106 577,106 Less current portion (470,439) (470,439) Long term portion $ 126,667 $ 106,667 Accrued interest payable – related party $ 264,165 $ 232,599 Number of shares of common stock into which the notes are convertible 113,460,360 110,303,800

Note 8 - Convertible Debentur39

Note 8 - Convertible Debentures: Schedule of Maturities of Long-term Debt (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Maturities of Long-term Debt	December 31, 2015 September 30, 2015 2014 Convertible debenture - 10% interest, due on June 3, 2019 $ 200,000 $ 200,000 Unamortized discount (136,667) (146,667) Subtotal 63,333 53,333 Less current portion - - Long term portion $ 63,333 $ 53,333 Accrued interest payable $ 32,055 $ 27,014 Number of shares of common stock into which the notes are convertible 23,205,480 22,701,370

Note 8 - Convertible Debentur40

Note 8 - Convertible Debentures: Schedule of Principal Payments on Convertible Debentures (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Principal Payments on Convertible Debentures	Related party Non-related party Total Year ending December 31, 2016 $ 470,439 $ - $ 470,439 Year ending December 31, 2017 - - - Year ending December 31, 2018 - - - Year ending December 31, 2019 400,000 200,000 600,000 TOTAL CONVERTIBLE DEBENTURES $ 870,439 $ 200,000 $ 1,070,439

Note 9 - Derivative Liabiliti41

Note 9 - Derivative Liabilities: Schedule of fair value of warrant derivative liability (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of fair value of warrant derivative liability	December 31, 2015 September 30, 2015 Stock price $ 0.0040 $ 0.0076 Risk-free interest rate 0.65% 0.56% Expected term 1.13 years 1.88 years Expected volatility 274.50% 274.3% Fair value of warrant derivative units $0.0023 $0.0106

Note 9 - Derivative Liabiliti42

Note 9 - Derivative Liabilities: Schedule of change in warrant derivative liability (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of change in warrant derivative liability	Three months ended December 31, 2015 2014 Beginning balance $ 4,861 $ 24,697 Net change in fair value of warrant derivative liability (2,562) (15,440) Ending balance $ 2,299 $ 9,257

Note 10 - Promissory Notes_ Sch

Note 10 - Promissory Notes: Schedule of Promissory Notes and Accrued Interest (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Promissory Notes and Accrued Interest	December 31, 2015 September 30, 2015 July 2014 working interest note – 0% interest rate, currently in default $ 31,642 $ 31,642 January 2015 working interest note – 6% interest rate - 201,139 February 2015 vendor note – 8% interest rate, currently in default 37,790 37,790 August 2015 vendor note – 0% interest rate 33,156 36,304 Total principal 102,588 306,875 Less current portion (89,957) (264,582) Long term portion $ 12,631 $ 42,293 Accrued interest payable – promissory notes, non-related party $ 772 $ -

Note 10 - Promissory Notes_ S44

Note 10 - Promissory Notes: Schedule of Principal payments on Promissory Notes (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Principal payments on Promissory Notes	Related party Non-related party Total Current portion, December 31, 2016 $ - 89,957 $ 89,957 Year ending December 31, 2017 51,107 12,631 63,738 Year ending December 31, 2018 53,722 - 53,722 Year ending December 31, 2019 5,952 - 5,952 TOTAL PROMISSORY NOTES $ 110,781 $ 102,588 $ 213,369

Note 13 - Stock Based Compens45

Note 13 - Stock Based Compensation: Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award	Number of shares under options Weighted Average Exercise Price Per Share Aggregate Intrinsic Value Balance outstanding and exercisable, September 30, 2014 4,000,000 $ 0.01 $ - Issued - - - Exercised - - - Forfeited (600,000) (0.01) - Balance outstanding and exercisable, September 30, 2015 3,400,000 $ 0.01 $ - Issued - - - Exercised - - - Forfeited (2,250,000) (0.01) - Balance outstanding and exercisable, December 31, 2016 1,150,000 $ 0.01 $ -

Note 14 -warrants_ Schedule of

Note 14 -warrants: Schedule of Activity of the Company's share purchase and broker warrants (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Activity of the Company's share purchase and broker warrants	Broker Warrants Weighted Average Exercise Price Share Purchase Warrants Weighted Average Exercise Price Balance outstanding, September 30, 2014 1,000,000 $ 0.06 2,777,778 $ 0.05 Forfeited or expired - (2,777,778) (0.05) Exercised - - - - Granted - - 15,000,000 0.001 Balance outstanding, September 30, 2015 1,000,000 $ 0.06 15,000,000 $ 0.001 Forfeited or expired - Exercised - - - - Granted - - 133,979,550 0.005 Balance outstanding, December 31, 2015 1,000,000 $ 0.06 148,979,550 $ 0.005

Note 14 -warrants_ Schedule o47

Note 14 -warrants: Schedule of Stockholders' Equity Note, Warrants or Rights (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Stockholders' Equity Note, Warrants or Rights	Issuance date Number of warrants Exercise price Expiration date Remaining life (years) February 15, 2012 1,000,000 $0.06 February 15, 2017 1.13 April 16, 2015 15,000,000 $0.001 March 17, 2020 4.21 October 8, 2015 94,333,678 $0.005 October 8, 2020 4.77 November 3, 2015 39,645,872 $0.005 November 3, 2020 4.85 Balance outstanding, December 31, 2015 149,979,550 $0.005 (a) 4.70 (a)

Note 18 - Revision of Financi48

Note 18 - Revision of Financial Statement: Schedule of Financial Statement Revisions (Tables)	3 Months Ended
	Dec. 31, 2015
Tables/Schedules
Schedule of Financial Statement Revisions	Balance Sheet at September 30, 2015 As Previously Reported Revision As Revised Total assets $ 349,315 $ - $ 349,315 Total liabilities $ 3,087,584 - $ 3,087,584 Shareholders’ deficit Common stock 1,999 197,877 199,876 Additional paid in Capital 24,998,897 (197,877) 24,801,020 Accumulated deficit (27,739,165) - (27,739,165) Total shareholders’ deficit $ (2,738,269) $ - $ (2,738,269) Total liabilities and shareholders’ deficit $ 349,315 $ - $ 349,315

Note 1 - Organization and Des49

Note 1 - Organization and Description of Business (Details)	3 Months Ended
	Dec. 31, 2015
Details
Entity Incorporation, Date of Incorporation	Apr. 5, 2004
Entity Information, Former Legal or Registered Name	Bella Trading Company, Inc
Entity Information, Date to Change Former Legal or Registered Name	Jun. 21, 2007
Disposal Date	Sep. 1, 2015
Entity Incorporation, State Country Name	Nevada

Note 2 - Summary of Significa50

Note 2 - Summary of Significant Accounting Policies: Going Concern (Details) - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015
Details
Accumulated deficit	$ (28,156,038)		$ (27,739,165)
NET INCOME (LOSS)	$ (416,873)	$ 269,412
Substantial Doubt about Going Concern, Conditions or Events	Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, to locate profitable energy properties and generate revenue from current and planned business operations, and control costs
Substantial Doubt about Going Concern, Management's Plans, Substantial Doubt Not Alleviated	The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining additional commercial production

Note 2 - Summary of Significa51

Note 2 - Summary of Significant Accounting Policies: Income Or Loss Per Common Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Details
Incremental common shares attributable to stock options	1,150,000	4,000,000
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities	136,665,840	110,028,675
Incremental Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares	112,515,136
Incremental Common Shares Attributable to Dilutive Effect of Call Options and Warrants	149,979,550	3,777,778
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	400,310,526	117,806,453

Note 3 - Fair Value of Financ52

Note 3 - Fair Value of Financial Instruments: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($)		Dec. 31, 2015	Sep. 30, 2015
Liabilities
Derivative Liability	[1]	$ 2,299	$ 4,861
[1]	Input Hierarchy Level 2.

Note 4 - Unproved Properties 53

Note 4 - Unproved Properties and Impairment: Schedule of Unproved Properties and Impairment (Details) - USD ($)		Dec. 31, 2015	Sep. 30, 2015
Unproved properties, net	[1]	$ 181,096	$ 185,523
Unproved and Developed
Capitalized drilling costs		684,696	684,696
Unproved properties, net		3,869,594	3,869,594
Oil and Gas Property, Successful Effort Method, Accumulated Impairment		(2,432,086)	(2,432,087)
Oil and Gas Property, Successful Effort Method, Accumulated Depreciation, Depletion and Amortization		(1,256,412)	(1,251,984)
Unproved and Developed | Jayhawk Gas Transport Company
Capitalized Costs, Support Equipment and Facilities		2,605,871	2,605,871
Unproved and Developed | Girard
Capitalized Costs, Support Equipment and Facilities		579,027	579,027
Unproved
Capitalized Costs, Oil and Gas Producing Activities, Net		$ 181,096	$ 185,523
[1]	Note 4

Note 5 - Proved Properties an54

Note 5 - Proved Properties and Impairment (Details)	3 Months Ended
	Dec. 31, 2015USD ($)
Jenks and Knudsen well bores
Loss on write-offs	$ 11,527

Note 6 - Reclamation Bonds_ S55

Note 6 - Reclamation Bonds: Schedule of Other Assets, Noncurrent (Details) - USD ($)	Dec. 31, 2015	Sep. 30, 2015
Details
Reclamation Bonds	$ 150,476	$ 150,450
Rental Security Deposit, Reclamation Bonds, and other long-term assets	$ 150,476	$ 150,450

Note 7 - Convertible Line of 56

Note 7 - Convertible Line of Credit Related Party (Details)	3 Months Ended
	Dec. 31, 2015USD ($)
Vast Exploration, LLC - Credit Loan Agreement
Line of Credit Facility, Initiation Date	Jun. 30, 2015
Line of Credit Facility, Description	revolving credit loan agreement
Line of Credit Facility, Maximum Borrowing Capacity	$ 100,000
Line of Credit Facility, Interest Rate Description	interest rate equal to 1.5% per month of the unpaid principal balance on the loan
Line of Credit Facility, Fair Value of Amount Outstanding	$ 255,543
Line of Credit Facility, accrued interest balance	$ 25,744
Vast Exploration, LLC - Line of Credit Modification Agreement
Line of Credit Facility, Initiation Date	Aug. 6, 2015
Line of Credit Facility, Description	Line of Credit Modification Agreement
Line of Credit Facility, Maximum Borrowing Capacity	$ 150,000
Vast Exploration, LLC - Second Line of Credit Modification Agreement
Line of Credit Facility, Initiation Date	Sep. 25, 2015

Note 8 - Convertible Debentur57

Note 8 - Convertible Debentures: Schedule of Related Party Long Term Debt (Details) - USD ($)		Dec. 31, 2015	Sep. 30, 2015
Details
Convertible debt related party		$ 870,439	$ 870,439
Convertible debt unamortized discount related party		597,106	577,106
Convertible debentures related party, current portion	[1]	(470,439)	(470,439)
Convertible debt non current related party		126,667	106,667
Accrued interest payable - related party		$ 264,165	$ 232,599
Number of shares of common stock into which the notes are convertible, related party		113,460,360	110,303,800
[1]	Note 8

Note 8 - Convertible Debentur58

Note 8 - Convertible Debentures: Schedule of Maturities of Long-term Debt (Details) - USD ($)		Dec. 31, 2015	Sep. 30, 2015
Details
Convertible Debt		$ 200,000	$ 200,000
Debt Instrument, Unamortized Discount		(136,667)	(146,667)
Convertible debt less unamortized discount		63,333	53,333
Convertible debenture, net	[1]	63,333	53,333
Interest Payable		$ 32,055	$ 27,014
Number of shares of common stock into which the notes are convertible		23,205,480	22,701,370
[1]	Note 8

Note 8 - Convertible Debentur59

Note 8 - Convertible Debentures: Schedule of Principal Payments on Convertible Debentures (Details)	Dec. 31, 2015USD ($)
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year	$ 89,957
Long-term Debt, Maturities, Repayments of Principal in Year Two	63,738
Long-term Debt, Maturities, Repayments of Principal in Year Three	53,722
Long-term Debt, Maturities, Repayments of Principal in Year Four	5,952
Long-term Debt	213,369
Related party
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year	470,439
Long-term Debt, Maturities, Repayments of Principal in Year Two	51,107
Long-term Debt, Maturities, Repayments of Principal in Year Three	53,722
Long-term Debt, Maturities, Repayments of Principal in Year Four	5,952
Long-term Debt	110,781
Non-related party
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year	89,957
Long-term Debt, Maturities, Repayments of Principal in Year Two	12,631
Long-term Debt, Maturities, Repayments of Principal in Year Four	200,000
Long-term Debt	$ 102,588

Note 9 - Derivative Liabiliti60

Note 9 - Derivative Liabilities (Details) - USD ($)	3 Months Ended
	Dec. 31, 2015	Sep. 30, 2015
Details
Derivative Liability, Fair Value, Gross Liability		$ 1,244,472
Derivative Liability, Warrant	$ 24,697
Increase (Decrease) in Derivative Liabilities	(15,440)
Derivative Liability, Warrant	$ 9,257

Note 9 - Derivative Liabiliti61

Note 9 - Derivative Liabilities: Schedule of fair value of warrant derivative liability (Details) - $ / shares	Dec. 31, 2015	Sep. 30, 2015
Share Price	$ 0.0040	$ 0.0076
Fair Value Assumptions, Risk Free Interest Rate	0.65%	0.56%
Fair Value Assumptions, Expected Term	1 year 1 month 17 days	1 year 10 months 17 days
Fair Value Assumptions, Expected Volatility Rate	274.50%	274.30%
Fair Value Assumptions, Exercise Price	$ 0.0023	$ 0.0106

Note 10 - Promissory Notes (Det

Note 10 - Promissory Notes (Details)	3 Months Ended
	Dec. 31, 2015USD ($)shares
Long-term Debt	$ 213,369
Promissory Note 1
Debt Instrument, Issuance Date	Jul. 12, 2014
Debt Instrument, Face Amount	$ 46,642
Debt Instrument, Issuer	working interest partner
Debt Instrument, Payment Terms	The Company was scheduled to make seven monthly payments in the amount of $2,500 and subsequently make ten monthly payments in the amount of $2,914.
Long-term Debt	$ 31,642
Promissory Note 2
Debt Instrument, Issuance Date	Jan. 27, 2015
Debt Instrument, Face Amount	$ 189,790
Debt Instrument, Issuer	working interest partner
Debt Instrument, Payment Terms	The Company was scheduled to make nineteen monthly payments in the amount of $9,542 and subsequently make one monthly payment in the amount of $19,016
Debt Instrument, Interest Rate, Stated Percentage	6.00%
Warrants granted | shares	39,645,872
Warrants granted value	$ 198,229
Promissory Note 3
Debt Instrument, Issuance Date	Feb. 12, 2015
Debt Instrument, Face Amount	$ 49,696
Debt Instrument, Issuer	vendor
Debt Instrument, Payment Terms	make one payment of $5,000, thirty-eight monthly payments in the amount of $1,500 and subsequently make one monthly payments in the amount of $1,378
Long-term Debt	$ 37,790
Debt Instrument, Interest Rate, Stated Percentage	8.00%
Promissory Note 4
Debt Instrument, Issuance Date	Aug. 28, 2015
Debt Instrument, Face Amount	$ 37,892
Debt Instrument, Issuer	service provider
Debt Instrument, Payment Terms	make twenty-four monthly payments in the amount of $1,579
Long-term Debt	$ 33,156
Separation Agreement
Debt Instrument, Face Amount	$ 110,781
Debt Instrument, Issuer	executive
Debt Instrument, Payment Terms	The Company is scheduled to make twenty-four monthly payments beginning no later than October 31, 2016
Debt Instrument, Description	separation agreement
Debt Instrument, Increase, Accrued Interest	$ 1,396

Note 10 - Promissory Notes_ S63

Note 10 - Promissory Notes: Schedule of Promissory Notes and Accrued Interest (Details) - USD ($)	Dec. 31, 2015	Sep. 30, 2015
Details
Promissory Notes current portion	$ (89,957)	$ (264,582)
Promissory Notes noncurrent	12,631	$ 42,293
Accrued Interest Promissory Notes	$ 772

Note 10 - Promissory Notes_ S64

Note 10 - Promissory Notes: Schedule of Principal payments on Promissory Notes (Details)	Dec. 31, 2015USD ($)
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year	$ 89,957
Long-term Debt, Maturities, Repayments of Principal in Year Two	63,738
Long-term Debt, Maturities, Repayments of Principal in Year Three	53,722
Long-term Debt, Maturities, Repayments of Principal in Year Four	5,952
Long-term Debt	213,369
Related party
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year	470,439
Long-term Debt, Maturities, Repayments of Principal in Year Two	51,107
Long-term Debt, Maturities, Repayments of Principal in Year Three	53,722
Long-term Debt, Maturities, Repayments of Principal in Year Four	5,952
Long-term Debt	110,781
Non-related party
Long-term Debt, Maturities, Repayments of Principal, Remainder of Fiscal Year	89,957
Long-term Debt, Maturities, Repayments of Principal in Year Two	12,631
Long-term Debt, Maturities, Repayments of Principal in Year Four	200,000
Long-term Debt	$ 102,588

Note 11. Asset Retirement Obl65

Note 11. Asset Retirement Obligations (Details) - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Details
Asset Retirement Obligation, Revision of Estimate	$ 6,166	$ 4,016
Asset retirement obligation for North Dakota reclamation	$ 37,780

Note 12 - Common Stock (Details

Note 12 - Common Stock (Details) - shares	Dec. 31, 2015	Sep. 30, 2015	Jun. 08, 2015	Apr. 30, 2015
Common Stock, Shares Issued	1,998,756	1,998,756
Vast Exploration
Common Stock, Shares Issued				1,187,498
Certain directors of the Company
Common Stock, Shares Issued			600,000
A related party
Common Stock, Shares Issued		150,000

Note 13 - Stock Based Compens67

Note 13 - Stock Based Compensation (Details) - shares	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Aug. 11, 2009
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	1,150,000	3,400,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term	2 years 9 months 11 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	2,250,000
Stock and option plan
Share-based Compensation Arrangement by Share-based Payment Award, Description	The Company’s board of directors approved a stock and option plan on August 11, 2009 (the “Plan”).
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			4,000,000

Note 13 - Stock Based Compens68

Note 13 - Stock Based Compensation: Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Details) - $ / shares	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Details
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	1,150,000	3,400,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 0.01	$ 0.01
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	(2,250,000)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ (0.01)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance	1,150,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance	$ 0.01

Note 14 -warrants (Details)

Note 14 -warrants (Details)	Apr. 17, 2015USD ($)
Details
Fair value of the warrants issued	$ 167,441

Note 14 -warrants_ Schedule o70

Note 14 -warrants: Schedule of Activity of the Company's share purchase and broker warrants (Details) - $ / shares	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	1,150,000	3,400,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 0.01	$ 0.01
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	(2,250,000)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ (0.01)
Broker Warrants
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	1,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 0.06
Share Purchase Warrants
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	15,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 0.005
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	(2,777,778)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ (0.05)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	148,979,550
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.005

Note 14 -warrants_ Schedule o71

Note 14 -warrants: Schedule of Stockholders' Equity Note, Warrants or Rights (Details)	Dec. 31, 2015USD ($)
Broker Warrants
Warrants and Rights Outstanding	$ 149,979,550

Note 15 - Related Party Trans72

Note 15 - Related Party Transactions (Details) - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Marlin Property Management, LLC
Related Party Transaction, Date	Dec. 1, 2011
Related Party Transaction, Description of Transaction	Company entered into a four-year lease
Related Party Transaction, Terms and Manner of Settlement	Company is required to pay $2,500 per month
Related Party Transaction, Purchases from Related Party	$ 15,000	$ 15,000
Vast Exploration, LLC
Related Party Transaction, Date	Jul. 8, 2015
Related Party Transaction, Description of Transaction	Company executed a Contract Operating Agreement
Related Party Transaction, Terms and Manner of Settlement	The Company paid Vast Exploration a monthly fee for services in the amount of $20,000
Due to Related Parties, Current	$ 5,000

Note 16 - Commitments and Con73

Note 16 - Commitments and Contingencies (Details)	3 Months Ended
	Dec. 31, 2015USD ($)
Details
Loss Contingency, Settlement Agreement, Date	February 12, 2015
Loss Contingency, Settlement Agreement, Terms	The Company was found in violation of failure to plug, return to service or temporarily abandon 71 wells and assessed a $7,100 penalty, of which $3,100 was payable immediately, a $2,000 payment due by April 1, 2015 and the final $2,000 payment by May 1, 2015.
Litigation Settlement, Amount	$ (7,100)

Note 19 - Gain (Loss) On Sett74

Note 19 - Gain (Loss) On Settlement of Liabilities (Details) - USD ($)		3 Months Ended
		Dec. 31, 2015	Dec. 31, 2014
Loss on settlement of liabilities	[1]	$ (274,349)
Total
Loss on settlement of liabilities		$ 274,349
[1]	Note 17

Note 18 - Revision of Financi75

Note 18 - Revision of Financial Statement: Schedule of Financial Statement Revisions (Details) - USD ($)		Dec. 31, 2015	Sep. 30, 2015
TOTAL ASSETS		$ 344,753	$ 349,315
TOTAL LIABILITIES		2,548,190	3,087,584
Common Stock, $.001 par value; 200,000,000 shares authorized; 199,875,629 shares issued and outstanding	[1]	199,876	199,876
Additional paid in capital		25,752,725	24,801,020
Accumulated deficit		(28,156,038)	(27,739,165)
TOTAL STOCKHOLDERS' DEFICIT		(2,203,437)	(2,738,269)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		344,753	$ 349,315
Revision
Common Stock, $.001 par value; 200,000,000 shares authorized; 199,875,629 shares issued and outstanding		197,877
Additional paid in capital		(197,877)
As revised
TOTAL ASSETS		349,315
TOTAL LIABILITIES		3,087,584
Common Stock, $.001 par value; 200,000,000 shares authorized; 199,875,629 shares issued and outstanding		199,876
Additional paid in capital		24,801,020
Accumulated deficit		(27,739,165)
TOTAL STOCKHOLDERS' DEFICIT		(2,738,269)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$ 349,315
[1]	Notes 12 and 18

Note 20 - Subsequent Events (De

Note 20 - Subsequent Events (Details)	3 Months Ended
	Dec. 31, 2015
Event 1
Subsequent Event, Description	On June 30, 2016, Vast Exploration, LLC gave notice to the Company that the $150,000 Revolving Line of Credit Note (“Line of Credit”) entered between the parties on June 30, 2015 would not be renewed past the maturity date of the Line of Credit and that the final date for determining the principal and interest owed to Vast Exploration on the Line of Credit would be June 30, 2016. The balance of the Line of Credit was $255,543 as of December 31, 2015. The balance of the Line of Credit at June 30, 2016 was $380,014.
Event 2
Subsequent Event, Description	On February 2, 2011, the Industrial Commission of the State of North Dakota filed a complaint against JayHawk Energy, Inc. (the “Company” or “JayHawk”) for violating North Dakota Administrative Code Section (NDAC) 43-02-03-19 by failing to reclaim wells within a reasonable time, not more than one year from the date a well is plugged, NDAC Section 43-02-03-17 by failing to have the required signs posted on site, NDAC 43-02-03-45 for failing to equip each flare with an automatic ignitor or a continuous burning pilot, and NDAC 43-02-05-49 by failing to properly seal oil tanks in the following wells in Divide County, North Dakota: Knudsen 1, Jenks 1, Arla Knudsen 1-28H and Landstrom 3-33H. In the complaint, the Commission requested JayHawk pay $100,000 in fines and pay $485 in costs and expenses incurred by the Commission. In lieu of a formal hearing on the complaint, the parties subsequently agreed to resolve all matters in the complaint. The complaint was dismissed without prejudice on August 29, 2016, and no balance was paid or is currently owed by JayHawk.
Event 3
Subsequent Event, Description	On September 1, 2016, the Company entered into a Limited Liability Company Member Interest Purchase and Sale Agreement (“LLC Purchase Agreement”) with Vast Exploration, LLC, a related party. Pursuant to the terms of the LLC Purchase Agreement, Vast Exploration sold 100% of its membership interests in Vast Operations, LLC, a Nevada limited liability company, to the Company “as-is” and in consideration for $10.00 and the Company’s assumption of approximately $100,000 of Vast Operations, LLC’s liabilities. As a result of the purchase, Vast Operations, LLC became a wholly-owned subsidiary of JayHawk. Additionally, the Company indirectly acquired the contractual obligation to operate certain oil and gas assets in the state of North Dakota.
Event 4
Subsequent Event, Description	On September 1, 2016, the Company entered into a Limited Liability Company Member Interest Purchase and Sale Agreement (“LLC Purchase Agreement”) with Vast Exploration, LLC, a related party. Pursuant to the terms of the LLC Purchase Agreement, Vast Exploration sold 100% of its membership interests in Vast Holdings, LLC, a Nevada limited liability company, to the Company “as-is” and in consideration for $10.00 and the Company’s indirect assumption of approximately $600,000 of Vast Holdings, LLC’s liabilities. As a result of the purchase, Vast Holdings, LLC became a wholly-owned subsidiary of the Company. Additionally, the Company indirectly acquired certain oil and gas assets in the state of North Dakota.
Event 5
Subsequent Event, Description	On September 1, 2016, the Company entered into a Limited Liability Company Member Interest Purchase and Sale Agreement (“LLC Purchase Agreement”) with Vast Exploration, LLC, a related party. Pursuant to the terms of the Stock Purchase Agreement, Vast Exploration sold 100% of Vast Funding Corp., a Nevada corporation, evidenced by 100,000,000 shares of common stock to the Company “as-is” and in consideration for $10.00 and the indirect assumption of approximately $550,000 in Vast Funding Corp.’s liabilities. As a result of the purchase, Vast Funding Corp. became a wholly-owned subsidiary of the Company. Additionally, the Company indirectly acquired a funding vehicle for proving up certain oil and gas assets indirectly acquired through the acquisition of Vast Holdings, LLC.
Event 6
Subsequent Event, Description	On September 20, 2016, the Company issued Convertible Promissory Notes to entities controlled by three affiliates of Vast Exploration, LLC, a related party, for services to the Company. The Convertible Promissory Notes have an aggregate principal balance of $19,500 with an interest rate of 5% per annum and a term of two years, maturing on September 20, 2018. The Convertible Promissory Notes are convertible at any time after the original issue date into a number of shares of the Company’s common stock, determined by dividing the amount to be converted by a conversion price of $0.0065 per share, or an aggregate of 3,000,000 shares. Upon the occurrence of a corporate re-organizational or re-capitalization event, the Convertible Promissory Notes shall automatically convert into shares of the Company’s common stock.
Event 7
Subsequent Event, Description	On September 20, 2016, the Company issued a Convertible Promissory Note to an entity controlled by a related party in consideration for a reduction in amounts owed to the related party for legal services previously rendered to the Company. The Convertible Promissory Note has a principal balance of $6,500 with an interest rate of 5% per annum and a term of two years, maturing on September 20, 2018. The Convertible Promissory Note is convertible at any time after the original issue date into a number of shares of the Company’s common stock, determined by dividing the amount to be converted by a conversion price of $0.0065 per share, or an aggregate of 1,000,000 shares. Upon the occurrence of a corporate re-organizational or re-capitalization event, the Convertible Promissory Note shall automatically convert into shares of the Company’s common stock.
Event 8
Subsequent Event, Description	On October 1, 2016, Vast Exploration, LLC gave advanced written notice to the Company of its intent to terminate that certain Contract Operating Agreement made effective between the parties on January 1, 2016.
Event 9
Subsequent Event, Description	On November 11, 2016, the Company entered into a Settlement Agreement with a director of the Company. The purpose of the Settlement Agreement was to come to a resolution regarding certain outstanding dollar and equity amounts owed to the director for wages, consulting services rendered and change of control provisions related to his employment contract and to maintain an amicable working relationship moving forward. The Company agreed to provide the director with the following consideration: The Company will execute a convertible promissory note with a face value of $177,173 to the director and/or assigns; the note will have a term of four (4) years and an interest rate of null (0%) and includes certain interest penalties in the event a default occurs and is secured by a pledge of 350,000 shares of the Company’s common stock (“Note”). The Note is convertible into shares of the Company’s common stock at a rate equal to the lesser of: (a) the conversion rate provided to a plurality of investors in the Company’s first round of financing wherein the Company raises at least $300,000 following the completion of its contemplated 100:1 reverse split of its securities, or (b) the closing price on the first day of trading immediately following the Company’s 100:1 reverse split. The Note has an effective date of December 20, 2016 (“Effective Replacement Note Date”). Upon the occurrence of the Company having raised at least three million dollars ($3,000,000) in the aggregate through the sale of debt or equity securities of the Company, the director will have the option to have the remaining balance of the Note paid in full. In the event JayHawk Energy, Inc. makes a disposition of substantially all of its assets (including those held in subsidiaries) the holder of the Note shall have the option to foreclose on the Stock Pledge described above. The director will be granted 100,000 common stock purchase warrants (“Warrants”) in four (4) tranches based on attaining certain milestones. The Warrants will have a term of five (5) years and shall convert at $0.01 per common share. The Warrants will include a “cashless exercise” provision. The Company and the director may agree to adjust the amounts described above to effect the spirit of the Settlement Agreement.
Event 10
Subsequent Event, Description	On December 9, 2016, the Company and the director agreed to modify the Settlement Agreement. The modification eliminated certain penalty provisions related to milestones and added an additional scope of work for additional consideration.