Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Aug. 31, 2014 | Nov. 13, 2014 | ||
Document And Entity Information [Abstract] | ||||
Document Type | 10-K/A | |||
Amendment Flag | TRUE | |||
Document Period End Date | 31-Aug-14 | |||
Entity Registrant Name | HAWKER ENERGY, INC. | |||
Entity Central Index Key | 1415286 | |||
Current Fiscal Year End Date | -23 | |||
Document Fiscal Year Focus | 2014 | |||
Document Fiscal Period Focus | FY | |||
Entity Filer Category | Smaller Reporting Company | |||
Entity Common Stock, Shares Outstanding | 74,674,703 | |||
Entity Current Reporting Status | No | |||
Entity Well-known Seasoned Issuer | No | |||
Entity Voluntary Filers | No | |||
Entity Public Float | $2.30 | |||
Amendment Description | Explanatory Note | |||
Hawker Energy, Inc., together with its consolidated subsidiaries, the “Company,” sometimes referred to as “we”, “us” or “our”) is filing this amendment (this “Amendment” or “Form 10-K/A”) to its Annual Report on Form 10-K for the fiscal year ended August 31, 2014, which was originally filed with the U.S. Securities and Exchange Commission (“SEC”) on November 24, 2014 (the “Original Form 10-K”). | ||||
The purpose of this Amendment No. 1 to Form 10-K/A (“Form 10-K/A”) is to amend and restate audited financial statements and related disclosures in the Original Form 10-K to properly account for a $350,000 convertible note payable, which contains a conversion price protection mechanism, creating an embedded conversion option that requires bifurcation and separate accounting for the derivative liability due to the conversion feature. Due to this error, we determined in May 2015 to restate our condensed consolidated financial statements for the fiscal year ended August 31, 2014 and the fiscal quarter ended November 30, 2014, and that the previously filed financial statements for these periods (including those contained in the original Annual Report on Form 10-K for the year ended August 31, 2014 and the Form 10-Q for the three months ended November 30, 2014 (“Original Form 10-Q")) should no longer be relied upon. This Form 10-K/A contains restated audited consolidated financial statements for the fiscal year ended August 31, 2014. In addition, we have corrected the determination of the fair value of financial instruments disclosed in the footnotes to the consolidated financial statements. Together, we refer to these corrections as the “Restatement”. Refer also to the Quarterly Report on Form 10-Q/A for the fiscal quarter ended November 30, 2014 (“Form 10-Q/A”), for a restatement of similar nature. | ||||
This Form 10-K/A restates the Original Form 10-K in its entirety. It includes both items that have been changed as a result of the amended disclosures and items that are unchanged from the Original Form 10-K. Other than the revision of the disclosures as discussed below and expressly set forth herein, the Form 10-K/A speaks as of the original filing date of the Original Form 10-K and has not been updated to reflect other events occurring subsequent to the original filing date. This Form 10-K/A should be read in conjunction with our filings with the SEC subsequent to the filing of the Original Form 10-K, including the Form 10-Q/A for the fiscal quarter ended November 30, 2014. | ||||
The following are the items that have changed, and if applicable the specific portion of the items that have changed: | ||||
• | Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations: | |||
o | “Results of Operations” has been updated to reflect a $32,896 increase in net loss arising from an increased in interest expense partially offset by a favorable change in fair value of the conversion option. | |||
o | “Liquidity and Financial Condition” and “Going Concern” has been updated to reflect the corresponding changes in current liabilities, working capital deficit, net loss and accumulated deficit. | |||
• | Item 8 – Financial Statements and Supplementary Data: | |||
o | The Report of Independent Registered Public Accounting Firm has been revised for the restatement. | |||
o | A Restatement footnote (Note 20) to the audited consolidated financial statements has been added to indicate the changes in the financial statement line items and footnotes. Reference should be made to this footnote to see the particulars of what has changed in Item 8 as a result of the Restatement. | |||
• | Item 9 – Controls and Procedures: | |||
o | In connection with the Restatement, management has re-evaluated the effectiveness of our disclosure controls and procedures as of August 31, 2014 and the effectiveness of the Company's internal control over financial reporting as of August 31, 2014. Based on such re-evaluation, management confirmed that the material weaknesses described in the Original Form 10-K continue to be material weaknesses as of the time of the re-evaluation, and that some of these same material weaknesses contributed to the Restatement. In addition, the re-evaluation concluded that two additional material weaknesses existed related to (i) the calculation of our derivative liability due to embedded conversion feature in our convertible note, which contributed to the Restatement; and (ii) the proper determination of the fair value of financial instruments measured at fair value on a recurring basis, as disclosed in the footnotes. | |||
• | Item 15 - Exhibits, Financial Statements Schedules: | |||
o | The exhibit list has been updated to reflect which exhibits were filed with the Original Form 10-K and which new exhibits are included, being the consents and certifications below. | |||
• | Attached as Exhibits 23.1 and 23.2 are updated consents of Chapman Petroleum Engineering Ltd. and Independent Registered Public Accounting Firm, respectively. | |||
• | Attached as Exhibits 31 and 32 to this Amendment No. 1 are updated and revised certifications of our Chief Executive and Financial Officer. | |||
The correction of the errors described above is further discussed in Note 20 to the consolidated financial statements included in Part II, Item 8 herein and in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” | ||||
Other than this Form 10-K/A and the Form 10-Q/A, we do not intend to file any other amended reports in connection with the Restatement. All of our future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q will reflect the restated information included in this Form 10-K/A and the Form 10-Q/A, as applicable. | ||||
Other than with respect to matters related to the Restatement (including consequences of our delay in filing the Form 10-Q for the quarter ended February 28, 2015), this Form 10-K/A generally does not reflect events that have occurred after November 24, 2014, the filing date of the Original Form 10-K, or modify or update the disclosures presented in the Original Form 10-K, except to reflect the effects of the Restatement. Accordingly, this Form 10-K/A should be read in conjunction with (i) our Current Reports on Form 8-K filed with the Commission since November 24, 2014, and (ii) the November 30, 2014 Form 10-Q/A. | ||||
Our Chief Executive Officer and Chief Financial Officer have issued certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 in connection with this Form 10-K/A. The certifications are included in this Form 10-K/A as Exhibits 31 and 32. | ||||
Internal Control Considerations | ||||
In connection with the Restatement, management has re-evaluated the effectiveness of our disclosure controls and procedures as of August 31, 2014 and the effectiveness of our internal control over financial reporting as of August 31, 2014 based on the framework in “Internal Control—Integrated Framework (1992 framework)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on such re-evaluation, management confirmed that the material weaknesses described in the Original Form 10-K continue to be material weaknesses as of the time of the re-evaluation, and that some of these same material weaknesses contributed to the Restatement. In addition, the re-evaluation concluded that an additional material weakness existed related to the determination and calculation of our embedded conversion feature derivative liability related to the issuance of certain convertible notes. | ||||
For a discussion of management's consideration of our disclosure controls and procedures and the material weaknesses identified, see Part II, Item 9A, “Controls and Procedures” of the Form 10-K/A. | ||||
Amendment Number | 1 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Current assets: | ||
Cash | $13,207 | $8,298 |
Accounts receivable | 42,815 | 18,755 |
Inventory | 6,092 | 7,064 |
Prepaid expenses | 22,389 | 2,658 |
Secured subordinated loan receivable, short term | 1,298,322 | |
Total current assets | 1,382,825 | 36,775 |
Fixed assets: | ||
Machinery and equipment, net of accumulated depreciation of $19,605 and $15,179, respectively | 14,269 | 13,156 |
Other assets: | ||
Capitalized oil and gas properties, net of accumulated depletion of $86,193 and $59,878, respectively | 730,046 | 297,590 |
Deposits | 5,000 | |
Total assets | 2,132,140 | 347,521 |
Current liabilities: | ||
Accounts payable and accrued expenses | 813,438 | 31,018 |
Accrued bonuses | 480,000 | |
Net profits interest payable, current portion | 20,065 | 12,109 |
Loans payable to related parties, short term | 226,876 | |
Convertible notes payable, short term, net of discount | 862,450 | |
Conversion option | 122,045 | |
Total current liabilities | 2,524,874 | 43,127 |
Long term liabilities: | ||
Loans payable to related parties, long term | 89,833 | |
Asset retirement obligations | 168,110 | 103,299 |
Net profits interest payable, long term portion | 149,039 | 112,488 |
Total long term liabilities | 317,149 | 305,620 |
Total liabilities | 2,842,023 | 348,747 |
Stockholders' (deficit): | ||
Common stock; $0.001 par value; 750,000,000 shares authorized, 41,174,703 and 0 shares issued and outstanding, respectively | 41,175 | |
Common stock payable | 50,000 | |
Additional paid in capital | 1,224,300 | 350,000 |
Accumulated deficit | -2,080,358 | -351,226 |
Total stockholders' (deficit) | -764,883 | -1,226 |
Non-controlling interest | 55,000 | |
Total (deficit) | -709,883 | -1,226 |
Total liabilities and (deficit) | $2,132,140 | $347,521 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Accumulated depreciation of machinery and equipment | $19,605 | $15,179 |
Capitalized oil and gas properties accumulated depletion | $86,193 | $59,878 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 41,174,703 | 0 |
Common stock, shares outstanding | 41,174,703 | 0 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Revenue: | ||
Oil revenues | $125,587 | $80,792 |
Expenses: | ||
Direct operating costs | 62,505 | 58,797 |
Depletion, depreciation and amortization | 41,680 | 25,695 |
Professional fees | 837,127 | 16,790 |
Bonuses | 480,000 | |
General and administrative expenses | 296,926 | 8,636 |
Equity compensation expense | 68,760 | |
Total expenses | 1,786,998 | 109,918 |
Net operating (loss) | -1,661,411 | -29,126 |
Other (income) expense: | ||
Interest (income) | -7,609 | |
Interest expense | 94,966 | 12,865 |
Change in fair value of conversion option | -19,636 | |
Total other expense | 67,721 | 12,865 |
Loss before income taxes | -1,729,132 | -41,991 |
Provision for income taxes | ||
Net loss | -1,729,132 | -41,991 |
Net loss attributable to non-controlling interests | ||
Net loss attributable to the Company | ($1,729,132) | ($41,991) |
Net loss per common share - basic and diluted | ($0.05) | ($0.01) |
Weighted average common shares outstanding - basic and diluted | 31,950,963 | 5,882,117 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($1,729,132) | ($41,991) |
Depletion, depreciation and amortization | 30,832 | 17,602 |
Accretion of asset retirement obligation | 10,848 | 8,093 |
Accretion of net profits interest liability | 14,104 | 12,865 |
Accretion of discount on convertible note payable | 49,902 | |
Change in fair value of conversion option | -19,636 | |
Other non-cash interest expense | 2,630 | |
Stock compensation expense | 68,760 | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Accounts receivable | -22,507 | -5,201 |
Inventory | 5,150 | 1,456 |
Prepaid expenses | -3,106 | -654 |
Accounts payable and accrued expenses | 809,601 | 14,714 |
Accrued bonuses | 480,000 | |
Net cash (used in) provided by operating activities | -302,554 | 6,884 |
Cash flows from investing activities: | ||
Cash acquired in Sara Creek acquisition | 6,004 | |
Cash acquired in Hawker acquisition | 1,214 | |
Acquisition of an additional working interest in DEEP Lease | -325,000 | |
Secured subordinated loan receivable | -1,290,727 | |
Net cash (used in) investing activities | -1,608,509 | |
Cash flows from financing activities: | ||
Loans from related parties | 221,000 | 17,500 |
Net proceeds from unit offering | 738,416 | |
Payments on net profits interest agreement | -28,444 | -23,908 |
Proceeds from convertible notes | 930,000 | |
Proceeds from sale of non-controlling interest | 55,000 | |
Net cash provided by (used in) financing activities | 1,915,972 | -6,408 |
Net change in cash | 4,909 | 476 |
Cash, beginning | 8,298 | 7,822 |
Cash, end | 13,207 | 8,298 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 42,434 | 12,865 |
Units issued to settle loans from related parties | 103,687 | |
Units issued to settle accounts payable | 188,185 | |
Value of convertible note payable assigned to conversion option | $139,051 |
STATEMENT_OF_STOCKHOLDERS_DEFI
STATEMENT OF STOCKHOLDERS' DEFICIT (USD $) | Total | Common Stock [Member] | Common Stock Payable [Member] | Additional Paid-in Capital [Member] | Accumulated (Deficit) [Member] | Non-Controlling Interest [Member] |
Balance at Aug. 31, 2012 | $40,765 | $350,000 | ($309,235) | |||
Balance, shares at Aug. 31, 2012 | ||||||
Stock compensation | ||||||
Sale of non-controlling interest | ||||||
Net loss | -41,991 | -41,991 | ||||
Balance at Aug. 31, 2013 | -1,226 | 350,000 | -351,226 | |||
Balance, shares at Aug. 31, 2013 | 0 | |||||
Recapitalization on completion of acquisition of SCNRG | 1,626 | 25,962 | 2,000 | -26,336 | ||
Recapitalization on completion of acquisition of SCNRG, shares | 25,961,983 | 2,000,000 | ||||
Issued to acquire Hawker | -135,199 | 3,000 | -138,199 | |||
Issued to acquire Hawker, shares | 3,000,000 | |||||
Issuance of common stock payable | 2,000 | -2,000 | ||||
Issuance of common stock payable, shares | 2,000,000 | -2,000,000 | ||||
Net proceeds from unit offering | 980,288 | 10,213 | 970,075 | |||
Net proceeds from unit offering, shares | 10,212,720 | |||||
Proceeds received for common stock payable | 50,000 | 50,000 | ||||
Proceeds received for common stock payable, shares | 500,000 | |||||
Stock compensation | 68,760 | 68,760 | ||||
Sale of non-controlling interest | 55,000 | 55,000 | ||||
Net loss | -1,729,132 | -1,729,132 | ||||
Balance at Aug. 31, 2014 | ($709,883) | $41,175 | $50,000 | $1,224,300 | ($2,080,358) | $55,000 |
Balance, shares at Aug. 31, 2014 | 41,174,703 | 41,174,703 | 500,000 |
DESCRIPTION_OF_BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Aug. 31, 2014 | |
DESCRIPTION OF BUSINESS [Abstract] | |
DESCRIPTION OF BUSINESS | 1. DESCRIPTION OF BUSINESS |
Hawker Energy, Inc. (“we”, “our”, “us”, “Hawker” or “the Company”) was incorporated under the laws of the State of Nevada on June 12, 2006, under the name of Uventus Technologies Corp. On September 23, 2009, we merged with our wholly owned subsidiary and changed our name to Sara Creek Gold Corp. Subsequently, on September 11, 2014, we changed our name to Hawker Energy, Inc. | |
On October 25, 2013, we closed on the Agreement and Plan of Reorganization with SCNRG, LLC (“SCNRG”), a California limited liability company, whereby we acquired 100% of the membership interest in SCNRG, resulting in SCNRG becoming our wholly-owned subsidiary, in exchange for 14.0 million shares of our common stock issued to the members of SCNRG (see Note 4). For accounting purposes, our acquisition of SCNRG has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of Hawker. Accordingly, SCNRG is considered the acquirer for accounting purposes and, therefore, the historical financial statements of SCNRG are presented and consolidated with Hawker's beginning October 25, 2013. As a result of this transaction, Hawker changed its business direction and is now in the oil and gas industry. Our goal is to acquire and develop mature leases, interests and other rights to oil and gas producing properties with proven undeveloped potential. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Aug. 31, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation | |
The accompanying financial statements and related notes present our consolidated financial position as of August 31, 2014 and 2013, and results of operations, changes in stockholders' equity and non-controlling interest, and cash flows for the years ended August 31, 2014, and 2013. Comprehensive income is the same as net income (loss). | |
We have prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). | |
Principles of Consolidation | |
The acquisition of SCNRG by Hawker on October 25, 2013, has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of Hawker. Therefore, our condensed consolidated financial statements include the historic accounts of SCNRG, and consolidated with Hawker's beginning October 25, 2013. | |
On January 1, 2014, we acquired all of the membership interests of Hawker Energy, LLC, which has a wholly-owned subsidiary Punta Gorda Resources, LLC (see Note 5). Hawker Energy, LLC changed its name to Hawker Energy (Rincon), LLC on October 22, 2014. Our condensed consolidated financial statements include the accounts of these entities beginning January 1, 2014. | |
All significant intercompany balances and transactions have been eliminated. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates included in the financial statements are: (1) depreciation and depletion; (2) accrued assets and liabilities; (3) asset retirement obligations; and (4) net profits interest payable. Recorded amounts are based on estimates of oil reserves, retirement costs and date. By their nature, these estimates including the estimates of future prices and costs, and the related future cash flows are subject to measurement uncertainly, and the impact in the consolidated financial statements of future periods could be material. Although management believes these estimates are reasonable, changes in facts and circumstances or discovery of new information may result in revised estimates. Actual results could differ from those estimates. | |
Cash and Cash Equivalents | |
Cash is held in a business checking account with a major financial institution. Our policy is to consider all highly liquid investment instruments purchased with original maturities of three months or less to be cash equivalents for purposes of the statements of cash flows and other statements. On two occasions in the twelve months ended August 31, 2014, cash on deposit has exceeded federally insured limits for up to one week at a time. We have not experienced any losses on such accounts and believe we are not exposed to any significant credit risk on cash and cash equivalents. | |
Accounts Receivable | |
Accounts receivable represent oil sales, and are collected by the operator in the month following sale. After deducting and paying the appropriate royalties, the operator either promptly remits our share of the net proceeds to us, or offsets the net proceeds against joint interest billings for our share of production and other costs. We regularly review receivables to insure that the amounts will be collected and establish or adjust an allowance for uncollectible amounts as necessary using the specific identification method. There were no reserves for uncollectible amounts in the periods presented. | |
Inventory | |
Inventory consists of oil that has been produced and stored in a tank on the DEEP Lease property (see Note 6). Inventory is valued at the lower of average cost and market. | |
Financial Instruments | |
Financial instruments consist of cash, accounts receivable, loan receivable, accounts payable, loans payable and convertible notes payable. Recorded values of cash, receivables, accounts payable and accrued liabilities approximate fair values due to the short maturities of such instruments. Recorded values for loans and convertible notes payable approximate fair values, since their stated or imputed interest rates are commensurate with prevailing market rates for similar obligations. | |
Machinery and Equipment | |
Machinery and equipment are recorded at cost. Depreciation is on a straight-line method using the estimated lives of the assets. Expenditures for maintenance and repairs are charged to expense. | |
Oil Properties | |
We follow the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize internal costs that can be directly identified with our acquisition, and exploration and development activities. We do not capitalize any costs related to production, general corporate overhead or similar activities. Surface equipment on a property is also part of the amounts capitalized. | |
Under the full-cost method, capitalized costs are depleted (amortized) on a composite unit-of-production method based on proved oil reserves. If we maintain the same level of production year over year, the depletion expense may be significantly different if our estimate of remaining reserves changes significantly. Proceeds from the sale of properties are accounted for as reductions of capitalized costs unless such sales involve a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved properties, in which case a gain or loss is recognized. The costs of unproved properties are excluded from amortization until the properties are evaluated. We review all of our unevaluated properties quarterly to determine whether or not and to what extent proved reserves have been assigned to the properties, and if impairment has occurred. Unevaluated properties are assessed individually when individual costs are significant. | |
We review the carrying value of our oil properties under the full-cost accounting rules of the Securities and Exchange Commission ("SEC") on a quarterly basis. This quarterly review is referred to as a ceiling test. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. In calculating future net revenues, current SEC regulations require us to utilize prices at the end of the appropriate quarterly period. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts, including the effects of derivatives qualifying as cash flow hedges. Two primary factors impacting this test are reserve levels and current prices, and their associated impact on the present value of estimated future net revenues. Revisions to estimates of oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Any excess of the net book value, less deferred income taxes, is generally written off as an expense. Under SEC regulations, the excess above the ceiling is not expensed (or is reduced) if, subsequent to the end of the period, but prior to the release of the financial statements, oil prices increase sufficiently such that an excess above the ceiling would have been eliminated (or reduced) if the increased prices were used in the calculations. | |
The estimates of proved crude oil reserves utilized in the preparation of the financial statements are estimated in accordance with guidelines established by the SEC and the Financial Accounting Standards Board (“FASB”), which require that reserve estimates be prepared under existing economic and operating conditions using a 12-month average price with no provision for price and cost escalations in future years except by contractual arrangements. Actual results could differ materially from these estimates. | |
Long-Lived Assets | |
Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying value. The carrying value of the assets is then reduced to their estimated fair value that is usually measured based on an estimate of future discounted cash flows. | |
Convertible Notes and Derivative Liabilities | |
The Company evaluates conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”. | |
Professional standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards. | |
The terms of a $350,000 convertible note payable issued in June 2014 include a provision that would reset the conversion price in the event Hawker issues equity securities (or debt convertible into equity) for a lesser price. This conversion feature was required to be valued separately as a liability (shown on the balance sheet as “conversion option”) at its estimated fair value of $139,051 initially, creating a discount on the convertible note payable for the same amount. Each reporting period, the conversion option's fair value is remeasured, with the change in fair value being reported in the consolidated statement of operations. Fair value determinations prepared using the Black-Scholes Pricing Model require assumptions related to interest rates, stock price, exercise price, term and volatilities. The discount on the convertible note payable is accreted to interest expense over the term of the note. | |
In addition, the Company also evaluates convertible notes payable (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with the professional standard “Accounting for Convertible Securities with Beneficial Conversion Features”. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. To date, the Company has issued no convertible notes payable with beneficial conversion features. | |
Asset Retirement Obligations | |
Asset retirement obligations relate to the plug and abandonment costs when our wells are no longer useful, and for the cost of removing related surface facilities. We determine the value of the liability by reviewing operator estimates and estimate the increase we will face in the future. We then discount the future value based on an intrinsic interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the future, however, on a quarterly basis we monitor the costs of the abandoned wells and adjust this liability if necessary. | |
Non-Controlling Interest | |
We report non-controlling interest in Tapia Holdings, LLC in the financial statements pursuant to paragraph ASC No. 810-10-65-1. The non-controlling interest of $55,000 reported on the balance sheet as of August 31, 2014, represents the non-controlling interest holders' proportionate share of the equity of the Tapia Holdings, LLC. This amount was received on August 26 and 28, 2014, in contemplation of the pending acquisition of Tapia, LLC (Note 7). In the year ended August 31, 2014, there was no amount to recognize for the non-controlling interest holders' proportionate share of the earnings or losses. Including the $55,000 funded to date, $65,000 in future funding, and $144,000 of future commitment to participate in the note payable to Sefton Resources Ltd. on closing of the Tapia, LLC acquisition, non-controlling interest at closing of the acquisition is expected to represent 4.80% of the total outstanding equity of Tapia Holdings, LLC, increased to 4.83% after August 31, 2014. See also Note 19, Subsequent Events. | |
Revenue Recognition | |
Oil revenues are recognized net of royalties when production is sold to a purchaser at a fixed or determinable price, when title has transferred, and if collection of the revenue is probable. | |
Equity Compensation Expense | |
We record equity compensation expense for stock option grants based on the estimated grant-date fair value over the period the officers or consultants are required to provide services to earn the awards. | |
Net Profits Interest | |
A Net Profits Interest (“NPI”) on the DEEP Lease calls for 40% of the net cash flow, as defined in the Assignment of Net Profit Interest (see Note 12), to be paid each month to the owner of the NPI. If net cash flow is negative, such losses carry forward to be deducted against future positive net cash flow. Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG's December 1, 2009, acquisition date of a 66.67% working interest in the DEEP property, and this liability was increased pro rata when our working interest increased to 87.18% on February 1, 2014, and again on May 15, 2014, when our working interest increased to 100.0% (see Note 6). The discount rate used in all cases was 10.0% per annum (see Note 12). | |
Income Taxes | |
Until October 25, 2013, SCNRG (the accounting acquirer of Hawker) was not a taxable entity for U.S. federal or California income tax purposes. Taxes on its net income were borne by its members through the allocation of taxable income. Until July 31, 2013, we were treated as a partnership for tax purposes. On August 1, 2013, we elected to be treated as an S-Corp. Upon completion of the reverse acquisition of Hawker, SCNRG became part of a consolidated taxable entity. Due to a history of losses, we have a full valuation allowance for all net deferred tax assets, including our net operating loss. | |
Loss Per Share | |
Dilutive securities, including warrants to acquire common stock, shares issuable on conversion of notes payable and stock options, are excluded from the diluted weighted average shares of common stock outstanding computation in periods where they have an anti-dilutive effect, such as when we report a loss. Anti-dilutive securities omitted from the calculation for the year ended August 31, 2014 were 4,436,236 and none for the comparable 2013 period. | |
Concentrations | |
Pursuant to a January 13, 2010, Crude Oil Purchase Contract between the DEEP Lease operator and Plains Marketing L.P. (“PMLP”), all production from the DEEP Lease is sold to PMLP. The initial term of the agreement was for one year, expiring on December 31, 2010, and was automatically renewed for an additional one-year term that expired on December 31, 2011. Since January 1, 2012, the agreement has continued on a month-to-month basis and is cancellable upon thirty days' written notice by either party. | |
Changes in Accounting Policy | |
The Company has not had any changes in accounting policies during the year. | |
New Accounting Pronouncements | |
In May 2014, the FASB issued ASU 2014-9, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to receive in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is not permitted. We are currently assessing the impact that this standard will have on our consolidated financial statements. | |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. Under GAAP, financial statements are prepared based on the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management's responsibility to evaluate whether there is substantial doubt about the organization's ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization's management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company has not conducted its analysis to determine whether it will adopt the new standard early or not. | |
GOING_CONCERN
GOING CONCERN | 12 Months Ended |
Aug. 31, 2014 | |
GOING CONCERN | |
GOING CONCERN | 3. GOING CONCERN |
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of August 31, 2014, the Company had total current assets of $1,382,825 but a working capital deficit in the amount of $1,142,049. The Company incurred a net loss of $1,729,132 during the year ended August 31, 2014 and an accumulated net loss of $2,080,358 since inception. The Company has earned insufficient revenues since inception and its cash resources are insufficient to meet its planned business objectives. | |
These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to obtain additional financing or sale of its common stock as may be required and ultimately to attain profitability. | |
Management's plan in this regard is to complete the acquisition of the Tapia and Eureka oilfields (see Note 7), which is depending on financing, and to raise capital through a combination of equity and debt financing sufficient to finance the continuing operations for the next twelve months. However, there can be no assurance that the Company will be successful in completing such financing. | |
ACQUISITION_OF_SCNRG
ACQUISITION OF SCNRG | 12 Months Ended | ||||
Aug. 31, 2014 | |||||
ACQUISITION OF SCNRG [Abstract] | |||||
ACQUISITION OF SCNRG | 4. ACQUISITION OF SCNRG | ||||
As described in Note 1, on October 25, 2013, we acquired 100% of the membership interest in SCNRG, resulting in SCNRG becoming a wholly-owned subsidiary of Hawker, in exchange for 14.0 million shares of our common stock issued to the members of SCNRG. For accounting purposes, the acquisition of SCNRG by Hawker has been accounted for as a reverse acquisition effectuating a recapitalization of SCNRG. Accordingly, SCNRG is considered the acquirer for accounting purposes and, therefore, the historical financial statements of SCNRG are brought forward and consolidated with Hawker's beginning October 25, 2013. | |||||
The 14.0 million common shares issued in the transaction had an estimated fair value of $14,000. The following is a summary of the fair value of consideration transferred in exchange for the estimated fair value of net assets acquired on October 25, 2013: | |||||
Fair value of consideration transferred: | |||||
14,000,000 shares of Hawker restricted common stock | $ | 14,000 | |||
Fair value of net assets acquired: | |||||
Cash | $ | 6,004 | |||
Accounts receivable | 1,553 | ||||
Oil properties | 26,500 | ||||
Deposit | 5,000 | ||||
Accounts payable and accrued liabilities | (37,431 | ) | |||
Net assets acquired | $ | 1,626 | |||
The difference between the estimated fair value of the common shares issued and the net assets acquired was recorded to additional paid-in capital. |
ACQUISITION_OF_HAWKER_ENERGY_L
ACQUISITION OF HAWKER ENERGY, LLC | 12 Months Ended | ||||
Aug. 31, 2014 | |||||
ACQUISITION OF HAWKER ENERGY (RINCON), LLC [Abstract] | |||||
ACQUISITION OF HAWKER ENERGY (RINCON), LLC | 5. ACQUISITION OF HAWKER ENERGY (RINCON), LLC | ||||
On January 1, 2014, we exercised our option to acquire all of the membership interests in Hawker Energy (Rincon), LLC (“HERLLC”) from Darren Katic (who was also a seller in our transaction with SCNRG) and Charles Moore (collectively the “HERLLC Sellers”). We issued 3,000,000 shares of our common stock to the HERLLC Sellers as consideration for the acquisition and, as described below, were required to issue up to an additional 33,000,000 shares of our common stock to the HERLLC Sellers upon us or HERLLC consummating certain follow-on transactions described below (“Potential Follow-On Transactions”). In addition, we assumed $135,199 in net liabilities of HERLLC. | |||||
HERLLC, through its wholly-owned subsidiary Punta Gorda Resources, LLC (“Punta Gorda”), claims oil production and development rights of coastal lease PRC 145.1 just offshore Ventura County in the Rincon Field and ownership rights to an associated on-shore drilling and production site, which rights are being challenged in court by the lease's operator of record (see Part I, Item 3, “Legal Proceedings”). HERLLC has also engaged in preliminary discussions with various third parties concerning the Potential Follow-On Transactions, none of which were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of HERLLC) due to the preliminary status of those discussions and lack of certainty around HERLLC's or Hawker's ability to finance one or more of these Potential Follow-On Transactions. Other than its contested interest in PRC 145.1 and its preliminary discussions concerning the Potential Follow-On Transactions, HERLLC had no assets or operations as of January 1, 2014. PRC 145.1 and the Potential Follow-On Transactions are discussed in greater detail below. | |||||
PRC 145.1 is subject to 24.5% in overriding royalties, primarily to the State of California. A single active well on PRC 145.1 produced an average of 10 barrels of oil per day (gross production before royalties) for the eight months August 31, 2014. This lease has ten other non-active wells, one or more of which may be recompleted or re-drilled. Although initial technical work has been done on PRC 145.1 to develop a preliminary understanding of the resource and opportunity, no reserve reports done to SEC standards have been completed to date. | |||||
All rights claimed by HERLLC to PRC 145.1 are being challenged in court by the lease's operator of record -- Case No. 56-2013-00440672-CU-BC-VTA pending in Ventura County Superior Court (see Part I, Item 3, “Legal Proceedings”). HERLLC is currently not receiving any net proceeds from production on this lease pending resolution of this matter in our favor. | |||||
After we exercised our option to acquire HERLLC on January 1, 2014, the agreement provided that the HERLLC Sellers were entitled to additional shares of our common stock upon the consummation of Potential Follow-On Transactions as follows: | |||||
(a) 2,000,000 shares of our common stock shall be issued upon our or HERLLC's acquisition of California Oil Independents or its oil and gas interests being the “Doud” leases, comprised of approximately 340 acres, 20 wells and two tank batteries, located in the Monroe Swell Field, near Greenfield, California; | |||||
(b) 2,000,000 shares of our common stock shall be issued upon our or HERLLC's acquisition of a participation in South Coast Oil – Huntington Beach CA oil and gas interests comprised of approximately 340 acres, and 20 wells (of which 9 are active) and 4 tank batteries, and known as the “Town Lot”; | |||||
(c) 5,000,000 shares of our common stock shall be issued upon our or HERLLC's acquisition of all of the oil and gas leases held by Christian Hall (or affiliates) in the Midway-Sunset field located between the towns of Taft and McKittrick in Kern County, CA; | |||||
(d) 10,000,000 shares of our common stock shall be issued upon our or HERLLC's acquisition of TEG Oil & Gas USA, Inc. (or certain oil and gas interests held by it, being all leases located in the Tapia Field, Los Angeles County, California); | |||||
(e) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or HERLLC of certain assets and rights regarding PRC 145.1 Lease held by Rincon Island Limited Partnership or settlement in lieu of such conveyance (see Part I, Item 3, “Legal Proceedings”); and | |||||
(f) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or HERLLC of certain mineral rights regarding PRC 427 Lease held by ExxonMobil, a lease that is adjacent to PRC 145.1 Lease above. | |||||
The Potential Follow-On Transactions described above are dependent on a number of variables that are not within our control and, as a result, (i) as of August 31, 2014, we cannot state with a reasonable degree of certainty that any of the transactions will occur and (ii) none of the transactions were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of HERLLC) or August 31, 2014. Each of the Potential Follow-On Transactions described above, if consummated, would constitute a transaction separate and independent from our acquisition of HERLLC pursuant to the option. Any shares of our common stock that may be issued upon the consummation of any of the Potential Follow-On Transactions will constitute expensed costs incurred concurrently with consummation of the applicable follow-on transaction (as opposed to incremental consideration for our acquisition of HERLLC). | |||||
The assets and liabilities of HERLLC at the date of acquisition were recorded at their fair values of: | |||||
Cash | $ | 1,214 | |||
Prepaid expenses | 16,625 | ||||
Less: | |||||
Accounts payable | (123,413 | ) | |||
Loan payable to related party, short term | (29,625 | ) | |||
Net liabilities assumed | $ | 135,199 | |||
The $138,199 difference between the par value of the common stock issued, $3,000, and the net liabilities assumed, $135,199, was recorded to paid in capital as there is no objective evidence of the value of HERLLC's assets, which consist of the disputed claim to coastal lease PRC 145.1, and inability to determine a probability of success of the litigation. As a result and in an effort to fairly represent and not overstate the consolidated assets of Hawker, a decrease in capital was deemed appropriate. | |||||
On October 10, 2014, Hawker authorized an amendment to the Potential Follow-On Transaction terms described above where Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock. The amendment waives all of the Potential Follow-On Transaction requirements and authorizes the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we will hold 19,000,000 shares in escrow, eligible to be released as set forth in Note 19, Subsequent Events. | |||||
Pursuant to a separate agreement dated November 13, 2014, between Messrs. Katic, Moore and Tywoniuk, Mr. Tywoniuk (a significant shareholder) holds warrants to acquire 9.7222% of any shares acquired by Messrs. Katic and Moore pursuant to amendment described in the prior paragraph. This agreement amended a December 27, 2013, agreement entitling Mr. Tywoniuk to acquire 5% of any shares acquired by Messrs. Katic and Moore pursuant to the agreement above. | |||||
ACQUISITION_OF_AN_ADDITIONAL_3
ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE | 12 Months Ended |
Aug. 31, 2014 | |
ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE [Abstract] | |
ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE | 6. ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE |
As a result of two transactions (described below) through our wholly-owned subsidiary SCNRG, we acquired the remaining 33.33% working interest in the DEEP Lease. | |
On February 4, 2014, SCNRG completed the acquisition of additional 20.5108% working interest in the DEEP Lease for $200,000 in cash plus assumed asset retirement obligations and net profits interest liabilities aggregating to an estimated fair value of $69,729, for total consideration of $269,729. SCNRG's working interest increased from 66.67% to 87.18% as a result of the purchase, effective February 1, 2014. Our condensed consolidated financial statements include the increased working interest beginning February 1, 2014. The purchase price was allocated $3,529 to machinery and equipment, and $266,200 to oil properties based on estimated fair values. | |
On May 15, 2014, SCNRG completed the acquisition of the remaining 12.8192% working interest in the DEEP Lease for $125,000 in cash plus assumed asset retirement obligations and net profits interest liabilities aggregating to an estimated fair value of $43,081, for total consideration of $168,081. SCNRG's working interest increased from 87.18% to 100.0% as a result of the purchase, effective May 15, 2014. Our condensed consolidated financial statements include the increased working interest beginning May 15, 2014. The purchase price was allocated $2,010 to machinery and equipment, and $166,071 to oil properties based on estimated fair values. | |
The operator, Caleco, LLC, will continue to operate the DEEP Lease on SCNRG's behalf during a transitional period until SCNRG qualifies with the regulatory agency as an operator. | |
SECURED_SUBORDINATED_LOAN_RECE
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM [Abstract] | |||||||||
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM | 7. SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM | ||||||||
Between April 18, 2014 and August 31, 2014, our subsidiary Tapia Holdings, LLC (“Tapia Holdings”) made a number of advances to TEG Oil & Gas USA, Inc. (“TEG”), pursuant to several secured subordinated notes and a related security agreement, both as amended and restated into a Secured Subordinated Note dated June 27, 2014 (the “Note”), and a Third Amended and Restated Security Agreement dated August 29, 2014 (the “Security Agreement”) (collectively, the “Loan Receivable Agreements”). The Loan Receivable Agreements and an Intercreditor Agreement (defined below) were entered into in connection with a proposal by Tapia Holdings to acquire a majority interest in the assets of TEG (the “Proposed TEG Acquisition”). | |||||||||
TEG Nonbinding Letter of Intent | |||||||||
On June 18, 2014, we entered into a nonbinding letter of intent with Sefton (the “Sefton LOI”) concerning the principal terms upon which the Proposed TEG Acquisition might be consummated. The principal terms of the Sefton LOI are as follows: (i) TEG would contribute all of its assets, including the Tapia Assets,the Eureka Assets (as these terms are defined below) and accompanying production equipment (collectively the "TEG Assets") to TEG's newly-formed wholly-owned subsidiary Tapia, LLC, and Tapia, LLC would assume specified liabilities of TEG, (ii) Tapia Holdings would acquire 80% of the common membership interests of Tapia, LLC for $2.5 million in cash and the issuance to TEG of a $3.0 million promissory note that would accrue 6% interest per annum and amortize quarterly on a straight line basis over the 12 quarters following closing, and (iii) TEG would retain the balance of the ownership interest in Tapia, LLC comprising the remaining 20% common membership interests of Tapia, LLC. The note to TEG will be subject to adjustment based on the working capital of Tapia, LLC at closing. The transactions contemplated by the Sefton LOI are subject to a number of conditions, contingencies and uncertainties inherent to any nonbinding preliminary terms, including, but not limited to, completion of definitive documentation, amending or refinancing the BOTW debt that encumbers TEG and its assets, our ability to finance the transaction, our satisfactory completion of due diligence concerning TEG's assets, and consummation of definitive agreements. Sefton shareholders have voted in favor of the proposed transaction. As a result of a significant decrease in oil prices and other factors that have arisen since the date of the Sefton LOI, the parties are currently in discussions regarding possible adjustments to the transaction. | |||||||||
The TEG Assets that would be contributed by TEG to Tapia, LLC under the terms of the Proposed TEG Acquisition comprise four oil and gas leases encompassing the Tapia Canyon field (the “Tapia Assets”) and one lease west of the Tapia Canyon field, (the “Eureka Assets”), and the accompanying production equipment. | |||||||||
The Proposed TEG Acquisition (including, but not limited to, the transactions contemplated by the Sefton LOI) are subject to a number of conditions and contingencies outside of our control, all of which create a level of uncertainly concerning our ability to ultimately consummate the Proposed TEG Acquisition. Even if the Proposed TEG Acquisition is ultimately consummated, it may be on terms materially different than the terms described. | |||||||||
Tapia Holdings has outside equity investors, representing non-controlling interests. Including amounts funded after August 31, 2014 (see Note 19), $145,000 has been funded by these parties to date, and $145,000 of future commitments have been made to participate in the note payable to Sefton Resources Ltd. on closing of the Proposed TEG Acquisition. As a result, non-controlling interest at closing of the acquisition is expected to represent 4.83% of the total outstanding equity of Tapia Holdings. | |||||||||
Between April 18, 2014 and August 31, 2014, Tapia Holdings made a number of advances as described below, totaling $1,290,727 plus accrued interest, as of August 31, 2014, plus additional advances subsequent to August 31, 2014 as described in Note 19. These advances will be credited against the $2.5 million cash payment noted above, at closing of the Proposed TEG Acquisition. | |||||||||
Secured Subordinated Loan Receivable, Short Term | |||||||||
Under the terms of the Loan Receivable Agreements, TEG agreed to pay Tapia Holdings the principal sum of $1,500,000, or such lesser amount as may be outstanding from time to time, with interest on the unpaid principal amount at the rate of 3.0% per annum. As of August 31, 2014, the amount of outstanding advances was $1,290,727, plus accrued interest of $7,595. Further advances are subject to the sole and absolute discretion of Tapia Holdings. The loan receivable matures on December 29, 2014, at which time all outstanding principal and accrued interest is due and payable in full. The personal property assets of TEG secure the Note. These assets consist of all personal property assets located in the Tapia and Eureka Fields, Los Angeles and Ventura Counties, California. The Note and our security interest in the personal property assets of TEG are subordinate to senior indebtedness of TEG, pursuant to a Subordination and Intercreditor Agreement (“Intercreditor Agreement”) dated June 2, 2014, by and among Tapia Holdings, TEG, TEG's parent company Sefton Resources, Inc. (“Sefton”), TEG's affiliate TEG MidContinent, Inc., and Sefton's senior lender Bank of the West. | |||||||||
The Security Agreement also provides that if the transactions contemplated by the Proposed TEG Acquisition are consummated (such transactions, the “Acquisition”), Tapia Holdings may apply any or all of the outstanding principal and accrued interest on the Note towards the consideration for the Acquisition. Further, under the terms of the Security Agreement, Tapia Holdings has the option, in the event of a default, upon a refinancing of TEG's bank loan or after December 14, 2014 if TEG cannot provide written evidence of its ability to repay the Note, to cause TEG to contribute its assets to Tapia, LLC (“Tapia, LLC”), a newly organized California limited liability company and wholly-owned subsidiary of TEG, and to sell, to Tapia Holdings, up to 80% of TEG's membership interests in Tapia, LLC at the rate of $68,750 for each 1.0% of membership interest in Tapia, LLC for cash or for such other consideration as set forth in the Security Agreement, including but not limited to, cancellation of outstanding amounts payable under the Note. TEG further agreed to cease and terminate any solicitation or encouragement of a third party acquisition proposal; provided, that, if TEG receives an unsolicited, bona fide acquisition proposal that is found to be superior to the Proposed TEG Acquisition terms, to the extent Tapia Holdings declines to renegotiate the Proposed TEG Acquisition terms or to otherwise match the terms of the third party acquisition proposal, TEG may pursue such third party acquisition proposal. The Security Agreement also contains other representations, warranties and covenants of both parties that are customary for an agreement of this type. | |||||||||
The following shows the changes in secured subordinated loan receivable, short term, for the years ended August 31, 2014 and 2013: | |||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Secured subordinated loan receivable, short term, | $ | - | $ | - | |||||
beginning | |||||||||
Loan made during the period | 1,290,727 | - | |||||||
Current period interest | 7,595 | - | |||||||
Secured subordinated loan receivable, short term, | $ | 1,298,322 | $ | - | |||||
ending | |||||||||
See also Note 19, Subsequent Events, for particulars of additional advances to TEG made subsequent to August 31, 2014. | |||||||||
MACHINERY_AND_EQUIPMENT_CAPITA
MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES | 12 Months Ended | |||||||||||||||||
Aug. 31, 2014 | ||||||||||||||||||
MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES | ||||||||||||||||||
MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES | 8. MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES | |||||||||||||||||
The asset categories of machinery and equipment and capitalized oil and gas properties at August 31, 2014 and August 31, 2013 were as follows: | ||||||||||||||||||
31-Aug-14 | ||||||||||||||||||
Cost | Accumulated | Net Book | ||||||||||||||||
Depletion, | Value | |||||||||||||||||
Depreciation | ||||||||||||||||||
and | ||||||||||||||||||
Amortization | ||||||||||||||||||
Machinery and equipment | $ | 33,874 | $ | 19,605 | $ | 14,269 | ||||||||||||
Capitalized oil and gas properties | 816,239 | 86,193 | 730,046 | |||||||||||||||
Total | $ | 850,113 | $ | 105,798 | $ | 744,315 | ||||||||||||
31-Aug-13 | ||||||||||||||||||
Cost | Accumulated | Net Book | ||||||||||||||||
Depletion, | Value | |||||||||||||||||
Depreciation | ||||||||||||||||||
and | ||||||||||||||||||
Amortization | ||||||||||||||||||
Machinery and equipment | $ | 28,335 | $ | 15,179 | $ | 13,156 | ||||||||||||
Capitalized oil and gas properties | 357,468 | 59,878 | 297,590 | |||||||||||||||
Total | $ | 385,803 | $ | 75,057 | $ | 310,746 |
LOANS_PAYABLE_TO_RELATED_PARTI
LOANS PAYABLE TO RELATED PARTIES | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
LOANS PAYABLE TO RELATED PARTIES [Abstract] | |||||||||
LOANS PAYABLE, RELATED PARTIES | 9. LOANS PAYABLE TO RELATED PARTIES | ||||||||
Loan Payable To Related Parties, Short Term | |||||||||
Loans payable to related parties, short term, consist of the following at August 31, 2014, and August 31, 2013: | |||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Darren Katic | $ | 161,000 | $ | - | |||||
Manhattan Holdings, LLC | 60,000 | - | |||||||
Total long-term loans | 221,000 | - | |||||||
Accrued interest payable | 5,876 | - | |||||||
Loans payable to related parties, short term | $ | 226,876 | $ | - | |||||
Loans payable to related parties are unsecured and bear interest at 10% per annum Mr. Katic's loan is due on demand. Manhattan Holdings, LLC's loan was originally due on October 31, 2014, but the maturity date was extended to January 31, 2015. Accordingly, the loans have been treated as short-term loans. Mr. Katic is an officer, director and significant shareholder. Manhattan Holdings, LLC is a significant shareholder. | |||||||||
In addition, as part of the acquisition of HERLLC on January 1, 2014, we assumed $29,625 loan payable to Mr. Katic (for both cash advanced to Hawker and expenses incurred on its behalf). This loan was unsecured and non-interest bearing with no formal maturity date. On April 9, 2014, Mr. Katic agreed to convert this amount into common stock and warrants on the same terms as the unit offering described in Note 16. | |||||||||
Finally, as part of the acquisition of Hawker on October 25, 2013, we assumed a $15,000 amount owing to Kristian Andresen, a director and significant shareholder, and an officer at that time. This amount was converted similarly to common stock and warrants on January 31, 2014. | |||||||||
See also Note 19, Subsequent Events. | |||||||||
Loan Payable To Related Parties, Long Term | |||||||||
SCNRG received various loans from its former members from its inception totaling $0 as of August 31, 2014, and $89,833 as of August 31, 2013. Each loan was originally unsecured, non-interest bearing and due on demand. On September 18, 2013, each loan was formalized through the issuance of an amended and restated promissory note to each former member. The amended and restated promissory notes were unsecured, bore interest at a rate of 1.66% per annum and matured no later than September 18, 2018. The unpaid principal and interest were payable upon the earlier of their maturity or upon the issuance of new debt or equity securities in a transaction or series of transactions resulting in aggregate gross proceeds to Hawker of a minimum of $5 million. Hawker assumed these loans payable upon its reverse merger with SCNRG on October 25, 2013. | |||||||||
On April 9, 2014, the related parties agreed to convert the long-term loans payable, including accrued interest, into common stock and warrants on the same terms as the unit offering described in Note 16. | |||||||||
Loans payable to related parties, long term, consist of the following at August 31, 2014, and August 31, 2013: | |||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Darren Katic | $ | - | $ | 38,500 | |||||
Manhattan Holdings, LLC | - | 38,500 | |||||||
Gerald Tywoniuk | - | 12,833 | |||||||
Total long-term loans | - | 89,833 | |||||||
Accrued interest payable | - | - | |||||||
Less current portion | - | - | |||||||
Loans payable to related parties, long term | $ | - | $ | 89,833 | |||||
Gerald Tywoniuk is a significant shareholder of Hawker. Mr. Katic's and Manhattan Holdings, LLC's relationship to Hawker is described above. | |||||||||
CONVERTIBLE_NOTES_PAYABLE_SHOR
CONVERTIBLE NOTES PAYABLE, SHORT TERM | 12 Months Ended | |||||||||||||||||||||||||||||||||||
Aug. 31, 2014 | ||||||||||||||||||||||||||||||||||||
CONVERTIBLE NOTES PAYABLE, SHORT TERM [Abstract] | ||||||||||||||||||||||||||||||||||||
CONVERTIBLE NOTES PAYABLE, SHORT TERM | 10. CONVERTIBLE NOTES PAYABLE, SHORT TERM | |||||||||||||||||||||||||||||||||||
Convertible notes payable | ||||||||||||||||||||||||||||||||||||
Between May 13, 2014, and August 31, 2014, we issued a number of convertible notes payable("CNP"). All were issued in amounts equal to the cash we received, and bear simple interest on the unpaid principal balance at 12% per annum, which is payable on maturity. | ||||||||||||||||||||||||||||||||||||
Convertible notes payable, short term, consist of the following at August 31, 2014, and August 31, 2013; conversion features, security provisions and warrants to acquire common stock of Hawker are also set forth below: | ||||||||||||||||||||||||||||||||||||
Issue | Maturity | August 31, | August 31, | |||||||||||||||||||||||||||||||||
Date | Date | 2014 | 2013 | |||||||||||||||||||||||||||||||||
CNP 1 | $ | 260,851 | $ | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) | 25-Jun-14 | 30-Nov-14 | ||||||||||||||||||||||||||||||||||
CNP 2 | May 30, 2014 | November 30, 2014 | 250,000 | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) | ||||||||||||||||||||||||||||||||||||
CNP 3 | July 17, 2014 | June 30, 2015 | 100,000 | - | ||||||||||||||||||||||||||||||||
(1) (3) (4) | ||||||||||||||||||||||||||||||||||||
CNP 4 | July 17, 2014 | July 10, 2015 | 100,000 | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) (4) (5) | ||||||||||||||||||||||||||||||||||||
CNP 5 | May 13, 2014 | May 13, 2016 | 50,000 | - | ||||||||||||||||||||||||||||||||
-6 | ||||||||||||||||||||||||||||||||||||
CNP 6 | July 25, 2014 | July 25, 2015 | 50,000 | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) (4) | ||||||||||||||||||||||||||||||||||||
CNP 7 | August 28, 2014 | July 25, 2015 | 30,000 | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) (4) | ||||||||||||||||||||||||||||||||||||
840,851 | - | |||||||||||||||||||||||||||||||||||
Accrued interest payable | 21,599 | - | ||||||||||||||||||||||||||||||||||
Convertible notes payable, short term | $ | 862,450 | $ | - | ||||||||||||||||||||||||||||||||
-1 | Convertible at any time at the option of the investor into "Conversion Units." Each Conversion Unit consists of one share of common stock of Hawker and one warrant to purchase one-half share of common stock of Sara Creek at an exercise price of $0.25 per share. The number of Conversion Units into which the note is convertible is computed by dividing all of the then outstanding principal and accrued interest under the note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Each warrant has a five-year life from the date the convertible note payable was issued. In the event there is a future sale of common stock or instruments exchangeable for or convertible into common stock below the then current conversion price of the note, the conversion rate for CNP 1 shall be adjusted to that price. In the case of CNP 1 and 2, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. The face amount of CNP 1 is $350,000. CNP 1 and total convertible notes payable above are shown net of unamortized discount of $89,149, comprised of an initial discount of $139,051 recorded upon issuance of CNP 1 in June 2014 and accretion of discount of $49,902 for the period from June 2014 through August 31, 2014. See “$350,000 Convertible Note Payable and Conversion Option (Derivative Liability)” below. | |||||||||||||||||||||||||||||||||||
-2 | Hawker granted a security interest to the investor in all of its assets. | |||||||||||||||||||||||||||||||||||
-3 | The proceeds were required to be used solely for the purpose of allowing Tapia Holdings to make advances to TEG under the terms of the secured subordinated loan receivable described in Note 7. Any repayment of such advances by TEG to Tapia Holdings must be used by us to immediately first repay convertible notes payable to the holder of CNP 1 and 2, and second to repay other convertible notes payable pro rata. | |||||||||||||||||||||||||||||||||||
-4 | Conversion of unpaid principal into Conversions Units pursuant to the terms in (1) above is mandatory in the event Hawker closes the Proposed TEG Acquisition described in Note 7. Conversion of unpaid interest into Conversion Units is at the election of Hawker. | |||||||||||||||||||||||||||||||||||
-5 | The holder is related to Darren Katic, who is an officer, director and significant shareholder. | |||||||||||||||||||||||||||||||||||
-6 | Unpaid principal and accrued interest is convertible at any time at the option of the holder into Conversion Units in an amount computed by dividing the amount converted by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Repayment of the convertible note payable is required on collection of the secured subordinated loan receivable described in Note 7 if earlier than the maturity date above. As Hawker expects to receive repayment on the secured subordinated loan receivable within one year, this convertible note payable has been classified as a short term liability. | |||||||||||||||||||||||||||||||||||
We issued additional secured convertible notes payable in the amount of $50,000 subsequent to August 31, 2014, as described in Note 19, Subsequent Events. | ||||||||||||||||||||||||||||||||||||
$350,000 Convertible Note Payable and Conversion Option (Derivative Liability) | ||||||||||||||||||||||||||||||||||||
On June 25, 2014, the Company negotiated a short-term convertible promissory note payable to an unrelated entity. Under the terms of the note, the Company received $350,000. The repayment of the note is due on November 30, 2014. The repayment is subject to the convertible features of the note. The creditor has a conversion option allowing it to choose to receive repayment of the stated principal either in cash or, at the creditor's option the note is convertible into “Conversion Units.” Each Conversion Unit consists of one share of common stock of Hawker and one warrant to purchase one-half share of common stock of Hawker at an exercise price of $0.25 per share. The number of Conversion Units into which the note is convertible is computed by dividing all of the then outstanding principal and accrued interest under the note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Each warrant has a five-year life from the date the convertible note payable was issued. The note has an anti-dilution provision that allows for the automatic reset of the conversion price upon any future sale of common stock or instruments exchangeable for or convertible into common stock below the then current conversion price of the note. This note was amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. This note is referred to as “CNP 1” in the prior section of this footnote. | ||||||||||||||||||||||||||||||||||||
The Company identified an embedded derivative related to the certain conversion price reset provision. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the note, the Company determined a fair value of $139,051 of the embedded derivative. The fair value of the embedded derivative was determined using the Black-Scholes Pricing Model based on the following assumptions: | ||||||||||||||||||||||||||||||||||||
Dividend yield: | 0 | % | ||||||||||||||||||||||||||||||||||
Volatility | 178 | % | ||||||||||||||||||||||||||||||||||
Risk free rate: | 0.05 | % | ||||||||||||||||||||||||||||||||||
The initial fair values of the embedded debt derivative of $139,051 was allocated as a debt discount and amortized using the effective interest method. We amortized $49,902 as interest expense due to the accretion of the discount during year ended August 31, 2014. The unamortized discount as of August 31, 2014 was $89,149, which will be fully amortized during the year ended August 31, 2015. | ||||||||||||||||||||||||||||||||||||
The fair value of the described embedded derivative of $122,045 at August 31, 2014 was determined using the Black-Scholes Pricing Model with the following assumptions: | ||||||||||||||||||||||||||||||||||||
Dividend yield: | 0 | % | ||||||||||||||||||||||||||||||||||
Volatility | 213 | % | ||||||||||||||||||||||||||||||||||
Risk free rate: | 0.03 | % | ||||||||||||||||||||||||||||||||||
At August 31, 2014, the Company adjusted the recorded fair value of the derivative liability to market resulting in non-cash, non-operating gain of $19,636 for the year ended August 31, 2014. At August 31, 2014, the $350,000 balance of the note was outstanding. |
ASSET_RETIREMENT_OBLIGATION
ASSET RETIREMENT OBLIGATION | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
ASSET RETIREMENT OBLIGATION [Abstract] | |||||||||
ASSET RETIREMENT OBLIGATION | 11. ASSET RETIREMENT OBLIGATION | ||||||||
Our asset retirement obligations relate to the abandonment of oil wells and related surface facilities. The amounts recognized are based on numerous estimates and assumptions, including future retirement costs, inflation rates and credit adjusted risk-free interest rates. | |||||||||
The following shows the changes in asset retirement obligations for the years ended August 31, 2014 and 2013: | |||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Asset retirement obligations, beginning | $ | 103,299 | $ | 95,206 | |||||
Liabilities acquired during the period | 53,963 | - | |||||||
Liabilities settled during the period | - | - | |||||||
Current period accretion | 10,848 | 8,093 | |||||||
Asset retirement obligations, ending | $ | 168,110 | $ | 103,299 |
NET_PROFITS_INTEREST_NPI_PAYAB
NET PROFITS INTEREST ("NPI") PAYABLE | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
NET PROFITS INTEREST ("NPI") PAYABLE [Abstract] | |||||||||
NET PROFITS INTEREST ("NPI") PAYABLE | 12. NET PROFITS INTEREST (“NPI”) PAYABLE | ||||||||
In connection with SCNRG's December 1, 2009 Purchase and Sale Agreement for the DEEP Lease, and as part of the purchase price consideration, SCNRG entered into an Assignment of Net Profit Interest with Christian Hall Petroleum. Pursuant to the agreement, SCNRG is required to make monthly payments to the holder in an amount equal to 40% of SCNRG's share of net profit (as defined in the agreement) from production. | |||||||||
Until February 1, 2014, SCNRG's working interest in the DEEP property was 66.67%, and the NPI agreement called for a minimum monthly payment of $1,985 (SCNRG's 66.67% share). Beginning February 1, 2014, SCNRG's working interest in the DEEP Lease increased to 87.18%, and its share of the minimum monthly payment became $2,596. Beginning May 15, 2014, SCNRG's working interest in the DEEP Lease increased to 100.0%, and its share of the minimum monthly payment became $2,978. Payments are required until SCNRG and other working interest owners have made NPI payments in aggregate between $347,000 and $357,410 on or before December 31, 2022 (the actual maximum amount within this range is dependent on when SCNRG and other working interest owners satisfy their aggregate NPI payment obligations). As of August 31, 2014, SCNRG and other working interest owners have made NPI payments totaling $125,201. SCNRG has paid its 66.67% working interest share of this amount through February 1, 2014, its subsequent 87.18% share through May 15, 2014, and its subsequent 100.0% share through May 31, 2014. | |||||||||
Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG's December 1, 2009, acquisition date of a 66.67% working interest in the DEEP Lease, and this liability was increased pro rata when its working interest increased to 87.18% on February 1, 2014, and again on May 14, 2014 when its working interest increased to 100.0%. The discount rate used in all cases was 10.0% per annum. | |||||||||
Changes in SCNRG's share of the NPI liability are as follows for the years ended August 31, 2014 and 2013: | |||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
NPI liability, beginning of period | $ | 124,597 | $ | 135,640 | |||||
Liabilities assumed in connection with | 58,847 | - | |||||||
acquisition of additional DEEP Lease | |||||||||
working interests | |||||||||
Current period accretion | 14,104 | 12,865 | |||||||
Payments made | (28,444 | ) | (23,908 | ) | |||||
NPI liability, end of period | 169,104 | 124,597 | |||||||
Less: current portion | 20,065 | 12,109 | |||||||
NPI liability, long-term portion | $ | 149,039 | $ | 112,488 |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
INCOME TAXES [Abstract] | |||||||||||
INCOME TAXES | 13. INCOME TAXES | ||||||||||
There was no current or deferred income tax expense (benefit) for the years ended August 31, 2014 and August 31, 2013. Accordingly, a reconciliation between the statutory rate and our effective rate has not been provided. | |||||||||||
Significant components of the deferred tax assets and liabilities are as follows: | |||||||||||
Year Ended August 31, | |||||||||||
2014 | 2013 | ||||||||||
Deferred tax assets: | |||||||||||
Accounts payable and accrued expenses | $ | 504,765 | $ | - | |||||||
Asset retirement obligations | 5,992 | - | |||||||||
Convertible note payable | 20,333 | ||||||||||
Net operating loss carry-forward | 477,153 | - | |||||||||
Total deferred tax assets | 1,008,243 | - | |||||||||
Deferred tax liabilities: | |||||||||||
Depreciation and basis differences | (37,088 | ) | - | ||||||||
Conversion option | (6,929) | ||||||||||
Total deferred tax liabilities | (44,017 | ) | |||||||||
Net deferred tax assets | 964,226 | - | |||||||||
Valuation allowance | (964,226 | ) | - | ||||||||
Net deferred tax assets | $ | - | $ | - | |||||||
At August 31, 2014, we have Federal and State net operating loss carry forwards of approximately $1,302,500 and $370,300 expiring in 2034 and 2024, respectively. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs (see Note 4). Therefore, the amount available to offset future taxable income is limited. A valuation allowance has been established against net operating losses where it is more likely than not that such losses will expire before they are utilized. | |||||||||||
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended | |||||||||||||||
Aug. 31, 2014 | ||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | ||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | 14. FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. | ||||||||||||||||
The following tables set forth by level within the fair value hierarchy the Company's financial assets and liabilities that were accounted for at fair value as of August 31, 2014 and 2013. As required by ASC 820, a financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. There were no transfers between fair value hierarchy levels for the years ended August 31, 2014 and 2013. | ||||||||||||||||
The carrying amounts reported in the balance sheets for cash, accounts receivable, loan receivable, accounts payable and accrued expenses, and loans and notes payable, approximate their fair market value based on the short-term maturity of these instruments. Non-financial assets and liabilities of the Company measured at fair value include long-lived assets (e.g., Oil and Gas properties) that are impaired in a currently reported period. | ||||||||||||||||
The following table presents assets and liabilities that are measured and recognized at fair value on a recurring basis, as of August 31, 2014 and 2013: | ||||||||||||||||
Assets and liabilities measured at fair | ||||||||||||||||
value on a recurring | ||||||||||||||||
basis at August 31, 2014: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Carrying | ||||||||||||||||
Value | ||||||||||||||||
Total Assets | $ | - | $ | - | $ | - | $ | - | ||||||||
Liabilities: | ||||||||||||||||
Conversion option | $ | - | $ | - | $ | 122,045 | $ | 122,045 | ||||||||
Total Liabilities | $ | - | $ | - | $ | 122,045 | $ | 122,045 | ||||||||
There were no assets nor liabilities measured at fair value on a recurring basis at August 31, 2013. | ||||||||||||||||
The following table provides a summary of changes in fair value of the Company's Level 3 financial liabilities as of August 31, 2014: | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Balance, August 31, 2013 | $ | - | $ | - | ||||||||||||
Initial fair value of debt derivatives at note issuances | 139,051 | |||||||||||||||
Initial fair value of additional derivative created through interest accrual | 2,630 | |||||||||||||||
Extinguished derivative liability | - | - | ||||||||||||||
Mark-to-market at August 31, 2014 -Embedded debt derivatives | (19,636 | ) | - | |||||||||||||
Balance, August 31, 2014 | $ | 122,045 | $ | - | ||||||||||||
Net gain for the period included in earnings relating to the liabilities held | $ | 19,636 | $ | - | ||||||||||||
at August 31, 2014 | ||||||||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||
Aug. 31, 2014 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES | ||||
Commitments | |||||
Oil production from the DEEP Lease is subject to a 1% overriding royalty. Additionally, production is also subject to an aggregate additional 19.92% royalty for total royalties of 20.92%. | |||||
Further, on December 1, 2009, SCNRG entered into an Operating Agreement with Caleco, LLC (“Caleco”) for a term equal to the life of the DEEP Lease wells. As the operator, Caleco incurs production and other costs, which are subsequently billed to SCNRG for its share through a joint interest billing process; and the operator distributes to SCNRG its share of revenue received from production, less royalties and NPI obligations. All expenses and revenue presented by the operator represent the pro rata share of the revenue earned and expenses incurred. In accordance with the terms of the agreement, the operator is entitled to a fee for services but has instead elected to bill SCNRG based on actual time and materials. As described in Note 6, SCNRG increased its working interest in the DEEP Lease from 66.67% to 100.0% during the year ended August 31, 2014; Caleco continues to operate the DEEP Lease on SCNRG's behalf during a transitional period until SCNRG qualifies with the regulatory agency as an operator. | |||||
Contingencies | |||||
We are subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the owners for the cost of pollution cleanup resulting from operations and subject the owners to liability for pollution damages. In some instances, the operator may be directed to suspend or cease operations in the affected area. As of August 31, 2014, and August 31, 2013, we have no reserve for environmental remediation and are not aware of any environmental claims. | |||||
Contractual Obligations | |||||
On behalf of a related party, we have been making lease payments for two non-cancellable operating leases for its office space. No formal assumption agreement has yet been completed with the third-party landlord. See Note 17. The leases have terms ending in 2015 and 2017. | |||||
Future minimum payments under operating leases for the next five years total $86,450, and are as follows: | |||||
Year Ended August 31 | Amount | ||||
2015 | $ | 38,827 | |||
2016 | 32,758 | ||||
2017 | 14,865 | ||||
2018 | - | ||||
2019 | - | ||||
$ | 86,450 |
STOCKHOLDERS_DEFICIT
STOCKHOLDERS' (DEFICIT) | 12 Months Ended |
Aug. 31, 2014 | |
STOCKHOLDERS' (DEFICIT) [Abstract] | |
STOCKHOLDERS' (DEFICIT) | 16. STOCKHOLDERS' (DEFICIT) |
Common Stock | |
The following common stock transactions occurred during the year ended August 31, 2014: | |
(a) On October 25, 2013, we issued 14,000,000 shares of our common stock to the members of SCNRG to acquire 100% of the membership interests in SCNRG. As described in Notes 1 and 4, the acquisition of SCNRG by Hawker has been accounted for as a recapitalization of Hawker for accounting purposes; | |
(b) On January 1, 2014, we issued 3,000,000 shares of our common stock to acquire HERLLC as described in Note 5; | |
(c) On January 8, 2014, we issued 2,000,000 shares of our common stock to Ryan Bateman to satisfy an obligation pursuant to a July 2013 purchase agreement for the Sawtelle well interest; | |
(d) Between January 10, 2014 and July 1, 2014, we issued an aggregate 10,212,720 units at a price of $0.10 per unit. Each unit comprises one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock at $0.20 per share. The warrants expire five years from each closing date. Gross proceeds were $1,021,272, including $103,687 to settle certain loans payable to related parties and $188,185 to settle certain accounts payable. No commissions were paid or are payable. Net proceeds after legal and other offering costs were $980,288. No separate accounting was given to the warrants as the value is indeterminable, and any such allocation would be recorded to paid-in capital regardless, just as the excess over par value for the common stock was recorded. | |
(e) On August 27, 2014, we received an aggregate of $50,000 for the sale of 500,000 units on the same terms as set forth in (d) above. Closing occurred in September 2014. This amount is shown as common stock payable at August 31, 2014. | |
Related party transactions are set forth in Note 17. Additional units were sold after August 31, 2014, as described in Note 19. | |
Shares of Common Stock Potentially Issuable Pursuant To Warrants, Convertible Notes Payable and Options | |
Pursuant to warrants issued in our private placements of securities from January 10, 2014 through July 1, 2014, described above, up to 5,106,360 shares of our common stock would be issuable upon payment to us of $0.20 per share. The warrants expire five years from the date of each private placement. | |
Up to 14,014,939 shares of common stock could be issued pursuant to the convertible notes payable described in Note 10, as follows: | |
Up to 9,300,000 shares of common stock would be issuable if investors elect or are required to convert all of the $930,000 aggregate principal amount on or prior to maturity, with the number of shares issuable on conversion computed at a rate of $0.10 per share; | |
Up to an additional 4,400,000 shares of common stock would be issuable pursuant to warrants created if investors elect or are required to convert certain convertible note payables prior to or on maturity (which notes payable are included in the preceding paragraph) and pay us $0.25 per share on exercise; and | |
An additional amount of up to approximately 215,987 shares of common stock would be issuable determined based on the amount of any accrued interest payable as of August 31, 2014, if investors elect or are required to convert their notes payable into common stock, based on a conversion rate of $0.10 per share. Conversion of accrued interest into common stock would create warrants to acquire up to a further 98,952 shares at an exercise price of $0.25 per share. | |
On May 14, 2014, 5,950,000 common stock options were issued to our officers and other key consultants. | |
Each option has a life of 10 years and a strike price of $0.10 per share. One million stock options vest on December 15, 2014, with the balance of 4,950,000 stock options vesting one-third on each of May 13, 2015, 2016 and 2017. There are no other options outstanding, and no options have vested to date. | |
These options were granted pursuant to the 2014 Stock Plan approved by written consent of a majority of our stockholders on March 18, 2014, which authorized 15% of our outstanding shares of common stock to be available for grant in the form of options or stock purchase rights. At August 31, 2014, 15% of our outstanding common stock is 6,176,205, of which we granted 5,950,000 stock options as stated above. | |
The fair value of each stock option award was estimated on the date of grant using the Black-Scholes option pricing method. Compensation costs related to the options granted are recognized on a straight-line basis over the vesting period. The expected life assumption was 10 years, the same as the contract life, as we do not have historical data upon which to base an expected term assumption. No forfeitures were assumed, as we have no historical data. Expected volatility was based on historical volatility of our common stock. The risk-free interest rate was derived from the U.S. Treasury yields in effect at the time of grant and the dividend yield was zero, based on historical experience and expected future changes. | |
Equity compensation expense was $68,760 for the period from the date of grant on May 14, 2014, to August 31, 2014. The total compensation cost relating to unvested stock option grants not yet recognized at August 31, 2014, was $342,000, and the weighted average period over which this cost is expected to be recognized, as of August 31, 2014, is approximately 2.5 years. | |
See Note 19 for Subsequent Events. | |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Aug. 31, 2014 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 17. RELATED PARTY TRANSACTIONS |
The following information sets forth related party transactions, being transactions with: | |
Mr. Kristian Andresen is a director of Hawker and a significant shareholder. Until October 25, 2013, he was also our CEO, and from October 25, 2013, until July 17, 2014, he was Secretary of Hawker. Mr. Andresen has been actively providing services to Hawker since October 25, 2013. | |
Mr. Darren Katic is a director and Chief Executive Officer and Chief Financial Officer of Hawker. He was a member of SCNRG, which we acquired on October 25, 2013, and at which point Mr. Katic became a director, officer and a significant shareholder of Hawker. | |
Manhattan Holdings, LLC (“Manhattan”) was a member of SCNRG, which Hawker acquired on October 25, 2013, at which point Manhattan became a significant shareholder. | |
Mr. Charles Moore was a managing member of HERLLC until Hawker acquired his interest on January 1, 2014, at which point he became a significant shareholder of Hawker. Mr. Moore has been actively providing services to Hawker since that date. | |
Mr. Gerald Tywoniuk was a member of SCNRG, which Hawker acquired on October 25, 2013, at which point he became a significant shareholder of Hawker. Mr. Tywoniuk has been actively providing services to Hawker since that date. | |
HERLLC | |
On January 1, 2014, Hawker exercised its option to acquire all of the membership interests in HERLLC from Mr. Katic and Mr. Moore (collectively the “HERLLC Sellers”), as described in Note 5. Hawker issued 3,000,000 shares of our common to the HERLLC Sellers as consideration for the acquisition, 1,500,000 shares to each HERLLC Seller. Hawker also assumed net liabilities of $135,199, including $29,625 owing to Mr. Katic. Pursuant to the option agreement, Hawker is required to issue up to an additional 33,000,000 shares to Sellers upon Hawker or HERLLC consummating certain follow-on transactions. | |
The HERLLC option was originally entered into with Hawker on October 15, 2013 and amended on November 20, 2013 to (a) extend the term of the option, (b) revise the option consideration payable upon consummation of certain transactions described in the Agreement and (c) provide for additional option consideration in the event of the consummation of certain transactions not previously contemplated by the parties. | |
On October 10, 2014, the Board of Hawker waived all of the follow-on transaction requirements and authorized the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we hold 19,000,000 shares in escrow, to be released in accordance with the provisions described in Note 19, Subsequent Events. | |
Loan From Related Parties, Short Term | |
As of August 31, 2014, we owed Mr. Katic $161,000. This loan is unsecured, bears interest at 10% and is due on demand. Total advances were $228,000 and repayments were $67,000 during the year ended August 31, 2014. The maximum outstanding balance was $190,000. | |
As of August 31, 2014, we owed Manhattan $60,000. This loan is unsecured, bears interest at 10% and is due January 31, 2015, pursuant to a promissory note amendment dated September 29, 2014, which amended the maturity date from October 31, 2014. | |
Accrued interest payable as of August 31, 2014, on the above is $5,876. | |
See Note 19, Subsequent Events. | |
Loans From Related Parties, Long Term | |
SCNRG received various loans from its former members from its inception totaling $89,833 as of August 31, 2013: Mr. Katic $38,500, Manhattan $38,500 and Mr. Tywoniuk $12,833. Each loan was originally unsecured, non-interest bearing and due on demand. On September 18, 2013, each loan was formalized through the issuance of an amended and restated promissory note to each former member. The amended and restated promissory notes were unsecured, bore interest at a rate of 1.66% per annum and matured no later than September 18, 2018. The unpaid principal and interest were payable upon the earlier of their maturity or upon the issuance of new debt or equity securities in a transaction or series of transactions resulting in aggregate gross proceeds to Hawker of a minimum of $5 million. Hawker assumed these loans payable upon its acquisition of SCNRG on October 25, 2013. On April 9, 2014, the related parties agreed to convert the short- and long-term loans payable to related parties into common stock and warrants on the same terms as the unit offering described in Note 16. | |
Convertible Notes Payable | |
As of August 31, 2014, pursuant to a convertible note payable, we owed a relative of Mr. Darren Katic, $100,000 plus accrued interest of $1,710, all as described in Note 10. | |
Unit Sales | |
The following unit sale transactions involved related parties: | |
On January 10, 2014, Messrs. Katic and Tywoniuk purchased 380,000 and 500,000 units of Hawker for $38,000 and $50,000 respectively. In addition, Manhattan acquired 900,000 units of Hawker for $90,000. | |
On January 31, 2014, Mr. Andresen agreed to settle $15,000 owing to him by Hawker, as of the date of SCNRG's acquisition of Hawker, in exchange for 150,000 units, and on April 9, 2014, Mr. Katic agreed to settle $16,625 owing to him in exchange for 166,250 units. | |
On April 9, 2014, Mr. Katic, Manhattan and Mr. Tywoniuk agreed to settle SCRNG's “loans to related parties, long term” totaling $90,687 (see Note 9 and also referred to above in loans from related parties, long term), plus Mr. Katic agreed to settle a $13,000 amount owing to him from HERLLC at the January 1, 2014, acquisition date of HERLLC, for a total of $103,687 in exchange for 1,036,870 units. | |
All of these amounts are a portion of the proceeds from unit sales described in Note 16. Each unit comprises one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock at $0.20 per share. The warrants expire five years from the closing date. The price of each unit was $0.10 per unit. | |
As part of the common stock payable amounts outstanding on August 31, 2014, described in Note 16, $20,000 was received from each of Messrs. Katic and Tywoniuk. | |
Stock Option Grant And Accrued Bonuses | |
See Note 16 for a description of the stock option grant that occurred on May 14, 2014. Of the options granted, 600,000, 2,600,000 and 1,600,000 were granted to Messrs. Katic, Moore and Tywoniuk, respectively. These options vesting over three years. In addition, 1,000,000 options vesting December 15, 2014 were granted to SMED Capital Corp., an entity owned by Mr. Andresen. Each of these options have an exercise price is $0.10 per unit, and a term of 10 years. | |
At August 31, 2014, Hawker accrued bonuses of $120,000 each to Mr. Andresen, Katic, Moore and Tywoniuk, in recognition of services rendered. These amounts will not be paid until Hawker has sufficient funds, to be determined by our Chief Financial Officer. The total amount payable of $480,000 is shown separately on the balance sheet, and the total expense is shown separately on the statement of operations. | |
None of these individuals was an employee of Hawker, nor did they receive any other consideration in the years ended August 31, 2013 and 2014. | |
Other | |
On closing of the Tapia, LLC acquisition, the non-controlling interest held by Mr Moore is expected to be 1.5 percentage points. See Notes 7 and 19. | |
On behalf of a company controlled by Mr. Katic, the Company has been paying rent to a third party for its office space, beginning January 1, 2014. No formal assumption agreement has been completed to reassign the leases with the landlord from Mr. Katic's company to Hawker. See Note 15. Mr. Katic provided a personal guarantee to the landlord. For the year ended August 31, 2014, these payments totaled $25,644. | |
See also Note 19, Subsequent Events. | |
PRO_FORMA_FINANCIAL_INFORMATIO
PRO FORMA FINANCIAL INFORMATION | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
PRO FORMA FINANCIAL INFORMATION [Abstract] | |||||||||
PRO FORMA FINANCIAL INFORMATION | 18. PRO FORMA FINANCIAL INFORMATION | ||||||||
The following table presents unaudited pro forma consolidated information, adjusted for the reverse acquisition of Hawker (Note 4) and the acquisition of an additional 33.33% interest in DEEP Lease (Note 6), as if the acquisitions had occurred on September 1, 2012: | |||||||||
Year Ended | |||||||||
August 31, | |||||||||
2014 | 2013 | ||||||||
Revenue | $ | 150,802 | $ | 125,116 | |||||
Net loss | $ | (1,745,624 | ) | $ | (184,149 | ) | |||
Loss per share | $ | (0.05 | ) | $ | (0.01 | ) | |||
These amounts have been calculated after applying our accounting policies and adjusting the results to reflect the recapitalization of Hawker. The unaudited pro forma adjustments are based on available information and certain assumptions we believe are reasonable. It was determined that HERLLC was not a business and therefore there is no pro forma adjustment for the acquisition of HERLLC (Note 5). | |||||||||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Aug. 31, 2014 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS |
Secured Subordinated Loan Receivable From TEG | |
On September 30, 2014, October 2, 2014, and October 31, 2014, Tapia Holdings advanced to TEG a further $196,625 pursuant to the secured subordinated loan receivable described in Note 7, bringing the balance to $1,487,352 plus accrued interest. | |
Loans Payable To Related Parties, Short Term | |
Subsequent to August 31, 2014, we received additional cash proceeds of $95,000, converted an accounts payable of $3,525 into a loan payable, and repaid $10,000 as follows: | |
Manhattan advanced a further $30,000 on September 29, 2014, with a maturity date of January 31, 2014, and concurrently agreed to extend the maturity date on a prior $60,000 to January 31, 2015; | |
Mr. Andresen advanced $15,000 on September 29, 2014, and on November 10, 2014 agreed to convert a $3,525 amount payable to him for business expenses into a loan, for a total loan balance of $18,525 with a maturity date of January 31, 2015; | |
Mr. Tywoniuk advanced $50,000 on October 31, 2014, with a maturity date of January 31, 2015; and | |
On September 16, 2014, we repaid a $10,000 portion of the loan to Mr. Katic. | |
All loan amounts bear interest at 10% per annum, and are unsecured. See also Note 9. | |
Convertible Notes Payable | |
Subsequent to August 31, 2014, we received total additional cash proceeds of $50,000: | |
On September 26, 2014, we received $25,000 pursuant to a convertible promissory note with terms identical to CNP 3 set forth in Note 10, except that the maturity date is September 26, 2015; and | |
On November 3, 2014, we received $25,000 pursuant to a convertible promissory note with terms identical to the CNP 1 set forth in Note 10, except that the maturity date is May 3, 2015. | |
In the case of CNP 1 and 2 set forth in Note 10, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. | |
Additional Unit Sales | |
Subsequent to August 31, 2014, Sara Creek issued an aggregate of 500,000 Units to three investors in consideration of an aggregate of $50,000 in cash received prior to August 31, 2014, and shown as common stock payable as of that date. No commissions were paid or payable. The price of each Unit was $0.10. Each Unit was comprised of one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock on payment of $0.20 per share. The warrants expire five years from the closing date. | |
Non-Controlling Interest | |
On October 2, 2014, Mr. Moore invested an additional $25,000 for additional equity of Tapia Holdings, LLC. In addition, the other investor in Tapia Holdings, LLC funded an aggregate of $65,000 of its prior commitment on September 2 and 24, 2014. Including these funding amounts, a cumulative amount of $145,000 has been funded to date, leaving $145,000 of future commitment to participate in the note payable to Sefton on closing of the Tapia, LLC acquisition. The Tapia Holdings, LLC operating agreement was also amended. As a result of the additional investment and revision to the operating agreement, non-controlling interest at closing of the acquisition is expected to now represent 4.83% of the total outstanding equity of Tapia Holdings, LLC. | |
See also Note 2, Non-Controlling Interest, and Note 17, Related Party Transactions. | |
Amendment Of HERLLC Option Agreement | |
On October 10, 2014, Hawker authorized an amendment (the “Amendment”) to the Amended and Restated Option Agreement (“Option Agreement”) dated November 20, 2013, among Hawker, Darren Katic (a director, officer and significant stockholder of Hawker), and Charles Moore (a significant stockholder of Hawker). Under the original terms of the Option Agreement (see Note 5), Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock upon the consummation of certain Potential Follow-on Transactions. The Amendment waived all of the follow-on transaction requirements and authorized the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we hold 19,000,000 shares in escrow, to be released as follows: (i) 10,000,000 shares upon completion of the acquisition of the assets of TEG Oil & Gas, Inc. (located in the Tapia Field, Los Angeles County, California), and (ii) 9,000,000 shares upon completion, on or before December 31, 2017, of any one of the transactions evaluated by HERLLC, our wholly-owned subsidiary, prior to its reorganization with Hawker, including a transaction resulting in Hawker ownership of oil and gas lease interests in any one of the following unique oil fields: Cat Canyon (leases Tognazzini, Wickenden, Los Alamos, GWP, and those immediately adjacent to, in each case, in Santa Barbara County), Santa Maria (T 11N, R 36W extending southeast through T9N R33W in Santa Barbara County), Casmalia (leases Tompkins, Peshine, and those immediately adjacent to, in each case, in Santa Barbara County), North Lost Hills (Sections 12 & 13, T25S, R19E, and Sections 7 & 18, T25S, R 20E, totaling 1,500 acres in Kern County CA), Maricopa (McFarland and Jameson leases totaling 40 acres in Kern County), Pine Meadows (Section 1 Township 31 South Range 22E in Kern County) or Torrance (Joughin and South Torrance Units in totaling 900 acres in Los Angeles County). Waiver of the follow-on transaction requirements and the immediate issuance of the remaining shares are meant to simplify our common shareholding structure and share count and to assist in our capital raising efforts. | |
With respect to 14,000,000 shares of our common stock that were issued as a result of the October 10, 2014, amendment, an expense will be recorded based on the fair value of the shares at the date of issuance. With respect to the 19,000,000 share of our common stock that are in escrow, an expense will be recorded based on the par value of the shares at the date of issuance. As and when subsequently released from escrow, an expense will be recorded based on the fair value of the shares (less amounts previously expensed based on par value) concurrently with consummation of the applicable follow-on transaction. All of these amounts are not considered for accounting purposes to be incremental consideration for our acquisition of HERLLC. | |
Pursuant to a separate agreement dated November 13, 2014, between Messrs. Katic, Moore and Tywoniuk, Mr. Tywoniuk (a significant shareholder) holds warrants to acquire 9.7222% of any shares acquired by Messrs. Katic and Moore pursuant to the agreement above. This agreement amended a December 27, 2013, agreement entitling Mr. Tywoniuk to acquire 5% of any shares acquired by Messrs. Katic and Moore pursuant to the Option Agreement. | |
RESTATEMENT
RESTATEMENT | 12 Months Ended | ||||||||||||
Aug. 31, 2014 | |||||||||||||
RESTATEMENT [Abstract] | |||||||||||||
RESTATEMENT | 20. RESTATEMENT | ||||||||||||
In connection with the preparation of our consolidated interim quarterly financial statements for the fiscal quarter ended February 28, 2015, we determined that certain entries related to embedded conversion features in certain of our convertible notes with respect to the previously filed financial statements contained in the Original Form 10-Q and the Original Form 10-K were not properly accounted for under U.S. generally accepted accounting principles (“U.S. GAAP”). As further described below, these errors affect the fiscal year ended August 31, 2014, as well as the fiscal quarter ended November 30, 2014. Due to these errors, we determined in May 2015 to restate our consolidated financial statements for the fiscal year ended August 31, 2014, and the fiscal quarter ended November 30, 2014, and that the previously filed financial statements for these periods (including those contained in the Original Form 10-K and the Original Form 10-Q) should no longer be relied upon. This Form 10-K/A contains restated consolidated financial statements for the fiscal year ended August 31, 2014. | |||||||||||||
Contemporaneously with the filing of this Form 10-K/A, the Company is filing an amendment to the Form 10-Q/A, which amendment contains restated interim consolidated financial statements for the fiscal quarter ended November 30, 2014. The corrections of the additional errors in this Form 10-Q/A and the Form 10-K/A are referred to herein as the “Restatement.” | |||||||||||||
Background of Restatement | |||||||||||||
During the third quarter of fiscal year 2015, our management noted that the Company's accounting for certain convertible notes included embedded derivatives that should be bifurcated and accounted for separately. As a result, we reviewed accounting for these convertible notes and the related entries in prior periods. In connection with this review, we also further considered the applicable accounting methodology related to convertible notes. As further described below, after performing this review, we determined that errors existed relating to the accounting for the embedded conversion feature. After analyzing the errors, we determined to restate our financial statements as described herein. | |||||||||||||
These financial statements have been restated to correct an error in the year ended August 31, 2014 relating to a derivative liability created upon the issuance of a $350,000 convertible note in June 2014 (the “June 2014 Convertible Note”). The June 2014 Convertible Note includes an anti-dilution provision that allows for the automatic reset of the conversion price upon any future sale of common stock or instruments exchangeable for or convertible into common stock below the then current conversion price of the June 2014 Convertible Note. Hawker has now concluded that accounting standards require the fair value of the conversion option to be recorded as a derivative liability upon issuance, creating a discount on the June 2014 Convertible Note. The derivative liability is adjusted to fair value each quarter end, and the discount is accreted to interest expense over the term of the June 2014 Convertible Note. The correction of the error increased net loss by $32,896 for the year ended August 31, 2014. The impact of the restatement on the impacted line items is shown in the tables below. The changes impacted the financial statements as of and for the year ended August 31, 2014 and not prior periods. | |||||||||||||
Balance Sheet items | |||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
As at August 31, 2014 | |||||||||||||
Convertible notes payable, short term | $ | 951,599 | $ | (89,149 | ) | $ | 862,450 | ||||||
Conversion option | $ | - | $ | 122,045 | $ | 122,045 | |||||||
Accumulated deficit | $ | (2,047,462 | ) | $ | (32,896 | ) | $ | (2,080,358 | ) | ||||
Statement of Operations items | |||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
Year ended August 31, 2014 | |||||||||||||
Interest expense | $ | 42,434 | $ | 52,532 | $ | 94,966 | |||||||
Change in fair value of conversion option (income) | $ | - | $ | (19,636 | ) | $ | (19,636 | ) | |||||
Net income (loss) | $ | (1,696,236 | ) | $ | (32,896 | ) | $ | (1,729,132 | ) | ||||
Statement of Cash Flow items | |||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
Year ended August 31, 2014 | |||||||||||||
Net income (loss) | $ | (1,696,236 | ) | $ | (32,896 | ) | $ | (1,729,132 | ) | ||||
Adjustment to reconcile net income to cash | |||||||||||||
provided by operating activities: | |||||||||||||
Accretion of discount on convertible notes payable | $ | - | $ | 49,902 | $ | 49,902 | |||||||
Change in fair value of conversion option | $ | - | $ | (19,636 | ) | $ | (19,636 | ) | |||||
Other non-cash interest expense | $ | - | $ | 2,630 | $ | 2,630 | |||||||
Net cash (used in) operating activities | $ | (302,554 | ) | $ | - | $ | (302,554 | ) | |||||
In addition, Note 3 – Going Concern, Note 10 – Convertible Notes Payable, Short Term, Note 13 – Income Taxes, Note 14 – Fair Value of Financial Instruments, and Note 18 – Pro Forma Financial Information were updated for the restatement adjustments above, and Note 2 – Summary of Significant Accounting Policies was updated to add “Convertible Notes and Derivative Liabilities”. | |||||||||||||
Note 14 – Fair Value of Financial Instruments was also amended to disclose in the table only those assets and liabilities that are measured at fair value on a recurring basis. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Aug. 31, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Basis of Presentation | Basis of Presentation |
The accompanying financial statements and related notes present our consolidated financial position as of August 31, 2014 and 2013, and results of operations, changes in stockholders' equity and non-controlling interest, and cash flows for the years ended August 31, 2014, and 2013. Comprehensive income is the same as net income (loss). | |
We have prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). | |
Principles of Consolidation | Principles of Consolidation |
The acquisition of SCNRG by Hawker on October 25, 2013, has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of Hawker. Therefore, our condensed consolidated financial statements include the historic accounts of SCNRG, and consolidated with Hawker's beginning October 25, 2013. | |
On January 1, 2014, we acquired all of the membership interests of Hawker Energy, LLC, which has a wholly-owned subsidiary Punta Gorda Resources, LLC (see Note 5). Hawker Energy, LLC changed its name to Hawker Energy (Rincon), LLC on October 22, 2014. Our condensed consolidated financial statements include the accounts of these entities beginning January 1, 2014. | |
All significant intercompany balances and transactions have been eliminated. | |
Use of Estimates | Use of Estimates |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates included in the financial statements are: (1) depreciation and depletion; (2) accrued assets and liabilities; (3) asset retirement obligations; and (4) net profits interest payable. Recorded amounts are based on estimates of oil reserves, retirement costs and date. By their nature, these estimates including the estimates of future prices and costs, and the related future cash flows are subject to measurement uncertainly, and the impact in the consolidated financial statements of future periods could be material. Although management believes these estimates are reasonable, changes in facts and circumstances or discovery of new information may result in revised estimates. Actual results could differ from those estimates. | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Cash is held in a business checking account with a major financial institution. Our policy is to consider all highly liquid investment instruments purchased with original maturities of three months or less to be cash equivalents for purposes of the statements of cash flows and other statements. On two occasions in the twelve months ended August 31, 2014, cash on deposit has exceeded federally insured limits for up to one week at a time. We have not experienced any losses on such accounts and believe we are not exposed to any significant credit risk on cash and cash equivalents. | |
Accounts Receivable | Accounts Receivable |
Accounts receivable represent oil sales, and are collected by the operator in the month following sale. After deducting and paying the appropriate royalties, the operator either promptly remits our share of the net proceeds to us, or offsets the net proceeds against joint interest billings for our share of production and other costs. We regularly review receivables to insure that the amounts will be collected and establish or adjust an allowance for uncollectible amounts as necessary using the specific identification method. There were no reserves for uncollectible amounts in the periods presented. | |
Inventory | Inventory |
Inventory consists of oil that has been produced and stored in a tank on the DEEP Lease property (see Note 6). Inventory is valued at the lower of average cost and market. | |
Financial Instruments | Financial Instruments |
Financial instruments consist of cash, accounts receivable, loan receivable, accounts payable, loans payable and convertible notes payable. Recorded values of cash, receivables, accounts payable and accrued liabilities approximate fair values due to the short maturities of such instruments. Recorded values for loans and convertible notes payable approximate fair values, since their stated or imputed interest rates are commensurate with prevailing market rates for similar obligations. | |
Machinery and Equipment | Machinery and Equipment |
Machinery and equipment are recorded at cost. Depreciation is on a straight-line method using the estimated lives of the assets. Expenditures for maintenance and repairs are charged to expense. | |
Oil Properties | Oil Properties |
We follow the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize internal costs that can be directly identified with our acquisition, and exploration and development activities. We do not capitalize any costs related to production, general corporate overhead or similar activities. Surface equipment on a property is also part of the amounts capitalized. | |
Under the full-cost method, capitalized costs are depleted (amortized) on a composite unit-of-production method based on proved oil reserves. If we maintain the same level of production year over year, the depletion expense may be significantly different if our estimate of remaining reserves changes significantly. Proceeds from the sale of properties are accounted for as reductions of capitalized costs unless such sales involve a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved properties, in which case a gain or loss is recognized. The costs of unproved properties are excluded from amortization until the properties are evaluated. We review all of our unevaluated properties quarterly to determine whether or not and to what extent proved reserves have been assigned to the properties, and if impairment has occurred. Unevaluated properties are assessed individually when individual costs are significant. | |
We review the carrying value of our oil properties under the full-cost accounting rules of the Securities and Exchange Commission ("SEC") on a quarterly basis. This quarterly review is referred to as a ceiling test. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. In calculating future net revenues, current SEC regulations require us to utilize prices at the end of the appropriate quarterly period. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts, including the effects of derivatives qualifying as cash flow hedges. Two primary factors impacting this test are reserve levels and current prices, and their associated impact on the present value of estimated future net revenues. Revisions to estimates of oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Any excess of the net book value, less deferred income taxes, is generally written off as an expense. Under SEC regulations, the excess above the ceiling is not expensed (or is reduced) if, subsequent to the end of the period, but prior to the release of the financial statements, oil prices increase sufficiently such that an excess above the ceiling would have been eliminated (or reduced) if the increased prices were used in the calculations. | |
The estimates of proved crude oil reserves utilized in the preparation of the financial statements are estimated in accordance with guidelines established by the SEC and the Financial Accounting Standards Board (“FASB”), which require that reserve estimates be prepared under existing economic and operating conditions using a 12-month average price with no provision for price and cost escalations in future years except by contractual arrangements. Actual results could differ materially from these estimates. | |
Long-Lived Assets | Long-Lived Assets |
Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying value. The carrying value of the assets is then reduced to their estimated fair value that is usually measured based on an estimate of future discounted cash flows. | |
Convertible Notes and Derivative Liabilities | Convertible Notes and Derivative Liabilities |
The Company evaluates conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities”. | |
Professional standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards. | |
The terms of a $350,000 convertible note payable issued in June 2014 include a provision that would reset the conversion price in the event Hawker issues equity securities (or debt convertible into equity) for a lesser price. This conversion feature was required to be valued separately as a liability (shown on the balance sheet as “conversion option”) at its estimated fair value of $139,051 initially, creating a discount on the convertible note payable for the same amount. Each reporting period, the conversion option's fair value is remeasured, with the change in fair value being reported in the consolidated statement of operations. Fair value determinations prepared using the Black-Scholes Pricing Model require assumptions related to interest rates, stock price, exercise price, term and volatilities. The discount on the convertible note payable is accreted to interest expense over the term of the note. | |
In addition, the Company also evaluates convertible notes payable (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with the professional standard “Accounting for Convertible Securities with Beneficial Conversion Features”. Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. To date, the Company has issued no convertible notes payable with beneficial conversion features. | |
Asset Retirement Obligations | Asset Retirement Obligations |
Asset retirement obligations relate to the plug and abandonment costs when our wells are no longer useful, and for the cost of removing related surface facilities. We determine the value of the liability by reviewing operator estimates and estimate the increase we will face in the future. We then discount the future value based on an intrinsic interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the future, however, on a quarterly basis we monitor the costs of the abandoned wells and adjust this liability if necessary. | |
Non-Controlling Interest | Non-Controlling Interest |
We report non-controlling interest in Tapia Holdings, LLC in the financial statements pursuant to paragraph ASC No. 810-10-65-1. The non-controlling interest of $55,000 reported on the balance sheet as of August 31, 2014, represents the non-controlling interest holders' proportionate share of the equity of the Tapia Holdings, LLC. This amount was received on August 26 and 28, 2014, in contemplation of the pending acquisition of Tapia, LLC (Note 7). In the year ended August 31, 2014, there was no amount to recognize for the non-controlling interest holders' proportionate share of the earnings or losses. Including the $55,000 funded to date, $65,000 in future funding, and $144,000 of future commitment to participate in the note payable to Sefton Resources Ltd. on closing of the Tapia, LLC acquisition, non-controlling interest at closing of the acquisition is expected to represent 4.80% of the total outstanding equity of Tapia Holdings, LLC, increased to 4.83% after August 31, 2014. See also Note 19, Subsequent Events. | |
Revenue Recognition | Revenue Recognition |
Oil revenues are recognized net of royalties when production is sold to a purchaser at a fixed or determinable price, when title has transferred, and if collection of the revenue is probable. | |
Equity Compensation Expense | Equity Compensation Expense |
We record equity compensation expense for stock option grants based on the estimated grant-date fair value over the period the officers or consultants are required to provide services to earn the awards. | |
Net Profits Interest | Net Profits Interest |
A Net Profits Interest (“NPI”) on the DEEP Lease calls for 40% of the net cash flow, as defined in the Assignment of Net Profit Interest (see Note 12), to be paid each month to the owner of the NPI. If net cash flow is negative, such losses carry forward to be deducted against future positive net cash flow. Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG's December 1, 2009, acquisition date of a 66.67% working interest in the DEEP property, and this liability was increased pro rata when our working interest increased to 87.18% on February 1, 2014, and again on May 15, 2014, when our working interest increased to 100.0% (see Note 6). The discount rate used in all cases was 10.0% per annum (see Note 12). | |
Income Taxes | Income Taxes |
Until October 25, 2013, SCNRG (the accounting acquirer of Hawker) was not a taxable entity for U.S. federal or California income tax purposes. Taxes on its net income were borne by its members through the allocation of taxable income. Until July 31, 2013, we were treated as a partnership for tax purposes. On August 1, 2013, we elected to be treated as an S-Corp. Upon completion of the reverse acquisition of Hawker, SCNRG became part of a consolidated taxable entity. Due to a history of losses, we have a full valuation allowance for all net deferred tax assets, including our net operating loss. | |
Loss per share | Loss Per Share |
Dilutive securities, including warrants to acquire common stock, shares issuable on conversion of notes payable and stock options, are excluded from the diluted weighted average shares of common stock outstanding computation in periods where they have an anti-dilutive effect, such as when we report a loss. Anti-dilutive securities omitted from the calculation for the year ended August 31, 2014 were 4,436,236 and none for the comparable 2013 period. | |
Concentrations | Concentrations |
Pursuant to a January 13, 2010, Crude Oil Purchase Contract between the DEEP Lease operator and Plains Marketing L.P. (“PMLP”), all production from the DEEP Lease is sold to PMLP. The initial term of the agreement was for one year, expiring on December 31, 2010, and was automatically renewed for an additional one-year term that expired on December 31, 2011. Since January 1, 2012, the agreement has continued on a month-to-month basis and is cancellable upon thirty days' written notice by either party. | |
Changes in Accounting Policy | Changes in Accounting Policy |
The Company has not had any changes in accounting policies during the year. | |
New Accounting Pronouncements | New Accounting Pronouncements |
In May 2014, the FASB issued ASU 2014-9, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to receive in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is not permitted. We are currently assessing the impact that this standard will have on our consolidated financial statements. | |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. Under GAAP, financial statements are prepared based on the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management's responsibility to evaluate whether there is substantial doubt about the organization's ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization's management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company has not conducted its analysis to determine whether it will adopt the new standard early or not. | |
ACQUISITION_OF_SCNRG_Tables
ACQUISITION OF SCNRG (Tables) (SCNRG [Member]) | 12 Months Ended | ||||
Aug. 31, 2014 | |||||
SCNRG [Member] | |||||
Business Acquisition [Line Items] | |||||
Schedule of Net Assets Acquired | The following is a summary of the fair value of consideration transferred in exchange for the estimated fair value of net assets acquired on October 25, 2013: | ||||
Fair value of consideration transferred: | |||||
14,000,000 shares of Hawker restricted common stock | $ | 14,000 | |||
Fair value of net assets acquired: | |||||
Cash | $ | 6,004 | |||
Accounts receivable | 1,553 | ||||
Oil properties | 26,500 | ||||
Deposit | 5,000 | ||||
Accounts payable and accrued liabilities | (37,431 | ) | |||
Net assets acquired | $ | 1,626 |
ACQUISITION_OF_HAWKER_ENERGY_L1
ACQUISITION OF HAWKER ENERGY, LLC (Tables) (Hawker Energy Rincon Llc [Member]) | 12 Months Ended | ||||
Aug. 31, 2014 | |||||
Hawker Energy Rincon Llc [Member] | |||||
Business Acquisition [Line Items] | |||||
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | The assets and liabilities of HERLLC at the date of acquisition were recorded at their fair values of: | ||||
Cash | $ | 1,214 | |||
Prepaid expenses | 16,625 | ||||
Less: | |||||
Accounts payable | (123,413 | ) | |||
Loan payable to related party, short term | (29,625 | ) | |||
Net liabilities assumed | $ | 135,199 |
SECURED_SUBORDINATED_LOAN_RECE1
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM [Abstract] | |||||||||
Schedule of Secured Subordinated Loan Receivable, Short Term | The following shows the changes in secured subordinated loan receivable, short term, for the years ended August 31, 2014 and 2013: | ||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Secured subordinated loan receivable, short term, | $ | - | $ | - | |||||
beginning | |||||||||
Loan made during the period | 1,290,727 | - | |||||||
Current period interest | 7,595 | - | |||||||
Secured subordinated loan receivable, short term, | $ | 1,298,322 | $ | - | |||||
ending | |||||||||
MACHINERY_AND_EQUIPMENT_CAPITA1
MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES (Tables) | 12 Months Ended | |||||||||||||||||
Aug. 31, 2014 | ||||||||||||||||||
MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES | ||||||||||||||||||
Schedule of asset categories of machinery and equipment and capitalized oil and gas properties | The asset categories of machinery and equipment and capitalized oil and gas properties at August 31, 2014 and August 31, 2013 were as follows: | |||||||||||||||||
31-Aug-14 | ||||||||||||||||||
Cost | Accumulated | Net Book | ||||||||||||||||
Depletion, | Value | |||||||||||||||||
Depreciation | ||||||||||||||||||
and | ||||||||||||||||||
Amortization | ||||||||||||||||||
Machinery and equipment | $ | 33,874 | $ | 19,605 | $ | 14,269 | ||||||||||||
Capitalized oil and gas properties | 816,239 | 86,193 | 730,046 | |||||||||||||||
Total | $ | 850,113 | $ | 105,798 | $ | 744,315 | ||||||||||||
31-Aug-13 | ||||||||||||||||||
Cost | Accumulated | Net Book | ||||||||||||||||
Depletion, | Value | |||||||||||||||||
Depreciation | ||||||||||||||||||
and | ||||||||||||||||||
Amortization | ||||||||||||||||||
Machinery and equipment | $ | 28,335 | $ | 15,179 | $ | 13,156 | ||||||||||||
Capitalized oil and gas properties | 357,468 | 59,878 | 297,590 | |||||||||||||||
Total | $ | 385,803 | $ | 75,057 | $ | 310,746 |
LOANS_PAYABLE_TO_RELATED_PARTI1
LOANS PAYABLE TO RELATED PARTIES (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
LOANS PAYABLE TO RELATED PARTIES [Abstract] | |||||||||
Schedule of loans payable to related parties, short term | Loans payable to related parties, short term, consist of the following at August 31, 2014, and August 31, 2013: | ||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Darren Katic | $ | 161,000 | $ | - | |||||
Manhattan Holdings, LLC | 60,000 | - | |||||||
Total long-term loans | 221,000 | - | |||||||
Accrued interest payable | 5,876 | - | |||||||
Loans payable to related parties, short term | $ | 226,876 | $ | - | |||||
Schedule of loans payable to related parties, long term | Loans payable to related parties, long term, consist of the following at August 31, 2014, and August 31, 2013: | ||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Darren Katic | $ | - | $ | 38,500 | |||||
Manhattan Holdings, LLC | - | 38,500 | |||||||
Gerald Tywoniuk | - | 12,833 | |||||||
Total long-term loans | - | 89,833 | |||||||
Accrued interest payable | - | - | |||||||
Less current portion | - | - | |||||||
Loans payable to related parties, long term | $ | - | $ | 89,833 |
CONVERTIBLE_NOTES_PAYABLE_SHOR1
CONVERTIBLE NOTES PAYABLE, SHORT TERM (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||||||
Aug. 31, 2014 | ||||||||||||||||||||||||||||||||||||
CONVERTIBLE NOTES PAYABLE, SHORT TERM [Abstract] | ||||||||||||||||||||||||||||||||||||
Summary of convertible notes payable, short term | Convertible notes payable, short term, consist of the following at August 31, 2014, and August 31, 2013; conversion features, security provisions and warrants to acquire common stock of Hawker are also set forth below: | |||||||||||||||||||||||||||||||||||
Issue | Maturity | August 31, | August 31, | |||||||||||||||||||||||||||||||||
Date | Date | 2014 | 2013 | |||||||||||||||||||||||||||||||||
CNP 1 | $ | 260,851 | $ | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) | 25-Jun-14 | 30-Nov-14 | ||||||||||||||||||||||||||||||||||
CNP 2 | May 30, 2014 | November 30, 2014 | 250,000 | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) | ||||||||||||||||||||||||||||||||||||
CNP 3 | July 17, 2014 | June 30, 2015 | 100,000 | - | ||||||||||||||||||||||||||||||||
(1) (3) (4) | ||||||||||||||||||||||||||||||||||||
CNP 4 | July 17, 2014 | July 10, 2015 | 100,000 | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) (4) (5) | ||||||||||||||||||||||||||||||||||||
CNP 5 | May 13, 2014 | May 13, 2016 | 50,000 | - | ||||||||||||||||||||||||||||||||
-6 | ||||||||||||||||||||||||||||||||||||
CNP 6 | July 25, 2014 | July 25, 2015 | 50,000 | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) (4) | ||||||||||||||||||||||||||||||||||||
CNP 7 | August 28, 2014 | July 25, 2015 | 30,000 | - | ||||||||||||||||||||||||||||||||
(1) (2) (3) (4) | ||||||||||||||||||||||||||||||||||||
840,851 | - | |||||||||||||||||||||||||||||||||||
Accrued interest payable | 21,599 | - | ||||||||||||||||||||||||||||||||||
Convertible notes payable, short term | $ | 862,450 | $ | - | ||||||||||||||||||||||||||||||||
-1 | Convertible at any time at the option of the investor into "Conversion Units." Each Conversion Unit consists of one share of common stock of Hawker and one warrant to purchase one-half share of common stock of Sara Creek at an exercise price of $0.25 per share. The number of Conversion Units into which the note is convertible is computed by dividing all of the then outstanding principal and accrued interest under the note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Each warrant has a five-year life from the date the convertible note payable was issued. In the event there is a future sale of common stock or instruments exchangeable for or convertible into common stock below the then current conversion price of the note, the conversion rate for CNP 1 shall be adjusted to that price. In the case of CNP 1 and 2, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. The face amount of CNP 1 is $350,000. CNP 1 and total convertible notes payable above are shown net of unamortized discount of $89,149, comprised of an initial discount of $139,051 recorded upon issuance of CNP 1 in June 2014 and accretion of discount of $49,902 for the period from June 2014 through August 31, 2014. See “$350,000 Convertible Note Payable and Conversion Option (Derivative Liability)” below. | |||||||||||||||||||||||||||||||||||
-2 | Hawker granted a security interest to the investor in all of its assets. | |||||||||||||||||||||||||||||||||||
-3 | The proceeds were required to be used solely for the purpose of allowing Tapia Holdings to make advances to TEG under the terms of the secured subordinated loan receivable described in Note 7. Any repayment of such advances by TEG to Tapia Holdings must be used by us to immediately first repay convertible notes payable to the holder of CNP 1 and 2, and second to repay other convertible notes payable pro rata. | |||||||||||||||||||||||||||||||||||
-4 | Conversion of unpaid principal into Conversions Units pursuant to the terms in (1) above is mandatory in the event Hawker closes the Proposed TEG Acquisition described in Note 7. Conversion of unpaid interest into Conversion Units is at the election of Hawker. | |||||||||||||||||||||||||||||||||||
-5 | The holder is related to Darren Katic, who is an officer, director and significant shareholder. | |||||||||||||||||||||||||||||||||||
-6 | Unpaid principal and accrued interest is convertible at any time at the option of the holder into Conversion Units in an amount computed by dividing the amount converted by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Repayment of the convertible note payable is required on collection of the secured subordinated loan receivable described in Note 7 if earlier than the maturity date above. As Hawker expects to receive repayment on the secured subordinated loan receivable within one year, this convertible note payable has been classified as a short term liability. | |||||||||||||||||||||||||||||||||||
Summary of fair value of derivative instruments on the basis of fair value assumptions | Dividend yield: | 0 | % | |||||||||||||||||||||||||||||||||
Volatility | 178 | % | ||||||||||||||||||||||||||||||||||
Risk free rate: | 0.05 | % | ||||||||||||||||||||||||||||||||||
Dividend yield: | 0 | % | ||||||||||||||||||||||||||||||||||
Volatility | 213 | % | ||||||||||||||||||||||||||||||||||
Risk free rate: | 0.03 | % |
ASSET_RETIREMENT_OBLIGATION_Ta
ASSET RETIREMENT OBLIGATION (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
ASSET RETIREMENT OBLIGATION [Abstract] | |||||||||
Schedule of Changes in Asset Retirement Obligation | The following shows the changes in asset retirement obligations for the years ended August 31, 2014 and 2013: | ||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Asset retirement obligations, beginning | $ | 103,299 | $ | 95,206 | |||||
Liabilities acquired during the period | 53,963 | - | |||||||
Liabilities settled during the period | - | - | |||||||
Current period accretion | 10,848 | 8,093 | |||||||
Asset retirement obligations, ending | $ | 168,110 | $ | 103,299 |
NET_PROFITS_INTEREST_NPI_PAYAB1
NET PROFITS INTEREST ("NPI") PAYABLE (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
NET PROFITS INTEREST ("NPI") PAYABLE [Abstract] | |||||||||
Schedule of Changes in NPI Liability | Changes in SCNRG's share of the NPI liability are as follows for the years ended August 31, 2014 and 2013: | ||||||||
August 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
NPI liability, beginning of period | $ | 124,597 | $ | 135,640 | |||||
Liabilities assumed in connection with | 58,847 | - | |||||||
acquisition of additional DEEP Lease | |||||||||
working interests | |||||||||
Current period accretion | 14,104 | 12,865 | |||||||
Payments made | (28,444 | ) | (23,908 | ) | |||||
NPI liability, end of period | 169,104 | 124,597 | |||||||
Less: current portion | 20,065 | 12,109 | |||||||
NPI liability, long-term portion | $ | 149,039 | $ | 112,488 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
INCOME TAXES [Abstract] | |||||||||||
Schedule of significant components of the deferred tax assets and liabilities | Significant components of the deferred tax assets and liabilities are as follows: | ||||||||||
Year Ended August 31, | |||||||||||
2014 | 2013 | ||||||||||
Deferred tax assets: | |||||||||||
Accounts payable and accrued expenses | $ | 504,765 | $ | - | |||||||
Asset retirement obligations | 5,992 | - | |||||||||
Convertible note payable | 20,333 | ||||||||||
Net operating loss carry-forward | 477,153 | - | |||||||||
Total deferred tax assets | 1,008,243 | - | |||||||||
Deferred tax liabilities: | |||||||||||
Depreciation and basis differences | (37,088 | ) | - | ||||||||
Conversion option | (6,929) | ||||||||||
Total deferred tax liabilities | (44,017 | ) | |||||||||
Net deferred tax assets | 964,226 | - | |||||||||
Valuation allowance | (964,226 | ) | - | ||||||||
Net deferred tax assets | $ | - | $ | - |
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended | |||||||||||||||
Aug. 31, 2014 | ||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract] | ||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities measured at fair | |||||||||||||||
value on a recurring | ||||||||||||||||
basis at August 31, 2014: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Carrying | ||||||||||||||||
Value | ||||||||||||||||
Total Assets | $ | - | $ | - | $ | - | $ | - | ||||||||
Liabilities: | ||||||||||||||||
Conversion option | $ | - | $ | - | $ | 122,045 | $ | 122,045 | ||||||||
Total Liabilities | $ | - | $ | - | $ | 122,045 | $ | 122,045 | ||||||||
Summary of changes in fair value of the Company's Level 3 financial liabilities | 2014 | 2013 | ||||||||||||||
Balance, August 31, 2013 | $ | - | $ | - | ||||||||||||
Initial fair value of debt derivatives at note issuances | 139,051 | |||||||||||||||
Initial fair value of additional derivative created through interest accrual | 2,630 | |||||||||||||||
Extinguished derivative liability | - | - | ||||||||||||||
Mark-to-market at August 31, 2014 -Embedded debt derivatives | (19,636 | ) | - | |||||||||||||
Balance, August 31, 2014 | $ | 122,045 | $ | - | ||||||||||||
Net gain for the period included in earnings relating to the liabilities held | $ | 19,636 | $ | - | ||||||||||||
at August 31, 2014 | ||||||||||||||||
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||
Aug. 31, 2014 | |||||
COMMITMENTS AND CONTINGENCIES [Abstract] | |||||
Schedule of future minimum payments under operating leases | Future minimum payments under operating leases for the next five years total $86,450, and are as follows: | ||||
Year Ended August 31 | Amount | ||||
2015 | $ | 38,827 | |||
2016 | 32,758 | ||||
2017 | 14,865 | ||||
2018 | - | ||||
2019 | - | ||||
$ | 86,450 |
PRO_FORMA_FINANCIAL_INFORMATIO1
PRO FORMA FINANCIAL INFORMATION (Tables) | 12 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
PRO FORMA FINANCIAL INFORMATION [Abstract] | |||||||||
Schedule of Unaudited Pro Forma Consolidated Information | The following table presents unaudited pro forma consolidated information, adjusted for the reverse acquisition of Hawker (Note 4) and the acquisition of an additional 33.33% interest in DEEP Lease (Note 6), as if the acquisitions had occurred on September 1, 2012: | ||||||||
Year Ended | |||||||||
August 31, | |||||||||
2014 | 2013 | ||||||||
Revenue | $ | 150,802 | $ | 125,116 | |||||
Net loss | $ | (1,745,624 | ) | $ | (184,149 | ) | |||
Loss per share | $ | (0.05 | ) | $ | (0.01 | ) |
RESTATEMENT_Tables
RESTATEMENT (Tables) | 12 Months Ended | ||||||||||||
Aug. 31, 2014 | |||||||||||||
RESTATEMENT [Abstract] | |||||||||||||
Schedule of changes impacted the financial statements | Balance Sheet items | ||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
As at August 31, 2014 | |||||||||||||
Convertible notes payable, short term | $ | 951,599 | $ | (89,149 | ) | $ | 862,450 | ||||||
Conversion option | $ | - | $ | 122,045 | $ | 122,045 | |||||||
Accumulated deficit | $ | (2,047,462 | ) | $ | (32,896 | ) | $ | (2,080,358 | ) | ||||
Statement of Operations items | |||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
Year ended August 31, 2014 | |||||||||||||
Interest expense | $ | 42,434 | $ | 52,532 | $ | 94,966 | |||||||
Change in fair value of conversion option (income) | $ | - | $ | (19,636 | ) | $ | (19,636 | ) | |||||
Net income (loss) | $ | (1,696,236 | ) | $ | (32,896 | ) | $ | (1,729,132 | ) | ||||
Statement of Cash Flow items | |||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
Year ended August 31, 2014 | |||||||||||||
Net income (loss) | $ | (1,696,236 | ) | $ | (32,896 | ) | $ | (1,729,132 | ) | ||||
Adjustment to reconcile net income to cash | |||||||||||||
provided by operating activities: | |||||||||||||
Accretion of discount on convertible notes payable | $ | - | $ | 49,902 | $ | 49,902 | |||||||
Change in fair value of conversion option | $ | - | $ | (19,636 | ) | $ | (19,636 | ) | |||||
Other non-cash interest expense | $ | - | $ | 2,630 | $ | 2,630 | |||||||
Net cash (used in) operating activities | $ | (302,554 | ) | $ | - | $ | (302,554 | ) |
DESCRIPTION_OF_BUSINESS_Detail
DESCRIPTION OF BUSINESS (Details) (SCNRG [Member]) | 1 Months Ended |
Oct. 25, 2013 | |
SCNRG [Member] | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |
Acquisition of share interest | 100.00% |
Number of shares issued for acquisition | 14,000,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) (USD $) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Jun. 25, 2014 | |
item | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
Number of occasions in the period in which cash on deposit has exceeded federally insured limits | 2 | ||
Maximum period for which on deposit has exceeded federally insured limits on specified occasions | 7 days | ||
Convertible Notes and Derivative Liabilities [Line Items] | |||
Conversion option | $122,045 | ||
Convertible Notes Payable [Member] | |||
Convertible Notes and Derivative Liabilities [Line Items] | |||
Conversion option | 139,051 | ||
Debt issued with beneficial conversion features | 0 | ||
CNP 1 [Member] | |||
Convertible Notes and Derivative Liabilities [Line Items] | |||
Principal amount of debt issued | 350,000 | ||
Conversion option | $122,045 | $139,051 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative-Non-Controlling Interest) (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 | Oct. 02, 2014 | Sep. 24, 2014 | Sep. 01, 2014 |
Non-Controlling Interest | |||||
Non-controlling interest | $55,000 | ||||
Tapia Holdings, LLC [Member] | |||||
Non-Controlling Interest | |||||
Non-controlling interest | 55,000 | ||||
Future funding commitments | 65,000 | ||||
Future commitment to participate in the note payable | 144,000 | ||||
Members' equity (as a percent) | 4.80% | ||||
Tapia Holdings, LLC [Member] | Subsequent Event [Member] | |||||
Non-Controlling Interest | |||||
Non-controlling interest | 145,000 | 65,000 | 145,000 | ||
Future commitment to participate in the note payable | $145,000 | ||||
Members' equity (as a percent) | 4.83% | 4.83% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Additional Narrative) (Details) | 12 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Oct. 25, 2013 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Percentage of monthly payments equal to net profit | 40.00% | ||
Interest rate utilizing a discount rate | 10.00% | ||
Shares with anti-dilutive effect excluded from the computation of Diluted EPS | 4,436,236 | ||
SCNRG [Member] | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Acquisition of share interest | 100.00% |
GOING_CONCERN_Details
GOING CONCERN (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
GOING CONCERN | ||
Total current assets | $1,382,825 | $36,775 |
Working capital deficit | 1,142,049 | |
Net loss attributable to the Company | -1,729,132 | -41,991 |
Accumulated net loss | ($2,080,358) | ($351,226) |
ACQUISITION_OF_SCNRG_Narrative
ACQUISITION OF SCNRG (Narrative) (Details) (USD $) | 12 Months Ended | 1 Months Ended |
Aug. 31, 2014 | Oct. 25, 2013 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Stock issued during period for acquisition | $1,626 | |
SCNRG [Member] | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Number of shares issued for acquisition | 14,000,000 | |
Stock issued during period for acquisition | $14,000 | |
Acquisition of share interest | 100.00% |
ACQUISITION_OF_SCNRG_Schedule_
ACQUISITION OF SCNRG (Schedule of Net Assets Acquired) (Details) (USD $) | Oct. 25, 2013 |
ACQUISITION OF SCNRG [Abstract] | |
Cash | $6,004 |
Accounts receivable | 1,553 |
Oil properties | 26,500 |
Deposit | 5,000 |
Accounts payable and accrued liabilities | -37,431 |
Net assets acquired | $1,626 |
ACQUISITION_OF_HAWKER_ENERGY_L2
ACQUISITION OF HAWKER ENERGY, LLC (Narrative) (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||||
Aug. 31, 2014 | Jan. 01, 2014 | Oct. 10, 2014 | Dec. 27, 2014 | Nov. 30, 2014 | Nov. 13, 2014 | |
Business Acquisition [Line Items] | ||||||
Overriding royalty percentage | 1.00% | |||||
Hawker Energy Rincon Llc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 3,000,000 | |||||
Overriding royalty percentage | 24.50% | |||||
Par value | 138,199 | |||||
Additional paid-in capital | 3,000 | |||||
California Oil Independents [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 2,000,000 | |||||
South Coast Oil [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 2,000,000 | |||||
Christian Hall [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 5,000,000 | |||||
TEG Oil & Gas, Inc. [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 10,000,000 | |||||
Rincon Island Limited Partnership [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 7,000,000 | |||||
ExxonMobil [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 7,000,000 | |||||
Darren Katic [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 1,500,000 | |||||
Darren Katic [Member] | Hawker Energy Rincon Llc [Member] | Subsequent Event [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 16,500,000 | |||||
Sellers [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 3,000,000 | |||||
Possible additional shares required to issue | 33,000,000 | |||||
Charles Moore [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 1,500,000 | |||||
Charles Moore [Member] | Hawker Energy Rincon Llc [Member] | Subsequent Event [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 16,500,000 | |||||
Messrs. Katic and Moore [Member] | Hawker Energy Rincon Llc [Member] | Subsequent Event [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares issued for acquisition | 33,000,000 | |||||
Shares to be held in escrow | 19,000,000 | |||||
Mr. Tywoniuk [Member] | Hawker Energy Rincon Llc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Warrants to purchase percentage of shares of common stock held by a significant shareholder | 5.00% | |||||
Mr. Tywoniuk [Member] | Hawker Energy Rincon Llc [Member] | Subsequent Event [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Warrants to purchase percentage of shares of common stock held by a significant shareholder | 5.00% | 9.72% | 9.72% |
ACQUISITION_OF_HAWKER_ENERGY_L3
ACQUISITION OF HAWKER ENERGY, LLC (Schedule of Assets and Liabilities Acquired) (Details) (USD $) | Oct. 25, 2013 | Jan. 01, 2014 |
Business Acquisition [Line Items] | ||
Cash | $6,004 | |
Accounts payable and accrued liabilities | -37,431 | |
Hawker Energy Rincon Llc [Member] | ||
Business Acquisition [Line Items] | ||
Cash | 1,214 | |
Prepaid expenses | 16,625 | |
Accounts payable and accrued liabilities | -123,413 | |
Loan payable to related party, short term | -29,625 | |
Net liabilities assumed | $135,199 |
ACQUISITION_OF_AN_ADDITIONAL_31
ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE (Details) (USD $) | 0 Months Ended | ||||
15-May-14 | Feb. 04, 2014 | Aug. 31, 2014 | Oct. 25, 2013 | Dec. 01, 2009 | |
Business Acquisition [Line Items] | |||||
Oil properties | 26,500 | ||||
SCNRG [Member] | |||||
Business Acquisition [Line Items] | |||||
Ownership interest | 87.18% | 100.00% | 66.67% | ||
Cash paid for business acquisition | 125,000 | 200,000 | |||
Machinery and equipment | 2,010 | 3,529 | |||
Oil properties | 166,071 | 266,200 | |||
Purchase price of entity | 168,081 | 269,729 | |||
Contingent consideration liabilities | $43,081 | $69,729 | |||
Acquisition of additional working interest in DEEP lease | 12.82% | 20.51% | 33.33% | ||
Acquisition of share interest | 100.00% |
SECURED_SUBORDINATED_LOAN_RECE2
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Narrative) (Details) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 4 Months Ended | 0 Months Ended | 1 Months Ended | ||||
Jun. 02, 2014 | Jun. 18, 2014 | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2014 | Jun. 18, 2014 | Oct. 31, 2014 | Oct. 02, 2014 | Sep. 24, 2014 | Sep. 01, 2014 | |
item | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Potential acquisition of membership interest | 80.00% | 80.00% | ||||||||
Acquisition purchase price | $2,500,000 | |||||||||
Promissory note | 3,000,000 | 3,000,000 | ||||||||
Non-controlling interest | 55,000 | 55,000 | ||||||||
Total advances | 221,000 | 17,500 | ||||||||
Promissory note receivable | 1,500,000 | 1,500,000 | ||||||||
Rate of membership interests | 68,750 | |||||||||
Tapia Holdings, LLC [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Non-controlling interest | 55,000 | 55,000 | ||||||||
Future commitment to participate in the note payable | 144,000 | 144,000 | ||||||||
Members' equity (as a percent) | 4.80% | 4.80% | ||||||||
Total advances | 1,290,727 | |||||||||
Tapia Holdings, LLC [Member] | Subsequent Event [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Non-controlling interest | 145,000 | 65,000 | 145,000 | |||||||
Future commitment to participate in the note payable | 145,000 | |||||||||
Members' equity (as a percent) | 4.83% | 4.83% | ||||||||
Tapia Holdings, LLC [Member] | TEG [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Members' equity (as a percent) | 20.00% | 20.00% | ||||||||
Tapia Holdings, LLC [Member] | TEG [Member] | Tapia Canyon field [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Number of oil and gas leases contributed | 4 | |||||||||
Tapia Holdings, LLC [Member] | TEG [Member] | West of the Tapia Canyon field [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Number of oil and gas leases contributed | 1 | |||||||||
Secured Subordinated Loan Receivable, Short Term [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 3.00% | |||||||||
Outstanding advances | 1,290,727 | |||||||||
Current period interest | 7,595 | |||||||||
Secured Subordinated Loan Receivable, Short Term [Member] | Tapia Holdings, LLC [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Amortization period of cash received upon sale of common membership interests | 3 years | |||||||||
Interest rate | 6.00% | |||||||||
Secured Subordinated Loan Receivable, Short Term [Member] | Tapia Holdings, LLC [Member] | TEG [Member] | Subsequent Event [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Outstanding advances | $196,625 |
SECURED_SUBORDINATED_LOAN_RECE3
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Schedule of Secured Subordinated Loan Receivable, Short Term) (Details) (Secured Subordinated Loan Receivable, Short Term [Member], USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Secured Subordinated Loan Receivable, Short Term [Member] | ||
Debt Instrument [Line Items] | ||
Secured subordinated loan receivable, short term, beginning | ||
Loan made during the period | 1,290,727 | |
Current period interest | 7,595 | |
Secured subordinated loan receivable, short term, ending | $1,298,322 |
MACHINERY_AND_EQUIPMENT_CAPITA2
MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Machinery and equipment and capitalized oil and gas properties [Line Items] | ||
Cost | $850,113 | $385,803 |
Accumulated Depletion, Depreciation and Amortization | 105,798 | 75,057 |
Net Book Value | 744,315 | 310,746 |
Machinery and equipment [Member] | ||
Machinery and equipment and capitalized oil and gas properties [Line Items] | ||
Cost | 33,874 | 28,335 |
Accumulated Depletion, Depreciation and Amortization | 19,605 | 15,179 |
Net Book Value | 14,269 | 13,156 |
Capitalized oil and gas properties [Member] | ||
Machinery and equipment and capitalized oil and gas properties [Line Items] | ||
Cost | 816,239 | 357,468 |
Accumulated Depletion, Depreciation and Amortization | 86,193 | 59,878 |
Net Book Value | $730,046 | $297,590 |
LOANS_PAYABLE_TO_RELATED_PARTI2
LOANS PAYABLE TO RELATED PARTIES (Narrative) (Details) (USD $) | 1 Months Ended | 12 Months Ended | 0 Months Ended | ||
Sep. 18, 2013 | Aug. 31, 2014 | Aug. 31, 2013 | Jan. 31, 2014 | Jan. 01, 2014 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Loans payable | $89,833 | ||||
Interest rate | 1.66% | 10.00% | |||
Gross proceeds received to trigger repayment of loans to related party | 5,000,000 | ||||
Conversion of debt | 139,051 | ||||
Darren Katic [Member] | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Loans payable | 38,500 | ||||
Interest rate | 10.00% | ||||
Due to related party | -29,625 | ||||
Kristian Andresen [Member] | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Conversion of debt | $15,000 |
LOANS_PAYABLE_TO_RELATED_PARTI3
LOANS PAYABLE TO RELATED PARTIES (Schedule of Loans from Related Parties) (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Loans payable to related parties, short term | ||
Total long-term loans | $221,000 | |
Accrued interest payable | 5,876 | |
Loans Payable, Current | 226,876 | |
Loans payable to related parties, long term | ||
Total long-term loans | 89,833 | |
Less - current maturities | ||
Long-term loans from related parties | 89,833 | |
Darren Katic [Member] | ||
Loans payable to related parties, short term | ||
Total long-term loans | 161,000 | |
Loans payable to related parties, long term | ||
Total long-term loans | 38,500 | |
Manhattan Holdings, LLC [Member] | ||
Loans payable to related parties, short term | ||
Total long-term loans | 60,000 | |
Loans payable to related parties, long term | ||
Total long-term loans | 38,500 | |
Gerald Tywoniuk [Member] | ||
Loans payable to related parties, long term | ||
Total long-term loans | $12,833 |
CONVERTIBLE_NOTES_PAYABLE_SHOR2
CONVERTIBLE NOTES PAYABLE, SHORT TERM (Narrative) (Details) (USD $) | 12 Months Ended | 0 Months Ended | 2 Months Ended | ||||
Aug. 31, 2014 | Aug. 31, 2013 | Sep. 18, 2014 | Jun. 25, 2014 | Aug. 31, 2014 | Sep. 18, 2013 | Sep. 01, 2014 | |
item | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 10.00% | 10.00% | 1.66% | ||||
Warrant exercise price | $0.20 | $0.20 | |||||
Price per unit | $0.10 | $0.10 | |||||
Convertible notes payable, short term, net of discount | $862,450 | $862,450 | |||||
Accretion of discount on convertible note payable | 49,902 | ||||||
Conversion price | $0.10 | $0.10 | |||||
Fair value of derivative liability | 122,045 | 122,045 | |||||
Non-operating gain on derivative liability | 19,636 | ||||||
Subsequent Event [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 10.00% | 10.00% | |||||
Convertible Notes Payable [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 12.00% | 12.00% | |||||
Warrant exercise price | $0.25 | $0.25 | |||||
Convertible notes payable, short term, net of discount | 862,450 | 862,450 | |||||
Term of warrants | 5 years | ||||||
Fair value of derivative liability | 139,051 | 139,051 | |||||
Convertible Notes Payable [Member] | Subsequent Event [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Convertible notes payable, short term, net of discount | 50,000 | ||||||
Convertible Notes Payable One and Two [Member] | Subsequent Event [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum beneficial ownership interest after conversion of debt (as a percent) | 4.99% | ||||||
CNP 1 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Warrant exercise price | $0.25 | ||||||
Term of warrants | 5 years | ||||||
Maximum beneficial ownership interest after conversion of debt (as a percent) | 4.99% | ||||||
Principal amount of debt issued | 350,000 | ||||||
Unamortized discount | 89,149 | 139,051 | 89,149 | ||||
Accretion of discount on convertible note payable | 49,902 | 49,902 | |||||
Maturity date | 30-Nov-14 | 30-Nov-14 | |||||
Number of common shares | 1 | ||||||
Number of warrants | 1 | ||||||
Conversion price | $0.10 | ||||||
Fair value of derivative liability | 122,045 | 139,051 | 122,045 | ||||
Dividend yield | 0.00% | 0.00% | |||||
Volatility | 213.00% | 178.00% | |||||
Risk free rate | 0.03% | 0.05% | |||||
Non-operating gain on derivative liability | 19,636 | ||||||
Amount of note outstanding | $350,000 | $350,000 |
CONVERTIBLE_NOTES_PAYABLE_SHOR3
CONVERTIBLE NOTES PAYABLE, SHORT TERM (Summary of Changes in Convertible Notes Payable) (Details) (USD $) | 0 Months Ended | 12 Months Ended | |||
Jun. 25, 2014 | Aug. 31, 2014 | Aug. 31, 2013 | |||
Debt Instrument [Line Items] | |||||
Convertible notes payable | $221,000 | ||||
Accrued interest payable | 5,876 | ||||
Convertible notes payable, short term | 862,450 | ||||
Convertible Notes Payable [Member] | |||||
Debt Instrument [Line Items] | |||||
Convertible notes payable | 840,851 | ||||
Accrued interest payable | 21,599 | ||||
Convertible notes payable, short term | 862,450 | ||||
CNP 1 [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 30-Nov-14 | 30-Nov-14 | |||
Convertible notes payable | 260,851 | [1],[2],[3] | [1],[2],[3] | ||
CNP 2 [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 30-Nov-14 | ||||
Convertible notes payable | 250,000 | [1],[2],[3] | [1],[2],[3] | ||
CNP 3 [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 30-Jun-15 | ||||
Convertible notes payable | 100,000 | [1],[3],[4] | [1],[3],[4] | ||
CNP 4 [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 10-Jul-15 | ||||
Convertible notes payable | 100,000 | [1],[2],[3],[4],[5] | [1],[2],[3],[4],[5] | ||
CNP 5 [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 13-May-16 | ||||
Convertible notes payable | 50,000 | [6] | [6] | ||
CNP 6 [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 25-Jul-15 | ||||
Convertible notes payable | 50,000 | [1],[2],[3],[4] | [1],[2],[3],[4] | ||
CNP 7 [Member] | |||||
Debt Instrument [Line Items] | |||||
Maturity date | 25-Jul-15 | ||||
Convertible notes payable | $30,000 | [1],[2],[3],[4] | [1],[2],[3],[4] | ||
[1] | Convertible at any time at the option of the investor into "Conversion Units." Each Conversion Unit consists of one share of common stock of Hawker and one warrant to purchase one-half share of common stock of Sara Creek at an exercise price of $0.25 per share. The number of Conversion Units into which the note is convertible is computed by dividing all of the then outstanding principal and accrued interest under the note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Each warrant has a five-year life from the date the convertible note payable was issued. In the event there is a future sale of common stock or instruments exchangeable for or convertible into common stock below the then current conversion price of the note, the conversion rate for CNP 1 shall be adjusted to that price. In the case of CNP 1 and 2, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. The face amount of CNP 1 is $350,000. CNP 1 and total convertible notes payable above are shown net of unamortized discount of $89,149, comprised of an initial discount of $139,051 recorded upon issuance of CNP 1 in June 2014 and accretion of discount of $49,902 for the period from June 2014 through August 31, 2014. See b$350,000 Convertible Note Payable and Conversion Option (Derivative Liability)b below. | ||||
[2] | Hawker granted a security interest to the investor in all of its assets. | ||||
[3] | The proceeds were required to be used solely for the purpose of allowing Tapia Holdings to make advances to TEG under the terms of the secured subordinated loan receivable described in Note 7. Any repayment of such advances by TEG to Tapia Holdings must be used by us to immediately first repay convertible notes payable to the holder of CNP 1 and 2, and second to repay other convertible notes payable pro rata. | ||||
[4] | Conversion of unpaid principal into Conversions Units pursuant to the terms in (1) above is mandatory in the event Hawker closes the Proposed TEG Acquisition described in Note 7. Conversion of unpaid interest into Conversion Units is at the election of Hawker. | ||||
[5] | The holder is related to Darren Katic, who is an officer, director and significant shareholder. | ||||
[6] | Unpaid principal and accrued interest is convertible at any time at the option of the holder into Conversion Units in an amount computed by dividing the amount converted by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Repayment of the convertible note payable is required on collection of the secured subordinated loan receivable described in Note 7 if earlier than the maturity date above. As Hawker expects to receive repayment on the secured subordinated loan receivable within one year, this convertible note payable has been classified as a short term liability. |
ASSET_RETIREMENT_OBLIGATION_De
ASSET RETIREMENT OBLIGATION (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
ASSET RETIREMENT OBLIGATION [Abstract] | ||
Asset retirement obligations, beginning | $103,299 | $95,206 |
Liabilities acquired during the period | 53,963 | |
Liabilities settled during the period | ||
Current period accretion | 10,848 | 8,093 |
Asset retirement obligations, ending | $168,110 | $103,299 |
NET_PROFITS_INTEREST_NPI_PAYAB2
NET PROFITS INTEREST ("NPI") PAYABLE (Narrative) (Details) (USD $) | 0 Months Ended | 12 Months Ended | ||
Dec. 01, 2009 | Aug. 31, 2014 | 15-May-14 | Oct. 25, 2013 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Percentage of monthly payments equal to net profit | 40.00% | |||
Stated minimum monthly payment | $2,978 | |||
Maturity date | 31-Dec-22 | |||
Interest rate utilizing a discount rate | 10.00% | |||
NPI payments | 125,201 | |||
Minimum NPI payment requirement | 347,000 | |||
Maximum NPI payment requirement | 357,410 | |||
SCNRG [Member] | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Stated minimum monthly payment | $1,985 | $2,596 | ||
Ownership interest | 66.67% | 100.00% | 87.18% | |
Acquisition of share interest | 100.00% |
NET_PROFITS_INTEREST_NPI_PAYAB3
NET PROFITS INTEREST ("NPI") PAYABLE (Schedule of Changes in NPI Liability) (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
NET PROFITS INTEREST ("NPI") PAYABLE [Abstract] | ||
NPI liability, beginning of period | $124,597 | $135,640 |
Liabilities assumed in connection with acquisition of additional DEEP lease working interests | 58,847 | |
Current period accretion | 14,104 | 12,865 |
Payments made | -28,444 | -23,908 |
NPI liability, end of period | 169,104 | 124,597 |
Less: current portion | 20,065 | 12,109 |
NPI liability: long-term portion | $149,039 | $112,488 |
INCOME_TAXES_Narrative_Details
INCOME TAXES (Narrative) (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
INCOME TAXES [Abstract] | ||
Current income tax expense (benefit) | $0 | $0 |
Deferred income tax expense (benefit) | 0 | 0 |
Federal [member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carry forward | 1,302,500 | |
State [member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carry forward | $370,300 |
INCOME_TAXES_Schedule_of_Signi
INCOME TAXES (Schedule of Significant Components of the Deferred Tax Assets and Liabilities) (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Deferred tax assets: | ||
Accounts payable and accrued expenses | $504,765 | |
Asset retirement obligations | 5,992 | |
Convertible note payable | 20,333 | |
Net operating loss carry-forward | 477,153 | |
Total deferred tax assets | 1,008,243 | |
Deferred tax liabilities: | ||
Depreciation and basis differences | -37,088 | |
Conversion option | -6,929 | |
Total deferred tax liabilities | -44,017 | |
Net deferred tax assets | 964,226 | |
Valuation allowance | -964,226 | |
Net deferred tax assets |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Fair Value of Assets and Liabilities) (Details) (USD $) | Aug. 31, 2014 | Aug. 31, 2013 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Conversion option | $122,045 | |
Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | ||
Conversion option | 122,045 | |
Total liabilities | 122,045 | |
Recurring [Member] | Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | ||
Conversion option | ||
Total liabilities | ||
Recurring [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | ||
Conversion option | ||
Total liabilities | ||
Recurring [Member] | Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of assets | ||
Conversion option | 122,045 | |
Total liabilities | $122,045 |
FAIR_VALUE_OF_FINANCIAL_INSTRU3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Summary of Changes in Fair Value) (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Changes in fair value of Level 3 financial liabilities | ||
Balance at beginning of period | ||
Initial fair value of debt derivatives at note issuances | 139,051 | |
Initial fair value of additional derivative created through interest accrual | 2,630 | |
Extinguished derivative liability | ||
Mark-to-market embedded debt derivatives | -19,636 | |
Balance at end of period | 122,045 | |
Net gain included in earnings related to liabilities | $19,636 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) | 12 Months Ended | |
Aug. 31, 2014 | Dec. 01, 2009 | |
item | ||
Long-term Purchase Commitment [Line Items] | ||
Overriding royalty percentage | 1.00% | |
Aggregate additional royalty percentage subject to production | 19.92% | |
Total royalties | 20.92% | |
Number of non-cancellable operating leases | 2 | |
DEEP Property [Member] | ||
Long-term Purchase Commitment [Line Items] | ||
Working interest | 100.00% | 66.67% |
COMMITMENTS_AND_CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Schedule of Future Minimum Payments Under Operating Leases) (Details) (USD $) | Aug. 31, 2014 |
Future minimum payments under operating leases [Abstract] | |
2015 | $38,827 |
2016 | 32,758 |
2017 | 14,865 |
2018 | |
2019 | |
Total | $86,450 |
STOCKHOLDERS_DEFICIT_Details
STOCKHOLDERS' (DEFICIT) (Details) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | 6 Months Ended | 0 Months Ended | 1 Months Ended | ||
14-May-14 | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 27, 2014 | Jul. 01, 2014 | Jan. 01, 2014 | Jan. 08, 2014 | Oct. 25, 2013 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||
Warrant exercise price | $0.20 | |||||||
Price per unit | $0.10 | |||||||
Units issued to settle loans from related parties | $103,687 | |||||||
Maximum number of shares covered by warrant | 98,952 | |||||||
Units issued to settle accounts payable | 188,185 | |||||||
Common stock issuable | 5,106,360 | |||||||
Stock compensation | 68,760 | |||||||
Unrecognized balance of compensation expenses | 342,000 | |||||||
Expected life of options | 10 years | 2 years 6 months | ||||||
Shares of stock issued for the conversion of debt | 9,300,000 | |||||||
Convertible debt | 930,000 | |||||||
Conversion price | $0.10 | |||||||
Options granted | 5,950,000 | |||||||
Options outstanding | 6,176,205 | |||||||
Stock options vesting first | 1,000,000 | |||||||
Expected to vest | 5,950,000 | |||||||
Stock options vesting in subsequent transactions | 4,950,000 | |||||||
Net proceeds from unit offering | 738,416 | |||||||
Potential additional shares issuable | 215,987 | |||||||
Convertible Note [Member] | ||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||
Shares of stock issued for the conversion of debt | 14,014,939 | |||||||
Secured Convertible Note [Member] | ||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||
Warrant exercise price | $0.25 | |||||||
Potential additional warrants issuable | 4,400,000 | |||||||
Common Stock [Member] | ||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||
Warrant exercise price | $0.25 | |||||||
Price per unit | $0.10 | |||||||
Net proceeds from unit offering, shares | 10,212,720 | 500,000 | 10,212,720 | |||||
Gross proceeds from issuance of unit offering | 50,000 | 1,021,272 | ||||||
Units issued to settle loans from related parties | 103,687 | |||||||
Units issued to settle accounts payable | 188,185 | |||||||
Stock compensation | ||||||||
Net proceeds from unit offering | 980,288 | |||||||
Common Stock Payable [Member] | ||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||
Net proceeds from unit offering, shares | ||||||||
Stock compensation | ||||||||
Hawker Energy Rincon Llc [Member] | ||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||
Number of shares issued for acquisition | 3,000,000 | |||||||
Ryan Bateman [Member] | ||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||
Number of shares issued for acquisition | 2,000,000 | |||||||
SCNRG [Member] | ||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||
Number of shares issued for acquisition | 14,000,000 | |||||||
Acquisition of share interest | 100.00% |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 4 Months Ended | 0 Months Ended | |||||||
14-May-14 | Apr. 09, 2014 | Sep. 18, 2013 | Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2014 | Jan. 01, 2014 | Jan. 10, 2014 | Oct. 10, 2014 | Jan. 31, 2014 | Sep. 29, 2014 | Oct. 31, 2014 | |
Related Party Transaction [Line Items] | ||||||||||||
Warrant exercise price | $0.20 | $0.20 | ||||||||||
Price per unit | $0.10 | $0.10 | ||||||||||
Value of purchased units | $103,687 | |||||||||||
Purchased units | 1,036,870 | |||||||||||
Interest rate | 1.66% | 10.00% | 10.00% | |||||||||
Gross proceeds received to trigger repayment of loans to related party | 5,000,000 | |||||||||||
Amount owed to related party | 221,000 | 221,000 | ||||||||||
Total advances | 221,000 | 17,500 | ||||||||||
Accrued interest payable | 5,876 | 5,876 | ||||||||||
Common stock payable | 50,000 | 50,000 | ||||||||||
Option exercise price | $0.10 | |||||||||||
Option term | P10Y | |||||||||||
Accrued bonuses | 480,000 | 480,000 | ||||||||||
Loans payable | 89,833 | |||||||||||
Convertible notes payable | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Warrant exercise price | $0.25 | $0.25 | ||||||||||
Interest rate | 12.00% | 12.00% | ||||||||||
Amount owed to related party | 840,851 | 840,851 | ||||||||||
Accrued interest payable | 21,599 | 21,599 | ||||||||||
Relative Of Darren Katic [Member] | Convertible notes payable | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Amount owed to related party | 100,000 | 100,000 | ||||||||||
Accrued interest payable | 1,710 | 1,710 | ||||||||||
Tapia Holdings, LLC [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Total advances | 1,290,727 | |||||||||||
Hawker Energy (Rincon), LLC [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of shares issued for acquisition | 3,000,000 | |||||||||||
Liabilities assumed | -135,199 | |||||||||||
SCNRG [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Value of purchased units | 90,687 | |||||||||||
Subsequent Event [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||
Darren Katic [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of shares issued for acquisition | 1,500,000 | |||||||||||
Value of purchased units | 16,625 | 38,000 | ||||||||||
Purchased units | 166,250 | 380,000 | ||||||||||
Due to related party | -29,625 | |||||||||||
Options granted | 600,000 | |||||||||||
Vesting period | 3 years | |||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||
Amount owed to related party | 161,000 | 161,000 | ||||||||||
Total advances | 228,000 | |||||||||||
Repayments of advances to related party | 67,000 | |||||||||||
Maximum outstanding balance | 190,000 | |||||||||||
Common stock payable | 20,000 | 20,000 | ||||||||||
Accrued bonuses | 120,000 | 120,000 | ||||||||||
Payments for Rent | 25,644 | |||||||||||
Loans payable | 38,500 | |||||||||||
Darren Katic [Member] | Hawker Energy (Rincon), LLC [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Value of purchased units | 13,000 | |||||||||||
Darren Katic [Member] | Subsequent Event [Member] | Hawker Energy (Rincon), LLC [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of shares issued for acquisition | 16,500,000 | |||||||||||
Manhattan Holdings, LLC [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Value of purchased units | 90,000 | |||||||||||
Purchased units | 900,000 | |||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||
Amount owed to related party | 60,000 | 60,000 | ||||||||||
Loans payable | 38,500 | |||||||||||
Manhattan Holdings, LLC [Member] | Subsequent Event [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Amount owed to related party | 30,000 | |||||||||||
Sellers [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of shares issued for acquisition | 3,000,000 | |||||||||||
Possible additional shares required to issue | 33,000,000 | |||||||||||
Gerald Tywoniuk [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Value of purchased units | 50,000 | |||||||||||
Purchased units | 500,000 | |||||||||||
Options granted | 1,600,000 | |||||||||||
Vesting period | 3 years | |||||||||||
Common stock payable | 20,000 | 20,000 | ||||||||||
Accrued bonuses | 120,000 | 120,000 | ||||||||||
Loans payable | 12,833 | |||||||||||
Gerald Tywoniuk [Member] | Subsequent Event [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Amount owed to related party | 50,000 | |||||||||||
Charles Moore [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of shares issued for acquisition | 1,500,000 | |||||||||||
Options granted | 2,600,000 | |||||||||||
Vesting period | 3 years | |||||||||||
Accrued bonuses | 120,000 | 120,000 | ||||||||||
Charles Moore [Member] | Tapia Holdings, LLC [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 1.50% | 1.50% | ||||||||||
Charles Moore [Member] | Subsequent Event [Member] | Hawker Energy (Rincon), LLC [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of shares issued for acquisition | 16,500,000 | |||||||||||
Kristian Andresen [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Value of purchased units | 15,000 | |||||||||||
Purchased units | 150,000 | |||||||||||
Options granted | 1,000,000 | |||||||||||
Vesting period | 3 years | |||||||||||
Accrued bonuses | 120,000 | 120,000 | ||||||||||
Kristian Andresen [Member] | Subsequent Event [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Amount owed to related party | $15,000 | |||||||||||
Messrs. Katic and Moore [Member] | Subsequent Event [Member] | Hawker Energy (Rincon), LLC [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Number of shares issued for acquisition | 33,000,000 | |||||||||||
Shares to be held in escrow | 19,000,000 |
PRO_FORMA_FINANCIAL_INFORMATIO2
PRO FORMA FINANCIAL INFORMATION (Narrative) (Details) (SCNRG [Member]) | Aug. 31, 2014 | 15-May-14 | Feb. 04, 2014 |
SCNRG [Member] | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Acquisition of additional working interest in DEEP lease | 33.33% | 12.82% | 20.51% |
PRO_FORMA_FINANCIAL_INFORMATIO3
PRO FORMA FINANCIAL INFORMATION (Schedule of Unaudited Pro Forma Consolidated Information) (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
PRO FORMA FINANCIAL INFORMATION [Abstract] | ||
Revenue | $150,802 | $125,116 |
Net loss | ($1,745,624) | ($184,149) |
Loss per share | ($0.05) | ($0.01) |
SUBSEQUENT_EVENTS_Narrative_De
SUBSEQUENT EVENTS (Narrative) (Details) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | ||||||||
Aug. 31, 2014 | Aug. 30, 2014 | Aug. 31, 2013 | Sep. 02, 2014 | Aug. 31, 2014 | Sep. 18, 2014 | Oct. 31, 2014 | Sep. 16, 2014 | Sep. 18, 2013 | Sep. 26, 2014 | Nov. 03, 2014 | Sep. 01, 2014 | Sep. 29, 2014 | Nov. 10, 2014 | |
Subsequent Event [Line Items] | ||||||||||||||
Outstanding balance plus accrued interest | $1,298,322 | $1,298,322 | ||||||||||||
Cash received from units issued | 980,288 | |||||||||||||
Share price (in dollars per share) | $0.10 | $0.10 | ||||||||||||
Convertible Notes Payable, Current | 862,450 | 862,450 | ||||||||||||
Loans advanced | 221,000 | 221,000 | ||||||||||||
Loan balance | 226,876 | 226,876 | ||||||||||||
Interest rate | 10.00% | 10.00% | 1.66% | |||||||||||
Convertible Notes Payable [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Convertible Notes Payable, Current | 862,450 | 862,450 | ||||||||||||
Loans advanced | 840,851 | 840,851 | ||||||||||||
Interest rate | 12.00% | 12.00% | ||||||||||||
Common Stock Payable [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Units issued (in shares) | ||||||||||||||
Cash received from units issued | 50,000 | |||||||||||||
Secured Subordinated Loan Receivable, Short Term [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Further advanced amount | 1,290,727 | |||||||||||||
Manhattan Holdings Llc [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Loans advanced | 60,000 | 60,000 | ||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||||
Darren Katic [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Loans advanced | 161,000 | 161,000 | ||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||||
Subsequent Event [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Additional cash proceeds from related parties pursuant to loan payable current | 0 | 95,000 | ||||||||||||
Additional cash proceeds from related parties pursuant to convertible notes payable | 0 | |||||||||||||
Accounts payable converted into loan payable | 3,525 | 3,525 | ||||||||||||
Loan payable repaid | 10,000 | |||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||||
Subsequent Event [Member] | Convertible Notes Payable Eight [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Loans advanced | 25,000 | |||||||||||||
Subsequent Event [Member] | Convertible Notes Payable Nine [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Loans advanced | 25,000 | |||||||||||||
Subsequent Event [Member] | Convertible Notes Payable One and Two [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Maximum beneficial ownership interest after conversion of debt (as a percent) | 4.99% | |||||||||||||
Subsequent Event [Member] | Convertible Notes Payable [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Convertible Notes Payable, Current | 50,000 | |||||||||||||
Subsequent Event [Member] | Common Stock Payable [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Units issued (in shares) | 500,000 | |||||||||||||
Number of investors whose units are issued | 3 | |||||||||||||
Addition cash proceeds received from additional units issued | 0 | |||||||||||||
Commission paid | 0 | |||||||||||||
Commission payable | 0 | |||||||||||||
Share price (in dollars per share) | $0.10 | |||||||||||||
Unit comprised ratio into common stock | 1 | |||||||||||||
Unit comprised ratio into additional common stock to acquire warrant | 0.5 | |||||||||||||
Share price to acquire warrant (in dollars per share) | $0.20 | |||||||||||||
Warrants expire term | 5 years | |||||||||||||
Subsequent Event [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Outstanding balance plus accrued interest | 1,487,352 | |||||||||||||
Subsequent Event [Member] | TEG [Member] | Tapia Holdings, LLC [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Further advanced amount | 196,625 | |||||||||||||
Subsequent Event [Member] | Manhattan Holdings Llc [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Loans advanced | 30,000 | |||||||||||||
Subsequent Event [Member] | Kristian Andresen [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Accounts payable converted into loan payable | 3,525 | |||||||||||||
Loans advanced | 15,000 | |||||||||||||
Loan balance | 18,525 | |||||||||||||
Subsequent Event [Member] | Gerald Tywoniuk [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Loans advanced | 50,000 | |||||||||||||
Subsequent Event [Member] | Darren Katic [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Loan payable repaid | $10,000 |
SUBSEQUENT_EVENTS_Additional_N
SUBSEQUENT EVENTS (Additional Narrative) (Details) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||||||
Jan. 01, 2014 | Aug. 31, 2014 | Oct. 10, 2014 | Aug. 31, 2013 | Dec. 27, 2014 | Oct. 02, 2014 | Sep. 24, 2014 | Sep. 01, 2014 | Nov. 30, 2014 | Nov. 13, 2014 | |
Subsequent Event [Line Items] | ||||||||||
Equity funding | 55,000 | |||||||||
Tapia Holdings LLC [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Equity funding | 55,000 | |||||||||
Future commitment to participate in the note payable | 144,000 | |||||||||
Members' equity (as a percent) | 4.80% | |||||||||
Darren Katic [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 1,500,000 | |||||||||
Charles Moore [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 1,500,000 | |||||||||
Hawker Energy (Rincon), LLC [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 3,000,000 | |||||||||
Hawker Energy (Rincon), LLC [Member] | Mr. Tywoniuk [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Warrants to purchase percentage of shares of common stock held by a significant shareholder | 5.00% | |||||||||
TEG Oil & Gas, Inc. [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 10,000,000 | |||||||||
Subsequent Event [Member] | Tapia Holdings LLC [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Equity funding | 145,000 | 65,000 | 145,000 | |||||||
Future commitment to participate in the note payable | 145,000 | |||||||||
Members' equity (as a percent) | 4.83% | 4.83% | ||||||||
Subsequent Event [Member] | Charles Moore [Member] | Tapia Holdings LLC [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Equity funding | $25,000 | |||||||||
Subsequent Event [Member] | Hawker Energy (Rincon), LLC [Member] | Messrs. Katic and Moore [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 33,000,000 | |||||||||
Shares to be held in escrow | 19,000,000 | |||||||||
Subsequent Event [Member] | Hawker Energy (Rincon), LLC [Member] | Darren Katic [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 16,500,000 | |||||||||
Subsequent Event [Member] | Hawker Energy (Rincon), LLC [Member] | Charles Moore [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 16,500,000 | |||||||||
Subsequent Event [Member] | Hawker Energy (Rincon), LLC [Member] | Mr. Tywoniuk [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Warrants to purchase percentage of shares of common stock held by a significant shareholder | 5.00% | 9.72% | 9.72% | |||||||
Subsequent Event [Member] | Option Agreement [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Shares to be held in escrow till on or before December 31, 2017 | 9,000,000 | |||||||||
Subsequent Event [Member] | Option Agreement [Member] | Hawker Energy (Rincon), LLC [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Stock issued (in shares) | 14,000,000 | |||||||||
Subsequent Event [Member] | Option Agreement [Member] | Hawker Energy (Rincon), LLC [Member] | Kern County CA [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Area of land | 1,500 | |||||||||
Subsequent Event [Member] | Option Agreement [Member] | Hawker Energy (Rincon), LLC [Member] | Kern County [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Area of land | 40 | |||||||||
Subsequent Event [Member] | Option Agreement [Member] | Hawker Energy (Rincon), LLC [Member] | Los Angeles County [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Area of land | 900 | |||||||||
Subsequent Event [Member] | Option Agreement [Member] | Hawker Energy (Rincon), LLC [Member] | Messrs. Katic and Moore [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 33,000,000 | |||||||||
Shares to be held in escrow | 19,000,000 | |||||||||
Subsequent Event [Member] | Option Agreement [Member] | Hawker Energy (Rincon), LLC [Member] | Darren Katic [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 16,500,000 | |||||||||
Subsequent Event [Member] | Option Agreement [Member] | Hawker Energy (Rincon), LLC [Member] | Charles Moore [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Number of shares issued for acquisition | 16,500,000 | |||||||||
Subsequent Event [Member] | Option Agreement [Member] | Hawker Energy (Rincon), LLC [Member] | Mr. Tywoniuk [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Warrants to purchase percentage of shares of common stock held by a significant shareholder | 5.00% | 9.72% | ||||||||
Subsequent Event [Member] | Option Agreement [Member] | TEG Oil & Gas, Inc. [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Shares to be held in escrow till acquisition | 10,000,000 |
RESTATEMENT_Narrative_Details
RESTATEMENT (Narrative) (Details) (CNP 1 [Member], USD $) | Jun. 25, 2014 |
CNP 1 [Member] | |
Principal amount of debt issued | $350,000 |
RESTATEMENT_Schedule_of_change
RESTATEMENT (Schedule of changes impacted the financial statements) (Details) (USD $) | 12 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Balance Sheet items | ||
Convertible notes payable, short term | $862,450 | |
Conversion option | 122,045 | |
Accumulated deficit | -2,080,358 | -351,226 |
Statement of Operations items | ||
Interest expense | 94,966 | 12,865 |
Change in fair value of conversion option (income) | -19,636 | |
Net income (loss) | -1,729,132 | -41,991 |
Statement of Cash Flow items | ||
Net income (loss) | -1,729,132 | -41,991 |
Adjustment to reconcile net income to cash provided by operating activities: | ||
Accretion of discount on convertible notes payable | 49,902 | |
Change in fair value of conversion option | -19,636 | |
Other non-cash interest expense | 2,630 | |
Net cash (used in) operating activities | -302,554 | 6,884 |
As originally reported [Member] | ||
Balance Sheet items | ||
Convertible notes payable, short term | 951,599 | |
Conversion option | ||
Accumulated deficit | -2,047,462 | |
Statement of Operations items | ||
Interest expense | 42,434 | |
Change in fair value of conversion option (income) | ||
Net income (loss) | -1,696,236 | |
Statement of Cash Flow items | ||
Net income (loss) | -1,696,236 | |
Adjustment to reconcile net income to cash provided by operating activities: | ||
Accretion of discount on convertible notes payable | ||
Change in fair value of conversion option | ||
Other non-cash interest expense | ||
Net cash (used in) operating activities | -302,554 | |
Adjustment [Member] | ||
Balance Sheet items | ||
Convertible notes payable, short term | -89,149 | |
Conversion option | 122,045 | |
Accumulated deficit | -32,896 | |
Statement of Operations items | ||
Interest expense | 52,532 | |
Change in fair value of conversion option (income) | -19,636 | |
Net income (loss) | -32,896 | |
Statement of Cash Flow items | ||
Net income (loss) | -32,896 | |
Adjustment to reconcile net income to cash provided by operating activities: | ||
Accretion of discount on convertible notes payable | 49,902 | |
Change in fair value of conversion option | -19,636 | |
Other non-cash interest expense | 2,630 | |
Net cash (used in) operating activities |