Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |||
Nov. 30, 2014 | Jan. 06, 2014 | |||
Document And Entity Information [Abstract] | ||||
Document Type | 10-Q/A | |||
Amendment Flag | TRUE | |||
Document Period End Date | 30-Nov-14 | |||
Entity Registrant Name | HAWKER ENERGY, INC. | |||
Entity Central Index Key | 1415286 | |||
Current Fiscal Year End Date | -23 | |||
Document Fiscal Year Focus | 2015 | |||
Document Fiscal Period Focus | Q1 | |||
Entity Filer Category | Smaller Reporting Company | |||
Entity Common Stock, Shares Outstanding | 75,980,403 | |||
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-Q/A”) to its Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2014, which was originally filed with the U.S. Securities and Exchange Commission (“SEC”) on January 20, 2015 (the “Original Form 10-Q”). | ||||
The purpose of this Amendment No. 1 to Form 10-Q/A (“Form 10-Q/A”) is to amend and restate audited financial statements and related disclosures in the Original Form 10-Q to properly account for a $350,000 convertible note payable and a $25,000 convertible note payable, each of 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 these errors, 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 (“Original Form 10-K”) and the Original Form 10-Q) should no longer be relied upon. This Form 10-Q/A contains restated condensed consolidated interim financial statements for the fiscal quarter ended November 30, 2014. In addition, we have corrected the determination of the fair value of financial instruments disclosed in the footnotes to the condensed consolidated financial statements. Together, we refer to these corrections as the “Restatement”. Refer also to the Annual Report on Form 10-K/A for the fiscal year ended August 31, 2014 (“Form 10-K/A”), for a restatement of similar nature. | ||||
This Form 10-Q/A restates the Original Form 10-Q 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-Q. Other than the revision of the disclosures as discussed below and expressly set forth herein, the Form 10-Q/A speaks as of the original filing date of the Original Form 10-Q and has not been updated to reflect other events occurring subsequent to the original filing date. This Form 10-Q/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-K/A for the fiscal year ended August 31, 2014. | ||||
The following are the items that have changed, and if applicable the specific portion of the items that have changed: | ||||
• | Part I, Item 1 – Financial Statements and Supplementary Data: | |||
o | A Restatement footnote (Note 20) to the condensed 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 2 as a result of the Restatement. | |||
• | Part 1, Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations: | |||
o | “Results of Operations” has been updated to reflect an $18,828 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. | |||
• | Part I, Item 4 – 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 continuing as of November 30, 2014. Based on such re-evaluation, management confirmed that the material weaknesses described in the Original Form 10-K and the Original form 10-Q 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 certain of our convertible notes, 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 to the financial statements in Part I, Item I of this Form 10-Q/A. | |||
• | Part II, Item 6 - Exhibits: | |||
o | The exhibit list has been updated to reflect which exhibits were filed with the Original Form 10-Q and which new exhibits are included, being the certifications below. | |||
• | Attached as Exhibits 31 and 32 to this Form 10-Q/A 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 condensed consolidated financial statements included in Part I, Item 1 herein and in Part I, Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” | ||||
Other than this Form 10-Q/A and the Form 10-K/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-Q/A and the Form 10-K/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-Q/A generally does not reflect events that have occurred after January 20, 2015, the filing date of the Original Form 10-Q, or modify or update the disclosures presented in the Original Form 10-Q, except to reflect the effects of the Restatement. Accordingly, this Form 10-Q/A should be read in conjunction with (i) our Current Reports on Form 8-K filed with the Commission since January 20, 2015, and (ii) the August 31, 2014 Form 10-K/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-Q/A. The certifications are included in this Form 10-Q/A and 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 I, Item 4 of this Form 10-Q/A, as well Part II, Item 9A, “Controls and Procedures” of the Form 10-K/A. |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
Current assets: | ||
Cash | $6,604 | $13,207 |
Accounts receivable | 40,672 | 42,815 |
Inventory | 6,452 | 6,092 |
Prepaid expenses | 3,763 | 22,389 |
Secured subordinated loan receivable, short term | 1,505,451 | 1,298,322 |
Total current assets | 1,562,942 | 1,382,825 |
Fixed assets: | ||
Machinery and equipment, net of accumulated depreciation of $20,815 and $19,605, respectively | 22,311 | 14,269 |
Other assets: | ||
Capitalized oil and gas properties, net of accumulated depletion of $93,176 and $86,193, respectively | 723,063 | 730,046 |
Deposits | 5,000 | 5,000 |
Total assets | 2,313,316 | 2,132,140 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,272,854 | 813,438 |
Accrued bonuses | 480,000 | 480,000 |
Net profits interest payable, current portion | 20,570 | 20,065 |
Loans payable to related parties, short term | 332,182 | 226,876 |
Convertible notes payable, short term, net of discounts | 984,504 | 862,450 |
Conversion option | 97,398 | 122,045 |
Total current liabilities | 3,187,508 | 2,524,874 |
Long term liabilities: | ||
Asset retirement obligations | 171,682 | 168,110 |
Net profits interest payable, long term portion | 143,704 | 149,039 |
Total long term liabilities | 315,386 | 317,149 |
Total liabilities | 3,502,894 | 2,842,023 |
Stockholders' (deficit): | ||
Common stock; $0.001 par value; 750,000,000 shares authorized, 74,674,703 and 41,174,703 shares issued and outstanding, respectively | 74,675 | 41,175 |
Common stock payable | 50,000 | |
Additional paid in capital | 2,328,899 | 1,224,300 |
Accumulated (deficit) | -3,728,621 | -2,080,358 |
Total stockholders' (deficit) | -1,325,047 | -764,883 |
Non-controlling interest | 135,469 | 55,000 |
Total (deficit) | -1,189,578 | -709,883 |
Total liabilities and (deficit) | $2,313,316 | $2,132,140 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Accumulated depreciation of fixed asets | $20,815 | $19,605 |
Capitalized oil and gas properties accumulated depletion | $93,176 | $86,193 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 74,674,703 | 41,174,703 |
Common stock, shares outstanding | 74,674,703 | 41,174,703 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | |
Revenue: | ||
Oil revenues | $10,294 | $25,764 |
Expenses: | ||
Direct operating costs | 15,996 | 12,972 |
Depletion, depreciation and amortization | 11,036 | 8,110 |
Professional fees | 430,563 | 71,071 |
General and administrative expenses | 74,527 | 6,231 |
Equity compensation expense | 1,088,179 | |
Total expenses | 1,620,301 | 98,384 |
Net operating (loss) | -1,610,007 | -72,620 |
Other (income) expense: | ||
Interest (income) | -10,504 | |
Interest expense | 92,953 | 3,413 |
Change in fair value of conversion option | -34,662 | |
Total other expense | 47,787 | 3,413 |
Loss before income taxes | -1,657,794 | -76,033 |
Provision for income taxes | ||
Net loss | -1,657,794 | -76,033 |
Net loss attributable to non-controlling interests | 9,531 | |
Net loss attributable to the Company | ($1,648,263) | ($76,033) |
Net loss per common share - basic and diluted | ($0.03) | |
Weighted average common shares outstanding - basic and diluted | 60,064,813 | 17,654,293 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($1,657,794) | ($76,033) |
Depletion, depreciation and amortization | 7,464 | 5,915 |
Accretion of asset retirement obligation | 3,572 | 2,195 |
Accretion of net profits interest liability | 4,104 | 3,041 |
Accretion of discount on convertible note payable | 50,893 | |
Change in fair value of conversion option | -34,662 | |
Other non-cash interest expense | 2,597 | |
Stock compensation expense | 1,088,179 | |
Other | 13,000 | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Accounts receivable | 2,143 | -1,493 |
Inventory | 369 | 3,427 |
Prepaid expenses | 5,626 | 2,295 |
Accounts payable and accrued expenses | 487,717 | 71,101 |
Net cash (used in) provided by operating activities | -26,792 | 10,448 |
Cash flows from investing activities: | ||
Cash acquired in Hawker acquisition | 6,004 | |
Purchase of fixed assets | -9,252 | |
Secured subordinated loan receivable | -196,625 | |
Net cash (used in) provided by investing activities | -205,877 | 6,004 |
Cash flows from financing activities: | ||
Loans from related parties, short term | 105,000 | |
Repayment of loans from related parties, short term | -10,000 | |
Payments on net profits interest agreement | -8,934 | -5,957 |
Proceeds from convertible notes | 50,000 | |
Proceeds from sale of non-controlling interest | 90,000 | |
Net cash provided by (used in) financing activities | 226,066 | -5,957 |
Net change in cash | -6,603 | 10,495 |
Cash, beginning | 13,207 | 8,298 |
Cash, end | 6,604 | 18,793 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 4,104 | 3,041 |
Value of convertible note payable assigned to conversion option | $7,418 |
CONDENSED_STATEMENT_OF_STOCKHO
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (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, 2013 | ($1,226) | $350,000 | ($351,226) | |||
Balance, shares at Aug. 31, 2013 | ||||||
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 Energy (Rincon), LLC | -135,199 | 3,000 | -138,199 | |||
Issued to acquire Hawker Energy (Rincon), LLC, 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 option compensation | 68,760 | 68,760 | ||||
Sale of non-controlling interest | 55,000 | 55,000 | ||||
Net loss attributable to the Company | -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 | |||
Net proceeds from unit offering | 50,000 | |||||
Net proceeds from unit offering, shares | 500,000 | |||||
Proceeds received for common stock payable | -80 | 500 | -50,000 | 49,420 | ||
Proceeds received for common stock payable, shares | 500,000 | -500,000 | ||||
Equity compensation pursuant to HERLLC Option Agreement | 1,030,500 | 33,000 | 997,500 | |||
Equity compensation pursuant to HERLLC Option Agreement, shares | 33,000,000 | |||||
Stock option compensation | 57,679 | 57,679 | ||||
Sale of non-controlling interest | 90,000 | 90,000 | ||||
Net loss attributable to non-controlling interest | -9,531 | -9,531 | ||||
Net loss attributable to the Company | -1,648,263 | -1,648,263 | ||||
Balance at Nov. 30, 2014 | ($1,189,578) | $74,675 | $2,328,899 | ($3,728,621) | $135,469 | |
Balance, shares at Nov. 30, 2014 | 74,674,703 | 74,674,703 |
DESCRIPTION_OF_BUSINESS
DESCRIPTION OF BUSINESS | 3 Months Ended |
Nov. 30, 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 | 3 Months Ended |
Nov. 30, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis Of Presentation | |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three months ended November 30, 2014, are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2015. The balance sheet at August 31, 2014, has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Amended Form 10-K/A. The notes to the unaudited condensed consolidated financial statements are presented on a continuing basis unless otherwise noted. | |
The unaudited interim financial statements should be read in conjunction with our Annual Report on Form 10-K/A for the year ended August 31, 2014, which contains audited financial statements and notes thereto. | |
Principles Of Consolidation | |
Our 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 ours 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 dates. By their nature, these estimates including the estimates of future prices and costs, and the related future cash flows are subject to measurement uncertainty, 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. | |
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 provide 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 and a $25,000 convertible note issued in November 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 initial fair value of $146,469, 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. | |
Changes In Accounting Policies | |
The Company has not had any changes in accounting policies during the three months ended November 30, 2014. | |
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 | 3 Months Ended |
Nov. 30, 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 November 30, 2014, the Company had total current assets of $1,562,942 but a working capital deficit in the amount of $1,624,566. The Company incurred a net loss of $1,648,263 for the three months ended November 30, 2014 and an accumulated net loss of $3,728,621 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 TEG Oil & Gas U.S.A., Inc. (see Note 7), the further development of which is dependent on financing, and to raise capital through a combination of equity and debt financing sufficient to finance 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 | 3 Months Ended | ||||
Nov. 30, 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_R
ACQUISITION OF HAWKER ENERGY (RINCON), LLC | 3 Months Ended | ||||
Nov. 30, 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”), pursuant to an Amended and Restated Option Agreement (“Option Agreement”) dated November 20, 2013. 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. The terms for the issuance of additional shares were revised on October 10, 2014 as described below. | |||||
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. 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 11 barrels of oil per day (gross production before royalties) for the nine months September 30, 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. 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 Option 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; 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 were dependent on a number of variables that were not within our control and, as a result, none of the transactions were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of HERLLC). 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 (or pursuant to the terms of the October 10, 2014, amendment described below) 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 (the “Amendment”) to the Option Agreement. Under the original terms of the Option Agreement, 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: | |||||
(a)Cat Canyon (leases Tognazzini, Wickenden, Los Alamos, GWP, and those immediately adjacent to, in each case, in Santa Barbara County); | |||||
(b)Santa Maria (T 11N, R 36W extending southeast through T9N R33W in Santa Barbara County); | |||||
(c)Casmalia (leases Tompkins, Peshine, and those immediately adjacent to, in each case, in Santa Barbara County); | |||||
(d)North Lost Hills (Sections 12 & 13, T25S, R19E, and Sections 7 & 18, T25S, R 20E, totaling 1,500 acres in Kern County CA); | |||||
(e)Maricopa (McFarland and Jameson leases totaling 40 acres in Kern County); | |||||
(f)Pine Meadows (Section 1 Township 31 South Range 22E in Kern County); or | |||||
(g)Torrance (Joughin and South Torrance Units totaling 900 acres in Los Angeles County). | |||||
Waiver of the Potential Follow-On Transaction requirements and the immediate issuance of the remaining shares is 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 Amendment, an equity compensation expense of $1,011,500 recorded based on the fair value of the shares at the date of issuance. With respect to the 19,000,000 shares of our common stock that are in escrow, an equity compensation expense of $19,000 was recorded based on the par value of the shares at the date of issuance. Total expense was $1,030,500, which was recorded in the three months ended November 30, 2014. As and when subsequently released from escrow, a further expense will be recorded based on the fair value of the 19,000,000 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 of Hawker) holds warrants to acquire 9.7222% of any shares of Hawker acquired by Messrs. Katic and Moore pursuant to the Amendment above. This agreement amended a December 27, 2013, agreement entitling Mr. Tywoniuk to acquire 5% of any shares of Hawker acquired by Messrs. Katic and Moore pursuant to the Option Agreement. | |||||
ACQUISITION_OF_AN_ADDITIONAL_3
ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE | 3 Months Ended |
Nov. 30, 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 in the year ended August 31, 2014. | |
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 | 3 Months Ended | ||||||||
Nov. 30, 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 January 15, 2015, we and our wholly-owned subsidiary, Tapia Holdings, LLC (“Tapia Holdings”), made a number of advances to TEG Oil & Gas U.S.A., Inc. (“TEG”), pursuant to several secured subordinated notes and related security agreements, all as amended and restated into a Secured Subordinated Note dated January 12, 2015 (the “Note”), and a Fourth Amended and Restated Security Agreement dated January 12, 2015 (the “Security Agreement”), each executed by TEG, and a Limited Recourse Guarantee (“Guarantee”) and a Pledge Agreement (“Pledge Agreement”), each executed by Sefton Resources, Inc. (“Sefton”) (collectively, the “Loan Receivable Agreements”). The Loan Receivable Agreements and an Intercreditor Agreement (defined below) were entered into in connection with what ultimately became an executed Share Purchase Agreement to acquire TEG. | |||||||||
Share Purchase Agreement To Purchase All Of The Outstanding Shares Of Capital Stock Of TEG | |||||||||
On January 12, 2015, we entered into a Share Purchase Agreement (“Share Purchase Agreement”) with Sefton pursuant to which we agreed to purchase, and Sefton agreed to sell, 100% of the issued and outstanding shares of capital stock of Sefton's wholly-owned subsidiary, TEG. The principal terms of the Share Purchase Agreement are as follows: we will purchase all of the shares of TEG for $1.00 in cash plus the issuance of 3,000,000 shares of our common stock and a five-year warrant to purchase up to an additional 5,000,000 shares of our common stock for $0.25 per share. | |||||||||
Between April 18, 2014 and January 15, 2015, we and our wholly-owned subsidiary, Tapia Holdings, made a number of advances to TEG, pursuant to the Loan Receivable Agreements. These advances totaled approximately $1,637,352 as of January 15, 2015 (described further under “Secured Subordinated Loan Receivable, Short Term” below), plus accrued interest. This amount constitutes additional consideration for the acquisition, as this loan receivable will not be settled prior to the closing of our acquisition of TEG. | |||||||||
The transactions contemplated by the Share Purchase Agreement are subject to several customary conditions, most notably that the purchase and sale must be approved by Sefton's shareholders. | |||||||||
Bank of the West (“BOTW”), Sefton's senior lender, has consented to our acquisition of TEG and has agreed to forbear taking enforcement action against TEG on the senior loan provided that (i) Hawker lend TEG not less than $350,000 within 90 days, (ii) interest on TEG's obligations to BOTW be increased to 9%, with a monthly pay rate of 5% and the remaining deferred 4% of unpaid interest compounded monthly, (iii) the proceeds of any sale, assignment, licensing or other transfer of any real or personal property rights which serve as collateral for TEG's obligations to BOTW be remitted directly to BOTW, and (iv) commencing no later than the first month after which the California Midway-Sunset First Purchase Price as published by the U.S. Energy Information Administration exceeds $60 per barrel, TEG will begin making outstanding property tax payments to the County of Los Angeles of at least $15,000 per month. | |||||||||
As a result of a significant decline in oil prices and other factors, the transaction described above amends and replaces the transaction described in our Annual Report on Form 10-K filed November 24, 2014 to acquire 80% interest in the assets of TEG pursuant to a non-binding letter of intent dated June 18, 2014. | |||||||||
TEG's assets 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. | |||||||||
Secured Subordinated Loan Receivable, Short Term | |||||||||
Under the terms of the Loan Receivable Agreements, TEG agreed to pay us the principal sum of $2,100,000, 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. We advanced $196,625 to TEG during the three months ended November 30, 2014, for a total at November 30, 2014, of $1,487,352, and an additional $150,000 subsequent to November 30, 2014, for a total at January 15, 2015 of $1,637,352, not including accrued interest. Further advances are subject to our sole and absolute discretion. The loan receivable matures on December 31, 2015, at which time all outstanding principal and accrued interest is due and payable in full. The assets of TEG secure the Note, which is also guaranteed on a limited recourse basis by Sefton. Sefton's Guarantee is secured by a pledge of all of the outstanding shares of TEG. TEG's assets are located in the Tapia and Eureka Fields, Los Angeles and Ventura Counties, California. The Note and our security interest in the assets of TEG are subordinate to senior indebtedness of TEG, pursuant to an Amended and Restated Subordination and Intercreditor Agreement (“Intercreditor Agreement”) dated January 1, 2015, as amended, by and among Tapia Holdings, Hawker, TEG, Sefton, TEG's affiliate TEG MidContinent, Inc., BOTW, and us. | |||||||||
The Security Agreement and the Pledge Agreement also provide that it is a default under those agreements if the transactions contemplated by the Share Purchase Agreement are not consummated by January 31, 2015 (including if Sefton's shareholders have not approved the transactions by that date). 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 terms of the Share Purchase Agreement, to the extent we decline to renegotiate the Share Purchase Agreement terms or to otherwise match the terms of the third party acquisition proposal, TEG may pursue such third party acquisition proposal. The Security Agreement, Pledge Agreement and Guarantee also contain other representations, warranties and covenants of both parties that are customary for agreements of these types. | |||||||||
The period end balance of the secured subordinated note receivable is comprised of the following: | |||||||||
November 30, | August 31, | ||||||||
2014 | 2014 | ||||||||
Principal | $ | 1,487,352 | $ | 1,290,727 | |||||
Accrued interest | 18,099 | 7,595 | |||||||
Total | $ | 1,505,451 | $ | 1,298,322 | |||||
FIXED_ASSETS_CAPITALIZED_OIL_A
FIXED ASSETS; CAPITALIZED OIL AND GAS PROPERTIES | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
FIXED ASSETS; CAPITALIZED OIL AND GAS PROPERTIES | |||||||||||||
FIXED ASSETS; CAPITALIZED OIL AND GAS PROPERTIES | 8. FIXED ASSETS; CAPITALIZED OIL AND GAS PROPERTIES | ||||||||||||
The asset categories of fixed assets and capitalized oil and gas properties at November 30, 2014 and August 31, 2014 were as follows: | |||||||||||||
30-Nov-14 | |||||||||||||
Cost | Accumulated | ||||||||||||
Depletion, | Net Book | ||||||||||||
Depreciation and | Value | ||||||||||||
Amortization | |||||||||||||
Machinery and equipment | $ | 33,874 | $ | 20,815 | $ | 13,059 | |||||||
Other fixed assets | 9,252 | - | 9,252 | ||||||||||
Total fixed assets | 43,126 | 20,815 | 22,311 | ||||||||||
Capitalized oil and gas properties | 816,239 | 93,176 | 723,063 | ||||||||||
Total | $ | 859,365 | $ | 113,991 | $ | 745,374 | |||||||
31-Aug-14 | |||||||||||||
Cost | Accumulated | ||||||||||||
Depletion, | Net Book | ||||||||||||
Depreciation and | Value | ||||||||||||
Amortization | |||||||||||||
Fixed assets: machinery and | $ | 33,874 | $ | 19,605 | $ | 14,269 | |||||||
equipment | |||||||||||||
Capitalized oil and gas properties | 816,239 | 86,193 | 730,046 | ||||||||||
Total | $ | 850,113 | $ | 105,798 | $ | 744,315 | |||||||
LOANS_PAYABLE_TO_RELATED_PARTI
LOANS PAYABLE TO RELATED PARTIES, SHORT TERM | 3 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
LOANS PAYABLE TO RELATED PARTIES, SHORT TERM [Abstract] | |||||||||
LOANS PAYABLE TO RELATED PARTIES, SHORT TERM | 9. LOANS PAYABLE TO RELATED PARTIES, SHORT TERM | ||||||||
Loans payable to related parties, short term, consist of the following at November 30, 2014, and August 31, 2014: | |||||||||
November 30, | August 31, | ||||||||
2014 | 2014 | ||||||||
Darren Katic | $ | 151,000 | $ | 161,000 | |||||
Manhattan Holdings, LLC | 90,000 | 60,000 | |||||||
Gerald Tywoniuk | 60,000 | - | |||||||
Kristian Andresen | 18,525 | - | |||||||
Total short-term loans | 319,525 | 221,000 | |||||||
Accrued interest payable | 12,657 | 5,876 | |||||||
Loans payable to related parties, short term | $ | 332,182 | $ | 226,876 | |||||
Loans payable to related parties are unsecured and bear interest at 10% per annum. Mr. Katic's loan is due on demand. Of the Manhattan Holdings, LLC loan balance, $60,000 was originally due on October 31, 2014, but the maturity date on that portion was extended to January 31, 2015, in combination with an additional $30,000 loan. Other loans are due January 31, 2015. Accordingly, all loans from related parties above have been treated as short-term loans. Mr. Katic is an officer, director and significant shareholder. Manhattan Holdings, LLC and Gerald Tywoniuk are significant shareholders. Kristian Andresen is a director and significant shareholder. | |||||||||
CONVERTIBLE_NOTES_PAYABLE_SHOR
CONVERTIBLE NOTES PAYABLE, SHORT TERM | 3 Months Ended | ||||||||||||
Nov. 30, 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 November 30, 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 November 30, 2014, and August 31, 2014; conversion features, security provisions and warrants to acquire common stock of Hawker are also set forth below: | |||||||||||||
Issue | Maturity | November 30, | August 31, | ||||||||||
Date | Date | 2014 | 2014 | ||||||||||
CNP 1 | |||||||||||||
(1) (2) (3) | June 25, 2014 | 30-Nov-14 | $ | 309,228 | $ | 260,851 | |||||||
CNP 2 | |||||||||||||
(1) (2) (3) | 30-May-14 | November 30, 2014 | 250,000 | 250,000 | |||||||||
CNP 3 | |||||||||||||
(1) (3) (4) | 17-Jul-14 | 30-Jun-15 | 100,000 | 100,000 | |||||||||
CNP 4 | |||||||||||||
(1) (2) (3) (4) (5) | 17-Jul-14 | 10-Jul-15 | 100,000 | 100,000 | |||||||||
CNP 5 | |||||||||||||
-6 | 13-May-14 | 13-May-16 | 50,000 | 50,000 | |||||||||
CNP 6 | |||||||||||||
(1) (2) (3) (4) | 25-Jul-14 | 25-Jul-15 | 50,000 | 50,000 | |||||||||
CNP 7 | |||||||||||||
(1) (2) (3) (4) | 28-Aug-14 | 25-Jul-15 | 30,000 | 30,000 | |||||||||
CNP 8 | |||||||||||||
(1)(3)(4) | September 26, 2014 | September 26, 2015 | 25,000 | - | |||||||||
CNP 9 | |||||||||||||
(1)(2)(3) | 3-Nov-14 | 3-May-15 | 20,098 | - | |||||||||
934,326 | 840,851 | ||||||||||||
Accrued interest payable | 50,178 | 21,599 | |||||||||||
Convertible notes payable, short term | $ | 984,504 | $ | 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 the entire 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. CNP 9 is similarly limited. The face amount of CNP 1 is $350,000. CNP 1 is shown net of unamortized discount of $40,772, comprised of an initial discount of $139,051 recorded upon issuance of CNP 1 in June 2014 and accretion of discount of $98,279 for the period from June 2014 through November 30, 2014. CNP 9 has a face value of $25,000 and is shown net of unamortized discount of $4,902 comprised of an initial discount of $7,418 recorded upon issuance of CNP 9 in November 2014 and accretion of discount of $2,516 in November 2014. Total unamortized discount at November 30, 2014 is $45,674 compared to $89,149 at August 31, 2014. See “$350,000 and $25,000 Convertible Notes Payable and Conversion Options (Derivative Liabilities)” 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, 2 and 3, 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 or close on the TEG acquisition within one year, this convertible note payable has been classified as a short term liability. | ||||||||||||
See Note 19 for subsequent events concerning convertible notes payable. | |||||||||||||
$350,000 and $25,000 Convertible Notes Payable and Conversion Options (Derivative Liabilities) | |||||||||||||
On June 25, 2014, and November 3, 2014, the Company negotiated short-term convertible promissory notes payable to an unrelated entity. Under the terms of the notes, the Company received $350,000 and $25,000 respectively. The repayment of the notes is due on November 30, 2014 and May 3, 2014, respectively. 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. The $350,000 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. The $25,000 note has this limitation as well. These notes are referred to as “CNP 1” and “CNP 9” in the prior section of this footnote. | |||||||||||||
The Company identified an embedded derivative related to the certain conversion price reset provision in each note. 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 $350,000 and $25,000 notes, the Company determined a fair value of $139,051 and $7,418, respectively, of the embedded derivative. The fair value of the embedded derivative was determined using the Black-Scholes Pricing Model based on the following assumptions for each of the two notes: | |||||||||||||
Dividend yield: | 0 and 0 | % | |||||||||||
Volatility | 178 and 200 | % | |||||||||||
Risk free rate: | 0.05 and 0.02 | % | |||||||||||
The initial fair values of the embedded debt derivative of $139,051 and $7,418 were each 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, and a further $50,893 during the three months ended November 30, 2014. The unamortized discount as of November 30, 2014 was $45,674 compared to $89,149 at August 31, 2014. The November 30, 2014 amount will be fully amortized during the year ended August 31, 2015. | |||||||||||||
The fair value of the described embedded derivative of $97,398 at November 30, 2014 compares to $122,045 at August 31, 2014 was determined using the Black-Scholes Pricing Model with the following assumptions at each of the two dates: | |||||||||||||
Dividend yield: | 0 and 0 | % | |||||||||||
Volatility | 214 and 213 | % | |||||||||||
Risk free rate: | 0.025 and 0.03 | % | |||||||||||
At November 30, 2014, the Company adjusted the recorded fair value of the derivative liability to market resulting in non-cash, non-operating gain of $34,662 for the quarter ended November 30, 2014. |
ASSET_RETIREMENT_OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS | 3 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
ASSET RETIREMENT OBLIGATIONS [Abstract] | |||||||||
ASSET RETIREMENT OBLIGATIONS | 11. ASSET RETIREMENT OBLIGATIONS | ||||||||
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 three months ended November 30, 2014 and the year ended August 31, 2014: | |||||||||
Three Months | Year | ||||||||
Ended | Ended | ||||||||
November 30, | August 31, | ||||||||
2014 | 2014 | ||||||||
Asset retirement obligations, beginning | $ | 168,110 | $ | 103,299 | |||||
Liabilities acquired during the period | - | 53,963 | |||||||
Liabilities settled during the period | - | - | |||||||
Current period accretion | 3,572 | 10,848 | |||||||
Asset retirement obligations, ending | $ | 171,682 | $ | 168,110 |
NET_PROFITS_INTEREST_NPI_PAYAB
NET PROFITS INTEREST ("NPI") PAYABLE | 3 Months Ended | |||||||
Nov. 30, 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 November 30, 2014, SCNRG and other working interest owners have made NPI payments totaling $134,135. 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 November 30, 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 three months ended November 30, 2014 and the year ended August 31, 2014: | ||||||||
Three Months | Year | |||||||
Ended | Ended | |||||||
November 30, | August 31, | |||||||
2014 | 2014 | |||||||
NPI liability, beginning of period | $ | 169,104 | $ | 124,597 | ||||
Liabilities assumed in connection with acquisition of additional DEEP Lease working interests | - | 58,847 | ||||||
Current period accretion | 4,104 | 14,104 | ||||||
Payments made | (8,934 | ) | (28,444 | ) | ||||
NPI liability, end of period | 164,274 | 169,104 | ||||||
Less: current portion | 20,570 | 20,065 | ||||||
NPI liability, long-term portion | $ | 143,704 | $ | 149,039 |
INCOME_TAXES
INCOME TAXES | 3 Months Ended |
Nov. 30, 2014 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | 13. INCOME TAXES |
There was no current or deferred income tax expense (benefit) for the three months ended November 30, 2014 and 2013. 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 | 3 Months Ended | ||||||||||||||||
Nov. 30, 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 November 30, 2014 and August 31, 2014. 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 three months ended November 30, 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 November 30, 2014 and August 31, 2014: | |||||||||||||||||
Assets and liabilities measured at fair | |||||||||||||||||
value on a recurring | Total | ||||||||||||||||
basis at November 30, 2014: | Carrying | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Value | ||||||||||||||
Total Assets | $ | - | $ | - | $ | - | $ | - | |||||||||
Liabilities | |||||||||||||||||
Conversion option- derivative liability | $ | - | $ | - | $ | 97,398 | $ | 97,398 | |||||||||
Total Liabilities | $ | - | $ | - | $ | 97,398 | $ | 97,398 | |||||||||
Assets and liabilities measured at fair | |||||||||||||||||
value on a recurring | Total | ||||||||||||||||
basis at August 31, 2014: | Carrying | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Value | ||||||||||||||
Total Assets | $ | - | $ | - | $ | - | $ | - | |||||||||
Liabilities | |||||||||||||||||
Conversion option | $ | - | $ | - | $ | 122,045 | $ | 122,045 | |||||||||
Total Liabilities | $ | - | $ | - | $ | 122,045 | $ | 122,045 | |||||||||
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 | $ | - | |||||||||||||
The following table provides a summary of changes in fair value of the Company's Level 3 financial liabilities as of November 30, 2014: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Balance, August 31, 2014 | $ | 122,045 | $ | - | |||||||||||||
Initial fair value of debt derivatives at note issuances | 7,418 | ||||||||||||||||
Initial fair value of additional derivative created through interest accrual | 2,597 | ||||||||||||||||
Extinguished derivative liability | - | - | |||||||||||||||
Mark-to-market at November 30, 2014 - Embedded debt derivatives | (34,662 | ) | - | ||||||||||||||
Balance, November 30, 2014 | $ | 97,398 | $ | - | |||||||||||||
Net gain for the period included in earnings relating to the liabilities | $ | 34,662 | $ | - | |||||||||||||
held at November 30, 2014 | |||||||||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Nov. 30, 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 November 30, 2014, and August 31, 2014, we have no reserve for environmental remediation and are not aware of any environmental claims. | |
EQUITY_DEFICIT
EQUITY (DEFICIT) | 3 Months Ended |
Nov. 30, 2014 | |
EQUITY (DEFICIT) [Abstract] | |
EQUITY (DEFICIT) | 16. EQUITY (DEFICIT) |
Common Stock | |
During the three months ended November 30, 2014, we 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. Other transaction costs were $80. 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. | |
Related party transactions are set forth in Note 17. See also subsequent events 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 November 30, 2014, described above, up to 5,356,360 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 15,186,156 shares of common stock could be issued pursuant to the convertible notes payable described in Note 10, as follows: | |
Up to 9,800,000 shares of common stock would be issuable if investors elect or are required to convert all of the $980,000 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 4,650,000 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. | |
An additional amount of up to approximately 501,784 shares of common stock would be issuable determined based on the amount of any accrued interest payable as of November 30, 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 234,372 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 vested 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. | |
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 November 30, 2014, 15% of our outstanding common stock is 11,201,205 shares, of which we have 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 relating to stock options was $57,679 for the three months ended November 30, 2014. There was no equity compensation expense for the three months ended November 30, 2013. The total compensation cost relating to unvested stock option grants not yet recognized at November 30, 2014, was $284,000, and the weighted average period over which this cost is expected to be recognized, as of November 30, 2014, is approximately 2.4 years. | |
Non-Controlling Interest | |
We report non-controlling interest in Tapia Holdings in these unaudited interim financial statements pursuant to paragraph ASC No. 810-10-65-1. The non-controlling interest of $135,469 reported on the balance sheet as of November 30, 2014, represents the non-controlling interest holders' proportionate share of the equity of the Tapia Holdings. Of this amount, $145,000 represents capital contributions received , which has been reduced by $9,531 for the non-controlling interest share of losses for the three months ended November 30, 2014. | |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Nov. 30, 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 of Hawker. | |
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. | |
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 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 5, Acquisition of Hawker Energy (Rincon), LLC. | |
Loan Payable To Related Parties, Short Term | |
The components of $332,182 of loans payable to related parties, short term, are disclosed in Note 9. Interest expense on such loans was $6,781 and $0 for the three months ended November 30, 2014 and 2013 respectively. | |
Loans Payable To 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. | |
Interest expense on such loans was $0 and $372 for the three months ended November 30, 2014 and 2013 respectively. | |
Convertible Notes Payable | |
As of November 30, 2014, pursuant to a convertible note payable, we owed a relative of Mr. Darren Katic, $100,000 plus accrued interest of $4,701, all as described in Note 10. | |
Interest expense on this convertible note payable was $2,992 for the three months ended November 30, 2014. | |
Unit Issuances | |
As part of the common stock payable amounts outstanding on August 31, 2014 as described in Note 16, $20,000 was received from each of Messrs. Katic and Tywoniuk, for which 200,000 Units were issued to each during the three months ended November 30, 2014. 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. | |
Other | |
A portion of the non-controlling interest in Tapia Holdings is held by Mr. Moore, being $45,000 out of the $145,000 of capital received. See Note 16. | |
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 assign the leases with the landlord from Mr. Katic's company to Hawker. Mr. Katic provided a personal guarantee to the landlord. For the three months ended November 30, 2014, these payments totaled $9,617. | |
PRO_FORMA_FINANCIAL_INFORMATIO
PRO FORMA FINANCIAL INFORMATION | 3 Months Ended | |||||
Nov. 30, 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, 2013: | ||||||
Three Months | ||||||
Ended | ||||||
November 30, | ||||||
2013 | ||||||
Revenue | $ | 40,178 | ||||
Net loss attributable to the Company | $ | (89,670 | ) | |||
Loss per share | $ | - | ||||
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 | 3 Months Ended |
Nov. 30, 2014 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS |
Share Purchase Agreement To Purchase All Of The Outstanding Shares Of Capital Stock Of TEG, And Secured Subordinated Loan Receivable, Short Term | |
On January 12, 2015, we entered into a Share Purchase Agreement with Sefton pursuant to which we agreed to purchase, and Sefton agreed to sell, 100% of the issued and outstanding shares of capital stock of Sefton's wholly-owned subsidiary, TEG. The principal terms of the Share Purchase Agreement are as follows: we will purchase all of the shares of TEG for $1.00 in cash plus the issuance of 3,000,000 shares of our common stock and a five-year Warrant to purchase up to an additional 5,000,000 shares of our common stock for $0.25 per share. | |
Between April 18, 2014 and January 15, 2015, we and our wholly-owned subsidiary, Tapia Holdings, made a number of advances to TEG, pursuant to the Loan Receivable Agreements. These advances totaled approximately $1,637,352, not including accrued interest, as of January 15, 2015, including $150,000 advanced subsequent to November 30, 2014. This amount constitutes additional consideration for the TEG acquisition, as this loan receivable will not be settled prior to the closing of our acquisition of TEG. | |
The transactions contemplated by the Share Purchase Agreement are subject to several customary conditions, most notably that the purchase and sale must be approved by Sefton's shareholders. | |
As a result of a significant decline in oil prices and other factors, the transaction described above amends and replaces the transaction described in our Annual Report on Form 10-K filed November 24, 2014 to acquire the assets of TEG pursuant to a non-binding letter of intent dated June 18, 2014. | |
See Note 7 for further information about the Loan Receivable Agreements and BOTW's consent to our acquisition of TEG. | |
Term Sheet For A Third Amended and Restated Secured Convertible Note Payable | |
On January 14, 2015, we executed a term sheet to provide for a Third Amended and Restated Secured Convertible Promissory Note to an outside investor (the “Secured Convertible Note Payable”), in the aggregate principal amount of $1,000,000, to mature in two years. | |
The Secured Convertible Note Payable will be issued in consideration of additional gross proceeds to us in the amount of up to $335,000 (of which $200,000 was funded January 15, 2015, and $135,000 is to be funded within 120 days at the investor's option) and cancellation of previously issued notes to the investor in the amounts of $250,000, $350,000, and $25,000 (as well as accrued interest on each), the first two of which had maturity dates of November 30, 2014, and the latter of which had a maturity date of May 3, 2015. The Secured Convertible Note Payable will bear interest on the unpaid principal balance of the Secured Convertible Note Payable at the rate of 12% per annum. Interest payments will become payable quarterly on the six-month anniversary. The Secured Convertible Note Payable will be convertible at any time at the option of the investor into “Conversion Shares,” computed by dividing all of the then outstanding principal and accrued interest under the Secured Convertible Note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events) (the “Conversion Rate”). However, if we subsequently sell securities comprising the Conversion Shares at a price lower than the Conversion Rate (subject to customary exclusions), then the Conversion Rate then in effect will be automatically reduced to the lower price. We will at all times reserve and keep available out of our authorized but unissued shares a sufficient number of shares of common stock to give effect to the conversion of the Secured Convertible Note Payable.Unless notified in advance by the investor, conversion of a part or the entire Secured Convertible Note Payable is limited at any one time to a maximum beneficial ownership interest in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion.The proceeds from the Secured Convertible Note Payable are to be used for the purpose of allowing us to make advances to TEG, under the terms of a note receivable from TEG, and for general working capital Any repayment by TEG of the advances under the terms of the note receivable must be used by us to immediately make repayment to the investor under the terms of the Secured Convertible Note Payable. To secure our obligations under the Secured Convertible Note Payable, we will grant a security interest to the investor in all of our right, title and interest under the TEG note receivable, our second priority security interest in TEG's assets and in the interest of our subsidiary SCNRG, LLC in the oil-producing property known as the DEEP Lease. The Secured Convertible Note Payable will also contain other terms and covenants that are customary for a promissory note of this type. In addition, we will grant to the investor a 2.5% or 3.5% overriding royalty interest, depending on the lease, in oil sales from the TEG Assets, effective with the closing of the acquisition. Such amount would be accrued until TEG's lender, BOTW, has been paid in full; however, payment of royalties shall begin within twelve months or an event of default under the Secured Convertible Note Payable will occur. While interest and royalties are being accrued, no cash payments can be made to repay loans made to Hawker by Mr. Katic, nor can Hawker repurchase any non-controlling interest owned by Mr. Moore nor pay any salaries to Messrs. Katic and Moore. | |
Additional Unit Issuances | |
On December 12, 2014, Hawker and Kristian Andresen agreed to convert a $120,000 accrued bonus into Units on the same terms as described in Note 16, resulting in 1,200,000 shares of common stock being issued to Mr. Andresen together with five-year warrants to acquire 600,000 shares upon payment of an exercise price of $0.20 per share.In addition, a vendor agreed to convert a $10,570 accounts payable balance into Units on the same terms as described in Note 16, resulting in 105,700 shares of common stock being issued, together with five-year warrants to acquire 52,850 shares upon payment of an exercise price of $0.20 per share. | |
On January 8, 2015, we received $115,000 in cash proceeds from two investors for Units on the same terms as described in Note 16, which, when closed, will result in 1,150,000 shares of common stock being issued, together with five-year warrants to acquire 575,000 shares upon payment of an exercise price of $0.20 per share. | |
RESTATEMENT
RESTATEMENT | 3 Months Ended | ||||||||||||
Nov. 30, 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-Q/A contains restated consolidated interim financial statements for the fiscal quarter ended November 30, 2014. | |||||||||||||
Contemporaneously with the filing of this Form 10-Q/A, the Company is filing an amendment to the Form 10-K/A, which amendment contains restated consolidated financial statements for the fiscal year ended August 31, 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 in the Form 10-K/A and herein. | |||||||||||||
These financial statements have been restated to correct an error in the year ended August 31, 2014 and in the three months ended November 30, 2014 relating to a derivative liability created upon the issuance of a $350,000 convertible note in June 2014 and a $25,000 convertible note in November 2014. Both notes include 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 the notes. We have 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 notes. The derivative liability is adjusted to fair value each quarter end, and the discount is accreted to interest expense over the term of the notes. The correction of the error increased net loss by $32,896 for the year ended August 31, 2014 and by $18,828 in the quarter ended November 30, 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 the three months ended November 30, 2014 and not prior periods. | |||||||||||||
Balance Sheet items | |||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
As at November 30, 2014 | |||||||||||||
Convertible notes payable, short term | $ | 1,030,178 | $ | (45,674 | ) | $ | 984,504 | ||||||
Conversion option | $ | - | $ | 97,398 | $ | 97,398 | |||||||
Accumulated deficit | $ | (3,676,897 | ) | $ | (51,724 | ) | $ | (3,728,621 | ) | ||||
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 | |||||||||||
Three months ended November 30, 2014 | |||||||||||||
Interest expense | $ | 39,463 | $ | 53,490 | $ | 92,953 | |||||||
Change in fair value of conversion options (income) | $ | - | $ | (34,662 | ) | $ | (34,662 | ) | |||||
Net (loss) attributable to the Company | $ | (1,629,435 | ) | $ | (18,828 | ) | $ | (1,648,263 | ) | ||||
There were no changes to the Statement of Operations for the three months ended November 30, 2013. | |||||||||||||
Statement of Cash Flow items | |||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
Three months ended November 30, 2014 | |||||||||||||
Net (loss) before loss attributable to non-controlling interest | $ | (1,638,966 | ) | $ | (18,828 | ) | $ | (1,657,794 | ) | ||||
Adjustment to reconcile net income to cash provided by operating activities: | |||||||||||||
Accretion of discount on convertible notes payable | $ | - | $ | 50,893 | $ | 50,893 | |||||||
Change in fair value of conversion option | $ | - | $ | (34,662 | ) | $ | (34,662 | ) | |||||
Other non-cash interest expense | $ | - | $ | 2,597 | $ | 2,597 | |||||||
Net cash (used in) operating activities | $ | (26,792 | ) | $ | - | $ | (26,792 | ) | |||||
There were no changes to the Statement of Cash Flows for the three months ended November 30, 2013. | |||||||||||||
In addition, Note 3 – Going Concern, Note 10 – Convertible Notes Payable, Short Term, and Note 14 – Fair Value of Financial Instruments 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) | 3 Months Ended |
Nov. 30, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Basis of Presentation | Basis Of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three months ended November 30, 2014, are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2015. The balance sheet at August 31, 2014, has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Amended Form 10-K/A. The notes to the unaudited condensed consolidated financial statements are presented on a continuing basis unless otherwise noted. | |
The unaudited interim financial statements should be read in conjunction with our Annual Report on Form 10-K/A for the year ended August 31, 2014, which contains audited financial statements and notes thereto. | |
Principles of Consolidation | Principles Of Consolidation |
Our 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 ours 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 dates. By their nature, these estimates including the estimates of future prices and costs, and the related future cash flows are subject to measurement uncertainty, 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. | |
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 provide 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 and a $25,000 convertible note issued in November 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 initial fair value of $146,469, 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. | |
Changes in Accounting Policy | Changes In Accounting Policies |
The Company has not had any changes in accounting policies during the three months ended November 30, 2014. | |
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]) | 3 Months Ended | ||||
Nov. 30, 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_R1
ACQUISITION OF HAWKER ENERGY (RINCON), LLC (Tables) (Hawker Energy Rincon Llc [Member]) | 3 Months Ended | ||||
Nov. 30, 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) | 3 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM [Abstract] | |||||||||
Schedule of period end balance of the secured subordinated note receivable | The period end balance of the secured subordinated note receivable is comprised of the following: | ||||||||
November 30, | August 31, | ||||||||
2014 | 2014 | ||||||||
Principal | $ | 1,487,352 | $ | 1,290,727 | |||||
Accrued interest | 18,099 | 7,595 | |||||||
Total | $ | 1,505,451 | $ | 1,298,322 |
FIXED_ASSETS_CAPITALIZED_OIL_A1
FIXED ASSETS; CAPITALIZED OIL AND GAS PROPERTIES (Tables) | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
FIXED ASSETS; CAPITALIZED OIL AND GAS PROPERTIES | |||||||||||||
Schedule of asset categories of fixed assets and capitalized oil and gas properties | The asset categories of fixed assets and capitalized oil and gas properties at November 30, 2014 and August 31, 2014 were as follows: | ||||||||||||
30-Nov-14 | |||||||||||||
Cost | Accumulated | ||||||||||||
Depletion, | Net Book | ||||||||||||
Depreciation and | Value | ||||||||||||
Amortization | |||||||||||||
Machinery and equipment | $ | 33,874 | $ | 20,815 | $ | 13,059 | |||||||
Other fixed assets | 9,252 | - | 9,252 | ||||||||||
Total fixed assets | 43,126 | 20,815 | 22,311 | ||||||||||
Capitalized oil and gas properties | 816,239 | 93,176 | 723,063 | ||||||||||
Total | $ | 859,365 | $ | 113,991 | $ | 745,374 | |||||||
31-Aug-14 | |||||||||||||
Cost | Accumulated | ||||||||||||
Depletion, | Net Book | ||||||||||||
Depreciation and | Value | ||||||||||||
Amortization | |||||||||||||
Fixed assets: machinery and | $ | 33,874 | $ | 19,605 | $ | 14,269 | |||||||
equipment | |||||||||||||
Capitalized oil and gas properties | 816,239 | 86,193 | 730,046 | ||||||||||
Total | $ | 850,113 | $ | 105,798 | $ | 744,315 |
LOANS_PAYABLE_TO_RELATED_PARTI1
LOANS PAYABLE TO RELATED PARTIES, SHORT TERM (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
LOANS PAYABLE TO RELATED PARTIES, SHORT TERM [Abstract] | |||||||||
Schedule of loans payable to related parties, short term | Loans payable to related parties, short term, consist of the following at November 30, 2014, and August 31, 2014: | ||||||||
November 30, | August 31, | ||||||||
2014 | 2014 | ||||||||
Darren Katic | $ | 151,000 | $ | 161,000 | |||||
Manhattan Holdings, LLC | 90,000 | 60,000 | |||||||
Gerald Tywoniuk | 60,000 | - | |||||||
Kristian Andresen | 18,525 | - | |||||||
Total short-term loans | 319,525 | 221,000 | |||||||
Accrued interest payable | 12,657 | 5,876 | |||||||
Loans payable to related parties, short term | $ | 332,182 | $ | 226,876 |
CONVERTIBLE_NOTES_PAYABLE_SHOR1
CONVERTIBLE NOTES PAYABLE, SHORT TERM (Tables) | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
CONVERTIBLE NOTES PAYABLE, SHORT TERM [Abstract] | |||||||||||||
Summary of convertible notes payable, short term | Convertible notes payable, short term, consist of the following at November 30, 2014, and August 31, 2014; conversion features, security provisions and warrants to acquire common stock of Hawker are also set forth below: | ||||||||||||
Issue | Maturity | November 30, | August 31, | ||||||||||
Date | Date | 2014 | 2014 | ||||||||||
CNP 1 | |||||||||||||
(1) (2) (3) | June 25, 2014 | 30-Nov-14 | $ | 309,228 | $ | 260,851 | |||||||
CNP 2 | |||||||||||||
(1) (2) (3) | 30-May-14 | November 30, 2014 | 250,000 | 250,000 | |||||||||
CNP 3 | |||||||||||||
(1) (3) (4) | 17-Jul-14 | 30-Jun-15 | 100,000 | 100,000 | |||||||||
CNP 4 | |||||||||||||
(1) (2) (3) (4) (5) | 17-Jul-14 | 10-Jul-15 | 100,000 | 100,000 | |||||||||
CNP 5 | |||||||||||||
-6 | 13-May-14 | 13-May-16 | 50,000 | 50,000 | |||||||||
CNP 6 | |||||||||||||
(1) (2) (3) (4) | 25-Jul-14 | 25-Jul-15 | 50,000 | 50,000 | |||||||||
CNP 7 | |||||||||||||
(1) (2) (3) (4) | 28-Aug-14 | 25-Jul-15 | 30,000 | 30,000 | |||||||||
CNP 8 | |||||||||||||
(1)(3)(4) | September 26, 2014 | September 26, 2015 | 25,000 | - | |||||||||
CNP 9 | |||||||||||||
(1)(2)(3) | 3-Nov-14 | 3-May-15 | 20,098 | - | |||||||||
934,326 | 840,851 | ||||||||||||
Accrued interest payable | 50,178 | 21,599 | |||||||||||
Convertible notes payable, short term | $ | 984,504 | $ | 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 the entire 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. CNP 9 is similarly limited. The face amount of CNP 1 is $350,000. CNP 1 is shown net of unamortized discount of $40,772, comprised of an initial discount of $139,051 recorded upon issuance of CNP 1 in June 2014 and accretion of discount of $98,279 for the period from June 2014 through November 30, 2014. CNP 9 has a face value of $25,000 and is shown net of unamortized discount of $4,902 comprised of an initial discount of $7,418 recorded upon issuance of CNP 9 in November 2014 and accretion of discount of $2,516 in November 2014. Total unamortized discount at November 30, 2014 is $45,674 compared to $89,149 at August 31, 2014. See “$350,000 and $25,000 Convertible Notes Payable and Conversion Options (Derivative Liabilities)” 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, 2 and 3, 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 or close on the TEG acquisition 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 and 0 | % | |||||||||||
Volatility | 178 and 200 | % | |||||||||||
Risk free rate: | 0.05 and 0.02 | % | |||||||||||
Dividend yield: | 0 and 0 | % | |||||||||||
Volatility | 214 and 213 | % | |||||||||||
Risk free rate: | 0.025 and 0.03 | % |
ASSET_RETIREMENT_OBLIGATIONS_T
ASSET RETIREMENT OBLIGATIONS (Tables) | 3 Months Ended | ||||||||
Nov. 30, 2014 | |||||||||
ASSET RETIREMENT OBLIGATIONS [Abstract] | |||||||||
Schedule of Changes in Asset Retirement Obligation | The following shows the changes in asset retirement obligations for the three months ended November 30, 2014 and the year ended August 31, 2014: | ||||||||
Three Months | Year | ||||||||
Ended | Ended | ||||||||
November 30, | August 31, | ||||||||
2014 | 2014 | ||||||||
Asset retirement obligations, beginning | $ | 168,110 | $ | 103,299 | |||||
Liabilities acquired during the period | - | 53,963 | |||||||
Liabilities settled during the period | - | - | |||||||
Current period accretion | 3,572 | 10,848 | |||||||
Asset retirement obligations, ending | $ | 171,682 | $ | 168,110 |
NET_PROFITS_INTEREST_NPI_PAYAB1
NET PROFITS INTEREST ("NPI") PAYABLE (Tables) | 3 Months Ended | |||||||
Nov. 30, 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 three months ended November 30, 2014 and the year ended August 31, 2014: | |||||||
Three Months | Year | |||||||
Ended | Ended | |||||||
November 30, | August 31, | |||||||
2014 | 2014 | |||||||
NPI liability, beginning of period | $ | 169,104 | $ | 124,597 | ||||
Liabilities assumed in connection with acquisition of additional DEEP Lease working interests | - | 58,847 | ||||||
Current period accretion | 4,104 | 14,104 | ||||||
Payments made | (8,934 | ) | (28,444 | ) | ||||
NPI liability, end of period | 164,274 | 169,104 | ||||||
Less: current portion | 20,570 | 20,065 | ||||||
NPI liability, long-term portion | $ | 143,704 | $ | 149,039 |
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | ||||||||||||||||
Nov. 30, 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 | Total | ||||||||||||||||
basis at November 30, 2014: | Carrying | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Value | ||||||||||||||
Total Assets | $ | - | $ | - | $ | - | $ | - | |||||||||
Liabilities | |||||||||||||||||
Conversion option- derivative liability | $ | - | $ | - | $ | 97,398 | $ | 97,398 | |||||||||
Total Liabilities | $ | - | $ | - | $ | 97,398 | $ | 97,398 | |||||||||
Assets and liabilities measured at fair | |||||||||||||||||
value on a recurring | Total | ||||||||||||||||
basis at August 31, 2014: | Carrying | ||||||||||||||||
Level 1 | Level 2 | Level 3 | 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 | 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 | $ | - | |||||||||||||
The following table provides a summary of changes in fair value of the Company's Level 3 financial liabilities as of November 30, 2014: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Balance, August 31, 2014 | $ | 122,045 | $ | - | |||||||||||||
Initial fair value of debt derivatives at note issuances | 7,418 | ||||||||||||||||
Initial fair value of additional derivative created through interest accrual | 2,597 | ||||||||||||||||
Extinguished derivative liability | - | - | |||||||||||||||
Mark-to-market at November 30, 2014 - Embedded debt derivatives | (34,662 | ) | - | ||||||||||||||
Balance, November 30, 2014 | $ | 97,398 | $ | - | |||||||||||||
Net gain for the period included in earnings relating to the liabilities | $ | 34,662 | $ | - | |||||||||||||
held at November 30, 2014 | |||||||||||||||||
PRO_FORMA_FINANCIAL_INFORMATIO1
PRO FORMA FINANCIAL INFORMATION (Tables) | 3 Months Ended | |||||
Nov. 30, 2014 | ||||||
PRO FORMA FINANCIAL INFORMATION [Abstract] | ||||||
Schedule of Unaudited Pro Forma Consolidated Information | Three Months | |||||
Ended | ||||||
November 30, | ||||||
2013 | ||||||
Revenue | $ | 40,178 | ||||
Net loss attributable to the Company | $ | (89,670 | ) | |||
Loss per share | $ | - |
RESTATEMENT_Tables
RESTATEMENT (Tables) | 3 Months Ended | ||||||||||||
Nov. 30, 2014 | |||||||||||||
RESTATEMENT [Abstract] | |||||||||||||
Schedule of changes impacted the financial statements | Balance Sheet items | ||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
As at November 30, 2014 | |||||||||||||
Convertible notes payable, short term | $ | 1,030,178 | $ | (45,674 | ) | $ | 984,504 | ||||||
Conversion option | $ | - | $ | 97,398 | $ | 97,398 | |||||||
Accumulated deficit | $ | (3,676,897 | ) | $ | (51,724 | ) | $ | (3,728,621 | ) | ||||
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 | |||||||||||
Three months ended November 30, 2014 | |||||||||||||
Interest expense | $ | 39,463 | $ | 53,490 | $ | 92,953 | |||||||
Change in fair value of conversion options (income) | $ | - | $ | (34,662 | ) | $ | (34,662 | ) | |||||
Net (loss) attributable to the Company | $ | (1,629,435 | ) | $ | (18,828 | ) | $ | (1,648,263 | ) | ||||
There were no changes to the Statement of Operations for the three months ended November 30, 2013. | |||||||||||||
Statement of Cash Flow items | |||||||||||||
As originally reported | Adjustment | As restated | |||||||||||
Three months ended November 30, 2014 | |||||||||||||
Net (loss) before loss attributable to non-controlling interest | $ | (1,638,966 | ) | $ | (18,828 | ) | $ | (1,657,794 | ) | ||||
Adjustment to reconcile net income to cash provided by operating activities: | |||||||||||||
Accretion of discount on convertible notes payable | $ | - | $ | 50,893 | $ | 50,893 | |||||||
Change in fair value of conversion option | $ | - | $ | (34,662 | ) | $ | (34,662 | ) | |||||
Other non-cash interest expense | $ | - | $ | 2,597 | $ | 2,597 | |||||||
Net cash (used in) operating activities | $ | (26,792 | ) | $ | - | $ | (26,792 | ) |
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 (Details) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 | Jun. 25, 2014 | Nov. 03, 2014 |
Derivative [Line Items] | ||||
Conversion option | $97,398 | $122,045 | ||
Convertible Notes Payable [Member] | ||||
Derivative [Line Items] | ||||
Conversion option | 146,469 | |||
Debt issued with beneficial conversion features | 0 | |||
CNP 1 [Member] | ||||
Derivative [Line Items] | ||||
Principal amount of debt issued | 350,000 | 350,000 | ||
Conversion option | 122,045 | 139,051 | ||
CNP 9 [Member] | ||||
Derivative [Line Items] | ||||
Principal amount of debt issued | 25,000 | 25,000 | ||
Conversion option | $97,398 | $7,418 |
GOING_CONCERN_Details
GOING CONCERN (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | Aug. 31, 2014 | |
GOING CONCERN | |||
Total current assets | $1,562,942 | $1,382,825 | |
Working capital deficit | 1,624,566 | ||
Net loss attributable to the Company | -1,648,263 | -76,033 | -1,729,132 |
Accumulated net loss | ($3,728,621) | ($2,080,358) |
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) (SCNRG [Member], USD $) | Oct. 25, 2013 |
SCNRG [Member] | |
Business Acquisition [Line Items] | |
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_R2
ACQUISITION OF HAWKER ENERGY (RINCON), LLC (Narrative) (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||||||
Nov. 30, 2014 | Nov. 30, 2013 | Jan. 08, 2015 | Dec. 12, 2014 | Oct. 10, 2014 | Jan. 01, 2014 | Nov. 13, 2014 | Dec. 27, 2013 | |
Business Acquisition [Line Items] | ||||||||
Overriding royalty percentage | 1.00% | |||||||
Equity compensation expense recorded based on the fair value of the shares at the date of issuance | $1,088,179 | |||||||
Option Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Shares to be held in escrow till on or before December 31, 2017 | 9,000,000 | |||||||
Subsequent Event [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Stock issued (in shares) | 1,150,000 | 105,700 | ||||||
Hawker Energy Rincon Llc [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Overriding royalty percentage | 24.50% | |||||||
Par value | 138,199 | |||||||
Additional paid-in capital | 3,000 | |||||||
Hawker Energy Rincon Llc [Member] | Option Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Stock issued (in shares) | 14,000,000 | |||||||
Equity compensation expense recorded based on the fair value of the shares at the date of issuance | 1,030,500 | |||||||
Hawker Energy Rincon Llc [Member] | Kern County CA [Member] | Option Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Area of land | 1,500 | |||||||
Hawker Energy Rincon Llc [Member] | Kern County [Member] | Option Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Area of land | 40 | |||||||
Hawker Energy Rincon Llc [Member] | Los Angeles County [Member] | Option Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Area of land | 900 | |||||||
Hawker Energy Rincon Llc [Member] | Shares of common stock that were issued as a result of the Amendment [Member] | Option Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Equity compensation expense recorded based on the fair value of the shares at the date of issuance | 1,011,500 | |||||||
Hawker Energy Rincon Llc [Member] | Shares of common stock that are in escrow [Member] | Option Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Equity compensation expense recorded based on the fair value of the shares at the date of issuance | 19,000 | |||||||
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 | |||||||
TEG Oil & Gas, Inc. [Member] | Option Agreement [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Shares to be held in escrow till 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] | ||||||||
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] | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of shares issued for acquisition | 16,500,000 | |||||||
Messrs. Katic and Moore [Member] | Hawker Energy Rincon Llc [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 | 9.72% | 5.00% |
ACQUISITION_OF_HAWKER_ENERGY_R3
ACQUISITION OF HAWKER ENERGY (RINCON), LLC (Schedule of Assets and Liabilities Acquired) (Details) (Hawker Energy Rincon Llc [Member], USD $) | Jan. 01, 2014 |
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) (SCNRG [Member], USD $) | 0 Months Ended | ||||
15-May-14 | Feb. 04, 2014 | Aug. 31, 2014 | Feb. 01, 2014 | Dec. 01, 2009 | |
SCNRG [Member] | |||||
Business Acquisition [Line Items] | |||||
Ownership interest | 100.00% | 87.18% | 66.67% | ||
Cash paid for business acquisition | $125,000 | $200,000 | |||
Assumed liabilities | 43,081 | 69,729 | |||
Machinery and equipment | 2,010 | 3,529 | |||
Oil properties | 166,071 | 266,200 | |||
Purchase price of entity | $168,081 | $269,729 | |||
Acquisition of additional working interest in DEEP lease | 12.82% | 20.51% | 33.33% |
SECURED_SUBORDINATED_LOAN_RECE2
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Narrative) (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||||||
Jan. 08, 2015 | Dec. 12, 2014 | Nov. 30, 2014 | Jun. 18, 2014 | Jan. 15, 2015 | Dec. 02, 2014 | Jan. 12, 2015 | Aug. 31, 2014 | Nov. 24, 2014 | |
item | |||||||||
Debt Instrument [Line Items] | |||||||||
Exercise price of warrants (in dollars per share) | $0.25 | ||||||||
Advances | $1,505,451 | $1,298,322 | |||||||
Promissory note receivable | 2,100,000 | ||||||||
Subsequent Event [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Warrants expire term | 5 years | 5 years | |||||||
Shares of common stock that can be purchased from warrants | 575,000 | 52,850 | |||||||
Exercise price of warrants (in dollars per share) | $0.20 | $0.20 | |||||||
TEG [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Advances | 1,487,352 | ||||||||
Outstanding advances | 196,625 | ||||||||
TEG [Member] | Tapia Holdings, LLC [Member] | Tapia Canyon field [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of oil and gas leases contributed | 4 | ||||||||
TEG [Member] | Tapia Holdings, LLC [Member] | West of the Tapia Canyon field [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of oil and gas leases contributed | 1 | ||||||||
TEG [Member] | Subsequent Event [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Advances | 1,637,352 | ||||||||
Outstanding advances | 150,000 | 150,000 | |||||||
Secured Subordinated Loan Receivable, Short Term [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Advances | 1,505,451 | 1,298,322 | |||||||
Interest rate | 3.00% | ||||||||
Share Purchase Agreement with Sefton [Member] | TEG [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Potential acquisition of membership interest | 80.00% | ||||||||
Share Purchase Agreement with Sefton [Member] | TEG [Member] | Subsequent Event [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of issued and outstanding shares of capital stock purchased | 100.00% | ||||||||
Cash paid to purchase all of the shares of acquiree | 1 | ||||||||
Shares of common stock issued | 3,000,000 | ||||||||
Warrants expire term | 5 years | ||||||||
Shares of common stock that can be purchased from warrants | 5,000,000 | ||||||||
Exercise price of warrants (in dollars per share) | $0.25 | ||||||||
Share Purchase Agreement with Sefton [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | TEG [Member] | Subsequent Event [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Advances | 1,637,352 | ||||||||
Share Purchase Agreement with Sefton [Member] | Bank of the West [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | TEG [Member] | Subsequent Event [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Amount to be lent to acquiree | 350,000 | ||||||||
Maximum period within which remaining amount to be lent to acquiree | 90 days | ||||||||
Interest rate | 9.00% | ||||||||
Monthly pay rate | 5.00% | ||||||||
Deferred interest rate, unpaid interest compounded monthly | 4.00% | ||||||||
Per barrel price used in condition to take forebear enforcement action against the acquiree | 60 | ||||||||
Minimum monthly outstanding property tax payments which will be paid by acquiree | $15,000 |
SECURED_SUBORDINATED_LOAN_RECE3
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Schedule of Secured Subordinated Loan Receivable, Short Term) (Details) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
Receivable [Line Items] | ||
Notes, Loans and Financing Receivable, Gross, Current | $1,505,451 | $1,298,322 |
Subordinated Debt [Member] | ||
Receivable [Line Items] | ||
Notes Receivable, Related Parties, Current | 1,487,352 | 1,290,727 |
Interest Receivable, Current | 18,099 | 7,595 |
Notes, Loans and Financing Receivable, Gross, Current | $1,505,451 | $1,298,322 |
FIXED_ASSETS_CAPITALIZED_OIL_A2
FIXED ASSETS; CAPITALIZED OIL AND GAS PROPERTIES (Details) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
Fixed assets and capitalized oil and gas properties [Line Items] | ||
Cost | $859,365 | $850,113 |
Accumulated Depletion, Depreciation and Amortization | 113,991 | 105,798 |
Net Book Value | 745,374 | 744,315 |
Machinery and equipment [Member] | ||
Fixed assets and capitalized oil and gas properties [Line Items] | ||
Cost | 33,874 | 33,874 |
Accumulated Depletion, Depreciation and Amortization | 20,815 | 19,605 |
Net Book Value | 13,059 | 14,269 |
Other fixed assets [Member] | ||
Fixed assets and capitalized oil and gas properties [Line Items] | ||
Cost | 9,252 | |
Accumulated Depletion, Depreciation and Amortization | ||
Net Book Value | 9,252 | |
Total fixed assets [Member] | ||
Fixed assets and capitalized oil and gas properties [Line Items] | ||
Cost | 43,126 | |
Accumulated Depletion, Depreciation and Amortization | 20,815 | |
Net Book Value | 22,311 | |
Capitalized oil and gas properties [Member] | ||
Fixed assets and capitalized oil and gas properties [Line Items] | ||
Cost | 816,239 | 816,239 |
Accumulated Depletion, Depreciation and Amortization | 93,176 | 86,193 |
Net Book Value | $723,063 | $730,046 |
LOANS_PAYABLE_TO_RELATED_PARTI2
LOANS PAYABLE TO RELATED PARTIES, SHORT TERM (Narrative) (Details) (USD $) | 3 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Conversion of debt | $7,418 | |
Darren Katic [Member] | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Interest rate | 10.00% | |
Manhattan Holdings Llc [Member] | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Amount of loans to related party whose maturity date was extended to January 31, 2015 | 60,000 | |
Additional loans | $30,000 |
LOANS_PAYABLE_TO_RELATED_PARTI3
LOANS PAYABLE TO RELATED PARTIES, SHORT TERM (Schedule of Loans from Related Parties) (Details) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
Loans payable to related parties, short term | ||
Total short-term loans | $319,525 | $221,000 |
Accrued interest payable | 12,657 | 5,876 |
Loans payable to related parties, short term | 332,182 | 226,876 |
Darren Katic [Member] | ||
Loans payable to related parties, short term | ||
Total short-term loans | 151,000 | 161,000 |
Manhattan Holdings, LLC [Member] | ||
Loans payable to related parties, short term | ||
Total short-term loans | 90,000 | 60,000 |
Gerald Tywoniuk [Member] | ||
Loans payable to related parties, short term | ||
Total short-term loans | 60,000 | |
Kristian Andresen [Member] | ||
Loans payable to related parties, short term | ||
Total short-term loans | $18,525 |
CONVERTIBLE_NOTES_PAYABLE_SHOR2
CONVERTIBLE NOTES PAYABLE, SHORT TERM (Narrative) (Details) (USD $) | 3 Months Ended | 0 Months Ended | 1 Months Ended | 6 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | ||||||
Nov. 30, 2014 | Nov. 30, 2013 | Sep. 18, 2014 | Aug. 31, 2014 | Jun. 25, 2014 | Jun. 30, 2014 | Nov. 30, 2014 | Nov. 30, 2014 | Nov. 03, 2014 | Nov. 30, 2014 | Aug. 31, 2014 | Jan. 08, 2015 | Dec. 12, 2014 | |
Debt Instrument [Line Items] | |||||||||||||
Warrant exercise price | $0.25 | $0.25 | $0.25 | $0.25 | |||||||||
Price per unit | $0.10 | $0.10 | $0.10 | $0.10 | |||||||||
Accretion of discount on convertible note payable | $50,893 | ||||||||||||
Conversion price | $0.10 | $0.10 | $0.10 | $0.10 | |||||||||
Fair value of derivative liability | 97,398 | 122,045 | 97,398 | 97,398 | 97,398 | 122,045 | |||||||
Non-operating gain on derivative liability | 34,662 | ||||||||||||
Subsequent Event [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Warrant exercise price | $0.20 | $0.20 | |||||||||||
Convertible Notes Payable [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Interest rate | 12.00% | 12.00% | 12.00% | 12.00% | |||||||||
Warrant exercise price | $0.25 | $0.25 | $0.25 | $0.25 | |||||||||
Price per unit | $0.10 | $0.10 | $0.10 | $0.10 | |||||||||
Term of warrants | 5 years | ||||||||||||
Maximum beneficial ownership interest after conversion of debt (as a percent) | 4.99% | ||||||||||||
Fair value of derivative liability | 146,469 | 146,469 | 146,469 | 146,469 | |||||||||
CNP 1 [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Maximum beneficial ownership interest after conversion of debt (as a percent) | 4.99% | ||||||||||||
Principal amount of debt issued | 350,000 | 350,000 | 350,000 | 350,000 | 350,000 | ||||||||
Unamortized discount | 40,772 | 40,772 | 40,772 | 40,772 | |||||||||
Accretion of discount on convertible note payable | 139,051 | 98,279 | |||||||||||
Maturity date | 30-Nov-14 | 30-Nov-14 | |||||||||||
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 | 34,662 | ||||||||||||
CNP 9 [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Maximum beneficial ownership interest after conversion of debt (as a percent) | 4.99% | ||||||||||||
Principal amount of debt issued | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | ||||||||
Unamortized discount | 4,902 | 4,902 | 4,902 | 4,902 | |||||||||
Accretion of discount on convertible note payable | 7,418 | ||||||||||||
Maturity date | 3-May-15 | 3-May-14 | |||||||||||
Fair value of derivative liability | 97,398 | 97,398 | 97,398 | 7,418 | 97,398 | ||||||||
Dividend yield | 0.00% | 0.00% | |||||||||||
Volatility | 214.00% | 200.00% | |||||||||||
Risk free rate | 0.03% | 0.02% | |||||||||||
CNP 1 and 9 [Member] | |||||||||||||
Debt Instrument [Line Items] | |||||||||||||
Warrant exercise price | $0.25 | $0.25 | $0.25 | $0.25 | |||||||||
Term of warrants | 5 years | ||||||||||||
Unamortized discount | 45,674 | 89,149 | 45,674 | 45,674 | 45,674 | 89,149 | |||||||
Accretion of discount on convertible note payable | $50,893 | $49,902 | |||||||||||
Number of common shares | 1 | ||||||||||||
Number of warrants | 1 | ||||||||||||
Conversion price | $0.10 | $0.10 | $0.10 | $0.10 |
CONVERTIBLE_NOTES_PAYABLE_SHOR3
CONVERTIBLE NOTES PAYABLE, SHORT TERM (Summary of Changes in Convertible Notes Payable) (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||
Jun. 25, 2014 | Nov. 30, 2014 | Nov. 03, 2014 | Aug. 31, 2014 | |||
Debt Instrument [Line Items] | ||||||
Convertible notes payable | $319,525 | $221,000 | ||||
Accrued interest payable | 12,657 | 5,876 | ||||
Convertible notes payable, short term | 984,504 | 862,450 | ||||
Convertible Notes Payable [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Convertible notes payable | 934,326 | 840,851 | ||||
Accrued interest payable | 50,178 | 21,599 | ||||
Convertible notes payable, short term | 984,504 | 862,450 | ||||
CNP 1 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | 30-Nov-14 | 30-Nov-14 | ||||
Convertible notes payable | 309,228 | [1],[2],[3] | 260,851 | [1],[2],[3] | ||
CNP 2 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | 30-Nov-14 | |||||
Convertible notes payable | 250,000 | [1],[2],[3] | 250,000 | [1],[2],[3] | ||
CNP 3 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | 30-Jun-15 | |||||
Convertible notes payable | 100,000 | [1],[2],[4] | 100,000 | [1],[2],[4] | ||
CNP 4 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | 10-Jul-15 | |||||
Convertible notes payable | 100,000 | [1],[2],[3],[4],[5] | 100,000 | [1],[2],[3],[4],[5] | ||
CNP 5 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | 13-May-16 | |||||
Convertible notes payable | 50,000 | [6] | 50,000 | [6] | ||
CNP 6 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | 25-Jul-15 | |||||
Convertible notes payable | 50,000 | [1],[2],[3],[4] | 50,000 | [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] | 30,000 | [1],[2],[3],[4] | ||
CNP 8 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | 26-Sep-15 | |||||
Convertible notes payable | 25,000 | [1],[2],[4] | [1],[2],[4] | |||
CNP 9 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | 3-May-15 | 3-May-14 | ||||
Convertible notes payable | $20,098 | [1],[2],[3] | [1],[2],[3] | |||
[1] | 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, 2 and 3, and second to repay other convertible notes payable pro rata. | |||||
[2] | Convertible at any time at the option of the investor into bConversion Units.b 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 the entire 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. CNP 9 is similarly limited. The face amount of CNP 1 is $350,000. CNP 1 is shown net of unamortized discount of $40,772, comprised of an initial discount of $139,051 recorded upon issuance of CNP 1 in June 2014 and accretion of discount of $98,279 for the period from June 2014 through November 30, 2014. CNP 9 has a face value of $25,000 and is shown net of unamortized discount of $4,902 comprised of an initial discount of $7,418 recorded upon issuance of CNP 9 in November 2014 and accretion of discount of $2,516 in November 2014. Total unamortized discount at November 30, 2014 is $45,674 compared to $89,149 at August 31, 2014. See b$350,000 and $25,000 Convertible Notes Payable and Conversion Options (Derivative Liabilities)b below. | |||||
[3] | Hawker granted a security interest to the investor in all of its assets. | |||||
[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 or close on the TEG acquisition within one year, this convertible note payable has been classified as a short term liability. |
ASSET_RETIREMENT_OBLIGATIONS_D
ASSET RETIREMENT OBLIGATIONS (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | Aug. 31, 2014 | |
ASSET RETIREMENT OBLIGATIONS [Abstract] | |||
Asset retirement obligations, beginning | $168,110 | $103,299 | $103,299 |
Liabilities acquired during the period | 53,963 | ||
Liabilities settled during the period | |||
Current period accretion | 3,572 | 2,195 | 10,848 |
Asset retirement obligations, ending | $171,682 | $168,110 |
NET_PROFITS_INTEREST_NPI_PAYAB2
NET PROFITS INTEREST ("NPI") PAYABLE (Narrative) (Details) (USD $) | 0 Months Ended | 3 Months Ended | |||
Dec. 01, 2009 | Nov. 30, 2014 | 14-May-14 | 15-May-14 | Feb. 01, 2014 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Percentage of monthly payments equal to net profit | 40.00% | ||||
Maturity date | 31-Dec-22 | ||||
Interest rate utilizing a discount rate | 10.00% | ||||
NPI payments | $134,135 | ||||
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 | $2,978 | $2,596 | ||
Ownership interest | 66.67% | 100.00% | 87.18% |
NET_PROFITS_INTEREST_NPI_PAYAB3
NET PROFITS INTEREST ("NPI") PAYABLE (Schedule of Changes in NPI Liability) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | Aug. 31, 2014 | |
NET PROFITS INTEREST ("NPI") PAYABLE [Abstract] | |||
NPI liability, beginning of period | $169,104 | $124,597 | $124,597 |
Liabilities assumed in connection with acquisition of additional DEEP lease working interests | 58,847 | ||
Current period accretion | 4,104 | 3,041 | 14,104 |
Payments made | -8,934 | -5,957 | -28,444 |
NPI liability, end of period | 164,274 | 169,104 | |
Less: current portion | 20,570 | 20,065 | |
NPI liability: long-term portion | $143,704 | $149,039 |
INCOME_TAXES_Narrative_Details
INCOME TAXES (Narrative) (Details) (USD $) | 3 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | |
INCOME TAXES [Abstract] | ||
Current income tax expense (benefit) | $0 | $0 |
Deferred income tax expense (benefit) | $0 | $0 |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Fair Value of Assets and Liabilities) (Details) (USD $) | Nov. 30, 2014 | Aug. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Conversion option | $97,398 | $122,045 |
Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Conversion option | 97,398 | 122,045 |
Total liabilities | 97,398 | 122,045 |
Level 3 [Member] | Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Conversion option | 97,398 | 122,045 |
Total liabilities | $97,398 | $122,045 |
FAIR_VALUE_OF_FINANCIAL_INSTRU3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Summary of Changes in Fair Value) (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2014 | Nov. 30, 2013 | Aug. 31, 2014 | Aug. 31, 2013 | |
Changes in fair value of Level 3 financial liabilities | ||||
Balance at beginning of period | $122,045 | |||
Initial fair value of debt derivatives at note issuances | 7,418 | 139,051 | ||
Initial fair value of additional derivative created through interest accrual | 2,597 | 2,630 | ||
Extinguished derivative liability | ||||
Mark-to-market embedded debt derivatives | -34,662 | -19,636 | ||
Balance at end of period | 97,398 | 122,045 | ||
Net gain included in earnings related to liabilities | $34,662 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) | 3 Months Ended | ||
Nov. 30, 2014 | Aug. 31, 2014 | Dec. 01, 2009 | |
Long-term Purchase Commitment [Line Items] | |||
Overriding royalty percentage | 1.00% | ||
Aggregate additional royalty percentage subject to production | 19.92% | ||
Total royalties | 20.92% | ||
DEEP Property [Member] | |||
Long-term Purchase Commitment [Line Items] | |||
Working interest | 100.00% | 66.67% |
EQUITY_DEFICIT_Details
EQUITY (DEFICIT) (Details) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | |
14-May-14 | Nov. 30, 2014 | Nov. 30, 2013 | Aug. 31, 2014 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Cash received from units issued | $980,288 | |||
Warrant exercise price | $0.25 | |||
Price per unit | $0.10 | |||
Maximum number of shares covered by warrant | 234,372 | |||
Common stock issuable | 5,356,360 | |||
Stock option compensation | 1,088,179 | |||
Unrecognized balance of compensation expenses | 284,000 | |||
Expected life of options | 2 years | |||
Option life | 10 years | |||
Shares of stock issued for the conversion of debt | 9,800,000 | |||
Convertible debt | 980,000 | |||
Conversion price | $0.10 | |||
Options granted | 5,950,000 | |||
Options outstanding | 5,950,000 | |||
Stock options vesting first | 1,000,000 | |||
Maximum option available for issuance | 11,201,205 | |||
Stock options vesting in subsequent periods | 4,950,000 | |||
Potential additional shares issuable | 501,784 | |||
Non-controlling interest | 135,469 | 55,000 | ||
Non-controlling interest share of losses | 9,531 | |||
Tapia Holdings, LLC [Member] | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Capital contributions received in contemplation of the pending acquisition | 145,000 | |||
Non-controlling interest share of losses | 9,531 | |||
Convertible Note [Member] | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Shares of stock issued for the conversion of debt | 15,186,156 | |||
Secured Convertible Note [Member] | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Warrant exercise price | $0.25 | |||
Potential additional warrants issuable | 4,650,000 | |||
Common Stock [Member] | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Units issued (in shares) | 10,212,720 | |||
Cash received from units issued | 10,213 | |||
Warrant exercise price | $0.20 | |||
Price per unit | $0.10 | |||
Non-controlling interest share of losses | ||||
Common Stock Payable [Member] | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Units issued (in shares) | 500,000 | |||
Number of investors whose units are issued | 3 | |||
Cash received from units issued | 50,000 | |||
Other transaction costs | 80 | |||
Price per unit | $0.10 | |||
Non-controlling interest share of losses |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | |||||
Sep. 18, 2013 | Nov. 30, 2014 | Nov. 30, 2013 | Aug. 31, 2014 | Jan. 08, 2015 | Dec. 12, 2014 | Jan. 01, 2014 | Oct. 10, 2014 | Aug. 31, 2013 | |
Related Party Transaction [Line Items] | |||||||||
Loans payable to related parties, short term | $332,182 | $226,876 | |||||||
Interest expense | 92,953 | 3,413 | |||||||
Warrant exercise price | $0.25 | ||||||||
Price per unit | $0.10 | ||||||||
Loans payable | 89,833 | ||||||||
Gross proceeds received to trigger repayment of loans to related party | 5,000,000 | ||||||||
Amount owed to related party | 319,525 | 221,000 | |||||||
Accrued interest payable | 12,657 | 5,876 | |||||||
Net proceeds from unit offering | 980,288 | ||||||||
Non-controlling interest | 135,469 | 55,000 | |||||||
Proceeds from sale of non-controlling interest | 90,000 | 55,000 | |||||||
Common Stock Payable [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Price per unit | $0.10 | ||||||||
Net proceeds from unit offering | 50,000 | ||||||||
Net proceeds from unit offering, shares | 500,000 | ||||||||
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 | ||||||||
Proceeds from sale of non-controlling interest | |||||||||
Loan From Related Parties, Short Term [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Interest expense | 6,781 | 0 | |||||||
Loans From Related Parties, Long Term [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Interest expense | 0 | 372 | |||||||
Convertible notes payable | |||||||||
Related Party Transaction [Line Items] | |||||||||
Interest expense | 2,992 | ||||||||
Warrant exercise price | $0.25 | ||||||||
Price per unit | $0.10 | ||||||||
Interest rate | 12.00% | ||||||||
Amount owed to related party | 934,326 | 840,851 | |||||||
Accrued interest payable | 50,178 | 21,599 | |||||||
Relative Of Darren Katic [Member] | Convertible notes payable | |||||||||
Related Party Transaction [Line Items] | |||||||||
Amount owed to related party | 100,000 | ||||||||
Accrued interest payable | 4,701 | ||||||||
Tapia Holdings, LLC [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Proceeds from sale of non-controlling interest | 145,000 | ||||||||
Hawker Energy (Rincon), LLC [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Liabilities assumed | -135,199 | ||||||||
Subsequent Event [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Warrant exercise price | $0.20 | $0.20 | |||||||
Net proceeds from unit offering, shares | 1,150,000 | 105,700 | |||||||
Warrants expire term | 5 years | 5 years | |||||||
Darren Katic [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares issued for acquisition | 1,500,000 | ||||||||
Due to related party | -29,625 | ||||||||
Loans payable | -38,500 | ||||||||
Interest rate | 10.00% | ||||||||
Amount owed to related party | 151,000 | 161,000 | |||||||
Payments for Rent | 9,617 | ||||||||
Darren Katic [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] | |||||||||
Loans payable | -38,500 | ||||||||
Amount owed to related party | 90,000 | 60,000 | |||||||
Total advances | 30,000 | ||||||||
Sellers [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares issued for acquisition | 3,000,000 | ||||||||
Gerald Tywoniuk [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Loans payable | -12,833 | ||||||||
Amount owed to related party | 60,000 | ||||||||
Gerald Tywoniuk [Member] | Common Stock Payable [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Net proceeds from unit offering | 20,000 | ||||||||
Net proceeds from unit offering, shares | 200,000 | ||||||||
Charles Moore [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares issued for acquisition | 1,500,000 | ||||||||
Charles Moore [Member] | Tapia Holdings, LLC [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Non-controlling interest | 45,000 | ||||||||
Charles Moore [Member] | Hawker Energy (Rincon), LLC [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares issued for acquisition | 16,500,000 | ||||||||
Messrs. Katic and Moore [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 | ||||||||
Messrs. Katic [Member] | Common Stock Payable [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Net proceeds from unit offering | $20,000 | ||||||||
Net proceeds from unit offering, shares | 200,000 |
PRO_FORMA_FINANCIAL_INFORMATIO2
PRO FORMA FINANCIAL INFORMATION (Narrative) (Details) (SCNRG [Member]) | Aug. 31, 2014 | 15-May-14 | Feb. 04, 2014 |
SCNRG [Member] | |||
Pro forma information related to acquisition of Hawker [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 $) | 3 Months Ended |
Nov. 30, 2013 | |
PRO FORMA FINANCIAL INFORMATION [Abstract] | |
Revenue | $40,178 |
Net loss attributable to the Company | ($89,670) |
Loss per share |
SUBSEQUENT_EVENTS_Narrative_De
SUBSEQUENT EVENTS (Narrative) (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||||||||||
Nov. 30, 2014 | Nov. 30, 2013 | Jan. 01, 2014 | Jan. 08, 2015 | Dec. 12, 2014 | Jan. 14, 2015 | Jan. 15, 2015 | Dec. 02, 2014 | Jan. 12, 2015 | Aug. 31, 2014 | Nov. 03, 2014 | Jan. 31, 2015 | |
item | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Exercise price of warrants (in dollars per share) | $0.25 | |||||||||||
Accrued bonus converted into units | $480,000 | $480,000 | ||||||||||
Advances | 1,505,451 | 1,298,322 | ||||||||||
Gross proceeds from issuance of debt | 50,000 | |||||||||||
Convertible Notes Payable Nine [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Aggregate principal amount | 25,000 | 25,000 | ||||||||||
Secured Subordinated Loan Receivable, Short Term [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Advances | 1,505,451 | 1,298,322 | ||||||||||
TEG [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Advances | 1,487,352 | |||||||||||
Subsequent advances | 196,625 | |||||||||||
Darren Katic [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Shares of common stock issued | 1,500,000 | |||||||||||
Interest rate | 10.00% | |||||||||||
Subsequent Event [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Shares of common stock that can be purchased from warrants | 575,000 | 52,850 | ||||||||||
Exercise price of warrants (in dollars per share) | $0.20 | $0.20 | ||||||||||
Warrants expire term | 5 years | 5 years | ||||||||||
Accounts payable balance converted | 10,570 | |||||||||||
Net proceeds from unit offering | 115,000 | |||||||||||
Number of investors to whom units issued | 2 | |||||||||||
Units issued (in shares) | 1,150,000 | 105,700 | ||||||||||
Subsequent Event [Member] | Secured Convertible Note Payable [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Aggregate principal amount | 1,000,000 | |||||||||||
Maturity term | 2 years | |||||||||||
Interest rate | 12.00% | |||||||||||
Amount divided by outstanding principal and accrued interest to calculate shares to be issued | $0.10 | |||||||||||
Period after which interest payments would become payable quarterly | 6 months | |||||||||||
Subsequent Event [Member] | Secured Convertible Note Payable [Member] | Maximum [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Gross proceeds from issuance of debt | 335,000 | |||||||||||
Subsequent Event [Member] | Secured Convertible Note Payable [Member] | Note issued to Oceanside Strategies maturing on November 30, 2014, one | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Debt cancelled | 250,000 | |||||||||||
Subsequent Event [Member] | Secured Convertible Note Payable [Member] | Note issued to Oceanside Strategies maturing on November 30, 2014, two | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Debt cancelled | 350,000 | |||||||||||
Subsequent Event [Member] | Secured Convertible Note Payable [Member] | Note issued to Oceanside Strategies maturing on May 3, 2015 | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Debt cancelled | 25,000 | |||||||||||
Subsequent Event [Member] | Secured Convertible Note Payable [Member] | Funded January 15, 2015 [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Gross proceeds from issuance of debt | 200,000 | |||||||||||
Subsequent Event [Member] | Secured Convertible Note Payable [Member] | Funded within 120 days at the investor's option [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Gross proceeds from issuance of debt | 135,000 | |||||||||||
Maximum Period within which Balance Amount to be Lent to Acquiree | 120 days | |||||||||||
Subsequent Event [Member] | Hawker and Kristian Andresen [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Shares of common stock that can be purchased from warrants | 600,000 | |||||||||||
Exercise price of warrants (in dollars per share) | $0.20 | |||||||||||
Accrued bonus converted into units | 120,000 | |||||||||||
Warrants expire term | 5 years | |||||||||||
Units issued (in shares) | 1,200,000 | |||||||||||
Subsequent Event [Member] | TEG [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Advances | 1,637,352 | |||||||||||
Subsequent advances | 150,000 | 150,000 | ||||||||||
Maximum beneficial ownership interest which can be acquired upon conversion | 4.99% | |||||||||||
Period within which payment of royalties shall begin | 12 months | |||||||||||
Subsequent Event [Member] | TEG [Member] | Maximum [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Overriding royalty interest | 3.50% | |||||||||||
Subsequent Event [Member] | TEG [Member] | Minimum [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Overriding royalty interest | 2.50% | |||||||||||
Subsequent Event [Member] | TEG [Member] | Share Purchase Agreement with Sefton [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Percentage of issued and outstanding shares of capital stock purchased | 100.00% | |||||||||||
Cash paid to purchase all of the shares of acquiree | 1 | |||||||||||
Shares of common stock issued | 3,000,000 | |||||||||||
Warrant term | 5 years | |||||||||||
Shares of common stock that can be purchased from warrants | 5,000,000 | |||||||||||
Exercise price of warrants (in dollars per share) | $0.25 | |||||||||||
Warrants expire term | 5 years | |||||||||||
Subsequent Event [Member] | TEG [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | Share Purchase Agreement with Sefton [Member] | ||||||||||||
Subsequent Event [Line Items] | ||||||||||||
Advances | $1,637,352 |
RESTATEMENT_Narrative_Details
RESTATEMENT (Narrative) (Details) (USD $) | Nov. 30, 2014 | Jun. 25, 2014 | Nov. 03, 2014 |
CNP 1 [Member] | |||
Principal amount of debt issued | $350,000 | $350,000 | |
CNP 9 [Member] | |||
Principal amount of debt issued | $25,000 | $25,000 |
RESTATEMENT_Schedule_of_change
RESTATEMENT (Schedule of changes impacted the financial statements) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Nov. 30, 2014 | Nov. 30, 2013 | Aug. 31, 2014 | |
Balance Sheet items | |||
Convertible notes payable, short term | $984,504 | $862,450 | |
Conversion option | 97,398 | 122,045 | |
Accumulated deficit | -3,728,621 | -2,080,358 | |
Statement of Operations items | |||
Interest expense | 92,953 | 3,413 | |
Change in fair value of conversion options (income) | -34,662 | ||
Net loss attributable to the Company | -1,648,263 | -76,033 | -1,729,132 |
Statement of Cash Flow items | |||
Net (loss) before loss attributable to non-controlling interest | -1,657,794 | -76,033 | |
Adjustment to reconcile net income to cash provided by operating activities: | |||
Accretion of discount on convertible note payable | 50,893 | ||
Change in fair value of conversion option | -34,662 | ||
Other non-cash interest expense | 2,597 | ||
Net cash (used in) provided by operating activities | -26,792 | 10,448 | |
As originally reported [Member] | |||
Balance Sheet items | |||
Convertible notes payable, short term | 1,030,178 | 951,599 | |
Conversion option | |||
Accumulated deficit | -3,676,897 | -2,047,462 | |
Statement of Operations items | |||
Interest expense | 39,463 | ||
Change in fair value of conversion options (income) | |||
Net loss attributable to the Company | -1,629,435 | ||
Statement of Cash Flow items | |||
Net (loss) before loss attributable to non-controlling interest | -1,638,966 | ||
Adjustment to reconcile net income to cash provided by operating activities: | |||
Accretion of discount on convertible note payable | |||
Change in fair value of conversion option | |||
Other non-cash interest expense | |||
Net cash (used in) provided by operating activities | -26,792 | ||
Adjustment [Member] | |||
Balance Sheet items | |||
Convertible notes payable, short term | -45,674 | -89,149 | |
Conversion option | 97,398 | 122,045 | |
Accumulated deficit | -51,724 | -32,896 | |
Statement of Operations items | |||
Interest expense | 53,490 | ||
Change in fair value of conversion options (income) | -34,662 | ||
Net loss attributable to the Company | -18,828 | ||
Statement of Cash Flow items | |||
Net (loss) before loss attributable to non-controlling interest | -18,828 | ||
Adjustment to reconcile net income to cash provided by operating activities: | |||
Accretion of discount on convertible note payable | 50,893 | ||
Change in fair value of conversion option | -34,662 | ||
Other non-cash interest expense | 2,597 | ||
Net cash (used in) provided by operating activities |