Eflo Energy (EFLO) 10-Q 14 Jan 15 2015 Q1 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	3 Months Ended
	Nov. 30, 2014	Jan. 14, 2015
DocumentAndEntityInformationAbstract
Entity Registrant Name	EFLO ENERGY, INC.
Entity Central Index Key	1448806
Document Type	10-Q
Document Period End Date	30-Nov-14
Amendment Flag	FALSE
Current Fiscal Year End Date	-23
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		32,204,301
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015

CONSOLIDATED_BALANCE_SHEETS_Un

CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Nov. 30, 2014	Aug. 31, 2014
ASSETS
Cash	$241,752	$650,599
Accounts receivable; joint interest owners and other	1,587,852	1,589,898
Prepaids	165,254	47,864
Other	13,408	30,182
Total current assets	2,008,266	2,318,543
OIL AND GAS PROPERTIES, full cost method, unproven	50,518,238	50,305,989
OTHER ASSETS-Goodwill	1,194,365	1,194,365
Total assets	53,720,869	53,818,897
CURRENT LIABILITIES
Accounts payable and accrued liabilities	2,949,746	4,250,625
Convertible notes, net of $144,996 and $233,964 of unamortized discount at November 30, 2014 and August 31, 2014, respectively	3,485,004	3,396,036
Asset retirement obligation-current	80,000	80,000
Total current liabilities	6,514,750	7,726,661
NONCURRECT LIABILITIES
Asset retirement obligations	17,934,250	17,759,023
Deferred income taxes	3,297,434	3,297,434
Total liabilities	27,746,434	28,783,118
STOCKHOLDERS' EQUITY
Capital Stock Authorized: 10,000,000 preferred shares, par value $0.001 per share 150,000,000 common shares, par value $0.001 per share Issued and outstanding: 20,895,708 and 19,897,714 common shares at November 30, 2014 and August 31, 2014, respectively	20,896	19,898
Additional paid-in capital	30,621,893	30,493,045
Accumulated other comprehensive loss	-105,116	-90,423
Accumulated deficit	-4,563,238	-5,386,741
Total stockholders' equity	25,974,435	25,035,779
Total liabilities and stockholders' equity	$53,720,869	$53,818,897

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Nov. 30, 2014	Aug. 31, 2014
Statement of Financial Position [Abstract]
Unamortized Discount	$144,996	$233,964
Stockholders Equity
Preferred Stock Shares Par value	$0.00	$0.00
Preferred Stock Shares Authorized	10,000,000	10,000,000
Common Stock Shares Par value	$0.00	$0.00
Common Stock Shares Authorized	150,000,000	150,000,000
Common Stock Shares Issued	20,895,708	19,897,714
Common Stock Shares Outstanding	20,895,708	19,897,714

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended
	Nov. 30, 2014	Nov. 30, 2013
EXPENSES
Management and director's fees	$141,841	$213,892
Stock-based compensation expense	19,488	115,979
Consulting fees	69,809	157,798
Professional fees	136,610	133,153
Financing fees	0	176,822
Office, travel and general	63,926	91,879
Accretion of asset retirement obligations	175,227	170,668
Total Expenses	606,901	1,060,191
OPERATING LOSS	-606,901	-1,060,191
OTHER INCOME (EXPENSE)
Interest expense	-215,194	-34,704
Gain on forgiveness of accounts payable	1,645,598	0
NET INCOME (LOSS)	823,503	-1,094,895
Provision for income tax	0	0
NET INCOME (LOSS)	823,503	-1,094,895
Foreign currency translation	-14,693	6,101
COMPREHENSIVE INCOME (LOSS)	$808,810	($1,088,794)
INCOME (LOSS) PER SHARE
Basic	$0.04	($0.06)
Diluted	$0.03	($0.06)
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic	19,908,681	19,488,298
Diluted	23,753,448	19,488,298

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 income (loss)	$823,503	($1,094,895)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation and fee payments	19,488	123,016
Amortization of convertible note discount	88,968	15,306
Unrealized foreign exchange losses	-14,693	6,101
Gain on forgiveness of accounts payable	-1,645,598	0
Accretion of asset retirement obligations	175,227	170,668
Changes in working capital items-
Accounts receivable	2,046	-149,277
Prepaids and other	-100,616	-70,896
Accounts payable and accrued liabilities	455,077	212,167
Net cash used in operating activities	-196,598	-787,810
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures on oil and gas properties, net	-212,249	-236,838
Net cash used in investing activities	-212,249	-236,838
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable	0	2,255,000
Net cash provided by financing activities	0	2,255,000
INCREASE (DECREASE) IN CASH	-408,847	1,230,352
CASH, BEGINNING OF PERIOD	650,599	476,522
CASH, END OF PERIOD	241,752	1,706,874
SUPPLEMENTAL DISCLOSURE
Cash paid for interest	0	0
Cash paid for income taxes	0	0
NON-CASH INVESTING ACTIVITIES:
Accrued expenditures on oil and gas properties	643,609	0
NON-CASH FINANCING ACTIVITIES
Common stock issued for services	105,093	52,500
Exchangeable shares granted for Nahanni assets	$0	$533,803

1_BASIS_OF_PRESENTATION

1. BASIS OF PRESENTATION	3 Months Ended
	Nov. 30, 2014
Accounting Policies [Abstract]
1. BASIS OF PRESENTATION	Unaudited Interim Consolidated Financial Statements
	The unaudited interim consolidated financial statements of EFLO Energy, Inc. (the “Company”), have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended August 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC. The unaudited interim consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation have been made. Operating results for the three months ended November 30, 2014 are not necessarily indicative of the results that may be expected for the year ending August 31, 2015.
	Recent Accounting Pronouncements
	In June 2014, the FASB issued Accounting Standards Update 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation (ASU 2014-10), which eliminates the concept of a development stage entity (DSE) from U.S. GAAP. This change rescinds certain financial reporting requirements that have historically applied to DSEs and is intended to result in cost-savings for affected entities.  ASU 2014-10 is effective for public entities for annual reporting periods beginning after December 15, 2014 and interim periods therein.
	The Company adopted ASU 2014-10 on September 1, 2014 and has applied its guidance in the preparation of these unaudited interim consolidated financial statements.  The application of ASU 2014-10 resulted in the removal of 1) inception-to-date information in the statements of operations and cash flows, 2) labels on the financial statements indicating the Company’s exploration stage status, 3) certain historic disclosures describing exploration stage activities in which the Company has been engaged. The Company does not believe, however, that the removal of this information has a material effect on its unaudited interim consolidated financial statements or the related footnote disclosures thereto.
	In August 2014, the FASB issued Accounting Standard Update No. 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern. The amendments require management to perform interim and annual assessments of an entity's ability to continue as a going concern and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The standard applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact that this new guidance will have on its financial statements.

2_OIL_AND_GAS_PROPERTIES

2. OIL AND GAS PROPERTIES	3 Months Ended
	Nov. 30, 2014
Extractive Industries [Abstract]
2. OIL AND GAS PROPERTIES	Oil and Gas Acquisition – Kotaneelee Gas Project (the “KGP”)
	As a result of two working interest acquisitions, the Company generally owns a 53.65% working interest in the KGP, including a 100% working interest in one shut in gas well.
	The KGP covers 30,188 gross acres in the Yukon Territory in Canada, and includes: a gas dehydration plant (capacity: 70 MMcf/d), one shut in gas well, one water disposal well (capacity: 6,000 bbl/d), and two suspended gas wells.  The KGP has a fully developed gas gathering, sales and delivery infrastructure, airstrip, roads, flarestack, storage tanks, barge dock and a 24 person permanent camp facility.  The KGP gas dehydration plant has a processing capacity of 70 MMcf/d, outlet gas compression of 1,200 psig and is tied-in through a 24-inch gas sales line to a gas processing plant in Fort Nelson, British Columbia.
	On July 18, 2012, the Company completed an acquisition of Devon Canada’s (“Devon”) entire right and interest (generally a working interest of 22.989%, with a working interest of 69.337% in one shut in gas well) in the KGP. As consideration for Devon’s working interest in the KGP, (the “Devon Assets”), the Company paid approximately $23,298,000. The consideration was comprised of $290,000 in cash, 7,250,000 shares of the Company’s restricted common stock valued at $15,950,000, and the absorption of approximately $7,058,000 in asset retirement obligations.
	On October 17, 2012, the Company completed a Share Purchase Agreement with Nahanni Energy Inc., 1700665 Alberta Ltd., Apex Energy (2000), Inc. and Canada Southern Petroleum #1 L.P. (jointly “Nahanni”) for the acquisition of its entire right and interest (generally a working interest of 30.664%) in the KGP (the “Nahanni Assets”) which, in addition to the 69.337% working interest acquired from Devon on July 18, 2012, provided the Company with a 100% interest in one shut in gas well in the KGP.
	As consideration for the Nahanni Assets, the Company paid Nahanni approximately $13,761,000. The consideration was comprised of approximately $133,000 in cash ($398,550 offset by $265,950 paid in connection with the acquisition of the Devon Assets in settlement of certain Nahanni indebtedness), 1,614,767 shares of one of the Company’s subsidiaries, which are exchangeable for 1,614,767 shares of the Company’s restricted common stock valued at approximately $4,191,000, and the absorption of approximately $9,437,000 in asset retirement obligations. The number of shares issued by the Company’s subsidiary was calculated by dividing the fair value of the exchangeable shares by the volume weighted average trading price of the Company’s stock for the ten (10) trading days prior to closing the purchase agreement.  The fair value of the exchangeable shares has been recorded as additional paid in capital in the Company’s equity. The exchangeable shares enjoy no voting or revenue participation rights in the subsidiary.
	The Company records assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs associated with the acquisitions are expensed as incurred.  The Company uses relevant market assumptions to determine fair value and allocate purchase price, such as future commodity pricing for purchased hydrocarbons, market multiples for similar transactions and replacement value for certain equipment.  Many of the assumptions are unobservable. The Company’s preliminary assessment of the fair value of the Nahanni Assets resulted in a valuation of $25,526,554. As a result of incorporating this information into the purchase price allocation, a gain on bargain purchase of $11,766,787 was recognized in the accompanying consolidated statement of operations. The gain on bargain purchase was primarily attributable to the strategic nature of the divestiture by the motivated seller, coupled with a confluence of certain favorable economic trends in the industry and the geographic region in which the Nahanni Assets are located.
	The Company allocated the consideration paid for the Nahanni Assets and Devon assets based upon its assessment of their fair value at the dates of purchase, as follows:
		Fair Value of Assets Acquired (as restated)
	Asset Description	Nahanni Assets		Devon Assets		Total
				(Restated)
	Unproved leasehold costs	$	14,548,787	$	13,827,001	$	28,375,788
	Plant and equipment		8,594,362		6,484,001		15,078,363
	Gathering systems		2,383,405		1,788,001		4,171,406
	Vehicles		–		4,527		4,527
	Unproven Properties		25,526,554		22,103,530		47,630,084
	Goodwill		–		1,194,365		1,194,365
	Total Assets Acquired - KGP	$	25,526,554	$	23,297,895	$	48,824,449
	Development costs incurred to obtain access and provide facilities for extracting, gathering, treating and storing oil and gas related to unproved oil and gas properties that are being evaluated for economic viability are capitalized to the full cost pool until proved reserves are established, or determination is made that the unproved properties are impaired. During the three months ended November 30, 2014 and 2013, the full cost pool was increased by $212,249 and $236,838, respectively, as a result of these costs.

3_ASSET_RETIRMENT_OBLIGATIONS

3. ASSET RETIRMENT OBLIGATIONS	3 Months Ended
	Nov. 30, 2014
Notes to Financial Statements
3. ASSET RETIRMENT OBLIGATIONS	In connection with its acquisition of the Nahanni Assets and the Devon Assets, the Company acquired $9,436,526 and $7,057,716 in asset retirement obligations, respectively, relating to its portion of the abandonment, reclamation and environmental liabilities associated with the KGP.
	On March 31, 2011, the Company initiated oil and gas operations by entry into a Farmout and Participation Agreement which provided for its acquisition of a net working interest ranging from 21.25% to 42.5%, in a 2,629 acre oil and gas lease, insofar as that lease covers from the surface to the base of the San Miguel formation (the “San Miguel Lease”). The San Miguel Lease, which is located in Zavala County, Texas, is unproven and has no current production. The Company recorded $80,000 in asset retirement obligations related to the future plugging and abandonment of a test well on the San Miguel Lease. At May 31, 2014, the Company’s interest in the San Miguel lease was impaired and expensed to the extent of its carrying value, which included the full amount of the associated asset retirement obligation. The entire asset retirement obligation relating to the San Miguel Lease has been classified as a current liability.
	The Company has no assets that are legally restricted for purposes of settling asset retirement obligations. As part of the Company’s acquisition of the Devon Assets, it provided Devon a corporate guarantee (the “Guarantee”) in the amount of CAD$10,000,000 (USD$9,225,000) and delivered a letter of credit in the amount of CAD$4,380,000 (USD$4,041,000) to Devon (the “Devon LOC”). The Company also delivered a letter of credit in the amount of CAD$625,000 (USD$577,000) to the government of the Yukon Territory (the “Yukon LOC”). The amounts of the Devon LOC and Yukon LOC reduce the amount of the Guarantee on a dollar-for-dollar basis. The Company is primarily responsible for payment of all asset retirement obligations. The Guarantee, Devon LOC and Yukon LOC are only available to Devon in the event the Company defaults upon its asset retirement obligations relating to the Devon Assets.
	The following table summarizes amounts comprising the Company’s asset retirement obligations as of November 30, 2014:
	Asset Retirement Obligations
	Balance, August 31, 2013	$	17,146,750
	Liabilities incurred (acquired)		––
	Accretion expense		692,273
	Liabilities (settled)		––
	Changes in asset retirement obligations		––
	Balance, August 31, 2014		17,839,023
	Liabilities incurred (acquired)		––
	Accretion expense		175,227
	Liabilities (settled)		––
	Changes in asset retirement obligations		––
	Total Balance, November 30, 2014	$	18,014,250
	Total Balance, November 30, 2014 – Current	$	80,000
	Total Balance, November 30, 2014 – Long Term	$	17,934,250

4_CONVERTIBLE_NOTES_PAYABLE

4. CONVERTIBLE NOTES PAYABLE	3 Months Ended
	Nov. 30, 2014
Notes to Financial Statements
4. CONVERTIBLE NOTES PAYABLE	As of November 30, 2014 and August 31, 2014, convertible notes consisted of the following:
	Convertible Notes – November 30, 2014		Principal		Discount			Balance as of
			Amount					November 30,
								2014
	2013 Convertible Note Offering (net of  $25,000 principal conversion)		$	2,230,000	$	(144,996	)	$	2,085,004
	2014 Convertible Note Offering			1,400,000		––			1,400,000
	Total convertible notes, net		$	3,630,000	$	(144,996	)	$	3,485,004
	Convertible Notes – August 31, 2014		Principal		Discount			Balance as of
			Amount					August 31,
								2014
	2013 Convertible Note Offering (net of  $25,000 principal conversion)		$	2,230,000	$	(233,964	)	$	1,996,036
	2014 Convertible Note Offering			1,400,000		––			1,400,000
	Total convertible notes, net		$	3,630,000	$	(233,964	)	$	3,396,036
	2013 Convertible Note Offering
	On October 30, 2013 the Company sold convertible notes having an aggregate principal amount of $2,255,000 (the “2013 Convertible Notes”), to 22 accredited investors, under the following general terms (the "2013 Convertible Note Offering"):
	●	the maturity date of the 2013 Convertible Notes is April 30, 2015;
	●	the principal amount of the 2013 Convertible Notes is convertible into shares of the Company’s common stock at a price of $1.00 per share;
	●	the 2013 Convertible Notes bear interest at 15% per annum payable, at the Company’s election, in cash or shares of its common stock at a rate of $1.25 per share; and
	●	the Company also issued stock purchase warrants in connection with the 2013 Convertible Note Offering providing for the purchase of up to 1,127,500 shares of its common stock (1 full share for each $2.00 invested in the 2013 Convertible Notes”) at an exercise price of $1.25 per share for a period of three years (the "Stock Purchase Warrants”).
	During the three months ended November 30, 2014, the Company recognized $83,625 in interest expense relating to the 2013 Convertible Notes. During the three months ended November 30, 2013, the Company paid $176,400 in finders’ fees and recognized $34,704 in interest expense relating to the 2013 Convertible Notes.
	On June 2, 2014, $25,000 in principal payable on the 2013 Convertible Notes was converted to 25,000 shares of the Company’s common stock at a conversion price of $1.00 per share.
	2014 Convertible Note Offering
	During June 2014, the Company sold convertible notes having an aggregate principal amount of $1,400,000 (the “2014 Convertible Notes”), to two accredited investors, and one non-accredited investor, under the following general terms (the “2014 Convertible Note Offering”):
	●	the maturity date of the 2014 Convertible Notes is December 31, 2014. Subsequent to November 30, 2014, the maturity date of the 2014 Convertible Notes was extended to January 31, 2015 (see Note 7);
	●	at the option of the note holder, the principal amount of the 2014 Convertible Notes was to be convertible into shares of the Company’s common stock at a price per share to be determined in connection with the Company’s planned offering of shares upon migration to a senior stock exchange, less a 10% discount (the “2014 Conversion Right”);
	●	a 6% financing fee on the principal sum of the 2014 Convertible Notes, is payable at the option of the note holder, in shares of the Company’s common stock (the number of which is to be calculated using the closing market price of the Company’s shares at the notes’ maturity date), or in cash of $84,000.
	●	the 2014 Convertible Notes are non-interest bearing so long as they are paid or converted prior to their maturity date. In the event of default, or if a 2014 Convertible Note is not paid, or converted on or within ten (10) days following its maturity date:
		a.	the  note will bear interest at 10% per annum, payable monthly; and
		b.	an additional 4% financing fee (the Default Financing Fee) on the then outstanding principal balance of the 2014 Convertible Note(s) shall become due and payable. The Company is obligated to pay the Default Financing Fee in common shares at a conversion price equal to the closing market price of the common shares on the date of an event of default, or at the maturity date, whichever is earliest.
	Entities controlled in part or in whole, by the Company’s Chairman and former President acquired $1,000,000 and $350,000 of 2014 Convertible Notes under these terms.
	During the three months ended November 30, 2014 and 2013, the Company recognized $42,000 and $0 in interest expense relating to the 2014 Convertible Notes, respectively.

5_CAPITAL_STOCK_AND_STOCK_BASE

5. CAPITAL STOCK AND STOCK BASED COMPENSATION	3 Months Ended
	Nov. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
5. CAPITAL STOCK AND STOCK BASED COMPENSATION	Sales of Common Stock
	During December 2014, in connection with cost cutting efforts, Holloman Corporation and Niconsult GmbH voluntarily terminated their service agreements with the Company (see Note 6). The effective date of those terminations was June 1, 2014. As a result, the Company recognized no fees payable to these entities during three months ended November 30, 2014. The Company also adjusted fees totaling $22,500 related to the three months ended August 31, 2014, which had been paid using 23,991 shares of its restricted common stock, at a weighted average price of $0.938 per share. This adjustment resulted in the recognition of a gain on forgiveness of accounts payable of $22,500 as of November 30, 2014.
	During the three months ended November 30, 2013 fees totaling $52,500 were paid using 48,892 shares of the Company’s restricted common stock, at a weighted average price of $1.074 per share.
	Sale of Convertible Notes
	On October 30, 2013 the Company issued the 2013 Convertible Notes having an aggregate principal amount of $2,255,000. The Company also issued the Stock Purchase Warrants in connection with the 2013 Convertible Note Offering providing for the purchase of up to 1,127,500 shares of its common stock (1 full share for each $2.00 invested in the 2013 Convertible Notes) at an exercise price of $1.25 per share for a period of three years (see Note 4). In total, the Company has reserved 3,382,500 shares of its common stock (comprised of 2,230,000 shares issuable on conversion of the residual principal of the 2013 Convertible Notes and 1,127,500 shares issuable on exercise of the Warrants) or such greater number of shares as may be issuable upon election of interest repayment in common stock under the terms of the 2013 Convertible Notes.
	On June 2, 2014, $25,000 in principal payable on the 2013 Convertible Notes was converted to 25,000 shares of the Company’s common stock at a conversion price of $1.00 per share.
	Stock-Based Compensation
	During the three months ended November 30, 2014 and 2013, the Company recognized $19,488 and $123,016, respectively, of non-cash expense related to stock-based compensation under its 2012 Non-Qualified Stock Option Plan (the “Option Plan”). As of November 30, 2014, $27,310 of total unrecognized compensation cost remains under the Option Plan. All of this amount is expected to be recognized during the remainder of fiscal 2015.

6_RELATED_PARTY_TRANSACTIONS

6. RELATED PARTY TRANSACTIONS	3 Months Ended
	Nov. 30, 2014
Related Party Transactions [Abstract]
6. RELATED PARTY TRANSACTIONS	Effective January 20, 2011, a company controlled by the Company’s Chief Executive Officer, its Chief Financial Officer, and an unrelated consultant (the “Finders”) entered into an agreement with the Company providing for the payment of finder’s compensation ranging from 5% (on transaction values greater than $1,000,000) to 10% (on transactions valued up to $300,000) on transactions introduced to the Company by or through the Finders for a period of two years (the “Finder’s Fee Agreement”). Under the Finder’s Fee Agreement, compensation is divided between the Finders and the Finders may elect whether the finder’s compensation is payable in cash, or shares of the Company’s restricted common stock. The Finder’s Fee Agreement specifically recognizes that the KGP has been presented to the Company by the Finders. Subsequent to November 30, 2014, two of the Finders settled the fees payable under the Finders’ Fee Agreement at no cost to the Company (see Note 7).
	Effective September 1, 2013, the Company executed an administrative services agreement with Holloman Corporation. Under this agreement, fees of $5,000 per month are payable to Holloman Corporation covering; office and meeting space, supplies, utilities, office equipment, network access and other administrative facilities costs. These fees are payable quarterly in shares of the Company’s restricted common stock at the closing price of the stock on the last trading-day of the applicable monthly billing period. During December 2014, in connection with cost cutting efforts, Holloman Corporation voluntarily terminated its administrative services agreement with the Company. The effective date of that termination was June 1, 2014. As a result, the Company recognized no fees payable to Holloman Corporation during three months ended November 30, 2014. The Company also adjusted fees totaling $15,000 related to the three months ended August 31, 2014, which had been paid using 15,994 shares of its restricted common stock, at a weighted average price of $0.938 per share.
	Of the fees paid in stock during the three months ended November 30, 2013, consulting fees in the amounts of $30,000, were earned by an entity controlled by the Company’s Chief Executive Officer.
	The Company’s Chief Executive Officer purchased $50,000 in 2013 Convertible Notes (including 25,000 Stock Purchase Warrants), in connection with the 2013 Convertible Note Offering. The chairman of the Company’s board of directors is also a director of Pacific World Energy Corporation (“Pacific World”) which holds $1,000,000 in the principal amount of the 2014 Convertible Notes (See Note 4).

7_SUBSEQUENT_EVENTS

7. SUBSEQUENT EVENTS	3 Months Ended
	Nov. 30, 2014
Subsequent Events [Abstract]
7. SUBSEQUENT EVENTS	2014 Convertible Notes
	On December 30, 2014, the 2014 Convertible Note Holders agreed to extend the maturity date of the 2014 Convertible Notes to January 31, 2015 (see Note 4).
	Liability Settlements
	Effective January 12, 2015, the Company (together with its officers and directors), two of the 2014 Convertible Note holders, and other interested parties entered into a settlement agreement (the “Settlement Agreement”). The Settlement Agreement was undertaken in an effort to reduce costs, decrease liabilities and support the Company’s future operations. Under the terms of the Settlement Agreement, two of the 2014 Convertible Note holders agreed to accept payment of principal and interest aggregating $1,431,000 ($1,350,000 principal / $81,000 interest) due under the 2014 Convertible Notes in 11,007,692 shares of the Company’s common stock calculated using a price of  $0.13 per share. As a result, Pacific World Energy Corporation became the Company’s largest shareholder. In that connection, the Company’s current Chief Executive and Chief Financial Officers agreed to resign as officers and members of the Company’s board of directors effective January 15, 2015, in favor of candidates nominated by Pacific World.
	The Settlement Agreement also provides for the following liability settlements, the aggregate amount of which are to be paid in 1,322,885 shares of the Company’s common stock calculated using a price per share of $0.13:
		Original Liability Amount		Agreed Settlement Amount
	Description of Liability
	Finders Fees	$	1,079,802	$	––
	Directors Fees		451,750		55,900
	Management Fees		233,848		116,075
	Consulting Fees		33,428		––
		$	1,798,828	$	171,975
	Of the liabilities subject to the Settlement Agreement, $1,755,956 accrued as of November 30, 2014, were subsequently settled for $132,858 using 1,021,984 shares of the Company’s common stock. Accordingly, the Company has adjusted the estimated book value of those liabilities and recorded an additional gain on the forgiveness of accounts payable of $1,623,098 as of November 30, 2014 (also see Note 5).

2_OIL_AND_GAS_PROPERTIES_Table

2. OIL AND GAS PROPERTIES (Tables)	3 Months Ended
	Nov. 30, 2014
Oil And Gas Properties Tables
Schedule of Oil and Gas Acquisition		Fair Value of Assets Acquired (as restated)
	Asset Description	Nahanni Assets		Devon Assets		Total
				(Restated)
	Unproved leasehold costs	$	14,548,787	$	13,827,001	$	28,375,788
	Plant and equipment		8,594,362		6,484,001		15,078,363
	Gathering systems		2,383,405		1,788,001		4,171,406
	Vehicles		–		4,527		4,527
	Unproven Properties		25,526,554		22,103,530		47,630,084
	Goodwill		–		1,194,365		1,194,365
	Total Assets Acquired - KGP	$	25,526,554	$	23,297,895	$	48,824,449

3_ASSET_RETIREMENT_OBLIGATIONS

3. ASSET RETIREMENT OBLIGATIONS (Tables)	3 Months Ended
	Nov. 30, 2014
BalanceEnding1
Schedule of Asset Retirement Obligation	Asset Retirement Obligations
	Balance, August 31, 2013	$	17,146,750
	Liabilities incurred (acquired)		––
	Accretion expense		692,273
	Liabilities (settled)		––
	Changes in asset retirement obligations		––
	Balance, August 31, 2014		17,839,023
	Liabilities incurred (acquired)		––
	Accretion expense		175,227
	Liabilities (settled)		––
	Changes in asset retirement obligations		––
	Total Balance, November 30, 2014	$	18,014,250
	Total Balance, November 30, 2014 – Current	$	80,000
	Total Balance, November 30, 2014 – Long Term	$	17,934,250

4_CONVERTIBLE_NOTES_PAYABLE_Ta

4. CONVERTIBLE NOTES PAYABLE (Tables)	3 Months Ended
	Nov. 30, 2014
Convertible Notes Payable Tables
Schedule of convertible notes
	Convertible Notes – November 30, 2014	Principal		Discount			Balance as of
		Amount					November 30,
							2014
	2013 Convertible Note Offering (net of  $25,000 principal conversion)	$	2,230,000	$	(144,996	)	$	2,085,004
	2014 Convertible Note Offering		1,400,000		––			1,400,000
	Total convertible notes, net	$	3,630,000	$	(144,996	)	$	3,485,004
	Convertible Notes – August 31, 2014	Principal		Discount			Balance as of
		Amount					August 31,
							2014
	2013 Convertible Note Offering (net of  $25,000 principal conversion)	$	2,230,000	$	(233,964	)	$	1,996,036
	2014 Convertible Note Offering		1,400,000		––			1,400,000
	Total convertible notes, net	$	3,630,000	$	(233,964	)	$	3,396,036

2_OIL_AND_GAS_PROPERTIES_Detai

2. OIL AND GAS PROPERTIES (Details) (USD $)	Oct. 17, 2012	Jul. 18, 2012
Unproven Properties
Unproved Leasehold costs	$28,375,788
Plant and equipment	15,078,363
Gathering systems	4,171,406
Vehicles	4,527
Subtotal	47,630,084
Goodwill	1,194,365
Total Assets Acquired - KGP	48,824,449
Nahanni Assets
Unproven Properties
Unproved Leasehold costs	14,548,787
Plant and equipment	8,594,362
Gathering systems	2,383,405
Vehicles	0
Subtotal	25,526,554
Goodwill	0
Total Assets Acquired - KGP	25,526,554
Devon Assets
Unproven Properties
Unproved Leasehold costs		13,827,001	[1]
Plant and equipment		6,484,001	[1]
Gathering systems		1,788,001	[1]
Vehicles		4,527	[1]
Subtotal		22,103,530	[1]
Goodwill		1,194,365	[1]
Total Assets Acquired - KGP		$23,297,895	[1]
[1]	Restated

3_ASSET_RETIREMENT_OBLIGATIONS1

3. ASSET RETIREMENT OBLIGATIONS (Details) (USD $)	3 Months Ended	12 Months Ended
	Nov. 30, 2014	Aug. 31, 2014
Asset Retirement Obligations
Asset Retirement Obligation, Beginning	$17,839,023	$17,146,750
Liabilities incurred (acquired)	0	0
Accretion expense	175,227	692,273
Liabilities (settled)	0	0
Changes in asset retirement obligations	0	0
Asset Retirement Obligation, Ending	18,014,250	17,839,023
Total Balance, May 31, 2014 - Current	80,000	80,000
Total Balance, May 31, 2014 - Long Term	$17,934,250	$17,759,023

4_CONVERTIBLE_NOTES_PAYABLE_Sc

4. CONVERTIBLE NOTES PAYABLE - Schedule of convertible notes (Details) (USD $)	Nov. 30, 2014	Aug. 31, 2014
Principal Amount	$3,630,000	$3,630,000
Discount	-144,996	-233,964
Balance	3,485,004	3,396,036
2013 Convertible Note Offering
Principal Amount	2,230,000	2,230,000
Discount	-144,996	-233,964
Balance	2,085,004	1,996,036
2014 Convertible Note Offering
Principal Amount	1,400,000	1,400,000
Discount	0	0
Balance	$1,400,000	$1,400,000

6_RELATED_PARTY_TRANSACTIONS_D

6. RELATED PARTY TRANSACTIONS (Details Narrative)	3 Months Ended
	Nov. 30, 2014
Related Party Transactions Details Narrative
Related party transaction	During December 2014, in connection with cost cutting efforts, Holloman Corporation voluntarily terminated its administrative services agreement with the Company. The effective date of that termination was June 1, 2014. As a result, the Company recognized no fees payable to Holloman Corporation during three months ended November 30, 2014. The Company also reversed fees totaling $15,000 related to the three months ended August 31, 2014, which had been paid using 15,994 shares of its restricted common stock, at a weighted average price of $0.938 per share.