10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ý  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 2014

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File No. 000-52892

Hawker Energy, Inc.

(Exact name of registrant as specified in its charter)

Nevada	98-0511130
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

326 S. Pacific Coast Highway,  Suite 102 Redondo Beach, California	90277
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (310) 438-7997

Securities registered pursuant to Section 12(b) of the Securities Act: None

Securities registered pursuant to Section 12(g) of the Securities Act:

Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes         ý No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

o Yes         ý No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

ý Yes         o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

ý Yes         o No (Not required)

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o	Smaller reporting company  ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes   ý No

As of November 13, 2014, the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $2.3 million based on the closing sales price of the registrant’s common stock as reported on the OTCQB market on such date.  This calculation does not reflect a determination that persons are affiliates for any other purposes.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 74,674,703 shares of common stock as of November 13, 2014.

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FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K contains "forward-looking statements" relating to the registrant which represent the registrant's current expectations or beliefs including, statements concerning registrant's operations, performance, financial condition and growth. For this purpose, any statement contained in this annual report on Form 10-K that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "anticipation", "intend", "could", "estimate", or "continue" or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as ability of registrant to pursue its business plan and commence operations. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward-looking statements. We are in the development stage of our business and have not generated any significant revenues from operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the implementation of our plan of operations or difficulties with closing and achieving expected acquisition results, and possible cost overruns due to price and cost increases.

Throughout this annual report references to “we”, “our”, “us”, “Hawker”, “the Company”, and similar terms refer to Hawker Energy, Inc.

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HAWKER ENERGY, INC.

FOR THE FISCAL YEAR ENDED

AUGUST 31, 2014

INDEX TO FORM 10-K

PART I		Page
Item 1	Business	5
Item 1A	Risk Factors	12
Item 1B	Unresolved Staff Comments	12
Item 2	Properties	13
Item 3	Legal Proceedings	15
Item 4	Mine Safety Disclosures	15
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
Item 6	Selected Financial Data	16
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	23
Item 8	Financial Statements and Supplementary Data	24
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	54
Item 9A	Controls and Procedures	54
Item 9B	Other Information	55
PART III
Item 10	Directors, Executive Officers and Corporate Governance	55
Item 11	Executive Compensation	57
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	59
Item 13	Certain Relationships and Related Transactions, and Director Independence	60
Item 14	Principal Accounting Fees and Services	60
PART IV
Item 15	Exhibits, Financial Statement Schedules	61

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PART I

Item 1 Business

Organizational History and Overview

Hawker Energy, Inc. 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 29, 2014, we changed our name to Hawker Energy, Inc. (“we”, “our”, “us”, “Hawker”, or “the Company”).

We are now in the oil and gas exploitation and production business and our goal is to acquire and develop mature leases, interests and other rights to oil and gas producing properties with proven undeveloped potential.

Our recent history is as follows:

· We were a public shell company until July 18, 2013.

· On October 25, 2013, we acquired SCNRG, LLC (“SCNRG”), an entity that owned a 66.67% working interest in the DEEP Lease in California (we increased our ownership to 100% subsequently).  Mr. Darren Katic, a managing member of SCNRG, became a director, Chief Executive Officer and Chief Financial Officer of Hawker, and a significant shareholder of Hawker, upon our acquisition of SCNRG.

· On January 1, 2014, we acquired all of the membership interests in Hawker Energy, LLC, an entity owned by Mr. Katic and Mr. Charles Moore. Hawker Energy, LLC changed its name to Hawker Energy (Rincon), LLC (“HERLLC”) on October 22, 2014.  HERLLC, through its wholly-owned subsidiary Punta Gorda Resources, LLC (“Punta Gorda”), claims oil production and development rights of coastal lease PRC 145.1 just offshore Ventura County in the Rincon Field and ownership rights to an associated on-shore drilling and production site, which rights are being challenged in court by the lease’s operator of record (see Part I, Item 3, “Legal Proceedings”).  HERLLC had also engaged in preliminary discussions with various third parties concerning potential acquisitions.

· On June 18, 2014, we entered into a nonbinding letter of intent with Sefton Resources, Inc. (“Sefton”) (the “Sefton LOI”) concerning the principal terms upon which our newly-formed subsidiary Tapia Holdings, LLC (“Tapia Holdings”) would acquire 80% of the common membership interests of Tapia, LLC, an entity which would own four oil and gas producing leases encompassing the Tapia Canyon field (“Tapia Assets”) and one development lease west of the Tapia Canyon field (“Eureka Assets”), and the accompanying production equipment, all located in California.  The Tapia Assets, Eureka Assets and equipment to be owned by Tapia, LLC (collectively, the “TEG Assets”) are currently owned by Sefton’s wholly-owned subsidiary, TEG Oil & Gas USA, Inc. (“TEG”) but will be contributed by TEG to Tapia, LLC in connection with the transaction contemplated by the Sefton LOI. We are working to raise the necessary funds to complete this transaction. As a result of a significant decrease in oil prices and other factors that have arisen since the date of the Sefton LOI, the parties are currently in discussions regarding possible adjustments to the transaction. We have made advances of $1,487,352 through November 13, 2014, to TEG in connection with this proposed acquisition.  Repayment of these advance is secured by a second priority security interest in the Tapia Assets, Eureka Assets and equipment described above, subordinate to loans made by Sefton and TEG’s senior lender, Bank of the West (“BOTW”).

· During the year ended August 31, 2014, we raised funds as follows:  $980,288 through the sale of units comprised of stock and warrants, $930,000 through convertible notes payable and $221,000 from loans to related parties.  Subsequent to August 31, 2014, to November 13, 2014, we raised additional funds as follows: $50,000 of additional convertible notes payable, $95,000 of additional loans from related parties and $50,000 of units.

These events are described in more detail below.

Our consolidated financial statements,  including our wholly-owned subsidiaries SCNRG, HERLLC, Punta Gorda and Tapia Holdings, consist of SCNRG’s historical results consolidated with our results beginning October 25, 2013, as a result of SCNRG being considered the acquirer for accounting purposes, together with HERLLC’s (and its subsidiary Punta Gorda’s) results commencing with its acquisition on January 1, 2014, and Tapia Holdings’ results beginning with its formation in April 2014.

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Recent Business Developments

Nonbinding Letter of Intent to Acquire an Interest in Assets of TEG (“Proposed TEG Acquisition”)

On June 18, 2014, we entered into the Sefton LOI concerning the principal terms upon which the Proposed TEG Acquisition might be consummated.  The principal terms of the nonbinding Sefton LOI are as follows: (i) Sefton’s wholly-owned subsidiary, TEG, would contribute all of its assets, including the Eureka Assets, Tapia Assets and equipment described above to TEG’s newly-formed wholly-owned subsidiary Tapia, LLC, and Tapia, LLC would assume specified liabilities of TEG, (ii) Tapia Holdings would acquire 80% of the common membership interests of Tapia, LLC for $2.5 million in cash and the issuance to TEG of our $3.0 million promissory note that would accrue 6% interest per annum and amortize quarterly on a straight line basis over the 12 quarters following closing, and (iii) TEG would retain the balance of the ownership interest in Tapia, LLC comprising the remaining 20% common membership interests of Tapia, LLC.  Our note to TEG would be subject to adjustment based on the working capital of Tapia, LLC at closing.  The transactions contemplated by the Sefton LOI are subject to a number of conditions, contingencies and uncertainties inherent to any nonbinding preliminary terms, including, but not limited to, completion of definitive documentation, amending or refinancing the BOTW debt that encumbers all of TEG’s assets (which debt is expected to be approximately $3.8 million at closing), our ability to finance the transaction, our satisfactory completion of due diligence concerning TEG and its assets, and consummation of definitive agreements.  Sefton shareholders have voted in favor of the proposed transaction.  As a result of a significant decrease in oil prices and other factors that have arisen since the date of the Sefton LOI, the parties are currently in discussions regarding possible adjustments to the transaction.

The Proposed TEG Acquisition (including, but not limited to, the transactions contemplated by the nonbinding letter of intent) are subject to a number of conditions and contingencies outside of our control, all of which create a level of uncertainly concerning our ability to ultimately consummate the Proposed TEG Acquisition.  Even if the Proposed TEG Acquisition is ultimately consummated, it may be on different terms than described above.

Including $145,000 funded to date and $145,000 of future commitment to participate in the note payable to Sefton on closing of the Proposed TEG Acquisition, we anticipate that, effective as of the closing of the Proposed TEG Acquisition, outside members will own a non-controlling 4.83% of members’ equity interest in Tapia Holdings.

Between April 18, 2014 and August 31, 2014, our newly-formed wholly-owned subsidiary Tapia Holdings made a number of advances to TEG, pursuant to a Secured Subordinated Note dated June 27, 2014 (the “Note”), and a Third Amended and Restated Security Agreement dated August 29, 2014 (the “Security Agreement”) (collectively, the “Loan Receivable Agreements”). These advances, totaling $1.5 million as of November 13, 2014, together with accrued interest, will be credited against the $2.5 million cash payment noted above. The balance of the cash payment (to the extent not used toward repayment of the BOTW debt) will be retained by Tapia, LLC as consideration for newly issued membership interests in Tapia, LLC.

Secured Subordinated Loan Receivable, Short Term

Under the terms of the Loan Receivable Agreements, TEG agreed to pay Tapia Holdings the principal sum of $1,500,000, or such lesser amount as may be outstanding from time to time, with interest on the unpaid principal amount at the rate of 3.0% per annum.  We advanced $1,290,727 to TEG during the year ended August 31, 2014, and a further $196,625 subsequent to August 31, 2014 for a total to November 13, 2014, of $1,487,352, not including accrued interest.  Further advances are subject to the sole and absolute discretion of Tapia Holdings. The loan receivable matures on December 29, 2014, at which time all outstanding principal and accrued interest is due and payable in full.  The personal property assets of TEG secure the Note.  These assets consist of all personal property assets located in the Tapia and Eureka Fields, Los Angeles and Ventura Counties, California. The Note and our security interest in the personal property assets of TEG are subordinate to senior indebtedness of TEG, pursuant to a Subordination and Intercreditor Agreement (“Intercreditor Agreement”) dated June 2, 2014, by and among Tapia Holdings, TEG, Sefton, TEG’s affiliate TEG MidContinent, Inc., and Sefton’s senior lender, BOTW.

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The Security Agreement also provides that if the transactions contemplated by the Proposed TEG Acquisition are consummated (such transactions, the “Acquisition”), Tapia Holdings may apply any or all of the outstanding principal and accrued interest on the Note towards the consideration for the Acquisition.  Further, under the terms of the Security Agreement, Tapia Holdings has the option, in the event of a default, upon a refinancing of TEG’s bank loan or after December 14, 2014 if TEG cannot provide written evidence of its ability to repay the Note, to cause TEG to contribute its assets to Tapia, LLC and to sell to Tapia Holdings up to 80% of TEG’s membership interests in Tapia, LLC at the rate of $68,750 for each 1.0% of membership interest in Tapia, LLC for cash or for such other consideration as set forth in the Security Agreement, including but not limited to, cancellation of outstanding amounts payable under the Note. TEG further agreed to cease and terminate any solicitation or encouragement of a third party acquisition proposal; provided, that, if TEG receives an unsolicited, bona fide acquisition proposal that is found to be superior to the Proposed TEG Acquisition terms, to the extent Tapia Holdings declines to renegotiate the Proposed TEG Acquisition terms or to otherwise match the terms of the third party acquisition proposal, TEG may pursue such third party acquisition proposal. The Security Agreement also contains other representations, warranties and covenants of both parties that are customary for an agreement of this type.

See “Acquisition of Hawker Energy (Rincon), LLC” below for a description of common stock to be released from escrow to the HERLLC Sellers (also defined below), should the Proposed TEG Acquisition above be consummated.

Description of Tapia Assets

The Tapia Canyon field covers an area of approximately 383 acres located about 40 miles north of the Los Angeles, California metropolitan area. The Tapia Canyon field was discovered in 1957, when the Yule No. 2 well tested at 120 barrels per day of 18-degree API oil. The Tapia Canyon field commenced production in August 1957. Based on information provided to us by TEG, the Tapia assets produced 79 barrels of oil per day (gross) in October 2014 from 17 wells at a reservoir depth of just over 1,000 feet. According to TEG, the Tapia Assets benefit from relatively low royalty burdens, which average approximately seven percent. Production is from the Yule reservoir, which is, on average, greater than 100 feet thick over the majority of the oil field, and comprised of sand and silts.

Based on information provided to us by TEG, the field operator built a small steam generator for testing purposes in 2007 and has completed 31 steam injection cycles of various sizes to assist in field modeling. The field operator has confirmed the value of thermal EOR (enhanced oil recovery) at Tapia. According to TEG, during the last full-time cyclic steam test in October 2013, production reached 170 barrels of oil per day (gross). Extensive infrastructure exists currently in the field to facilitate steaming operations going forward, and for oil gathering and storage purposes.

Although we have performed initial technical work on the Tapia Assets to develop a preliminary understanding of the resource and opportunity, no reserve reports done to Securities and Exchange Commission (“SEC”) standards have been completed by us to date.

Description of Eureka Assets

The Eureka Assets cover an area of approximately 1,600 acres located about 25 miles west of the Tapia Canyon field in Ventura County, California. According to TEG, the Eureka Assets produced six barrels of oil per day (gross) in October 2014.

Although we have performed initial technical work on the Eureka Assets to develop a preliminary understanding of the resource and opportunity, no reserve reports done to SEC standards have been completed by us to date.

All acreage, production and well information described above are gross figures.

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Fiscal Year ended August 31, 2014

Acquisition of SCNRG and Subsequent Acquisition of an Additional Working Interest in the DEEP Lease

On October 25, 2013, we acquired all of the membership interests in SCNRG from Darren Katic, Gerald Tywoniuk and Manhattan Holdings, LLC, a Delaware limited liability company, in exchange for 14.0 million shares of our common stock. As a result of the acquisition, SCNRG became our wholly-owned subsidiary.  Mr. Katic became a director, Chief Executive Officer and Chief Financial Officer, and a significant shareholder of Hawker upon our acquisition of SCNRG.  Subsequent to the acquisition, Mr. Tywoniuk has been performing finance and accounting services for Hawker.

SCNRG owns a working interest in an oil producing property known as the DEEP Lease (also referred to as “DEEP” or the “DEEP property”).   Until February 1, 2014, SCNRG owned a 66.67% working interest in the DEEP Lease.  On February 4, 2014, SCNRG completed the acquisition of an additional 20.51% 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.

On May 15, 2014, SCNRG closed on the remaining 12.82% 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.

The DEEP Lease consists of 40 gross acres of land including both surface and mineral rights located within the Midway-Sunset oil field.  Midway-Sunset is a very large oil field in Kern County, San Joaquin Valley, California. Discovered in 1894, and having a cumulative production of close to 3 billion barrels of oil through the end of 2006, it is the largest oil field in California and the third largest in the United States. Wells drilled in the Midway-Sunset oil field produce primarily 13° to 15° API gravity oil from numerous productive semi-consolidated Miocene sands, ranging in depth from 1,400’ to approximately 3,500’. The productive intervals in the DEEP Lease are the Monarch sand at about 1,600’, and the Top Oil sand at about 1,450’. Both sands are characterized with above-average permeability (.5 Darcy to 2 Darcies) and porosity (25% to 35%), and low water saturation (under 35%). The net Top Oil thickness averages about 35’, and the Monarch thickness averages about 80’.

Oil production on the DEEP Lease is subject to a 20.92% overriding royalty interest.  In addition, in connection with SCNRG’s December 1, 2009 Purchase and Sale Agreement whereby it acquired DEEP, 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 its 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 property 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 property increased to 100.0%, and its share of the minimum monthly payment became $2,978.  Payments are required until SCNRG and other working interest owners have made NPI payments in aggregate between $347,000 and $357,410 on or before December 31, 2022 (the actual maximum amount within this range is dependent on when SCNRG and other working interest owners satisfy their aggregate NPI payment obligations).  As of August 31, 2014, SCNRG and other working interest owners have made NPI payments totaling $125,201.  SCNRG has paid its 66.67% working interest share of this amount through February 1, 2014, its 87.18% share through May 15, 2014, and its 100.0% share through August 31, 2014.

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As further described in our Annual Report on Form 10-K for the year ended August 31, 2013, our then 66.67% working interest share of the net proved reserves at that date from the DEEP Lease were 178,500 barrels, of which 1,900 barrels were proved producing reserves and 176,600 barrels were proved undeveloped reserves.  The present value (at a 10% discount rate) of our then 66.67% working interest was $3.3 million, of which $0.1 million was from the proved developed reserves and $3.2 million was from the proved undeveloped reserves.  The property has development potential both from the existing wellbores, together with twelve additional proved undeveloped gross well locations.  We have since increased our working interest to 100.0%, increasing our share of proved reserves and present value accordingly.  See updated reserve information as of August 31, 2014, in Item 2 of this annual report.

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, see above) and Charles Moore (collectively the “HERLLC Sellers”).  We issued 3,000,000 shares of our common stock to the HERLLC Sellers as consideration for the acquisition and, as described below, were required to issue up to an additional 33,000,000 shares of our common stock to the HERLLC Sellers upon us or HERLLC consummating certain follow-on transactions described below (“Potential Follow-On Transactions”).  In addition, we assumed $135,199 in net liabilities of HERLLC.  Subsequent to the date of acquisition, Mr. Moore has been performing acquisition and business development services to Hawker.

HERLLC, through its wholly-owned subsidiary Punta Gorda Resources, LLC (“Punta Gorda”), claims oil production and development rights of coastal lease PRC 145.1 just offshore Ventura County in the Rincon Field and ownership rights to an associated on-shore drilling and production site, which rights are being challenged in court by the lease’s operator of record (see Part I, Item 3, “Legal Proceedings”).  HERLLC has also engaged in preliminary discussions with various third parties concerning the Potential Follow-On Transactions, none of which were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of HERLLC) due to the preliminary status of those discussions and lack of certainty around HERLLC’s or Hawker’s ability to finance one or more of these Potential Follow-On Transactions.  Other than its contested interest in PRC 145.1 and its preliminary discussions concerning the Potential Follow-On Transactions, HERLLC had no assets or operations as of January 1, 2014.  PRC 145.1 and the Potential Follow-On Transactions are discussed in greater detail below.

PRC 145.1 is subject to 24.5% in overriding royalties, primarily to the State of California. A single active well on PRC 145.1 produced an average of 10 barrels of oil per day (gross production before royalties) for the eight months ended August 31, 2014.  This lease has ten other non-active wells, one or more of which may be recompleted or re-drilled.  Although initial technical work has been done on PRC 145.1 to develop a preliminary understanding of the resource and opportunity, no reserve reports done to SEC standards have been completed to date.

All rights claimed HERLLC to PRC 145.1 are being challenged in court by the lease’s operator of record -- Case No. 56-2013-00440672-CU-BC-VTA pending in Ventura County Superior Court (see Part I, Item 3, “Legal Proceedings”).  HERLLC  is currently not receiving any net proceeds from production on this lease pending resolution of this matter in our favor.

After we exercised our option to acquire HERLLC, the agreement also 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”;

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(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, Inc. (or certain oil and gas interests held by it, being all leases located in the Tapia Field, Los Angeles County, California);

(e) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or HERLLC of certain assets and rights regarding PRC 145.1 Lease held by Rincon Island Limited Partnership or settlement in lieu of such conveyance (see Part I, Item 3, “Legal Proceedings”); and

(f) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or HERLLC of certain mineral rights regarding PRC 427 Lease held by ExxonMobil, a lease that is adjacent to PRC 145.1 Lease above.

The Potential Follow-On Transactions described above are dependent on a number of variables that are not within our control and, as a result, (i) we cannot state with a reasonable degree of certainty that any of the transactions will occur and (ii) as described above, 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 will constitute expensed costs incurred concurrently with consummation of the applicable follow-on transaction (as opposed to incremental consideration for our acquisition of HERLLC).

Hawker agreed to these potential additional share issuances as a result of the HERLLC Sellers’ work on the Potential Follow-On Transactions to the date of our acquisition of HERLLC and based on our belief that significant value may accrue to Hawker in the event one or more of these Potential Follow-On Transactions is consummated and the properties further developed.  The HERLLC Sellers’ work to the date of Hawker’s acquisition of HERLLC consisted of opportunity identification and screening, resource evaluation through hiring of third-party technical consultants, preliminary financial analyses, preliminary discussions with the potential sellers around value and other evaluation work.  Furthermore, it was important to Hawker that all of the HERLLC Sellers’ oil growth opportunities be acquired by Hawker, not just the PRC 145.1 opportunity, so that the business interests of the HERLLC Sellers (each of whom is now actively involved with Hawker) be more directly aligned with interests of the Company.  Although technical work has been done on each of the Potential Follow-On Transaction’s underlying properties to develop an initial understanding of the resource and opportunity, no reserve reports done to SEC standards have been completed to date.

On October 10, 2014, Hawker authorized an amendment to the Potential Follow-On Transaction terms described above where Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock. The amendment waives all of the Potential Follow-On Transaction requirements and authorizes the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we 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 USA, 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 prior to its acquisition by Hawker, including a transaction resulting in Hawker ownership of oil and gas lease interests in any one of the following unique oil fields: Cat Canyon (leases Tognazzini, Wickenden, Los Alamos, GWP, and those immediately adjacent to, in each case, in Santa Barbara County), Santa Maria (T 11N, R 36W extending southeast through T9N R33W in Santa Barbara County), Casmalia (leases Tompkins, Peshine, and those immediately adjacent to, in each case, in Santa Barbara County), North Lost Hills (Sections 12 & 13, T25S, R19E, and Sections 7 & 18, T25S, R 20E, totaling 1,500 acres in Kern County CA), Maricopa (McFarland and Jameson leases totaling 40 acres in Kern County), Pine Meadows (Section 1 Township 31 South Range 22E in Kern County) or Torrance (Joughin and South Torrance Units in totaling 900 acres in Los Angeles County). Waiver of the follow-on transaction requirements and the immediate issuance of the remaining shares was done to simplify our common shareholding structure and share count and to assist in our capital raising efforts.

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With respect to 14,000,000 shares of our common stock that were issued as a result of the October 10, 2014 amendment, an expense for accounting purposes will be recorded based on the fair value of the shares at the date of issuance.  With respect to the 19,000,000 share of our common stock that are in escrow, an expense for accounting purposes will be recorded based on the par value of the shares at the date of issuance.  As and when subsequently released from escrow, an expense for accounting purposes will be recorded based on the fair value of the shares (less amounts previously expensed based on par value) concurrently with consummation of the applicable follow-on transaction.

As of November 13, 2014, Mr. Katic beneficially owns 25,897,365 shares (or 34.39%) of our outstanding common stock (including 9,500,000 shares held in escrow) and Mr. Moore beneficially owns 18,000,000 shares (or 24.10%) of our outstanding common stock (including 9,500,000 shares held in escrow).  These assumed percentage ownership figures do not consider any potential common stock issuances to fund any of the transactions required to release shares from escrow.

Pursuant to a separate agreement dated November 13, 2014, between Messrs. Katic, Moore and Gerald Tywoniuk, Mr. Tywoniuk (a significant shareholder) holds warrants to acquire 9.7222% of any shares issued to Messrs. Katic and Moore in connection with their HERLLC agreement. This agreement amended a December 27, 2013, agreement entitling Mr. Tywoniuk to acquire 5% of any shares issued to Messrs. Katic and Moore in connection with their HERLLC agreement.

Sale of Common Stock and Warrant Units, Convertible Notes Payable and Other Financings

Between January 10 and August 31, 2014, we closed private placements for an aggregate of 10,212,720 units for gross proceeds of $1,021,272.  The price of each unit was $0.10.  Each unit is comprised of one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock at $0.20 per share.  The warrants expire five years from each closing date. Net proceeds after associated legal and related costs through August 31, 2014, were $980,288.  Included in this amount is $103,687 for units issued to settle loans from related parties and $188,185 for units issued to settle accounts payable.  Together with $50,000 received for a future closing of units, we received the balance of $738,416 in cash.  Subsequent to August 31, 2014, we closed a $50,000 private placement under the same terms for an aggregate of 500,000 units.

In addition, during the year ended August 31, 2014, we issued convertibles notes payable for $930,000, and received a $221,000 short-term loan from Mr. Katic, our CEO, director and significant shareholder, and another related party, as described in Notes 10 and 9 to the Financial Statements included elsewhere in this report.

Subsequent to August 31, 2014, as of November 13, 2014, we raised additional funds as follows: $50,000 of additional convertible notes payable, $95,000 of additional loans from related parties and $50,000 of units, all as described in Note 19 to the Financial Statements included elsewhere in this report.

Included in the above private placements and other financings are some related party transactions as set forth in Notes 17 and 19 to the Financial Statements included elsewhere in this report.

Fiscal Year ended August 31, 2013

On July 18, 2013, we acquired the rights to a 2.5% working interest in the DF#15 well in the Sawtelle Field (the “Well”) effective as of June 30, 2013. The Well produces oil and is currently drilled pursuant to an oil and gas lease held by a third party, Breitburn Energy Company LLP.  This acquisition ended our status as a public shell company.

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Employees

As of November 13, 2014, we had one officer, Mr. Katic, responsible for overseeing all of our operations, who is not an employee at the present time.  We rely on the services of three other significant shareholders, one of whom is a director, and hire outside contractors to perform necessary functions.

Industry Regulation

Our oil and gas operations are subject to various national, state, and local laws and regulations in the jurisdictions in which we operate. These laws and regulations may be changed in response to economic or political conditions. Matters subject to current governmental regulation or pending legislative or regulatory changes include bonding or other financial responsibility requirements to cover drilling contingencies and well plugging and abandonment costs, reports concerning our operations, the spacing of wells, unitization and pooling of properties, taxation, and the use of derivative hedging instruments. Our operations are also subject to permit requirements for the drilling of wells and regulations relating to the location of wells, the method of drilling and the casing of wells, surface use and restoration of properties on which wells are located, and the plugging and abandonment of wells. Failure to comply with the laws and regulations in effect from time to time may result in the assessment of administrative, civil, and criminal penalties, the imposition of remedial obligations, and the issuance of injunctions that could delay, limit, or prohibit certain of our operations. At various times, regulatory agencies have imposed price controls and limitations on oil and gas production. In order to conserve supplies of oil and gas, these agencies may restrict the rates of flow of oil and gas wells below actual production capacity. Further, a significant spill from one of our facilities could have a material adverse effect on our results of operations, competitive position, or financial condition. The laws of the jurisdictions in which we operate regulate, among other things, the production, handling, storage, transportation, and disposal of oil and gas, by-products from oil and gas, and other substances and materials produced or used in connection with oil and gas operations. We cannot predict the ultimate cost of compliance with these requirements or their effect on our operations.

Environmental Regulations

We are subject to stringent national, state, and local laws and regulations in the jurisdictions where we operate relating to environmental protection, including the manner in which various substances such as wastes generated in connection with oil and gas exploration, production, and transportation operations are managed. Compliance with these laws and regulations can affect the location or size of wells and facilities, prohibit or limit the extent to which exploration and development may be allowed, and require proper closure of wells and restoration of properties when production ceases. Failure to comply with these laws and regulations may result in the assessment of administrative, civil, or criminal penalties, imposition of remedial obligations, incurrence of additional compliance costs, and even injunctions that limit or prohibit exploration and production activities or that constrain the disposal of substances generated by oil field operations.

Item 1A Risk Factors

Not required for a smaller reporting company.

Item 1B Unresolved Staff Comments

Not required for a smaller reporting company.

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Item 2 Properties

Headquarters

As of August 31, 2014, our principal executive and administrative offices were located at 326 S. Pacific Coast Highway, Suite 102, Redondo Beach, CA 90277. We do not have a lease agreement for the space, rather we have been paying a third-party landlord the actual costs of a lease entered into by a company owned by our CEO.  See Note 17 to the Financial Statements.

DEEP Lease

The following is information on the DEEP Lease as of August 31, 2014.

Reserves

We engaged an independent reserve engineering firm, Chapman Petroleum Engineering Ltd., to prepare a reserve estimate as of August 31, 2014.  The lead technical person at Chapman primarily responsible for the preparation of the reserve estimates is a Registered Engineer in the Province of Alberta, Canada, is a member of the Association of Professional Engineers and Geoscientists of Alberta, and has in excess of 20 years in the conduct of evaluation and engineering studies relating to oil and gas fields in Canada and around the world.

The following table summarizes SCNRG’s share of the estimated quantities of proved reserves as of August 31, 2014 for the DEEP Lease based on $92.02 per barrel of oil, which represents the unweighted arithmetic average of the first-day-of-the month oil prices (being Plains Marketing LP Kern River Area posting, less contracted differential and average gravity adjustment realized by SCNRG) during the twelve-month period prior to August 31, 2014.

Summary of Estimated Proved Oil Reserves

as of August 31, 2014

Proved Reserves Category	Net STB (1)(2)		PV10  (before tax)
Proved, Developed Producing		3,200		$	88,000
Proved, Undeveloped		264,900			4,313,000
Total Proved		268,100		$	4,401,000

(1)	STB = one stock-tank barrel.
(2)	Net STB is based upon SCNRG’s net revenue interest.  Net reserve or other net information is based on our 79.1 percent net revenue interest as of August 31, 2014, being SCNRG’s 100% working interest less 20.9% overriding royalties.  See also “Net Profits Interest” below.

The total PV10 (present value) of our proved reserves as of August 31, 2014 was approximately $4.4 million. "PV10" means the estimated future gross revenue to be generated from the production of proved reserves, net of estimated production and future development and abandonment costs, using prices and costs in effect at the determination date, before income taxes, and without giving effect to non-property related expenses or the Net Profits Interest, discounted to a present value using an annual discount rate of 10% in accordance with the guidelines of the U.S. Securities and Exchange Commission (“SEC”). PV10 is a non-GAAP financial measure and generally differs from the standardized measure of discounted future net cash flows, the most directly comparable GAAP financial measure, because it does not include the effects of income taxes on future net revenues.

Uncertainties are inherent in estimating quantities of proved reserves, including many factors beyond our control. Reserve engineering is a subjective process of estimating subsurface accumulations of oil that cannot be measured in an exact manner, and the accuracy of any reserves estimate is a function of the quality of available data and its interpretation. As a result, estimates by different engineers often vary, sometimes significantly. In addition, physical factors such as the results of drilling, testing, and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices or development and production expenses, may require revision of such estimates. Accordingly, oil quantities ultimately recovered will vary from reserves estimates.

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Neither we nor SCNRG filed any estimates of total proved net oil reserves with, or included such information in, reports to any federal authority or agency during the twelve months ended August 31, 2014.

Net Production, Average Sales Price and Average Production and Lifting Costs

The table below sets forth SCNRG’s net oil production (net of all overriding royalties) for the twelve months ended August 31, 2014 and 2013, the average sales prices, average production costs and direct lifting costs per unit of production.

	Twelve Months Ended August 31, 2014		Twelve Months Ended August 31, 2013
Net production - oil (barrels)		835		796
Average sales price per barrel of oil	$	91.94	$	94.57
Average production cost(1) per barrel of oil	$	71.66	$	94.27
Average lifting costs (2) per barrel of oil	$	47.51	$	72.55

(1) Production costs include all operating expenses, depreciation, depletion and amortization, lease operating expenses and all associated taxes.

(2) Direct lifting costs do not include depreciation, depletion and amortization.

Active Wells, Acreage, Drilling Activity, Present Activity and Delivery Commitments

At August 31, 2014, there were three gross wells (3.0 net wells) that were actively producing oil and one gross well (1.0 net well) injecting water in which SCNRG owned an interest as of August 31, 2014.

At August 31, 2014, SCNRG’s acreage was as follows: 

Project Name

Developed Acreage

Undeveloped Acreage

Total Acreage

Gross

Net

Gross

Net

Gross

Net

Total

7.5

7.5

32.5

32.5

40.0

40.0

Gross wells or acres are the total numbers of wells or acres in which SCNRG owns a working interest.  Net wells or acres represent gross wells or acres multiplied by SCNRG’s 100.0% working interest.

There were no wells drilled in the twelve months ended August 31, 2014 and 2013.

Currently, there is no activity other than production from existing wellbores.

There are no commitments to provide a fixed and determinable quantity of oil in the near future under existing contracts or agreements.  There is however a net profits interest in the property as described below.

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Net Profits Interest

There is a terminating Net Profits Interest (“NPI”) on the DEEP Lease.  The NPI calls for 40% of the net cash flow to be paid each month to the owner of the NPI, with a minimum monthly payment of $2,978, until a specific total has been paid (see Note 12 to the Financial Statements included elsewhere in this report).  The discounted present value of the NPI is shown as a liability on SCNRG’s financial statements in the amount of approximately $169,100 at August 31, 2014.   This payment is not accounted for as a revenue reduction, nor an operating expense or reserve deduction, rather the NPI is accounted for as debt.

Item 3 Legal Proceedings

Punta Gorda Resources, LLC vs. Windsor Energy US Corporation, Rincon Island Limited Partnership, Ron Klarc, James P. Garten, and Skiff Lake Holdings, South Coast Oil Corporation, Case No. 56-2013-00440672-CU-BC-VTA, Superior Court of California, Ventura County.  On June 4, 2013, Punta Gorda Resources, LLC (a wholly owned subsidiary of Hawker Energy (Rincon), LLC) filed a complaint for specific performance, breach of contract and declaratory relief in the United States Bankruptcy Court against the named defendants seeking to compel them to transfer lease rights and interests and overriding royalty interests provided in a Bankruptcy Court-approved Settlement Agreement concerning coastal lease PRC 145.1 just offshore Ventura County in the Rincon Field.  The complaint was dismissed on procedural grounds and re-filed by Punta Gorda in the Ventura County Superior Court.  Defendant Rincon now holds all of the subject rights and interests, except the Garten overriding royalty interest.  Deposition, document and written discovery have commenced.  On June 19, 2014, defendant Rincon filed a motion for summary judgment, which we intend to oppose.  The hearing date for the summary judgment motion is scheduled for December 8, 2014.  A stipulation to postpone the hearing date to late February 2015 or thereafter to allow for discovery from Rincon is pending with the court.  Although we intend to vigorously pursue Punta Gorda’s rights in this case, the outcome of this matter is not determinable as of the date of this report.

In addition to the pending matters described above, we are, from time to time, involved in various legal proceedings incidental to the conduct of our business. We are unable to predict the ultimate outcome of these matters.

Item 4 Mine Safety Disclosures

Not applicable.

PART II

Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed to trade in the over-the-counter securities market through the OTC Markets Group (“OTCQB”), under the symbol “HWKR” (formerly “SCGC”).

The following table sets forth the quarterly high and low bid prices for our common stock during the last two fiscal years, as reported by the OTCQB. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

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	Bid Prices ($)
2014 Fiscal Year	High	Low
November 30, 2013	0.20	0.16
February 28, 2014	0.40	0.25
May 31, 2014	0.49	0.30
August 31, 2014	0.35	0.10
2013 Fiscal Year
November 30, 2012	0.15	0.12
February 22, 2013	0.10	0.08
May 31, 2013	0.10	0.08
August 31, 2013	0.20	0.09

On November 13, 2014, the closing price for our common stock on the OTCQB was $0.14 per share.

Holders

As of November 13, 2014, we had 86 holders of record of our common stock. 

Dividend Policy

The payment by us of dividends, if any, in the future rests within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition, as well as other relevant factors.   We do not intend to pay any cash dividends in the foreseeable future, but intend to retain all earnings, if any, for use in our business.

Equity Compensation Plan Information

We record equity compensation expense for stock option grants based on the estimated grant-date fair value over the period the officers or consultants are required to provide services to earn the awards.

Recent Sales of Unregistered Securities

Unregistered sales of our equity securities during the year ended August 31, 2014, and subsequently, have been disclosed on Current Reports on Form 8-K previously filed by us.  The issuances of the securities were made in reliance upon the exemption from registration available under Section 4(2) of the Securities Act of 1933, as amended (“Securities Act”), including Regulation D promulgated thereunder, as transactions not involving a public offering, or pursuant to Regulation S as transactions not requiring registration under Section 5 of the Securities Act. In transactions made in reliance on the exemption from registration, the exemption was claimed on the basis that those transactions did not involve any public offering and the purchasers in each offering were accredited or sophisticated and had sufficient access to the kind of information registration would provide. In transactions made in reliance on Regulation S, the safe harbor from registration was claimed on the basis that they involved an offshore transaction, no directed selling efforts were made in the United States and appropriate offering restrictions were implemented.  In each case, appropriate investment representations were obtained and stock certificates were issued with restrictive legends.

Item 6 Selected Financial Data

Not required for smaller reporting companies.

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Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the financial statements and the related notes included in this annual report.  This discussion contains forward-looking statements that involve risks and uncertainties.  Our actual results could differ significantly from those projected in the forward-looking statements as a result of many factors, including those discussed elsewhere in this report. 

Overview

We are in the oil and gas exploitation and production business and our goal is to acquire and develop mature leases, interests and other rights to oil and gas producing properties with proven undeveloped potential.

Recent Developments

See Item 1, Recent Business Developments.

Results of Operations

The following discussion of the financial condition and results of operations should be read in conjunction with the Financial Statements and related notes appearing elsewhere in this report. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future.

As noted above, as a result of completion of our acquisition of SCNRG, the consolidated financial statements of Hawker, including SCNRG, consist of SCNRG’s historical results consolidated with Hawker’s results beginning October 25, 2013, compared to SCNRG’s historical results for the year ended August 31, 2013.    In addition, On January 1, 2014, we acquired all of the membership interests of HERLLC, of which Punta Gorda Resources, LLC is its wholly-owned subsidiary, and our consolidated financial statements include the accounts of these entities beginning January 1, 2014.  Finally, SCNRG increased its working interest in the DEEP Lease from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014.

Years ended August 31, 2014 and 2013

Our net loss of $1,696,236 for the year ended August 31, 2014, was largely the result of being a development stage oil production company.  We incurred significant professional fees pursuing the litigation described in Item 3 (“Legal Proceedings”), pursuing the Tapia and Eurka oil properties’ acquisition, effecting the reverse acquisition of Hawker by SCNRG, acquiring HERLLC, and acquiring our partners’ 33.33 percent working interest in the DEEP Lease.  We also incurred professional fees and general and administrative costs associated with being a public company.  We accrued bonuses to the four principals of Hawker (these will remain unpaid until sufficient funds are accumulated); they received stock options during the year but no cash compensation.  The fiscal 2014 loss compares to a $41,991 loss in the comparable prior year period, which reflects solely SCNRG’s results in an inactive year.

Revenue was $125,587 for the year ended August 31, 2014, compared to $80,792 for the year ended August 31, 2013. Net oil sales from our working interest in the DEEP Lease to our account (after royalties) from the current three (gross) producing wells averaged 3.0 net barrels per day for the year ended August 31, 2014, and realized $91.94 per barrel before royalties of $26,395 to produce net revenues of $110,495 after royalties, with the $15,092 balance of the oil sales revenue attributable to a 2.5% working interest in the DF#15 well in the Sawtelle Field, Los Angeles, which was included in our results beginning October 25, 2013.  Oil sales in the 2013 period averaged 2.2 net barrels per day to realize $94.57 per barrel to produce net revenues of $80,792 after royalties.

Direct operating costs were $62,505 for the year ended August 31, 2014, largely unchanged from $58,797 for the year ended August 31, 2013.

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Depletion, depreciation and amortization expense were $41,680 for the year ended August 31, 2014, compared to $25,695 for the year ended August 31, 2013.  Depletion expense varies with oil sales volumes, which were higher in 2014.  In addition, our working interest in the DEEP property increased from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014, which increases our share of the accretion on the asset retirement obligation.  Finally, our 2.5% working interest in the DF#15 well was included in our results beginning October 25, 2013.

Revenue, direct operating costs, and depletion, depreciation and amortization expenses vary with oil prices, downtime, repair and other operating costs, expensed workover programs, investments in drilling for new production and proved reserve estimates.

Professional fees increased from $16,790 for the year ended August 31, 2013, to $837,127 for the year ended August 31, 2014, primarily due to professional fees incurred in connection with: the acquisition of, and preparation of audited financial statements for, SCNRG; acquisitions of HERLLC and an additional working interest in the DEEP; litigation costs associated with HERLLC’s claim to coastal lease PRC 145.1; legal and diligence costs related to the potential acquisition of an interest in the assets of TEG and related potential financing; costs associated with being a public company; and other start-up expenses resulting from our acquisition of SCNRG, which closed October 25, 2013.  Professional fees can vary substantially from period-to-period going forward depending on financing activity, business development and property evaluation costs, litigation expenses associated with coastal lease PRC 145.1 and costs associated with being a public company.

In the year ended August 31, 2014, we accrued bonuses of $480,000, compared to zero in the prior year.  These amounts were unpaid at August 31, 2014 and shall be paid only at such time in the future as the finances of the Company permit, as determined by the Chief Financial Officer of the Company.

Other general and administrative expenses for the year ended August 31, 2014 were $296,926 compared to $8,636 for the year ended August 31, 2013 reflecting investor relations activities, outsourced accounting services, start-up expenses, costs associated with being a public company, rent and increased activity.

Stock compensation expense was $68,760 for the year ended August 31, 2014, compared to $0 for the year ended August 31, 2013, as a result of stock options granted on May 14, 2014.  There were no equity incentive grants in the corresponding period of fiscal 2013.

Interest income of $7,609 for the year ended August 31, 2014, compared to $0 for the year ago period, is primarily from a secured subordinated loan receivable from TEG.  See Note 7 to the Financial Statements included elsewhere in this report.

Interest expense amounted to $42,434 for the year ended August 31, 2014, compared to $12,865 for the year ended August 31, 2013.   Included in the fiscal 2014 amount is $21,599 for interest expense on convertible notes payable, as described in Note 10 to the Financial Statements included elsewhere in this report.  There was no comparable amount in the 2013 period.  Also included in the fiscal 2014 period is $14,105 compared to $12,865 for prior year period for accretion of interest on the DEEP net profits interest payable.  Our share of the net profits interest payable increased from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014 as a result of acquiring additional working interest.  Going forward, interest expense on the NPI will remain relatively constant unless there is a reduction in the expected timeframe for repayment of the NPI, which would cause interest accretion to accelerate. Finally, included in the fiscal 2014 period is $6,730 for interest accrued on loans to related parties; there was none in the fiscal 2013 period.

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Cash Flows

Operating Activities

During the year ended August 31, 2014, we used cash in the amount of $302,554 for operating activities, compared to $6,884 cash provided by operating activities in the corresponding year period.  There were significant professional fees, $837,127, for the year ended August 31, 2014, as discussed above.  Contributing to the cash used for operating activities was the net loss offset in part by an increase of $809,601 in accounts payable (largely for professional fees) and $480,000 of accrued but unpaid bonuses.  We anticipate that the accounts payables will be paid from proceeds from private placements or other financings that we may undertake, and the bonuses will only be paid when we have sufficient cash resources.

Investing Activities

Cash flows used in investing activities were $1,608,509 for the year ended August 31, 2014, compared to none for the year ended August 31, 2013.

During the year ended August 31, 2014, completion of the acquisition of SCNRG meant that SCNRG acquired Hawker’s cash balance of $6,004; completion of the acquisition of HERLLC meant that SCNRG acquired HERLLC’s cash balance of $1,214; and the acquisition of additional working interest in DEEP Lease used cash of $325,000.  Finally, the secured subordinated loan receivable investment used cash of $1,290,727.

Financing Activities

Cash flows provided by financing activities were $1,915,972 for the year ended August 31, 2014, compared to cash flows used in financing activities of $6,408 for the year ended August 31, 2013.

During the year ended August 31, 2014, we generated net cash proceeds of $738,416 from the unit offering, $221,000 from related party loans, $930,000 from convertible notes payable, and $55,000 from the sale of a non-controlling interest in Tapia Holdings, LLC.  During the year ended August 31, 2013, we received $17,500 from related party loans.  During the years ended August 31, 2014 and 2013, we paid $28,444 and $23,908, respectively, required under the DEEP Lease net profits interest.

Liquidity and Financial Condition

As of August 31, 2014, we had cash of $13,207, current assets of $1,382,825, current liabilities of $2,491,978 and a working capital deficit of $1,109,153.  During the year ended August 31, 2014, the Company had a net loss of $1,696,236, largely attributable to $837,127 in professional fees, $480,000 of accrued but unpaid bonuses and $296,926 of other general administrative costs, all as described above.

To date, we have relied on investor capital to fund our operations and investing activities.  Net proceeds after legal and related costs were $980,288 from private placements of units that closed between January 2014 and August 2014.  Included in this amount is $103,687 for units issued to settle loans from related parties and $188,185 for units issued to settle accounts payable.  Together with $50,000 received for a future closing of units, we received the balance of $738,416 in cash.  In addition, during the year ended August 31, 2014, we issued convertibles notes payable for $930,000, and received a $221,000 short-term loan from Mr. Katic, our CEO, director and significant shareholder, and another related party.

In June 2014, we entered into a letter of intent to acquire a majority interest in the TEG Assets, as described above.  We advanced $1,290,727 to TEG during the year ended August 31, 2014, and a further $196,625 subsequent to August 31, 2014 for a total to November 13, 2014, of $1,487,352.  Expected financing sources for the $2.5 million cash portion of the acquisition are: application of the $1,487,352 advances to November 13, 2014, towards the purchase price and $1,012,648 from other sources of equity.  In addition, we would issue a promissory note to the seller in the amount of $3.0 million.  Finally, Tapia, LLC would need to refinance or replace the BOTW debt current secured by the TEG Assets.  Such debt is expected to be approximately $3.8 million at closing.

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In addition, management’s business plan for fiscal 2015 is to continue to pursue HERLLC’s claim to coastal lease PRC 145.1 (see Part I, Item 3, “Legal Proceedings”), conduct further technical work on the DEEP property and pursue other opportunities. We currently do not have sufficient financial resources to fund this plan.  We will also require further financial resources to further develop the DEEP Lease, to exploit coastal lease PRC 145.1 (assuming we are successful in securing our claim in the lease) and close other opportunities in future years.

We presently do not have any available credit, financing or other external sources of liquidity.  In order to obtain future capital, we anticipate needing to sell additional shares of common stock or borrow funds from private lenders.  We have no assurance that future financings will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations.  Equity financing could result in additional dilution to existing shareholders and any downturn in the U.S. stock and debt markets, or oil prices, is likely to make it more difficult to obtain financing through the issuance of equity or debt securities.  As a result, there can be no assurance that we will be successful in obtaining additional funding.

Even if we are able to raise the funds required, it is possible that operations do not perform as expected, we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, fail to consummate contemplated transactions; or experience unexpected cash requirements that would force us to seek alternative financing.

Business Plan and Funding Needs

There is limited historical financial information about us upon which to base an evaluation of our performance. We are in the development stage of our business and have generated minimal revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the implementation of our plan of operations or difficulties with closing and achieving expected acquisition results, production and commodity price declines and possible cost overruns due to price and cost increases in services.

We have no assurance that future financings will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Equity financing could result in additional dilution to existing stockholders.

For these reasons, our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of August 31, 2014, we had total current assets of $1,382,825 and a working capital deficit in the amount of $1,109,153. We incurred a net loss of $1,696,236 during the year ended August 31, 2014, and an accumulated net loss of $2,047,462 since the inception of SCNRG in December 2009.

The financial statements contained elsewhere in this report 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 we be unable to continue as a going concern. Our continuation as a going concern is dependent upon our ability to obtain additional financing or sale of our common stock as may be required and ultimately to attain profitability.

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Critical Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.  

Our significant accounting policies are summarized in Note 2 of our Financial Statements contained elsewhere in this report. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.

We believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates used in the preparation of our financial statements:

Secured Subordinated Loan Receivable, Short Term

This receivable is recorded at cost, plus accrued interest.  We have conducted extensive due diligence on the underlying security.  We regularly evaluate the balance, and incorporate its subordinated nature, to determine if any reserve for uncollectible amount should be established.  To date, no such reserve is required.

Oil Properties

We follow the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize internal costs that can be directly identified with our acquisition and exploration and development activities.  We do not capitalize any costs related to production, general corporate overhead or similar activities.  Surface equipment on a property is also part of the amounts capitalized.

Under the full-cost method, capitalized costs are depleted (amortized) on a composite unit-of-production method based on proved oil reserves.  If we maintain the same level of production year over year, the depletion expense may be significantly different if our estimate of remaining reserves changes significantly. Proceeds from the sale of properties are accounted for as reductions of capitalized costs unless such sales involve a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved properties, in which case a gain or loss is recognized. The costs of unproved properties are excluded from amortization until the properties are evaluated.  We review all of our unevaluated properties quarterly to determine whether or not and to what extent proved reserves have been assigned to the properties, and if impairment has occurred.  Unevaluated properties are assessed individually when individual costs are significant.

21

We review the carrying value of our oil properties under the full-cost accounting rules of the SEC on a quarterly basis. This quarterly review is referred to as a ceiling test. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. In calculating future net revenues, current SEC regulations require us to utilize prices at the end of the appropriate quarterly period. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts, including the effects of derivatives qualifying as cash flow hedges. Two primary factors impacting this test are reserve levels and current prices, and their associated impact on the present value of estimated future net revenues. Revisions to estimates of oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Any excess of the net book value, less deferred income taxes, is generally written off as an expense. Under SEC regulations, the excess above the ceiling is not expensed (or is reduced) if, subsequent to the end of the period, but prior to the release of the financial statements, oil prices increase sufficiently such that an excess above the ceiling would have been eliminated (or reduced) if the increased prices were used in the calculations.

The estimates of proved crude oil reserves utilized in the preparation of the financial statements are estimated in accordance with guidelines established by the SEC and the Financial Accounting Standards Board (“FASB”), which require that reserve estimates be prepared under existing economic and operating conditions using a 12-month average price with no provision for price and cost escalations in future years except by contractual arrangements. Actual results could differ materially from these estimates. 

Long-Lived Assets 

Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying value.  The carrying value of the assets is then reduced to their estimated fair value that is usually measured based on an estimate of future discounted cash flows.

Asset Retirement Obligations

Asset retirement obligations relate to the plug and abandonment costs when our wells are no longer useful, and for the cost of removing related surface facilities. We determine the value of the liability by reviewing operator estimates and estimate the increase we will face in the future. We then discount the future value based on an intrinsic interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the future, however, we monitor the costs of the abandoned wells quarterly and we will adjust this liability if necessary. 

Net Profits Interest

A Net Profits Interest (“NPI”) on the DEEP property calls for 40% of the net cash flow, as defined in the Assignment of Net Profit Interest, to be paid each month to the owner of the NPI.  If net cash flow is negative, such losses carry forward to be deducted against future positive net cash flow.  There is a minimum monthly payment.  See Note 12 to the Financial Statements contained elsewhere in this report.

Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG’s December 1, 2009, acquisition date of a 66.67% working interest in the DEEP property, and this liability was increased pro rata when our working interest increased to 87.18% on February 1, 2014, and again on May 14, 2014 when our working interest increased to 100.0% .  The discount rate used in all cases was 10.0% per annum.

Equity Compensation Expense

We record equity compensation expense for stock option grants based on the estimated grant-date fair value over the period the officers or consultants are required to provide services to earn the awards.

22

Recently Issued 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.  We are currently assessing the new guidance and have not made any decision with respect to early adoption.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 7A Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

23

Item 8 Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Hawker Energy, Inc. (formerly known as Sara Creek Gold Corp.)

We have audited the accompanying consolidated balance sheets of Hawker Energy, Inc. (formerly known as Sara Creek Gold Corp.) as of August 31, 2014 and 2013 and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years ended August 31, 2014 and 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hawker Energy, Inc. (formerly known as Sara Creek Gold Corp.) as of August 31, 2014 and 2013 and the results of its operations, stockholders’ deficit, and cash flows for years ended August 31, 2014 and 2013 in conformity accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ L.L. Bradford & Company, LLC

Las Vegas, Nevada

November 21, 2014

24

HAWKER ENERGY, INC. (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

 CONSOLIDATED BALANCE SHEETS

	August 31, 2014			August 31, 2013
ASSETS
Current assets:
Cash	$	13,207		$	8,298
Accounts receivable		42,815			18,755
Inventory		6,092			7,064
Prepaid expenses		22,389			2,658
Secured subordinated loan receivable, short term		1,298,322			-
Total current assets		1,382,825			36,775
Fixed assets:
Machinery and equipment, net of accumulated
depreciation of $19,605 and $15,179, respectively		14,269			13,156
Other assets:
Capitalized oil and gas properties, net of accumulated
depletion of $86,193 and $59,878, respectively		730,046			297,590
Deposits		5,000			-
Total assets	$	2,132,140		$	347,521
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	813,438		$	31,018
Accrued bonuses		480,000			-
Net profits interest payable, current portion		20,065			12,109
Loans payable to related parties, short term		226,876			-
Convertible notes payable, short term		951,599			-
Total current liabilities		2,491,978			43,127
Long term liabilities:
Loans payable to related parties, long term		-			89,833
Asset retirement obligations		168,110			103,299
Net profits interest payable, long term portion		149,039			112,488
Total long term liabilities		317,149			305,620
Total liabilities		2,809,127			348,747
Stockholders' equity (deficit):
Common stock; $0.001 par value; 750,000,000
shares authorized, 41,174,703 and 0
shares issued and outstanding, respectively		41,175			-
Common stock payable		50,000			-
Additional paid in capital		1,224,300			350,000
Accumulated deficit		(2,047,462	)		(351,226	)
Total stockholders' equity (deficit)		(731,987	)		(1,226	)
Non-controlling interest		55,000			-
Total equity (deficit)		(676,987	)		(1,226	)
Total liabilities and equity (deficit)	$	2,132,140		$	347,521

The accompanying notes are an integral part of these financial statements.

25

HAWKER ENERGY, INC. (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Year Ended
	August 31, 2014			August 31, 2013
Revenue:
Oil revenues	$	125,587		$	80,792
Expenses:
Direct operating costs		62,505			58,797
Depletion, depreciation and amortization		41,680			25,695
Professional fees		837,127			16,790
Bonuses		480,000			-
General and administrative expenses		296,926			8,636
Equity compensation expense		68,760			-
Total expenses		1,786,998			109,918
Net operating (loss)		(1,661,411	)		(29,126	)
Other (income) expense:
Interest (income)		(7,609	)		-
Interest expense		42,434			12,865
Total other expense		34,825			12,865
Loss before income taxes		(1,696,236	)		(41,991	)
Provision for income taxes		-			-
Net loss		(1,696,236	)		(41,991	)
Net loss attributable to non-controlling interests		-			-
Net loss attributable to the Company	$	(1,696,236	)	$	(41,991	)
Net loss per common share - basic and diluted	$	(0.05	)	$	(0.01	)
Weighted average common shares outstanding -
basic and diluted		31,950,963			5,882,117

The accompanying notes are an integral part of these financial statements.

26

HAWKER ENERGY, INC. (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended
	August 31, 2014			August 31, 2013
Cash flows from operating activities:
Net loss	$	(1,696,236	)	$	(41,991	)
Depletion, depreciation and amortization		30,832			17,602
Accretion of asset retirement obligation		10,848			8,093
Accretion of net profits interest liability		14,104			12,865
Stock compensation expense		68,760			-
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Accounts receivable		(22,507	)		(5,201	)
Inventory		5,150			1,456
Prepaid expenses		(3,106	)		(654	)
Accounts payable and accrued expenses		809,601			14,714
Accrued bonuses		480,000			-
Net cash (used in) provided by operating activities		(302,554	)		6,884
Cash flows from investing activities:
Cash acquired in Sara Creek acquisition		6,004			-
Cash acquired in Hawker acquisition		1,214			-
Acquisition of an additional working interest in DEEP Lease		(325,000	)		-
Secured subordinated loan receivable		(1,290,727	)		-
Net cash (used in) investing activities		(1,608,509	)		-
Cash flows from financing activities:
Loans from related parties		221,000			17,500
Net proceeds from unit offering		738,416			-
Payments on net profits interest agreement		(28,444	)		(23,908	)
Proceeds from convertible notes		930,000			-
Proceeds from sale of non-controlling interest		55,000			-
Net cash provided by (used in) financing activities		1,915,972			(6,408	)
	#REF!
Net change in cash		4,909			476
Cash, beginning		8,298			7,822
Cash, end	$	13,207		$	8,298
Supplemental disclosure of cash flow information:
Interest paid	$	42,434		$	12,865
Units issued to settle loans from related parties	$	103,687		$	-
Units issued to settle accounts payable	$	188,185		$	-

The accompanying notes are an integral part of these financial statements.

27

HAWKER ENERGY, INC. (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

STATEMENT OF STOCKHOLDERS' EQUITY

																			Total
	Common Stock				Common Stock Payable						Additional			Accumulated			Non-Controlling		Equity
	Shares		Amount		Shares			Amount			Paid-in Capital			(Deficit)			Interest		(Deficit)
Balance, August 31, 2012		-	$	-		-		$	-		$	350,000		$	(309,235	)	$	-	$	40,765
Net loss												-			(41,991	)		-		(41,991	)
Balance, August 31, 2013		-		-		-			-			350,000			(351,226	)		-		(1,226	)
Recapitalization on completion of acquisition of SCNRG		25,961,983		25,962		2,000,000			2,000			(26,336	)		-			-		1,626
Issued to acquire Hawker		3,000,000		3,000		-			-			(138,199	)		-			-		(135,199	)
Issuance of common stock payable		2,000,000		2,000		(2,000,000	)		(2,000	)		-			-			-		-
Net proceeds from unit offering		10,212,720		10,213		-			-			970,075			-			-		980,288
Proceeds received for common stock payable		-		-		500,000			50,000			-			-			-		50,000
Stock compensation		-		-		-			-			68,760			-			-		68,760
Sale of non-controlling interest		-		-		-			-			-			-			55,000		55,000
Net loss		-		-		-			-			-			(1,696,236	)		-		(1,696,236	)
Balance, August 31, 2014		41,174,703	$	41,175		500,000		$	50,000		$	1,224,300		$	(2,047,462	)	$	55,000	$	(676,987	)

The accompanying notes are an integral part of these financial statements.

28

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

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.

2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements and related notes present our consolidated financial position as of August 31, 2014 and 2013, and results of operations, changes in stockholders’ equity and non-controlling interest, and cash flows for the years ended August 31, 2014, and 2013.  Comprehensive income is the same as net income (loss).

We have prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

The acquisition of SCNRG by Hawker on October 25, 2013, has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of Hawker.  Therefore, our condensed consolidated financial statements include the historic accounts of SCNRG, and consolidated with Hawker’s beginning October 25, 2013.

On January 1, 2014, we acquired all of the membership interests of Hawker Energy, LLC, which has a wholly-owned subsidiary, Punta Gorda Resources, LLC (see Note 5).  Hawker Energy, LLC changed its name to Hawker Energy (Rincon), LLC on October 22, 2014.  Our condensed consolidated financial statements include the accounts of these entities beginning January 1, 2014.

All significant intercompany balances and transactions have been eliminated.

29

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates included in the financial statements are: (1) depreciation and depletion; (2) accrued assets and liabilities; (3) asset retirement obligations; and (4) net profits interest payable.  Recorded amounts are based on estimates of oil reserves, retirement costs and date.  By their nature, these estimates including the estimates of future prices and costs, and the related future cash flows are subject to measurement uncertainly, and the impact in the consolidated financial statements of future periods could be material.  Although management believes these estimates are reasonable, changes in facts and circumstances or discovery of new information may result in revised estimates.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash is held in a business checking account with a major financial institution.  Our policy is to consider all highly liquid investment instruments purchased with original maturities of three months or less to be cash equivalents for purposes of the statements of cash flows and other statements.  On two occasions in the twelve months ended August 31, 2014, cash on deposit has exceeded federally insured limits for up to one week at a time.  We have not experienced any losses on such accounts and believe we are not exposed to any significant credit risk on cash and cash equivalents.

Accounts Receivable

Accounts receivable represent oil sales, and are collected by the operator in the month following sale.  After deducting and paying the appropriate royalties, the operator either promptly remits our share of the net proceeds to us, or offsets the net proceeds against joint interest billings for our share of production and other costs.  We regularly review receivables to insure that the amounts will be collected and establish or adjust an allowance for uncollectible amounts as necessary using the specific identification method.  There were no reserves for uncollectible amounts in the periods presented.

Inventory

Inventory consists of oil that has been produced and stored in a tank on the DEEP Lease property (see Note 6).  Inventory is valued at the lower of average cost and market.

Financial Instruments

Financial instruments consist of cash, accounts receivable, loan receivable, accounts payable, loans payable and convertible notes payable. Recorded values of cash, receivables, accounts payable and accrued liabilities approximate fair values due to the short maturities of such instruments.  Recorded values for loans and convertible notes payable approximate fair values, since their stated or imputed interest rates are commensurate with prevailing market rates for similar obligations.

Machinery and Equipment

Machinery and equipment are recorded at cost.  Depreciation is on a straight-line method using the estimated lives of the assets.  Expenditures for maintenance and repairs are charged to expense.  

30

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014
          

Oil Properties

We follow the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize internal costs that can be directly identified with our acquisition, and exploration and development activities.  We do not capitalize any costs related to production, general corporate overhead or similar activities.  Surface equipment on a property is also part of the amounts capitalized.

Under the full-cost method, capitalized costs are depleted (amortized) on a composite unit-of-production method based on proved oil reserves.  If we maintain the same level of production year over year, the depletion expense may be significantly different if our estimate of remaining reserves changes significantly. Proceeds from the sale of properties are accounted for as reductions of capitalized costs unless such sales involve a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved properties, in which case a gain or loss is recognized. The costs of unproved properties are excluded from amortization until the properties are evaluated.  We review all of our unevaluated properties quarterly to determine whether or not and to what extent proved reserves have been assigned to the properties, and if impairment has occurred. Unevaluated properties are assessed individually when individual costs are significant.

We review the carrying value of our oil properties under the full-cost accounting rules of the Securities and Exchange Commission (“SEC”) on a quarterly basis. This quarterly review is referred to as a ceiling test. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. In calculating future net revenues, current SEC regulations require us to utilize prices at the end of the appropriate quarterly period. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts, including the effects of derivatives qualifying as cash flow hedges. Two primary factors impacting this test are reserve levels and current prices, and their associated impact on the present value of estimated future net revenues. Revisions to estimates of oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Any excess of the net book value, less deferred income taxes, is generally written off as an expense. Under SEC regulations, the excess above the ceiling is not expensed (or is reduced) if, subsequent to the end of the period, but prior to the release of thefinancial statements, oilprices increase sufficiently such that an excess above the ceiling would have been eliminated (or reduced) if the increased prices were used in the calculations.

The estimates of proved crude oil reserves utilized in the preparation of the financial statements are estimated in accordance with guidelines established by the SEC and the Financial Accounting Standards Board (“FASB”), which require that reserve estimates be prepared under existing economic and operating conditions using a 12-month average price with no provision for price and cost escalations in future years except by contractual arrangements. Actual results could differ materially from these estimates. 

Long-Lived Assets

Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying value.  The carrying value of the assets is then reduced to their estimated fair value that is usually measured based on an estimate of future discounted cash flows.

31

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

Asset Retirement Obligations

Asset retirement obligations relate to the plug and abandonment costs when our wells are no longer useful, and for the cost of removing related surface facilities. We determine the value of the liability by reviewing operator estimates and estimate the increase we will face in the future. We then discount the future value based on an intrinsic interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the future, however, on a quarterly basis we monitor the costs of the abandoned wells and adjust this liability if necessary.

Non-Controlling Interest

We report non-controlling interest in Tapia Holdings, LLC in the financial statements pursuant to paragraph ASC No. 810-10-65-1.  The non-controlling interest of $55,000 reported on the balance sheet as of August 31, 2014, represents the non-controlling interest holders' proportionate share of the equity of the Tapia Holdings, LLC.  This amount was received on August 26 and 28, 2014, in contemplation of the pending acquisition of Tapia, LLC (Note 7).  In the year ended August 31, 2014, there was no amount to recognize for the non-controlling interest holders' proportionate share of the earnings or losses. Including the $55,000 funded to date, $65,000 in future funding, and $144,000 of future commitment to participate in the note payable to Sefton Resources Ltd. on closing of the Tapia, LLC acquisition, non-controlling interest at closing of the acquisition is expected to represent 4.80% of the total outstanding equity of Tapia Holdings, LLC, increased to 4.83% after August 31, 2014.  See also Note 19, Subsequent Events.

Revenue Recognition

Oil revenues are recognized net of royalties when production is sold to a purchaser at a fixed or determinable price, when title has transferred, and if collection of the revenue is probable.

Equity Compensation Expense

We record equity compensation expense for stock option grants based on the estimated grant-date fair value over the period the officers or consultants are required to provide services to earn the awards.

Net Profits Interest

A Net Profits Interest (“NPI”) on the DEEP Lease calls for 40% of the net cash flow, as defined in the Assignment of Net Profit Interest (see Note 12), to be paid each month to the owner of the NPI.  If net cash flow is negative, such losses carry forward to be deducted against future positive net cash flow.  Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG’s December 1, 2009, acquisition date of a 66.67% working interest in the DEEP property, and this liability was increased pro rata when our working interest increased to 87.18% on February 1, 2014, and again on May 15, 2014, when our working interest increased to 100.0% (see Note 6).  The discount rate used in all cases was 10.0% per annum (see Note 12).

Income Taxes

Until October 25, 2013, SCNRG (the accounting acquirer of Hawker) was not a taxable entity for U.S. federal or California income tax purposes.  Taxes on its net income were borne by its members through the allocation of taxable income.  Until July 31, 2013, we were treated as a partnership for tax purposes.  On August 1, 2013, we elected to be treated as an S-Corp.  Upon completion of the reverse acquisition of Hawker, SCNRG became part of a consolidated taxable entity.  Due to a history of losses, we have a full valuation allowance for all net deferred tax assets, including our net operating loss.

32

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

Loss Per Share

Dilutive securities, including warrants to acquire common stock, shares issuable on conversion of notes payable and stock options, are excluded from the diluted weighted average shares of common stock outstanding computation in periods where they have an anti-dilutive effect, such as when we report a loss. Anti-dilutive securities omitted from the calculation for the year ended August 31, 2014 were 4,436,236 and none for the comparable 2013 period.

Concentrations

Pursuant to a January 13, 2010, Crude Oil Purchase Contract between the DEEP Lease operator and Plains Marketing L.P. (“PMLP”), all production from the DEEP Lease is sold to PMLP. The initial term of the agreement was for one year, expiring on December 31, 2010, and was automatically renewed for an additional one-year term that expired on December 31, 2011. Since January 1, 2012, the agreement has continued on a month-to-month basis and is cancellable upon thirty days’ written notice by either party.

Changes in Accounting Policy

The Company has not had any changes in accounting policies during the year.

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-9, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to receive in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is not permitted. We are currently assessing the impact that this standard will have on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under GAAP, financial statements are prepared based on the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued.  The Company has not conducted its analysis to determine whether it will adopt the new standard early or not.

33

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

3.           GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of August 31, 2014, the Company had total current assets of $1,382,825 but a working capital deficit in the amount of $1,109,153. The Company incurred a net loss of $1,696,236 during the year ended August 31, 2014 and an accumulated net loss of $2,047,462 since inception.  The Company has earned insufficient revenues since inception and its cash resources are insufficient to meet its planned business objectives.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to obtain additional financing or sale of its common stock as may be required and ultimately to attain profitability.

Management’s plan in this regard is to complete the acquisition of the Tapia and Eureka oilfields (see Note 7), which is depending on financing, and to raise capital through a combination of equity and debt financing sufficient to finance the continuing operations for the next twelve months.  However, there can be no assurance that the Company will be successful in completing such financing.  

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.

34

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

5.           ACQUISITION OF HAWKER ENERGY (RINCON), LLC

On January 1, 2014, we exercised our option to acquire all of the membership interests in Hawker Energy (Rincon), LLC (“HERLLC”) from Darren Katic (who was also a seller in our transaction with SCNRG) and Charles Moore (collectively the “HERLLC Sellers”).  We issued 3,000,000 shares of our common stock to the HERLLC Sellers as consideration for the acquisition and, as described below, were required to issue up to an additional 33,000,000 shares of our common stock to the HERLLC Sellers upon us or HERLLC consummating certain follow-on transactions described below (“Potential Follow-On Transactions”).  In addition, we assumed $135,199 in net liabilities of HERLLC.

HERLLC, through its wholly-owned subsidiary Punta Gorda Resources, LLC (“Punta Gorda”), claims oil production and development rights of coastal lease PRC 145.1 just offshore Ventura County in the Rincon Field and ownership rights to an associated on-shore drilling and production site, which rights are being challenged in court by the lease’s operator of record (see Part I, Item 3, “Legal Proceedings”).  HERLLC has also engaged in preliminary discussions with various third parties concerning the Potential Follow-On Transactions, none of which were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of HERLLC) due to the preliminary status of those discussions and lack of certainty around HERLLC’s or Hawker’s ability to finance one or more of these Potential Follow-On Transactions.  Other than its contested interest in PRC 145.1 and its preliminary discussions concerning the Potential Follow-On Transactions, HERLLC had no assets or operations as of January 1, 2014.  PRC 145.1 and the Potential Follow-On Transactions are discussed in greater detail below.

PRC 145.1 is subject to 24.5% in overriding royalties, primarily to the State of California. A single active well on PRC 145.1 produced an average of 10 barrels of oil per day (gross production before royalties) for the eight months August 31, 2014. This lease has ten other non-active wells, one or more of which may be recompleted or re-drilled.  Although initial technical work has been done on PRC 145.1 to develop a preliminary understanding of the resource and opportunity, no reserve reports done to SEC standards have been completed to date.

All rights claimed by HERLLC to PRC 145.1 are being challenged in court by the lease’s operator of record -- Case No. 56-2013-00440672-CU-BC-VTA pending in Ventura County Superior Court (see Part I, Item 3, “Legal Proceedings”).  HERLLC is currently not receiving any net proceeds from production on this lease pending resolution of this matter in our favor.

After we exercised our option to acquire HERLLC on January 1, 2014, the agreement provided that the HERLLC Sellers were entitled to additional shares of our common stock upon the consummation of Potential Follow-On Transactions as follows:

(a) 2,000,000 shares of our common stock shall be issued upon our or HERLLC’s acquisition of California Oil Independents or its oil and gas interests being the “Doud” leases, comprised of approximately 340 acres, 20 wells and two tank batteries, located in the Monroe Swell Field, near Greenfield, California;

(b) 2,000,000 shares of our common stock shall be issued upon our or HERLLC’s acquisition of a participation in South Coast Oil – Huntington Beach CA oil and gas interests comprised of approximately 340 acres, and 20 wells (of which 9 are active) and 4 tank batteries, and known as the “Town Lot”;

(c) 5,000,000 shares of our common stock shall be issued upon our or HERLLC’s acquisition of all of the oil and gas leases held by Christian Hall (or affiliates) in the Midway-Sunset field located between the towns of Taft and McKittrick in Kern County, CA;

(d) 10,000,000 shares of our common stock shall be issued upon our or HERLLC’s acquisition of TEG Oil & Gas USA, Inc. (or certain oil and gas interests held by it, being all leases located in the Tapia Field, Los Angeles County, California);

35

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

(e) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or HERLLC of certain assets and rights regarding PRC 145.1 Lease held by Rincon Island Limited Partnership or settlement in lieu of such conveyance (see Part I, Item 3, “Legal Proceedings”); and

(f) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or HERLLC of certain mineral rights regarding PRC 427 Lease held by ExxonMobil, a lease that is adjacent to PRC 145.1 Lease above.

The Potential Follow-On Transactions described above are dependent on a number of variables that are not within our control and, as a result, (i) as of August 31, 2014, we cannot state with a reasonable degree of certainty that any of the transactions will occur and (ii) none of the transactions were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of HERLLC) or August 31, 2014.  Each of the Potential Follow-On Transactions described above, if consummated, would constitute a transaction separate and independent from our acquisition of HERLLC pursuant to the option.  Any shares of our common stock that may be issued upon the consummation of any of the Potential Follow-On Transactions will constitute expensed costs incurred concurrently with consummation of the applicable follow-on transaction (as opposed to incremental consideration for our acquisition of HERLLC).

The assets and liabilities of HERLLC at the date of acquisition were recorded at their fair values of:

Cash	$	1,214
Prepaid expenses		16,625
Less:
Accounts payable		(123,413	)
Loan payable to related party, short term		(29,625	)
Net liabilities assumed	$	135,199

The $138,199 difference between the par value of the common stock issued, $3,000, and the net liabilities assumed, $135,199, was recorded to paid in capital as there is no objective evidence of the value of HERLLC’s assets, which consist of the disputed claim to coastal lease PRC 145.1, and inability to determine a probability of success of the litigation.  As a result and in an effort to fairly represent and not overstate the consolidated assets of Hawker, a decrease in capital was deemed appropriate.

On October 10, 2014, Hawker authorized an amendment to the Potential Follow-On Transaction terms described above where Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock. The amendment waives all of the Potential Follow-On Transaction requirements and authorizes the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we will hold 19,000,000 shares in escrow, eligible to be released as set forth in Note 19, Subsequent Events.

Pursuant to a separate agreement dated November 13, 2014, between Messrs. Katic, Moore and Tywoniuk, Mr. Tywoniuk (a significant shareholder) holds warrants to acquire 9.7222% of any shares acquired by Messrs. Katic and Moore pursuant to amendment described in the prior paragraph.  This agreement amended a December 27, 2013, agreement entitling Mr. Tywoniuk to acquire 5% of any shares acquired by Messrs. Katic and Moore pursuant to the agreement above.

36

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

6.           ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE

As a result of two transactions (described below) through our wholly-owned subsidiary SCNRG, we acquired the remaining 33.33% working interest in the DEEP Lease.

On February 4, 2014, SCNRG completed the acquisition of additional 20.5108% working interest in the DEEP Lease for $200,000 in cash plus assumed asset retirement obligations and net profits interest liabilities aggregating to an estimated fair value of $69,729, for total consideration of $269,729.  SCNRG’s working interest increased from 66.67% to 87.18% as a result of the purchase, effective February 1, 2014.  Our condensed consolidated financial statements include the increased working interest beginning February 1, 2014.  The purchase price was allocated $3,529 to machinery and equipment, and $266,200 to oil properties based on estimated fair values.

On May 15, 2014, SCNRG completed the acquisition of the remaining 12.8192% working interest in the DEEP Lease for $125,000 in cash plus assumed asset retirement obligations and net profits interest liabilities aggregating to an estimated fair value of $43,081, for total consideration of $168,081.  SCNRG’s working interest increased from 87.18% to 100.0% as a result of the purchase, effective May 15, 2014.  Our condensed consolidated financial statements include the increased working interest beginning May 15, 2014.  The purchase price was allocated $2,010 to machinery and equipment, and $166,071 to oil properties based on estimated fair values.

The operator, Caleco, LLC, will continue to operate the DEEP Lease on SCNRG’s behalf during a transitional period until SCNRG qualifies with the regulatory agency as an operator.

7.           SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM

Between April 18, 2014 and August 31, 2014, our subsidiary Tapia Holdings, LLC (“Tapia Holdings”) made a number of advances to TEG Oil & Gas USA, Inc. (“TEG”), pursuant to several secured subordinated notes and a related security agreement, both as amended and restated into a Secured Subordinated Note dated June 27, 2014 (the “Note”), and a Third Amended and Restated Security Agreement dated August 29, 2014 (the “Security Agreement”) (collectively, the “Loan Receivable Agreements”). The Loan Receivable Agreements and an Intercreditor Agreement (defined below) were entered into in connection with a proposal by Tapia Holdings to acquire a majority interest in the assets of TEG (the “Proposed TEG Acquisition”).

TEG Nonbinding Letter of Intent

On June 18, 2014, we entered into a nonbinding letter of intent with Sefton (the “Sefton LOI”) concerning the principal terms upon which the Proposed TEG Acquisition might be consummated.  The principal terms of the Sefton LOI are as follows: (i) TEG would contribute all of its assets, including the Tapia Assets, the Eureka Assets (as these terms are defined below) and accompanying production equipment (collectively the “TEG Assets”) to TEG’s newly-formed wholly-owned subsidiary Tapia, LLC, and Tapia, LLC would assume specified liabilities of TEG, (ii) Tapia Holdings would acquire 80% of the common membership interests of Tapia, LLC for $2.5 million in cash and the issuance to TEG of a $3.0 million promissory note that would accrue 6% interest per annum and amortize quarterly on a straight line basis over the 12 quarters following closing, and (iii) TEG would retain the balance of the ownership interest in Tapia, LLC comprising the remaining 20% common membership interests of Tapia, LLC.  The note to TEG will be subject to adjustment based on the working capital of Tapia, LLC at closing.  The transactions contemplated by the Sefton LOI are subject to a number of conditions, contingencies and uncertainties inherent to any nonbinding preliminary terms, including, but not limited to, completion of definitive documentation, amending or refinancing the BOTW debt that encumbers TEG and its assets, our ability to finance the transaction, our satisfactory completion of due diligence concerning TEG’s assets, and consummation of definitive agreements.  Sefton shareholders have voted in favor of the proposed transaction.  As a result of a significant decrease in oil prices and other factors that have arisen since the date of the Sefton LOI, the parties are currently in discussions regarding possible adjustments to the transaction.

37

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

The TEG Assets that would be contributed by TEG to Tapia, LLC under the terms of the Proposed TEG Acquisition comprise four oil and gas leases encompassing the Tapia Canyon field (the “Tapia Assets”) and one lease west of the Tapia Canyon field (the “Eureka Assets”), and the accompanying production equipment.

The Proposed TEG Acquisition (including, but not limited to, the transactions contemplated by the Sefton LOI) are subject to a number of conditions and contingencies outside of our control, all of which create a level of uncertainly concerning our ability to ultimately consummate the Proposed TEG Acquisition.  Even if the Proposed TEG Acquisition is ultimately consummated, it may be on terms materially different than the terms described.

Tapia Holdings has outside equity investors, representing non-controlling interests.  Including amounts funded after August 31, 2014 (see Note 19), $145,000 has been funded by these parties to date, and $145,000 of future commitments have been made to participate in the note payable to Sefton Resources Ltd. on closing of the Proposed TEG Acquisition.  As a result, non-controlling interest at closing of the acquisition is expected to represent 4.83% of the total outstanding equity of Tapia Holdings.

Between April 18, 2014 and August 31, 2014, Tapia Holdings made a number of advances as described below, totaling $1,290,727 plus accrued interest, as of August 31, 2014, plus additional advances subsequent to August 31, 2014 as described in Note 19.  These advances will be credited against the $2.5 million cash payment noted above, at closing of the Proposed TEG Acquisition.

Secured Subordinated Loan Receivable, Short Term

Under the terms of the Loan Receivable Agreements, TEG agreed to pay Tapia Holdings the principal sum of $1,500,000, or such lesser amount as may be outstanding from time to time, with interest on the unpaid principal amount at the rate of 3.0% per annum. As of August 31, 2014, the amount of outstanding advances was $1,290,727, plus accrued interest of $7,595.  Further advances are subject to the sole and absolute discretion of Tapia Holdings. The loan receivable matures on December 29, 2014, at which time all outstanding principal and accrued interest is due and payable in full.  The personal property assets of TEG secure the Note.  These assets consist of all personal property assets located in the Tapia and Eureka Fields, Los Angeles and Ventura Counties, California. The Note and our security interest in the personal property assets of TEG are subordinate to senior indebtedness of TEG, pursuant to a Subordination and Intercreditor Agreement (“Intercreditor Agreement”) dated June 2, 2014, by and among Tapia Holdings, TEG, TEG’s parent company Sefton Resources, Inc. (“Sefton”), TEG’s affiliate TEG MidContinent, Inc., and Sefton’s senior lender Bank of the West.

The Security Agreement also provides that if the transactions contemplated by the Proposed TEG Acquisition are consummated (such transactions, the “Acquisition”), Tapia Holdings may apply any or all of the outstanding principal and accrued interest on the Note towards the consideration for the Acquisition.  Further, under the terms of the Security Agreement, Tapia Holdings has the option, in the event of a default, upon a refinancing of TEG’s bank loan or after December 14, 2014 if TEG cannot provide written evidence of its ability to repay the Note, to cause TEG to contribute its assets to Tapia, LLC (“Tapia, LLC”), a newly organized California limited liability company and wholly-owned subsidiary of TEG, and to sell to Tapia Holdings up to 80% of TEG’s membership interests in Tapia, LLC at the rate of $68,750 for each 1.0% of membership interest in Tapia, LLC for cash or for such other consideration as set forth in the Security Agreement, including but not limited to, cancellation of outstanding amounts payable under the Note. TEG further agreed to cease and terminate any solicitation or encouragement of a third party acquisition proposal; provided, that, if TEG receives an unsolicited, bona fide acquisition proposal that is found to be superior to the Proposed TEG Acquisition terms, to the extent Tapia Holdings declines to renegotiate the Proposed TEG Acquisition terms or to otherwise match the terms of the third party acquisition proposal, TEG may pursue such third party acquisition proposal. The Security Agreement also contains other representations, warranties and covenants of both parties that are customary for an agreement of this type.

38

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

The following shows the changes in secured subordinated loan receivable, short term, for the years ended August 31, 2014 and 2013:

	August 31,		August 31,
	2014		2013
Secured subordinated loan receivable, short term, beginning	$	-	$	-
Loan made during the period		1,290,727		-
Current period interest		7,595		-
Secured subordinated loan receivable, short term, ending	$	1,298,322	$	-

See also Note 19, Subsequent Events, for particulars of additional advances to TEG made subsequent to August 31, 2014.

8.           MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES

The asset categories of machinery and equipment and capitalized oil and gas properties at August 31, 2014 and August 31, 2013 were as follows:

	August 31, 2014
	Cost		Accumulated Depletion, Depreciation and Amortization		Net Book  Value
Machinery and equipment	$	33,874	$	19,605	$	14,269
Capitalized oil and gas properties		816,239		86,193		730,046
Total	$	850,113	$	105,798	$	744,315

	August 31, 2013
	Cost		Accumulated Depletion, Depreciation and Amortization		Net Book Value
Machinery and equipment	$	28,335	$	15,179	$	13,156
Capitalized oil and gas properties		357,468		59,878		297,590
Total	$	385,803	$	75,057	$	310,746

39

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

9.           LOANS PAYABLE TO RELATED PARTIES

Loan Payable To Related Parties, Short Term

Loans payable to related parties, short term, consist of the following at August 31, 2014, and August 31, 2013:

	August 31,		August 31,
	2014		2013
Darren Katic	$	161,000	$	-
Manhattan Holdings, LLC		60,000		-
Total long-term loans		221,000		-
Accrued interest payable		5,876		-
Loans payable to related parties, short term	$	226,876	$	-

Loans payable to related parties are unsecured and bear interest at 10% per annum.  Mr. Katic’s loan is due on demand.  Manhattan Holdings, LLC’s loan was originally due on October 31, 2014, but the maturity date was extended to January 31, 2015.  Accordingly, the loans have been treated as short-term loans.  Mr. Katic is an officer, director and significant shareholder.  Manhattan Holdings, LLC is a significant shareholder.

In addition, as part of the acquisition of HERLLC on January 1, 2014, we assumed $29,625 loan payable to Mr. Katic (for both cash advanced to Hawker and expenses incurred on its behalf).  This loan was unsecured and non-interest bearing with no formal maturity date.  On April 9, 2014, Mr. Katic agreed to convert this amount into common stock and warrants on the same terms as the unit offering described in Note 16.

Finally, as part of the acquisition of Hawker on October 25, 2013, we assumed a $15,000 amount owing to Kristian Andresen, a director and significant shareholder, and an officer at that time.  This amount was converted similarly to common stock and warrants on January 31, 2014.

See also Note 19, Subsequent Events.

Loan Payable To Related Parties, Long Term

SCNRG received various loans from its former members from its inception totaling $0 as of August 31, 2014, and $89,833 as of August 31, 2013. Each loan was originally unsecured, non-interest bearing and due on demand. On September 18, 2013, each loan was formalized through the issuance of an amended and restated promissory note to each former member. The amended and restated promissory notes were unsecured, bore interest at a rate of 1.66% per annum and matured no later than September 18, 2018. The unpaid principal and interest were payable upon the earlier of their maturity or upon the issuance of new debt or equity securities in a transaction or series of transactions resulting in aggregate gross proceeds to Hawker of a minimum of $5 million.  Hawker assumed these loans payable upon its reverse merger with SCNRG on October 25, 2013.

On April 9, 2014, the related parties agreed to convert the long-term loans payable, including accrued interest, into common stock and warrants on the same terms as the unit offering described in Note 16.

40

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

Loans payable to related parties, long term, consist of the following at August 31, 2014, and August 31, 2013:

	August 31,		August 31,
	2014		2013
Darren Katic	$	-	$	38,500
Manhattan Holdings, LLC		-		38,500
Gerald Tywoniuk		-		12,833
Total long-term loans		-		89,833
Accrued interest payable		-		-
Less current portion		-		-
Loans payable to related parties, long term	$	-	$	89,833

Gerald Tywoniuk is a significant shareholder of Hawker.  Mr. Katic’s and Manhattan Holdings, LLC’s relationship to Hawker is described above.

41

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

10.           CONVERTIBLE NOTES PAYABLE, SHORT TERM

Between May 13, 2014, and August 31, 2014, we issued a number of convertible notes payable (“CNP”).   All were issued in amounts equal to the cash we received, and bear simple interest on the unpaid principal balance at 12% per annum, which is payable on maturity.

Convertible notes payable, short term, consist of the following at August 31, 2014, and August 31, 2013; conversion features, security provisions and warrants to acquire common stock of Hawker are also set forth below:

	Issue Date	Maturity Date	August 31, 2014		August 31, 2013
CNP 1 (1) (2) (3)	June 25, 2014	November 30, 2014	$	350,000	$	-
CNP 2 (1) (2) (3)	May 30, 2014	November 30, 2014		250,000		-
CNP 3 (1) (3) (4)	July 17, 2014	June 30, 2015		100,000		-
CNP 4 (1) (2) (3) (4) (5)	July 17, 2014	July 10, 2015		100,000		-
CNP 5 (6)	May 13, 2014	May 13, 2016		50,000		-
CNP 6 (1) (2) (3) (4)	July 25, 2014	July 25, 2015		50,000		-
CNP 7 (1) (2) (3) (4)	August 28, 2014	July 25, 2015		30,000		-
				930,000		-
Accrued interest payable				21,599		-
Convertible notes payable, short term			$	951,599	$	-

(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 Hawker sells common stock for less than $0.10 per share, the conversion rate for CNP 1 shall be adjusted to that price.  In the case of CNP 1 and 2, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion.

(2) Hawker granted a security interest to the investor in all of its assets.

(3) The proceeds were required to be used solely for the purpose of allowing Tapia Holdings to make advances to TEG under the terms of the secured subordinated loan receivable described in Note 7.  Any repayment of such advances by TEG to Tapia Holdings must be used by us to immediately first repay convertible notes payable to the holder of CNP 1 and 2, and second to repay other convertible notes payable pro rata.

42

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

(4) Conversion of unpaid principal into Conversions Units pursuant to the terms in (1) above is mandatory in the event Hawker closes the Proposed TEG Acquisition described in Note 7.  Conversion of unpaid interest into Conversion Units is at the election of Hawker.

(5) The holder is related to Darren Katic, who is an officer, director and significant shareholder.

(6) Unpaid principal and accrued interest is convertible at any time at the option of the holder into Conversion Units in an amount computed by dividing the amount converted by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events).  Repayment of the convertible note payable is required on collection of the secured subordinated loan receivable described in Note 7 if earlier than the maturity date above.  As Hawker expects to receive repayment on the secured subordinated loan receivable within one year, this convertible note payable has been classified as a short term liability.

We issued additional secured convertible notes payable in the amount of $50,000 subsequent to August 31, 2014, as described in Note 19, Subsequent Events.

11.           ASSET RETIREMENT OBLIGATION

Our asset retirement obligations relate to the abandonment of oil wells and related surface facilities. The amounts recognized are based on numerous estimates and assumptions, including future retirement costs, inflation rates and credit adjusted risk-free interest rates.

The following shows the changes in asset retirement obligations for the years ended August 31, 2014 and 2013:

	August 31,		August 31,
	2014		2013
Asset retirement obligations, beginning	$	103,299	$	95,206
Liabilities acquired during the period		53,963		-
Liabilities settled during the period		-		-
Current period accretion		10,848		8,093
Asset retirement obligations, ending	$	168,110	$	103,299

12.           NET PROFITS INTEREST (“NPI”) PAYABLE

In connection with SCNRG’s December 1, 2009 Purchase and Sale Agreement for the DEEP Lease, and as part of the purchase price consideration, SCNRG entered into an Assignment of Net Profit Interest with Christian Hall Petroleum. Pursuant to the agreement, SCNRG is required to make monthly payments to the holder in an amount equal to 40% of SCNRG’s share of net profit (as defined in the agreement) from production.

Until February 1, 2014, SCNRG’s working interest in the DEEP property was 66.67%, and the NPI agreement called for a minimum monthly payment of $1,985 (SCNRG’s 66.67% share).  Beginning February 1, 2014, SCNRG’s working interest in the DEEP Lease increased to 87.18%, and its share of the minimum monthly payment became $2,596. Beginning May 15, 2014, SCNRG’s working interest in the DEEP Lease increased to 100.0%, and its share of the minimum monthly payment became $2,978.  Payments are required until SCNRG and other working interest owners have made NPI payments in aggregate between $347,000 and $357,410 on or before December 31, 2022 (the actual maximum amount within this range is dependent on when SCNRG and other working interest owners satisfy their aggregate NPI payment obligations).  As of August 31, 2014, SCNRG and other working interest owners have made NPI payments totaling $125,201.  SCNRG has paid its 66.67% working interest share of this amount through February 1, 2014, its subsequent 87.18% share through May 15, 2014, and its subsequent 100.0% share through May 31, 2014.

Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG’s December 1, 2009, acquisition date of a 66.67% working interest in the DEEP Lease, and this liability was increased pro rata when its working interest increased to 87.18% on February 1, 2014, and again on May 14, 2014 when its working interest increased to 100.0%.  The discount rate used in all cases was 10.0% per annum.

43

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

Changes in SCNRG’s share of the NPI liability are as follows for the years ended August 31, 2014 and 2013:

	August 31,			August 31,
	2014			2013
NPI liability, beginning of period	$	124,597		$	135,640
Liabilities assumed in connection with     acquisition of additional DEEP Lease working interests		58,847			-
Current period accretion		14,104			12,865
Payments made		(28,444	)		(23,908	)
NPI liability, end of period		169,104			124,597
Less: current portion		20,065			12,109
NPI liability, long-term portion	$	149,039		$	112,488

13.           INCOME TAXES

There was no current or deferred income tax expense (benefit) for the years ended August 31, 2014 and August 31, 2013.   Accordingly, a reconciliation between the statutory rate and our effective rate has not been provided.

Significant components of the deferred tax assets and liabilities are as follows:

	Year Ended August 31,
	2014			2013
Deferred tax assets:
Accounts payable and accrued expenses	$	504,765		$	-
Asset retirement obligations		5,992			-
Net operating loss carry-forward		477,153			-
Total deferred tax assets		987,910			-
Deferred tax liabilities:
Depreciation and basis differences		(37,088	)		-
Net deferred tax assets		950,822			-
Valuation allowance		(950,822	)		-
Net deferred tax assets	$	-		$	-

At August 31, 2014, we have Federal and State net operating loss carry forwards of approximately $1,302,500 and $370,300 expiring in 2034 and 2024, respectively.   Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs (see Note 4).  Therefore, the amount available to offset future taxable income is limited.  A valuation allowance has been established against net operating losses where it is more likely than not that such losses will expire before they are utilized.

44

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

14.           FAIR VALUE MEASUREMENTS

We hold certain financial assets, which assets are required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“ASC Topic 820-10”).   ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  ASC Topic 820-10 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 on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability.

The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

§   Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.  We believe accounts receivable, accounts payable and accrued expenses and accrued bonuses approximate fair value at August 31, 2014 and August 31, 2013.

§   Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs which are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

§   Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider secured subordinated loan receivable, depleting assets, loans payable to related parties, convertible notes payable, asset retirement obligations and net profit interest liability to be Level 3. We determine the fair value of Level 3 assets and liabilities utilizing various inputs, including oil price quotations and contract terms.

45

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

	Fair Value Measurement
	Level 1		Level 2		Level 3
August 31, 2014
Assets:
Secured subordinate loan receivable	$	-	$	-	$	1,298,322
Capitalized oil and gas properties, net						730,046
Liabilities:
Loans payable to related parties, short term						(226,876	)
Convertible notes payable, short term						(951,599	)
Net profit interest liability		-		-		(169,104	)
Asset retirement obligation						(168,110	)
Total	$	-	$	-	$	512,679
August 31, 2013
Assets:
Capitalized oil and gas properties, net	$	-	$	-	$	297,590
Liabilities:
Net profit interest liability		-		-		(124,597	)
Asset retirement obligation		-		-		(103,299	)
Total	$	-	$	-	$	69,694

46

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

15.           COMMITMENTS AND CONTINGENCIES

Commitments

Oil production from the DEEP Lease is subject to a 1% overriding royalty.  Additionally, production is also subject to an aggregate additional 19.92% royalty for total royalties of 20.92%.

Further, on December 1, 2009, SCNRG entered into an Operating Agreement with Caleco, LLC (“Caleco”) for a term equal to the life of the DEEP Lease wells.  As the operator, Caleco incurs production and other costs, which are subsequently billed to SCNRG for its share through a joint interest billing process; and the operator distributes to SCNRG its share of revenue received from production, less royalties and NPI obligations. All expenses and revenue presented by the operator represent the pro rata share of the revenue earned and expenses incurred.  In accordance with the terms of the agreement, the operator is entitled to a fee for services but has instead elected to bill SCNRG based on actual time and materials.  As described in Note 6, SCNRG increased its working interest in the DEEP Lease from 66.67% to 100.0% during the year ended August 31, 2014; Caleco continues to operate the DEEP Lease on SCNRG’s behalf during a transitional period until SCNRG qualifies with the regulatory agency as an operator.

Contingencies

We are subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the owners for the cost of pollution cleanup resulting from operations and subject the owners to liability for pollution damages. In some instances, the operator may be directed to suspend or cease operations in the affected area.  As of August 31, 2014, and August 31, 2013, we have no reserve for environmental remediation and are not aware of any environmental claims.

Contractual Obligations

On behalf of a related party, we have been making lease payments for two non-cancellable operating leases for its office space.  No formal assumption agreement has yet been completed with the third-party landlord.  See Note 17.  The leases have terms ending in 2015 and 2017.

Future minimum payments under operating leases for the next five years total $86,450, and are as follows:

Year Ended August 31	Amount
2015	$	38,827
2016		32,758
2017		14,865
2018		-
2019		-
	$	86,450

47

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

16.           STOCKHOLDERS’ EQUITY

Common Stock

The following common stock transactions occurred during the year ended August 31, 2014:

(a)  On October 25, 2013, we issued 14,000,000 shares of our common stock to the members of SCNRG to acquire 100% of the membership interests in SCNRG.  As described in Notes 1 and 4, the acquisition of SCNRG by Hawker has been accounted for as a recapitalization of Hawker for accounting purposes;

(b)  On January 1, 2014, we issued 3,000,000 shares of our common stock to acquire HERLLC as described in Note 5;

(c)  On January 8, 2014, we issued 2,000,000 shares of our common stock to Ryan Bateman to satisfy an obligation pursuant to a July 2013 purchase agreement for the Sawtelle well interest;

(d) Between January 10, 2014 and July 1, 2014, we issued an aggregate 10,212,720 units at a price of $0.10 per unit.  Each unit comprises one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock at $0.20 per share.  The warrants expire five years from each closing date.  Gross proceeds were $1,021,272, including $103,687 to settle certain loans payable to related parties and $188,185 to settle certain accounts payable.  No commissions were paid or are payable. Net proceeds after legal and other offering costs were $980,288.  No separate accounting was given to the warrants as the value is indeterminable, and any such allocation would be recorded to paid-in capital regardless, just as the excess over par value for the common stock was recorded.

(e)  On August 27, 2014, we received an aggregate of $50,000 for the sale of 500,000 units on the same terms as set forth in (d) above.  Closing occurred in September 2014.  This amount is shown as common stock payable at August 31, 2014.

Related party transactions are set forth in Note 17.  Additional units were sold after August 31, 2014, as described in Note 19.

Shares of Common Stock Potentially Issuable Pursuant To Warrants, Convertible Notes Payable and Options

Pursuant to warrants issued in our private placements of securities from January 10, 2014 through July 1, 2014, described above, up to 5,106,360 shares of our common stock would be issuable upon payment to us of $0.20 per share.  The warrants expire five years from the date of each private placement.

Up to 14,014,939 shares of common stock could be issued pursuant to the convertible notes payable described in Note 10, as follows:

· Up to 9,300,000 shares of common stock would be issuable if investors elect or are required to convert all of the $930,000 aggregate principal amount on or prior to maturity, with the number of shares issuable on conversion computed at a rate of $0.10 per share;

· Up to an additional 4,400,000 shares of common stock would be issuable pursuant to warrants created if investors elect or are required to convert certain convertible note payables prior to or on maturity (which notes payable are included in the preceding paragraph) and pay us $0.25 per share on exercise; and

· An additional amount of up to approximately 215,987 shares of common stock would be issuable determined based on the amount of any accrued interest payable as of August 31, 2014, if investors elect or are required to convert their notes payable into common stock, based on a conversion rate of $0.10 per share.  Conversion of accrued interest into common stock would create warrants to acquire up to a further 98,952 shares at an exercise price of $0.25 per share.

48

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014
                     

On May 14, 2014, 5,950,000 common stock options were issued to our officers and other key consultants.

· Each option has a life of 10 years and a strike price of $0.10 per share.  One million stock options vest on December 15, 2014, with the balance of 4,950,000 stock options vesting one-third on each of May 13, 2015, 2016 and 2017.  There are no other options outstanding, and no options have vested to date.

· These options were granted pursuant to the 2014 Stock Plan approved by written consent of a majority of our stockholders on March 18, 2014, which authorized 15% of our outstanding shares of common stock to be available for grant in the form of options or stock purchase rights.  At August 31, 2014, 15% of our outstanding common stock is 6,176,205, of which we granted 5,950,000 stock options as stated above.

· The fair value of each stock option award was estimated on the date of grant using the Black-Scholes option pricing method.  Compensation costs related to the options granted are recognized on a straight-line basis over the vesting period.  The expected life assumption was 10 years, the same as the contract life, as we do not have historical data upon which to base an expected term assumption.  No forfeitures were assumed, as we have no historical data.  Expected volatility was based on historical volatility of our common stock.  The risk-free interest rate was derived from the U.S. Treasury yields in effect at the time of grant and the dividend yield was zero, based on historical experience and expected future changes. 

· Equity compensation expense was $68,760 for the period from the date of grant on May 14, 2014, to August 31, 2014.  The total compensation cost relating to unvested stock option grants not yet recognized at August 31, 2014, was $342,000, and the weighted average period over which this cost is expected to be recognized, as of August 31, 2014, is approximately 2.5 years.

See Note 19 for Subsequent Events.

17.           RELATED PARTY TRANSACTIONS

The following information sets forth related party transactions, being transactions with:

· Mr. Kristian Andresen is a director of Hawker and a significant shareholder.  Until October 25, 2013, he was also our CEO, and from October 25, 2013, until July 17, 2014, he was Secretary of Hawker.  Mr. Andresen has been actively providing services to Hawker since October 25, 2013.

· Mr. Darren Katic is a director and Chief Executive Officer and Chief Financial Officer of Hawker.  He was a member of SCNRG, which we acquired on October 25, 2013, and at which point Mr. Katic became a director, officer and a significant shareholder of Hawker.

· Manhattan Holdings, LLC (“Manhattan”) was a member of SCNRG, which Hawker acquired on October 25, 2013, at which point Manhattan became a significant shareholder.

· Mr. Charles Moore was a managing member of HERLLC until Hawker acquired his interest on January 1, 2014, at which point he became a significant shareholder of Hawker.  Mr. Moore has been actively providing services to Hawker since that date.

· Mr. Gerald Tywoniuk was a member of SCNRG, which Hawker acquired on October 25, 2013, at which point he became a significant shareholder of Hawker.  Mr. Tywoniuk has been actively providing services to Hawker since that date.

HERLLC

On January 1, 2014, Hawker exercised its option to acquire all of the membership interests in HERLLC from Mr. Katic and Mr. Moore (collectively the “HERLLC Sellers”), as described in Note 5.  Hawker issued 3,000,000 shares of our common to the HERLLC Sellers as consideration for the acquisition, 1,500,000 shares to each HERLLC Seller.  Hawker also assumed net liabilities of $135,199, including $29,625 owing to Mr. Katic.  Pursuant to the option agreement, Hawker is required to issue up to an additional 33,000,000 shares to Sellers upon Hawker or HERLLC consummating certain follow-on transactions.

The HERLLC option was originally entered into with Hawker on October 15, 2013 and amended on November 20, 2013 to (a) extend the term of the option, (b) revise the option consideration payable upon consummation of certain transactions described in the Agreement and (c) provide for additional option consideration in the event of the consummation of certain transactions not previously contemplated by the parties.

49

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014
                         

On October 10, 2014, the Board of Hawker waived all of the follow-on transaction requirements and authorized the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we hold 19,000,000 shares in escrow, to be released in accordance with the provisions described in Note 19, Subsequent Events.

Loan From Related Parties, Short Term

As of August 31, 2014, we owed Mr. Katic $161,000.  This loan is unsecured, bears interest at 10% and is due on demand.  Total advances were $228,000 and repayments were $67,000 during the year ended August 31, 2014.  The maximum outstanding balance was $190,000.

As of August 31, 2014, we owed Manhattan $60,000.  This loan is unsecured, bears interest at 10% and is due January 31, 2015, pursuant to a promissory note amendment dated September 29, 2014, which amended the maturity date from October 31, 2014.

Accrued interest payable as of August 31, 2014, on the above is $5,876.

See Note 19, Subsequent Events.

Loans From Related Parties, Long Term

SCNRG received various loans from its former members from its inception totaling $89,833 as of August 31, 2013: Mr. Katic $38,500, Manhattan $38,500 and Mr. Tywoniuk $12,833.  Each loan was originally unsecured, non-interest bearing and due on demand. On September 18, 2013, each loan was formalized through the issuance of an amended and restated promissory note to each former member. The amended and restated promissory notes were unsecured, bore interest at a rate of 1.66% per annum and matured no later than September 18, 2018. The unpaid principal and interest were payable upon the earlier of their maturity or upon the issuance of new debt or equity securities in a transaction or series of transactions resulting in aggregate gross proceeds to Hawker of a minimum of $5 million.  Hawker assumed these loans payable upon its acquisition of SCNRG on October 25, 2013.  On April 9, 2014, the related parties agreed to convert the short- and long-term loans payable to related parties into common stock and warrants on the same terms as the unit offering described in Note 16.

Convertible Notes Payable

As of August 31, 2014, pursuant to a convertible note payable, we owed a relative of Mr. Darren Katic, $100,000 plus accrued interest of $1,710, all as described in Note 10.

Unit Sales

The following unit sale transactions involved related parties:

· On January 10, 2014, Messrs. Katic and Tywoniuk purchased 380,000 and 500,000 units of Hawker for $38,000 and $50,000 respectively.  In addition, Manhattan acquired 900,000 units of Hawker for $90,000.

· On January 31, 2014, Mr. Andresen agreed to settle $15,000 owing to him by Hawker, as of the date of SCNRG’s acquisition of Hawker, in exchange for 150,000 units, and on April 9, 2014, Mr. Katic agreed to settle $16,625 owing to him in exchange for 166,250 units.

· On April 9, 2014, Mr. Katic, Manhattan and Mr. Tywoniuk agreed to settle SCRNG’s “loans to related parties, long term” totaling $90,687 (see Note 9 and also referred to above in loans from related parties, long term), plus Mr. Katic agreed to settle a $13,000 amount owing to him from HERLLC at the January 1, 2014, acquisition date of HERLLC, for a total of $103,687 in exchange for 1,036,870 units.

· All of these amounts are a portion of the proceeds from unit sales described in Note 16.  Each unit comprises one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock at $0.20 per share.  The warrants expire five years from the closing date.   The price of each unit was $0.10 per unit.

50

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

As part of the common stock payable amounts outstanding on August 31, 2014, described in Note 16, $20,000 was received from each of Messrs. Katic and Tywoniuk.

Stock Option Grant And Accrued Bonuses

See Note 16 for a description of the stock option grant that occurred on May 14, 2014.   Of the options granted, 600,000, 2,600,000 and 1,600,000 were granted to Messrs. Katic, Moore and Tywoniuk, respectively.  These options vesting over three years.  In addition, 1,000,000 options vesting December 15, 2014 were granted to SMED Capital Corp., an entity owned by Mr. Andresen.  Each of these options have an exercise price is $0.10 per unit, and a term of 10 years.

At August 31, 2014, Hawker accrued bonuses of $120,000 each to Mr. Andresen, Katic, Moore and Tywoniuk, in recognition of services rendered.  These amounts will not be paid until Hawker has sufficient funds, to be determined by our Chief Financial Officer.  The total amount payable of $480,000 is shown separately on the balance sheet, and the total expense is shown separately on the statement of operations.

None of these individuals was an employee of Hawker, nor did they receive any other consideration in the years ended August 31, 2013 and 2014.

Other

On closing of the Tapia, LLC acquisition, the non-controlling interest held by Mr. Moore is expected to be 1.5 percentage points.  See Notes 7 and 19.

On behalf of a company controlled by Mr. Katic, the Company has been paying rent to a third party for its office space, beginning January 1, 2014.  No formal assumption agreement has been completed to reassign the leases with the landlord from Mr. Katic’s company to Hawker. See Note 15.  Mr. Katic provided a personal guarantee to the landlord.  For the year ended August 31, 2014, these payments totaled $25,644.

See also Note 19, Subsequent Events.

18.           PRO FORMA FINANCIAL INFORMATION

The following table presents unaudited pro forma consolidated information, adjusted for the reverse acquisition of Hawker (Note 4) and the acquisition of an additional 33.33% interest in DEEP Lease (Note 6), as if the acquisitions had occurred on September 1, 2012:

	Year Ended August 31,
	2014			2013
Revenue	$	150,802		$	125,116
Net loss	$	(1,712,728	)	$	(184,149	)
Loss per share	$	(0.05	)	$	(0.01	)

These amounts have been calculated after applying our accounting policies and adjusting the results to reflect the recapitalization of Hawker.  The unaudited pro forma adjustments are based on available information and certain assumptions we believe are reasonable.  It was determined that HERLLC was not a business and therefore there is no pro forma adjustment for the acquisition of HERLLC (Note 5).

51

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

19.           SUBSEQUENT EVENTS

Secured Subordinated Loan Receivable From TEG

On September 30, 2014, October 2, 2014, and October 31, 2014, Tapia Holdings advanced to TEG a further $196,625 pursuant to the secured subordinated loan receivable described in Note 7, bringing the balance to $1,487,352 plus accrued interest.

Loans Payable To Related Parties, Short Term

Subsequent to August 31, 2014, we received additional cash proceeds of $95,000, converted an accounts payable of $3,525 into a loan payable, and repaid $10,000 as follows:

· Manhattan advanced a further $30,000 on September 29, 2014, with a maturity date of January 31, 2014, and concurrently agreed to extend the maturity date on a prior $60,000 to January 31, 2015;

· Mr. Andresen advanced $15,000 on September 29, 2014, and on November 10, 2014 agreed to convert a $3,525 amount payable to him for business expenses into a loan, for a total loan balance of $18,525 with a maturity date of January 31, 2015;

· Mr. Tywoniuk advanced $50,000 on October 31, 2014, with a maturity date of January 31, 2015; and

· On September 16, 2014, we repaid a $10,000 portion of the loan to Mr. Katic.

All loan amounts bear interest at 10% per annum, and are unsecured.  See also Note 9.

Convertible Notes Payable

Subsequent to August 31, 2014, we received total additional cash proceeds of $50,000:

· On September 26, 2014, we received $25,000 pursuant to a convertible promissory note with terms identical to CNP 3 set forth in Note 10, except that the maturity date is September 26, 2015; and

· On November 3, 2014, we received $25,000 pursuant to a convertible promissory note with terms identical to the CNP 1 set forth in Note 10, except that the maturity date is May 3, 2015.

In the case of CNP 1 and 2 set forth in Note 10, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion.

Additional Unit Sales

Subsequent to August 31, 2014, Sara Creek issued an aggregate of 500,000 Units to three investors in consideration of an aggregate of $50,000 in cash received prior to August 31, 2014, and shown as common stock payable as of that date.  No commissions were paid or payable. The price of each Unit was $0.10. Each Unit was comprised of one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock on payment of $0.20 per share. The warrants expire five years from the closing date.

Non-Controlling Interest

On October 2, 2014, Mr. Moore invested an additional $25,000 for additional equity of Tapia Holdings, LLC.  In addition, the other investor in Tapia Holdings, LLC funded an aggregate of $65,000 of its prior commitment on September 2 and 24, 2014.  Including these funding amounts, a cumulative amount of $145,000 has been funded to date, leaving $145,000 of future commitment to participate in the note payable to Sefton on closing of the Tapia, LLC acquisition.  The Tapia Holdings, LLC operating agreement was also amended.  As a result of the additional investment and revision to the operating agreement, non-controlling interest at closing of the acquisition is expected to now represent 4.83% of the total outstanding equity of Tapia Holdings, LLC.

See also Note 2, Non-Controlling Interest, and Note 17, Related Party Transactions.

52

HAWKER ENERGY, INC.  (FORMERLY KNOWN AS SARA CREEK GOLD CORP.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED AUGUST 31, 2014

Amendment Of HERLLC Option Agreement

On October 10, 2014, Hawker authorized an amendment (the “Amendment”) to the Amended and Restated Option Agreement (“Option Agreement”) dated November 20, 2013, among Hawker, Darren Katic (a director, officer and significant stockholder of Hawker), and Charles Moore (a significant stockholder of Hawker).  Under the original terms of the Option Agreement (see Note 5), Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock upon the consummation of certain Potential Follow-on Transactions. The Amendment waived all of the follow-on transaction requirements and authorized the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we hold 19,000,000 shares in escrow, to be released as follows: (i) 10,000,000 shares upon completion of the acquisition of the assets of TEG Oil & Gas, Inc. (located in the Tapia Field, Los Angeles County, California), and (ii) 9,000,000 shares upon completion, on or before December 31, 2017, of any one of the transactions evaluated by HERLLC, our wholly-owned subsidiary, prior to its reorganization with Hawker, including a transaction resulting in Hawker ownership of oil and gas lease interests in any one of the following unique oil fields: Cat Canyon (leases Tognazzini, Wickenden, Los Alamos, GWP, and those immediately adjacent to, in each case, in Santa Barbara County), Santa Maria (T 11N, R 36W extending southeast through T9N R33W in Santa Barbara County), Casmalia (leases Tompkins, Peshine, and those immediately adjacent to, in each case, in Santa Barbara County), North Lost Hills (Sections 12 & 13, T25S, R19E, and Sections 7 & 18, T25S, R 20E, totaling 1,500 acres in Kern County CA), Maricopa (McFarland and Jameson leases totaling 40 acres in Kern County), Pine Meadows (Section 1 Township 31 South Range 22E in Kern County) or Torrance (Joughin and South Torrance Units in totaling 900 acres in Los Angeles County). Waiver of the follow-on transaction requirements and the immediate issuance of the remaining shares 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 October 10, 2014, amendment, an expense will be recorded based on the fair value of the shares at the date of issuance.  With respect to the 19,000,000 share of our common stock that are in escrow, an expense will be recorded based on the par value of the shares at the date of issuance.  As and when subsequently released from escrow, an expense will be recorded based on the fair value of the shares (less amounts previously expensed based on par value) concurrently with consummation of the applicable follow-on transaction.  All of these amounts are not considered for accounting purposes to be incremental consideration for our acquisition of HERLLC.

Pursuant to a separate agreement dated November 13, 2014, between Messrs. Katic, Moore and Tywoniuk, Mr. Tywoniuk (a significant shareholder) holds warrants to acquire 9.7222% of any shares acquired by Messrs. Katic and Moore pursuant to the agreement above.  This agreement amended a December 27, 2013, agreement entitling Mr. Tywoniuk to acquire 5% of any shares acquired by Messrs. Katic and Moore pursuant to the Option Agreement.

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Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this report, we have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated our disclosure controls and procedures and internal control over financial reporting and concluded that our disclosure controls and procedures were not effective as of August 31, 2014.

Management identified the following material weaknesses:

1. Lack of an audit committee, comprised of independent directors, of our Board of Directors, and lack of independent directors on our Board.

2. Inadequate number of accounting and finance personnel or consultants sufficiently trained to address some of the complex accounting and financial reporting matters that arise from time-to-time, and an insufficient number of management and accounting personnel for effective segregation of duties.

3. Lack of control procedures and documentation thereof.

As we increase the size and scale of our operations, we intend to remediate the foregoing material weaknesses.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of our financial statements for external purposes in accordance with generally accepted accounting principles.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of August 31, 2014, our Chief Executive Officer assessed the effectiveness of our internal control over financial reporting. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on that evaluation, our management concluded that, as of August 31, 2014, our internal control over financial reporting was not effective, as discussed above.

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This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.

Changes in Internal Control over Financial Reporting

During the fourth quarter of the year ended August 31, 2014, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B Other Information

None.

PART III

Item 10 Directors, Executive Officers and Corporate Governance

As of November 13, 2014, below is the name and certain information regarding our executive officers and directors.

Name	Age	Position
Darren Katic	41	Chief Executive Officer, Chief Financial Officer, President, Secretary and Director
Kristian Andresen	42	Director

The biography of our officers and directors are listed below and contains information regarding the person’s service as a director, business experience, public company director positions currently held or held at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Board to determine that the person should serve as a director in light of our business and structure.

Darren Katic.  Mr. Katic has been our Chief Executive Officer, Chief Financial Officer, President and Director from October 25, 2013.  He was also appointed Secretary effective July 17, 2014.  Mr. Katic has spent his career as an oil professional focusing on finance and business development.  Since 2009, prior to Hawker, Mr. Katic has built two development-stage private oil companies in California, SCNRG and HERLLC, and served as managing member for both.  From 2005 to 2009, Mr. Katic served as President and a director of the oil and gas exploration and development company Pacific Energy Resources Ltd. (formerly TSX:PFE).  In 1999, Mr. Katic founded PetroCal Incorporated, an independent oil and gas company based in Southern California, where he served as the company’s President until its 2005 merger into Pacific Energy Resources Ltd.  From 1997 to 1999, Mr. Katic was employed by Nations Energy Group, where he worked in Kazakhstan for 18 months on the completion of the company’s privatization of a state-owned oil company.  Mr. Katic graduated from the University of Southern California in 1996 with a Bachelor of Science in Accounting.

Kristian Andresen.  Mr. Andresen had been our Director since July 18, 2011.  From that date to October 25, 2013, Mr. Andresen was our CEO, CFO and President. Mr. Andresen was our Secretary from July 18, 2011 to July 17, 2014.  Prior to joining us, Mr. Andresen was an officer and director of Respect Your Universe, Inc. from 2008 to 2012. Mr. Andresen currently serves as officer and director of Sanborn Resources Ltd, an SEC reporting company.

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Board of Director Committees

Currently our Board of Directors does not have an audit, compensation or nomination committee due to our small size.  Our Board as a whole fulfills these functions.

Term of Office

Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws.  Our officers are appointed by our board of directors and hold office until the next annual meeting or until removed by the board.

Director Qualifications

The Board has considered the qualifications of our two directors and determined that they are qualified to serve due to the following:

Mr. Katic: experience as an executive in the oil and gas industry and as an executive and director of a publicly traded company.

Mr. Andresen: experience as an executive and director of publicly traded companies and in corporate governance compliance.

Involvement in Certain Legal Proceedings

Mr. Katic was an executive officer and director of Pacific Energy Resources, Ltd. at the time that it filed for bankruptcy in March 2009 pursuant to Chapter 11 of the United States Bankruptcy Code.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors and persons who own more than 10% of our common stock to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the SEC. Such officers, directors, and 10% stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) reports they file.  As a matter of practice, we typically assist our executive officers and directors in preparing initial ownership reports and reporting ownership changes, and typically file those reports on their behalf. To our knowledge, and based solely on our review of the copies of such reports furnished to us, we believe that during fiscal year 2014 all of our executive officers and directors, and that all greater than 10% stockholders other than Mr. Ryan Bateman, filed the required reports on a timely basis under Section 16(a). Mr. Ryan Bateman, a greater than 10% stockholder at the time, filed a late Form 4 on April 22, 2014 for a transaction that occurred on January 1, 2014.

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Item 11 Executive Compensation

Compensation of Executive Officers

The following table sets forth certain compensation information for the fiscal years ended August 31, 2014 and 2013, for our principal executive officer and principal financial officer (our “Named Executive Officers”).

Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Bonus ($)	Option Awards ($) (1)	All Other Compensation ($)	Total ($)
Darren Katic President; Chief Executive Officer; Chief Financial Officer; Secretary; Director (2)	2014	--	$120,000 (3)	$41,400 (4)	--	$161,400
	2013	--	--	--	--	--
Kristian Andresen Director and former officer (5)	2014	--	$120,000 (6)	$69,000 (7)	--	$189,000
	2013	--	--	--	--	--

(1)           The amounts in the Option Awards column reflect the aggregate grant date fair value of such awards computed in accordance with FASB ASC Topic 718, Compensation - Stock Compensation. Assumptions made in the calculation of these amounts are included in Note 16 to our audited financial statements for the fiscal year ended August 31, 2014, included in Item 8.

(2)           Mr. Katic has served as the Company’s President, Chief Executive Officer and Chief Financial Officer since October 25, 2013, and has served as the Company’s Secretary since July 17, 2014.

(3)           On September 29, 2014, the Company approved a discretionary bonus to Mr. Katic in the amount of $120,000. The discretionary bonus was recorded on the books of the Company and accrues as of August 31, 2014, but shall be paid only at such time in the future as the finances of the Company permit, as determined by the Chief Financial Officer of the Company.

(4)           On May 14, 2014, Mr. Katic was granted nonqualified options to purchase 600,000 shares of our common stock at an exercise price of $0.10 per share. Mr. Katic’s options vest one-third on each of May 13, 2015, May 13, 2016 and May 13, 2017 and expire on May 13, 2024.

(5)           Mr. Andresen served as the Company’s President, Chief Executive Officer and Chief Financial Officer until October 25, 2013, and as the Company’s Secretary until July 17, 2014.

(6)           On September 29, 2014, the Company approved a discretionary bonus to Mr. Andresen in the amount of $120,000. The discretionary bonus was recorded on the books of the Company and accrues as of August 31, 2014, but shall be paid only at such time in the future as the finances of the Company permit, as determined by the Chief Financial Officer of the Company.

(7)           On May 14, 2014, Mr. Andresen was granted, under the Company 2014 Stock Plan, nonqualified options to purchase 1,000,000 shares of our common stock at an exercise price of $0.10 per share. On July 17, 2014, all 1,000,000 nonqualified options were cancelled and, in consideration thereof, reissued to Smed Capital Corp. (in which Mr. Andresen has a beneficial interest) (the “Smed Options”). The Smed Options have an exercise price of $0.10 per share and expire on May 13, 2024. The Smed Options were issued outside of the Company 2014 Stock Plan but are subject to Mr. Andresen’s continued status as a service provider to the Company, including, without limitation, with respect to the vesting and forfeiture thereof. Subject to Mr. Andresen’s continued status as a service provider to the Company, the Smed Options will vest in full on December 15, 2014.

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Employment Agreements with Named Executive Officers

None.

Equity Compensation Plans

In September 2014, the Company adopted the Company 2014 Stock Plan (“Stock Plan”) in order to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants and to promote the success of the Company’s business. Equity incentives granted under the Stock Plan may be incentive stock options or nonstatutory options, as determined by the administrator of the Stock Plan at the time of grant. Stock purchase rights and restricted stock may also be granted under the plan.

The only outstanding equity awards under the Stock Plan are the nonqualified options to purchase 600,000 shares of our common stock granted to Mr. Katic, as set forth above under the section titled “Compensation of Executive Officers,” as well as nonqualified options to purchase 4,350,000 shares of our common stock granted to others performing services to the Company (see also Note 17 to the Financial Statements included elsewhere in this report), granted on the same date and terms as for Mr. Katic.

Change of Control Agreements

None.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth information about outstanding equity awards held by our Named Executive Officer as of August 31, 2014:

Option Awards
	Number of Securities Underlying Unexercised Options
Name	Exercisable (#)	Unexercisable (#)	Option Exercise Price ($)	Option Expiration Date
Darren Katic	0	600,000 (1)	0.10	May 13, 2024
Krisitan Andresen (2)	0	1,000,000 (3)	0.10	May 13, 2024

(1)           Option was granted on May 14, 2014 and vests in three equal installments on each of May 13, 2015, May 13, 2016 and May 13, 2017.

(2)           Option issued in the name of Smed Capital Corp., in which Mr. Andresen has a beneficial interest.

(3)           Option was granted on May 14, 2014 and vests in full on December 15, 2014.

Director Compensation

Other than as setforth above, no Named Executive Officer earned compensation for his service as a director.

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Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of November 13, 2014, certain information with respect to the beneficial ownership of our capital stock by (i) each of our executive officers, (ii) each of our directors, (iii) each person known to us to be the beneficial owner of more than 5% of each class of our outstanding voting securities, and (iv) all of our directors and executive officers as a group.

Name of Beneficial Owner	Title of Class	Amount and Nature of Beneficial Ownership	Percentage of Stock Outstanding(1)
Darren Katic(2) 326 S. Pacific Coast Highway, Suite 102 Redondo Beach, CA 90277	Common	25,897,365(3)	34.39%
Charles Moore 326 S. Pacific Coast Highway, Suite 102 Redondo Beach CA 90277	Common	18,000,000(4)	24.10%
Manhattan Holdings, LLC 1800 Washington Blvd Suite 140 Baltimore, MD 21230	Common	7,932,990(5)	10.53%
Ryan Bateman c/o B&C Capital Ltd 19 Fort Street P.O. Box 822 Grand Cayman KY1-1103	Common	5,550,777(6)	7.38%
Gerald Tywoniuk 326 S. Pacific Coast Highway, Suite 102 Redondo Beach, CA 90277	Common	4,897,102(7)	6.38%
Kristian Andresen(8) 10 Market St #328 Camana Bay, GC, Cayman Islands, KY1-9006	Common	2,422,288(9)	3.19%
All Executive Officers and Directors as a Group (2 persons)	Common	28,319,653(10)	37.02%

(1) Applicable percentage ownership is based on 74,674,703 shares of common stock outstanding as of November 13, 2014. Any securities not outstanding but subject to warrants, options or other rights exercisable as of November 13, 2014, or exercisable within 60 days after such date, are deemed to be outstanding for the purpose of computing the percentage of outstanding common stock beneficially owned by the person holding such warrants, options or other rights, but are not deemed to be outstanding for the purpose of computing the percentage of common stock beneficially owned by any other person.

(2) Darren Katic serves as President, Chief Executive Officer, Chief Financial Officer and Secretary, and is a member of the Board of Directors.

(3) The number of shares beneficially owned includes 632,455 shares that Darren Katic may acquire upon the exercise of certain warrants that are currently exercisable in full.  9,500,000 of the shares are being held in escrow pending future conditional release as determined by the Board of Directors of the Company, upon the Company meeting certain milestones.  See Item 1, Acquisition of Hawker Energy (Rincon), LLC.

(4) 9,500,000 of the shares are being held in escrow pending future conditional release as determined by the Board of Directors of the Company, upon the Company meeting certain milestones.  See Item 1, Acquisition of Hawker Energy (Rincon), LLC.

(5) The number of shares beneficially owned includes 644,330 shares that Manhattan Holdings, LLC may acquire upon the exercise of certain warrants that are currently exercisable in full.

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(6) The number of shares beneficially owned includes (i) 1,000,000 shares that Ryan Bateman owns indirectly through Glenmore Resources Fund and (ii) 500,000 shares that Ryan Bateman, indirectly through Glenmore Resources Fund, may acquire upon the exercise of certain warrants that are currently exercisable in full.

(7) The number of shares beneficially owned includes 2,067,552 shares that Gerald Tywoniuk may acquire upon the exercise of certain warrants that are currently exercisable in full, of which (i) 414,775 were issued by the Company, and (ii) 1,652,777 were issued by Darren Katic and Charles Moore in connection with the “Hawker Warrants”, as more further set forth in the Schedule 13D/A, filed with the Securities and Exchange Commission on November 18, 2014 on behalf of Gerald Tywoniuk.

(8) Kristian Andresen is a member of the Board of Directors.

(9) The number of shares beneficially owned includes (i) 75,000 shares that Kristian Andresen may acquire upon the exercise of certain warrants that are currently exercisable in full, (ii) 472,288 that Kristian Andresen owns indirectly through Smed Capital Corp., (iii) 125,000 shares that Kristian Andresen, indirectly through Smed Capital Corp., may acquire upon the exercise of certain warrants that are currently exercisable in full, and (iv) options to acquire 1,000,000 shares exercisable within 60 days.

(10) The number of shares beneficially owned includes (i) 832,455 shares that Darren Katic and Kristian Andresen, in the aggregate, may acquire upon the exercise of certain warrants that are currently exercisable in full, and (ii) options to acquire 1,000,000 shares exercisable within 60 days.

Item 13 Certain Relationships and Related Transactions, and Director Independence

For the year ended August 31, 2013, there were no related-party transactions.

Related party transactions for the year ended August 31, 2014, are disclosed in Note 17 to the Financial Statements.

Neither of our two directors are independent due to their respective positions as executive officer or significant shareholder performing services for the Company.

Item 14 Principal Accounting Fees and Services

The fees billed for professional services rendered by our principal accountant are as follows:

	Year Ended		Year Ended
	August 31, 2014		August 31, 2013
Audit Fees	$	39,750	$	20,000
Audit-Related Fees		23,450		-
Tax Fees		-		-
All Other Fees		-		-
Total Fees	$	63,200	$	20,000

The category of “Audit Fees” includes fees billed accrued for our annual audit, quarterly reviews and services rendered in connection with regulatory filings with the Securities and Exchange Commission, referred to as the “SEC,” such as the issuance of comfort letters and consents.  The category of “Audit-Related Fees” includes fees accrued for services related to employee benefit plan audits, internal control reviews, acquisition audits, and accounting consultation.  The category of “Tax Fees” includes fees accrued for the consultation and preparation of federal, state, and local tax returns.  It also includes fees for tax compliance, tax advice, and tax planning.  The category of “All Other Fees” includes all other accrued fees not reported with the categories previously defined.

Pre-Approval Policies and Procedures

The board of directors must pre-approve any use of our independent accountants for any non-audit services.  All services of our auditors are approved by our whole board and are subject to review by our whole board.

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PART IV

Item 15 Exhibits, Financial Statement Schedules

Number	Exhibit
3.1	Articles of Incorporation (1), as amended by the Certificate of Amendment (2)
3.2	Bylaws (3)
10.1	Agreement and Plan of Reorganization dated September 18, 2013 (4)
10.2	Form of Warrant (U.S. Investor) for Unit Sale (5)
10.3	Form of Warrant (Non-U.S. Investor) for Unit Sale (6)
10.4	Secured Convertible Promissory Note issued by Sara Creek Gold Corp. in favor of Oceanside Strategies dated May 30, 2014 (7)
10.5	Amended and Restated Secured Convertible Promissory Note issued by Sara Creek Gold Corp. in favor of Oceanside Strategies dated June 23, 2014 the aggregate amount of $250,000
10.6	Second Amended and Restated Secured Convertible Promissory Note issued by Sara Creek Gold Corp. in favor of Oceanside Strategies dated September 18, 2014 in the aggregate amount of $250,000
10.7	Amended and Restated Secured Convertible Promissory Note issued by Sara Creek Gold Corp. in favor of Oceanside Strategies dated June 25, 2014 in the aggregate amount of $350,000 (9)
10.8	Second Amended and Restated Secured Convertible Promissory Note issued by Sara Creek Gold Corp. in favor of Oceanside Strategies dated September 18, 2014 in the aggregate amount of $350,000
10.9	Promissory Note, dated July 7, 2014, issued by Sara Creek in favor of Darren Katic (10)
10.10#	2014 Stock Plan (11)
10.11#	Form of Stock Option Agreement under 2014 Stock Plan (12)
10.12#	Stock Option Agreement between Sara Creek Gold Corp. and Smed Capital Corp., dated July 17, 2014
10.13	Secured Subordinated Note Due July 31, 2014, issued by TEG Oil & Gas USA, Inc. in favor of Tapia Holdings, LLC dated June 2, 2014 (13)
10.14	Amended and Restated Security Agreement, by and among Tapia Holdings, LLC and TEG Oil & Gas USA, Inc. dated June 2, 2014 (14)
10.15	Subordination and Intercreditor Agreement by and among Tapia Holdings, LLC, TEG Oil & Gas USA, Inc., Sefton Resources, Inc., TEG MidContinent, Inc., and Bank of the West dated June 2, 2014 (15)
10.16	Secured Subordinated Note Due December 29, 2014, issued by TEG Oil & Gas USA, Inc.  in favor of Tapia Holdings, LLC dated June 27, 2014(16)
10.17	Second Amended and Restated Security Agreement, by and among Tapia Holdings, LLC and TEG Oil & Gas USA, Inc. dated June 27, 2014(17)
10.18	Convertible Promissory Note, dated July 17, 2014, issued to Robert Katic (18)
10.19	Convertible Promissory Note, dated July 17, 2014, issued to Zev Capital (19)
10.20	Third Amended and Restated Security Agreement, by and among Tapia Holdings, LLC and TEG Oil & Gas, USA, Inc. dated August 29, 2014.
10.21	Option Agreement regarding Hawker Energy (Rincon), LLC (formerly known as Hawker Energy, LLC), dated October 15, 2013 (20)
10.22	Amended and Restated Option Agreement regarding Hawker Energy (Rincon), LLC (formerly known as Hawker Energy, LLC), dated November 20, 2013, among Darren Katic, Charles Moore and Sara Creek Gold Corp. (21)
21	Subsidiaries
23.1	Consent of Chapman Petroleum Engineering Ltd.
23.2	Consent of Independent Registered Public Accounting Firm
31	Rule 13a-14(a) Certification of Chief Executive and Chief Financial Officer
32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive and Chief Financial Officer
99.1	Reserve Report of Chapman Petroleum Engineering Ltd.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

61

(1)	Incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form SB-2 filed on October 22, 2007
(2)	Incorporated by reference to Appendix A of the Company’s Definitive Information Statement on Schedule 14C filed on August 20, 2014.
(3)	Incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form SB-2 filed on October 22, 2007
(4)	Incorporated by reference to Exhibit 10 of the Company’s Current Report on Form 8-K dated September 23, 2013.

(5)	Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on January 16, 2014.
(6)	Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on January 16, 2014.

(7)	Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed on June 5, 2014.
(8)	Reserved

(9)	Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on July 8, 2014.
(10)	Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 8, 2014.
(11)	Incorporated by reference to Appendix B of the Company’s Definitive Information Statement on Schedule 14C filed on August 20, 2014.
(12)	Incorporated by reference to Exhibit 10.8 of the Company’s Form 10-Q for the quarterly period ended May 31, 2014, filed July 15, 2014

(13) Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on June 5, 2014.

(14)	Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on June 5, 2014.
(15)	Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on June 5, 2014.

(16)	Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 1, 2014.
(17)	Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on July 1, 2014.
(18)	Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 21, 2014.
(19)	Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on July 21, 2014.

(20)	Incorporated by reference to Exhibit 10 of the Company’s Current Report on Form 8-K filed on October 21, 2013.
(21)	Incorporated by reference to Exhibit 10.1 of the Company’s Annual Report on Form 10-K filed on November 29, 2013.

# Indicates a management contract or compensatory plan.

*  Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Hawker Energy, Inc.
Date:  November 21, 2014	/s/ Darren Katic
	Darren Katic Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Darren Katic

Darren Katic

Director, Chief Executive Officer, President, Secretary and Chief Financial Officer

(Principal Executive Officer, Principal Financial and Accounting Officer)

November 21, 2014

/s/ Kristian Andresen

Kristian Andresen

Director

November 21, 2014

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EX-10.5

Exhibit 10.5

THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

$250,000	Redondo Beach, California
	June 23, 2014

AMENDED AND RESTATED

SECURED CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned, SARA CREEK GOLD CORP., a Nevada corporation (the “Company”), promises to pay to Oceanside Strategies (“Holder”), at Georgetown, Grand Cayman, or at such other location as is designated by Holder in writing hereunder, the sum of $250,000, bearing simple interest on the unpaid principal balance of this Note, from the date of this Note until this Note is paid in full, at the rate of 12% per annum. Interest shall accrue until the Due Date (as defined below). All principal and accrued but unpaid interest will be due and payable on November 30, 2014 (the “Due Date”). All payments shall be made in lawful money of the United States, without offset, deduction, or counterclaim of any kind.

1.             Prior Note. This Note supersedes and replaces in its entirety the Secured Convertible Promissory Note dated May 30, 2014 (“Prior Note”), which Prior Note shall be automatically cancelled and of no further force and effect upon execution of this Note by the Company and delivery of the executed original of this Note to Holder.

2.             Prepayment. This Note may be prepaid, in whole or in part, by the Company at any time without penalty or premium.

3.             Events of Default. Any of the following events shall constitute an “Event of Default” under this Note:

(a)           Failure to Pay. The Company fails to pay all amounts owed on the Due Date as required under the terms of this Note.

(b)           Voluntary Bankruptcy or Insolvency Proceedings. The Company (i) applies for or consents to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) is unable, or admit in writing its inability, to pay its debts generally as they come due, (iii) makes a general assignment for the benefit of its creditors, (iv) is dissolved or liquidated in full or in part, (v) commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) takes any action for the purpose of effecting any of the foregoing, and an order for relief entered or the proceeding is not dismissed, discharged or stayed within 45 days of commencement.

(c)           Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company or all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect are commenced, and an order for relief entered or the proceeding is not dismissed, discharged or stayed within 45 days of commencement.

(d)           Breach. Any material breach by the Company of this Note.

4.             Acceleration. If an Event of Default (other than an Event of Default specified in Section 3(b) or (c)) with respect to the Company occurs and is continuing, then Holder may declare the outstanding principal and accrued interest on this Note and all other payments payable hereunder to be forthwith due and payable immediately, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company, to the fullest extent permitted by applicable law. If an Event of Default specified in Section 3(b) or (c) occurs and continues, then the outstanding principal and accrued interest on this Note and all other payments payable hereunder shall become and be immediately due and payable without any declaration or other act on the part of Holder. Holder by notice to the Company may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived. No rescission shall affect any subsequent default or impair any right thereto.

5.             Use of Proceeds. The Company shall use the proceeds of this Note to allow its subsidiary, Tapia Holdings, LLC, to advance funds to TEG Oil & Gas USA, Inc., a Colorado corporation (“TEG”), pursuant to a Secured Subordinated Note due July 18, 2014 secured by a second priority security interest in all of TEG’s personal property assets (the “Deposit”). If, at any time, the Deposit is repaid to the Company in immediately available funds (e.g., cash), the Company shall immediately use the proceeds of that repayment to prepay this Note.

6.             Conversion of Note. This Note is convertible into units consisting of shares of Common Stock and Warrants to purchase Common Stock of the Company, in substantially the form attached as Exhibit A hereto (“Conversion Units”), upon the terms and conditions set forth below.

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(a)           Voluntary Conversion. All or any portion of the then outstanding principal and accrued interest under this Note may be converted, at any time at the option of Holder, into a number of Conversion Units computed by dividing that amount by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events, the “Conversion Rate”) to arrive at the number of shares of Common Stock to be issued, and for each share of Common Stock received, Holder shall also receive a Warrant to purchase one-half (1/2) share of Common Stock for an exercise price of $0.25 per share.

(b)           Conversion Procedure. Before Holder is entitled to receive certificate for Conversion Units, or any other instruments in connection with a conversion hereunder, Holder shall surrender the original of this Note, duly endorsed, at the principal office of the Company. At its expense, the Company shall, as soon as practicable thereafter, issue and deliver to Holder at the principal office certificates for the number of Conversion Units to which Holder is entitled upon conversion (bearing any legends that are required by the terms of the conversion and applicable state and federal securities law in the opinion of counsel to the Company), together with any other securities and property to which Holder is entitled upon conversion under the terms of this Note and, if the conversion is for less than all of the then outstanding balance of principal and interest on this Note, a replacement Note of like tenor in the proper denomination.

(c)           No Fractional Shares. No fractional shares shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to Holder upon the conversion of this Note, the Company shall pay to Holder an amount in cash equal to the product obtained by multiplying the Conversion Rate applied to effect the conversion by the fraction of a share not issued pursuant to the previous sentence. Upon conversion of all principal of and accrued interest on this Note and/or payment of all principal and accrued interest, the Company shall be forever released from all its obligations and liabilities under this Note.

(d)           Reservation of Stock Issuable Upon Conversion and Upon Exercise. The Company shall at all times reserve and keep available out of its authorized but unissued shares solely for the purpose of effecting the conversion of the Note such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of the Note and the exercise of the Warrants issued upon conversion of this Note; and if at any time the number of authorized but unissued shares of Common Stock is not sufficient to effect the conversion of this Note and the exercise of the Warrants, then, in addition to any other remedies available to Holder, the Company will use its best efforts to take whatever corporate action is, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to a number of shares of Common Stock sufficient for those purposes.

7.             Security Interest. The Company hereby grants to Holder a security interest in and to all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter from time to time arising or acquired:

(a)           all fixtures and personal property of every kind and nature including all accounts, goods (including inventory and equipment), documents (including, if applicable, electronic documents), instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, general intangibles (including all payment intangibles), money, deposit accounts, and any other contract rights or rights to the payment of money; and

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(b)           all proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Company from time to time with respect to any of the foregoing.

8.             Attorneys’ Fees. If any action is instituted on this Note, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which the party or parties may be entitled. Diligence, demand, presentment, notice of dishonor, and protest are waived by the Company, and any and all makers, sureties, guarantors, and endorsers of this Note, and their successors and assigns. Time is of the essence for every obligation under this Note.

9.             Usury. It is the express intent of the Company and Holder that the payment of all or any portion of the outstanding principal amount of and accrued interest under this Note be exempt from the application of any applicable usury or similar laws under any state, federal or foreign jurisdiction. The Company hereby irrevocably waives, to the fullest extent permitted by law, any objection or defense which the Company may now or hereafter have to the payment when due of any and all Note principal or accrued interest arising out of or relating to a claim of usury or similar laws and the Company hereby agrees that neither it nor any of its affiliates shall in the future bring, commence, maintain, prosecute or voluntarily aid in any action at law, proceeding in equity or other legal proceeding against Holder based on a claim that the Company’s payment obligations under this Note violate the usury or similar laws of any state, federal or foreign jurisdiction. Notwithstanding the foregoing, if any interest paid on this Note is deemed to be in excess of the then legal maximum rate, that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

10.           Unconditional Obligation; Waivers.

(a)           No forbearance, indulgence, delay or failure to exercise any right or remedy with respect to this Note shall operate as a waiver, nor as an acquiescence in any default, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof.

(b)           The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, notice of dishonor, protest, notice of protest, bringing of suit, and diligence in taking any action to collect amounts called for hereunder, and shall be directly and primarily liable for the payment of all sums owing and to be owing hereon, regardless of and without any notice, diligence, act or omission with respect to the collection of any amount called for hereunder or in connection with any right at any and all times which Holder had or is existing hereunder.

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11.           Notices. All notices and other communications provided for hereunder shall be in writing and delivered, mailed or transmitted by any standard form of electronic communication. Notices and other communications to the Company shall be directed to it at 326 S. Pacific Coast Highway, Suite 102, Redondo Beach, California 90277, attention: Darren Katic, President, dkatic@hawkerenergyllc.com; and notices and other communications to Holder shall be directed to it at its address at __________________________________, _______@_______.com; or, as to each party, at such other address as shall be designated by that party in a written notice to the other party pursuant hereto. Any notice or other communication shall be deemed to have been duly given (a) when sent by Federal Express or other overnight delivery service of recognized standing, on the business day following deposit with that service; (b) when mailed by registered or certified mail, first class postage prepaid and addressed as aforesaid through the United States Postal Service, upon receipt; (c) when delivered by hand, upon delivery; and (d) when e-mailed, upon confirmation of receipt. Any party may by notice so given change its address for future notice hereunder.

12.           Payment. Payment shall be made in lawful tender of the United States.

13.           No Third Party Rights. Nothing expressed in or to be implied from this Note is intended to give, or shall be construed to give, any person, other than the parties hereto and their permitted successors and assigns, any benefit or legal or equitable right, remedy or claim under or by virtue of this Note.

14.           Replacement of Note. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (or any security issued on conversion of this Note), the Company will issue a replacement instrument, at Holder’s expense, in lieu of the lost, stolen, destroyed or mutilated instrument, provided that Holder indemnifies the Company for any losses incurred by the Company with respect to this Note.

15.           Amendment. Except as expressly provided herein, neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Note and signed by the Company and Holder.

16.           Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the United States of America and the State of California, without application of conflicts of law principles.

IN WITNESS WHEREOF, the Company has executed and delivered this Note as of the day and year and at the place first above written.

SARA CREEK GOLD CORP.
By:	/s/ Darren Katic
	Darren Katic, President

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Exhibit A

Form of Warrant

(see attached)

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN ISSUED PURSUANT TO REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  AS SUCH, THE SECURITIES REPRESENTED BY THIS WARRANT ARE “RESTRICTED SECURITIES” AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF OTHER THAN (A) (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT UNDER THE SECURITIES ACT, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (B) PURSUANT TO THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF APPLICABLE STATE, PROVENTIAL AND FOREIGN SECURITIES LAWS OR PURSUANT TO ONE OR MORE EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS, AND (C) IF THE CORPORATION REQUESTS, BASED ON AN OPINION SATISFACTORY TO THE CORPORATION WITH RESPECT TO FOREGOING (A) AND (B) HAS BEEN RENDERED BY COUNSEL.  THE HOLDER HEREOF AGREES THAT (X) ANY HEDGING TRANSACTION WITH RESPECT TO THE SECURITIES REPRESENTED BY THIS WARRANT WILL BE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT AND (Y) IT WILL DELIVER, OR CAUSE TO BE DELIVERED, TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS WARRANT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

WARRANT

(Non-U.S. Investor)

Warrant Certificate No.: [●]

Original Issue Date: [●]

FOR VALUE RECEIVED, Sara Creek Gold Corp., a Nevada corporation (the “Company”), hereby certifies that _________________, a ______________, or its permitted registered assigns (the “Holder”), is entitled to purchase from the Company _____________ (_________) duly authorized, validly issued, fully paid and nonassessable shares of Common Stock at a purchase price per share of $0.25 (subject to adjustment as provided herein, the “Exercise Price”), all subject to the terms, conditions and adjustments set forth below in this Warrant. Certain capitalized terms used in this Warrant are defined in Section 1.

This Warrant has been issued pursuant to the terms of that certain Amended and Restated Secured Convertible Promissory Note, dated as of June __, 2014 (the “Convertible Note”), issued by the Company in favor of the Holder.

2.             Definitions. As used in this Warrant, the following terms have the respective meanings set forth below:

“$” means United States dollars.

“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3, multiplied by (b) the Exercise Price in effect as of the Exercise Date.

“Board” means the board of directors of the Company.

“Business Day” means any day, except a Saturday, Sunday or legal holiday on which banking institutions in the city of Los Angeles, California, are authorized or obligated by law or executive order to close.

“Common Stock” means the common stock, par value $0.001 per share, of the Company, and any capital stock into which such Common Stock shall have been converted, exchanged or reclassified following the Original Issue Date.

“Company” has the meaning set forth in the preamble of this Warrant.

“Convertible Note” has the meaning set forth in the preamble of this Warrant.

“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.

“Exercise Date” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., Los Angeles, California time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Agreement, this Warrant and the Aggregate Exercise Price.

“Exercise Agreement” means an Exercise Agreement in the form attached to this Warrant as Exhibit A.

“Exercise Period” has the meaning set forth in Section 2.

“Exercise Price” has the meaning set forth in the preamble of this Warrant.

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“Fair Market Value” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Stock for such day on all domestic securities exchanges on which the Common Stock may at the time be listed; (b) if there have been no sales of the Common Stock on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Stock on all such exchanges at the end of such day; (c) if on any such day the Common Stock is not listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the OTC Bulletin Board or similar quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC Bulletin Board or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided, that if the Common Stock is listed on any domestic securities exchange, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Stock is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board or similar quotation system or association, the “Fair Market Value” of the Common Stock shall be the fair market value per share as determined by the Board in its reasonable discretion.

“Holder” has the meaning set forth in the preamble of this Warrant.

“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

“Original Issue Date” has the meaning set forth on the cover page to this Warrant.

“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

“Sale Event”means (i) any sale of Common Stock (excluding issuances of Common Stock by the Company) in a single transaction or a series of related transactions in which the holders of Common Stock immediately prior to such sale of Common Stock do not, directly or indirectly, own at least a majority of the Common Stock outstanding immediately after such sale of Common Stock, (ii) any merger, consolidation, reorganization or other business combination of the Company with or into any other corporation or other entity in which the holders of Common Stock immediately prior to such merger, consolidation, reorganization or business combination do not, directly or indirectly, own capital stock of the entity surviving such merger, consolidation, reorganization or business combination representing at least a majority of the combined voting power of the outstanding securities of such entity immediately after such merger, consolidation, reorganization or business combination, or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company to an unrelated person or entity by means of a single transaction or a series of related transactions.

“Securities Act” has the meaning set forth in the legend endorsed on the cover page of this Warrant.

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“Warrant” means this Warrant and all warrants issued upon division or combination of, or in substitution for, this Warrant.

“Warrant Shares” means the shares of Common Stock or other securities then purchasable upon exercise of this Warrant, as the same may be adjusted in accordance with the terms of this Warrant.

3.             Term of Warrant. Subject to the terms and conditions of this Warrant, at any time or from time to time after the date hereof and prior to 5:00 p.m., Los Angeles, California time, on the five (5) year anniversary of the Original Issue Date or, if such day is not a Business Day, on the next preceding Business Day (the “Exercise Period”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder.

4.             Exercise of Warrant.

(a)           Exercise Procedure. This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:

(i)           surrender of this Warrant to the Company at its then principal executive offices (or an indemnification in accordance with Section 9 in the case of the loss, theft, destruction or mutilation of this Warrant), together with a duly completed (including specifying the number of Warrant Shares for which this Warrant is being exercised) and executed Exercise Agreement; and

(ii)           payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b).

(b)           Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price.

(c)           Delivery of Stock Certificates. Upon receipt by the Company of the Exercise Agreement, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with Section 3(a)), the Company shall, as promptly as reasonably practicable, and in any event within ten (10) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, together with cash in lieu of any fraction of a share, as provided in Section 3(d). The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Agreement and shall be registered in the name of the Holder or, subject to compliance with Section 7, such other Person’s name as shall be designated in the Exercise Agreement. This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or (subject to compliance with Section 7) any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

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(d)           Fractional Shares. The Company shall not be required to issue a fractional Warrant Share upon exercise of this Warrant. As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

(e)           Delivery of New Warrant. Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with Section 3(c) hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

(f)            Valid Issuance of Warrant and Warrant Shares; Payment of Taxes. With respect to the exercise of this Warrant, the Company hereby represents, covenants and agrees that:

(i)            This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

(ii)           All Warrant Shares issuable upon the exercise of this Warrant in compliance with the terms of this Warrant shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all taxes, liens and charges.

(iii)           The Company shall use commercially reasonable efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any domestic securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares are listed at the time of such exercise.

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(iv)           The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to the Holder or to any other Person permitted to receive Warrant Shares upon exercise of this Warrant, and no such issuance or delivery shall be made unless and until the Holder or such Person has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

(g)           Conditional Exercise. Notwithstanding any other provision of this Warrant, if an exercise of any portion of this Warrant is to be made in connection with a public offering or a Sale Event, such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

(h)           Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant, and the par value per Warrant Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Warrant Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

5.             Adjustment to Exercise Price and Number of Warrant Shares. The Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 4.

(a)           Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Stock. If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Stock or any other capital stock of the Company payable in shares of Common Stock or in Options or Convertible Securities, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, then the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 4(a) shall become effective concurrent at the time such dividend, subdivision or combination becomes effective.

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(b)           Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than (x) a change in par value, from par value to no par value, or from no par value to par value, or (y) as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 4(a)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise; and, in such case, appropriate adjustment (in form and substance determined by the Board in its reasonable discretion) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Stock reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 4(b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. Subject to Section 5, the Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. With respect to any corporate event or other transaction contemplated by the provisions of this Section 4(b), the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 3 instead of giving effect to the provisions contained in this Section 4(b) with respect to this Warrant.

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(c)           Certain Events. If any event of the type contemplated by the provisions of this Section 4 but not expressly provided for by such provisions occurs, then the Board shall make an appropriate adjustment in the Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant so as to protect the rights of the Holder in a manner consistent with the provisions of this Section 4; provided, that no such adjustment pursuant to this Section 4(c) shall increase the Exercise Price or decrease the number of Warrant Shares issuable as otherwise determined pursuant to this Section 4.

(d)           Certificate as to Adjustment.

(i)           As promptly as reasonably practicable following any adjustment of the Exercise Price that results in an increase or decrease of the Exercise Price of $0.01 or more, but in any event not later than twenty (20) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

(ii)           As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than ten (10) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant; provided that the Holder may only exercise its rights pursuant to this Section 4(d)(ii) once during any twelve consecutive month period.

(e)           Notices. In the event:

(i)           that the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(ii)           of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person; or

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(iii)           of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 then, and in each such case, the Company shall send or cause to be sent to the Holder at least twenty (20) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution or other right or action, and a description of such dividend, distribution or other right, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.

6.             Sale Event.  Notwithstanding anything in this Warrant to the Contrary, the Company shall have the right (exercisable in the sole and absolute discretion of the Board), but not the obligation, in connection with a Sale Event to make or provide for a cash payment to Holder, in exchange for the cancellation of this Warrant, in an amount equal to the difference between (a) the value as determined by the Board of the consideration payable, or otherwise to be received by stockholders, per share of Common Stock pursuant to a Sale Event multiplied by the number of Warrant Shares then issuable under this Warrant and (b) the Aggregate Exercise Price of all such Warrant Shares, subject to the other terms and conditions of the Sale Event (such as representations and warranties, holdback and escrow amounts, indemnification obligations and purchase price adjustments) to the extent applicable to Common Stock holders.

7.             Restrictions on Exercise.  Notwithstanding anything in this Warrant to the contrary, this Warrant may not be exercised if the issuance of Warrant Shares upon such exercise or if the method of payment for such Warrant Shares would constitute a violation of any applicable laws or regulations, including, without limitation, applicable United States, foreign, provincial and state securities laws and regulations.  The Company may require Holder to make any representations and warranties to the Company as may be required by any applicable law or regulation (including, without limitation, applicable United States, foreign, provincial and state securities laws and regulations) before allowing this Warrant to be exercised.  Without limiting the generality of the foregoing, Warrant Shares issued upon exercise of this Warrant may not be issued in the name of any Person other than Holder unless the transfer conditions referred to in the legend endorsed on the cover page of this Warrant have been complied with to the satisfaction of the Company.  In addition, no Warrant Shares will be issued pursuant to the exercise of this Warrant unless such issuance and such exercise comply with all relevant requirements of any stock exchange upon which the Common Stock may then be listed.

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8.             Transfer of Warrant. Subject to the transfer conditions referred to in the legend endorsed on the cover page of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B, together with funds sufficient to pay any transfer taxes described in Section 3(f)(v) in connection with the making of such transfer. Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

9.             Holder Not Deemed a Stockholder; Limitations on Liability. Prior to the issuance to the Holder of the Warrant Shares to which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

10.           Replacement on Loss; Division and Combination.

(a)           Replacement of Warrant on Loss. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to the Company and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided, that, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

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(b)           Division and Combination of Warrant. Subject to compliance with the applicable provisions of this Warrant as to any transfer or other assignment that may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders. Subject to compliance with the applicable provisions of this Warrant as to any transfer or assignment that may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

11.           Compliance with the Securities Act.

(a)           Agreement to Comply with the Securities Act; Legend. The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 10 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that that Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act or applicable United States, foreign, provincial or state securities laws and regulations. This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN ISSUED PURSUANT TO REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  AS SUCH, THE SECURITIES REPRESENTED BY THIS WARRANT ARE “RESTRICTED SECURITIES” AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF OTHER THAN (A) (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT UNDER THE SECURITIES ACT, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (B) PURSUANT TO THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF APPLICABLE STATE, PROVENTIAL AND FOREIGN SECURITIES LAWS OR PURSUANT TO ONE OR MORE EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENT, AND (C) IF THE CORPORATION REQUESTS, BASED ON AN OPINION SATISFACTORY TO THE CORPORATION WITH RESPECT TO FOREGOING (A) AND (B) HAS BEEN RENDERED BY COUNSEL.  THE HOLDER HEREOF AGREES THAT (X) ANY HEDGING TRANSACTION WITH RESPECT TO THE SECURITIES REPRESENTED BY THIS WARRANT WILL BE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT AND (Y) IT WILL DELIVER, OR CAUSE TO BE DELIVERED, TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS WARRANT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN REGULATION S UNDER THE SECURITIES ACT.”

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(b)           Representations of the Holder. In connection with the issuance of this Warrant and each exercise of this Warrant, the Holder specifically represents, as of the Original Issue Date and each Exercise Date, to the Company as follows:

(i)            The Holder (A) is not a “U.S. Person” as defined in Rule 902 of Regulation S promulgated under the Securities Act and (B) is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and all Warrant Shares issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.

(ii)           The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Regulation S and Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

(iii)           The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. Subject to Section 10(b)(iv), the Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

(iv)          The Holder acknowledges and agrees that neither the Company, nor any officer, director, employee or representative of the Company, nor any other Person has made or is making any representations or warranties of any kind or nature whatsoever, express or implied, beyond those expressly given by the Company in this Warrant and in the Convertible Note.

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12.           Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of this Warrant and any transfers of this Warrant. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

13.           Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF (or similar electronic format) document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the fourth day after the date mailed, by USPS certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12).

If to the Company:	Sara Creek Gold Corp. 326 South Pacific Coast Highway Suite 102 Redondo Beach, CA 90277 E-mail: dkatic@hawkerenergyllc.com Attn:  President
with a copy to (which shall not constitute notice):	Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400 Costa Mesa, CA 92626 E-mail: gamber@rutan.com Attn:  Gregg Amber, Esq. and E-Mail: gsleichter@rutan.com Attn: Garett Sleichter, Esq.
If to the Holder:	E-mail:   Attn:

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14.           Cumulative Remedies. The rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

15.           Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

16.           Entire Agreement. This Warrant, together with the Convertible Note, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the provisions of this Warrant and the provisions of the Convertible Note, the provisions of this Warrant shall control.

17.           Successor and Assigns. This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

18.           No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

19.           Headings. The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

20.           Amendment and Modification; Waiver. This Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

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21.           Severability. If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

22.           Governing Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Nevada.

23.           Submission to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of California in each case located in the city of Los Angeles and County of Los Angeles, California, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

24.           Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, to the fullest extent permitted by law, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

25.           Counterparts. This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

26.           No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

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[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.

Sara Creek Gold Corp.

By:

Name:

Title:

Accepted and agreed,

[HOLDER NAME]

By:

Name:

Title:

Signature Page to Warrant

EXHIBIT A

EXERCISE AGREEMENT

TO:           SARA CREEK GOLD CORP.

The undersigned Holder hereby exercises the right to purchase _______________ shares of Common Stock of the Company pursuant to the terms of the attached Warrant.

The Aggregate Exercise Price for the purchase of such shares of Common Stock calculated in accordance with the Warrant equals: $_______________.  The undersigned Holder has either (a) enclosed herewith a certified or official bank check payable to the order of the Company in the full amount of such Aggregate Exercise Price or (b) prior to or on the date of this Exercise Agreement paid the full amount of such Aggregate Exercise Price by wire transfer of immediately available funds to an account designated in writing by the Company.

Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

The undersigned Holder represents that it is acquiring the shares upon exercise of the Warrant for its own account and not with a view toward, or for resale in connection with, the public sale or distribution of those shares, except pursuant to sales registered or exempted under the Securities Act of 1933, as amended (the “Securities Act”), and that as of the date hereof, the undersigned (A) is not a “U.S. Person” as defined in Rule 902 of Regulation S promulgated under the Securities Act and (B) is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act.

Name of Holder:

Signature of Holder:

Name of Authorized

Signatory (if an entity):

Title of Authorized

Signatory (if an entity):  

Dated:

EXHIBIT B

ASSIGNMENT

(To Be Signed Only On Transfer Of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees” the right represented by the within Warrant to purchase shares of Common Stock of Sara Creek Gold Corp. into which the within Warrant relates specified under the headings “Number of Warrants Transferred,” respectively, opposite the name(s) of such person(s) and appoints each and any officer of the Corporation as attorney to transfer the undersigned’s respective right on the register of warrants maintained by the Corporation with full power of substitution in the premises.

Transferees Address Number of Warrants Transferred

Dated:
	(Signature must conform to name of Holder as specified on the face of the Warrant)
	Address:
	Signature Guarantee

ACCEPTED AND AGREED:

[TRANSFEREE]

(Name)

The signature of the Holder to this Assignment must correspond exactly with the name of the Holder as set forth on the face of the Warrant in every particular and the signature must be guaranteed by a U.S. chartered bank or by a medallion signature guarantee from a member of a recognized Signature Medallion Guarantee Program.

EX-10.6

Exhibit 10.6

THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

$250,000	Redondo Beach, California
	September 18, 2014

SECOND AMENDED AND RESTATED

SECURED CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned, HAWKER ENERGY, INC., a Nevada corporation (the “Company”), promises to pay to Oceanside Strategies (“Holder”), at Georgetown, Grand Cayman, or at such other location as is designated by Holder in writing hereunder, the sum of $250,000, bearing simple interest on the unpaid principal balance of this Note, from the date of this Note until this Note is paid in full, at the rate of 12% per annum. Interest shall accrue until the Due Date (as defined below). All principal and accrued but unpaid interest will be due and payable on November 30, 2014 (the “Due Date”). All payments shall be made in lawful money of the United States, without offset, deduction, or counterclaim of any kind.

1.             Prior Note. This Note supersedes and replaces in its entirety the Amended and Restated Secured Convertible Promissory Note dated June 19, 2014 (“Prior Note”), which Prior Note shall be automatically cancelled and of no further force and effect upon execution of this Note by the Company and delivery of the executed original of this Note to Holder.

2.             Prepayment. This Note may be prepaid, in whole or in part, by the Company at any time without penalty or premium.

3.             Events of Default. Any of the following events shall constitute an “Event of Default” under this Note:

(a)           Failure to Pay. The Company fails to pay all amounts owed on the Due Date as required under the terms of this Note.

(b)           Voluntary Bankruptcy or Insolvency Proceedings. The Company (i) applies for or consents to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) is unable, or admit in writing its inability, to pay its debts generally as they come due, (iii) makes a general assignment for the benefit of its creditors, (iv) is dissolved or liquidated in full or in part, (v) commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) takes any action for the purpose of effecting any of the foregoing, and an order for relief entered or the proceeding is not dismissed, discharged or stayed within 45 days of commencement.

(c)           Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company or all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect are commenced, and an order for relief entered or the proceeding is not dismissed, discharged or stayed within 45 days of commencement.

(d)           Breach. Any material breach by the Company of this Note.

4.             Acceleration. If an Event of Default (other than an Event of Default specified in Section 3(b) or (c)) with respect to the Company occurs and is continuing, then Holder may declare the outstanding principal and accrued interest on this Note and all other payments payable hereunder to be forthwith due and payable immediately, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company, to the fullest extent permitted by applicable law. If an Event of Default specified in Section 3(b) or (c) occurs and continues, then the outstanding principal and accrued interest on this Note and all other payments payable hereunder shall become and be immediately due and payable without any declaration or other act on the part of Holder. Holder by notice to the Company may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived. No rescission shall affect any subsequent default or impair any right thereto.

5.             Use of Proceeds. The Company shall use the proceeds of this Note to allow its subsidiary, Tapia Holdings, LLC, to advance funds to TEG Oil & Gas USA, Inc., a Colorado corporation (“TEG”), pursuant to a Secured Subordinated Note due July 18, 2014 secured by a second priority security interest in all of TEG’s personal property assets (the “Deposit”). If, at any time, the Deposit is repaid to the Company in immediately available funds (e.g., cash), the Company shall immediately use the proceeds of that repayment to prepay this Note.

6.             Conversion of Note. This Note is convertible into units consisting of shares of Common Stock and Warrants to purchase Common Stock of the Company, in substantially the form attached as Exhibit A hereto (“Conversion Units”), upon the terms and conditions set forth below.

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(a)           Voluntary Conversion. All or any portion of the then outstanding principal and accrued interest under this Note may be converted, at any time at the option of Holder, into a number of Conversion Units computed by dividing that amount by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events, the “Conversion Rate”) to arrive at the number of shares of Common Stock to be issued, and for each share of Common Stock received, Holder shall also receive a Warrant to purchase one-half (1/2) share of Common Stock for an exercise price of $0.25 per share.

(b)           Conversion Procedure. Before Holder is entitled to receive certificate for Conversion Units, or any other instruments in connection with a conversion hereunder, Holder shall surrender the original of this Note, duly endorsed, at the principal office of the Company. At its expense, the Company shall, as soon as practicable thereafter, issue and deliver to Holder at the principal office certificates for the number of Conversion Units to which Holder is entitled upon conversion (bearing any legends that are required by the terms of the conversion and applicable state and federal securities law in the opinion of counsel to the Company), together with any other securities and property to which Holder is entitled upon conversion under the terms of this Note and, if the conversion is for less than all of the then outstanding balance of principal and interest on this Note, a replacement Note of like tenor in the proper denomination.

(c)           No Fractional Shares. No fractional shares shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to Holder upon the conversion of this Note, the Company shall pay to Holder an amount in cash equal to the product obtained by multiplying the Conversion Rate applied to effect the conversion by the fraction of a share not issued pursuant to the previous sentence. Upon conversion of all principal of and accrued interest on this Note and/or payment of all principal and accrued interest, the Company shall be forever released from all its obligations and liabilities under this Note.

(d)           Reservation of Stock Issuable Upon Conversion and Upon Exercise. The Company shall at all times reserve and keep available out of its authorized but unissued shares solely for the purpose of effecting the conversion of the Note such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of the Note and the exercise of the Warrants issued upon conversion of this Note; and if at any time the number of authorized but unissued shares of Common Stock is not sufficient to effect the conversion of this Note and the exercise of the Warrants, then, in addition to any other remedies available to Holder, the Company will use its best efforts to take whatever corporate action is, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to a number of shares of Common Stock sufficient for those purposes.

(e)           Beneficial Ownership. The Company shall not effect any conversion of this Note, and Holder shall not have the right to convert any portion of this Note pursuant to Section 6(a), to the extent that after giving effect to such conversion, Holder (together with Holder's affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect to such conversion.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by Holder and its affiliates includes, without limitation, the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but excludes the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of this Note beneficially owned by Holder or any of its affiliates, and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other convertible notes or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 6(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. 

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7.             Security Interest. The Company hereby grants to Holder a security interest in and to all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter from time to time arising or acquired:

(a)           all fixtures and personal property of every kind and nature including all accounts, goods (including inventory and equipment), documents (including, if applicable, electronic documents), instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, general intangibles (including all payment intangibles), money, deposit accounts, and any other contract rights or rights to the payment of money; and

(b)           all proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Company from time to time with respect to any of the foregoing.

8.             Attorneys’ Fees. If any action is instituted on this Note, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which the party or parties may be entitled. Diligence, demand, presentment, notice of dishonor, and protest are waived by the Company, and any and all makers, sureties, guarantors, and endorsers of this Note, and their successors and assigns. Time is of the essence for every obligation under this Note.

9.             Usury. It is the express intent of the Company and Holder that the payment of all or any portion of the outstanding principal amount of and accrued interest under this Note be exempt from the application of any applicable usury or similar laws under any state, federal or foreign jurisdiction. The Company hereby irrevocably waives, to the fullest extent permitted by law, any objection or defense which the Company may now or hereafter have to the payment when due of any and all Note principal or accrued interest arising out of or relating to a claim of usury or similar laws and the Company hereby agrees that neither it nor any of its affiliates shall in the future bring, commence, maintain, prosecute or voluntarily aid in any action at law, proceeding in equity or other legal proceeding against Holder based on a claim that the Company’s payment obligations under this Note violate the usury or similar laws of any state, federal or foreign jurisdiction. Notwithstanding the foregoing, if any interest paid on this Note is deemed to be in excess of the then legal maximum rate, that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

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10.            Unconditional Obligation; Waivers.

(a)           No forbearance, indulgence, delay or failure to exercise any right or remedy with respect to this Note shall operate as a waiver, nor as an acquiescence in any default, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof.

(b)           The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, notice of dishonor, protest, notice of protest, bringing of suit, and diligence in taking any action to collect amounts called for hereunder, and shall be directly and primarily liable for the payment of all sums owing and to be owing hereon, regardless of and without any notice, diligence, act or omission with respect to the collection of any amount called for hereunder or in connection with any right at any and all times which Holder had or is existing hereunder.

11.           Notices. All notices and other communications provided for hereunder shall be in writing and delivered, mailed or transmitted by any standard form of electronic communication. Notices and other communications to the Company shall be directed to it at 326 S. Pacific Coast Highway, Suite 102, Redondo Beach, California 90277, attention: Darren Katic, President, dkatic@hawkerenergyllc.com; and notices and other communications to Holder shall be directed to it at its address at __________________________________, _______@_______.com; or, as to each party, at such other address as shall be designated by that party in a written notice to the other party pursuant hereto. Any notice or other communication shall be deemed to have been duly given (a) when sent by Federal Express or other overnight delivery service of recognized standing, on the business day following deposit with that service; (b) when mailed by registered or certified mail, first class postage prepaid and addressed as aforesaid through the United States Postal Service, upon receipt; (c) when delivered by hand, upon delivery; and (d) when e-mailed, upon confirmation of receipt. Any party may by notice so given change its address for future notice hereunder.

12.           Payment. Payment shall be made in lawful tender of the United States.

13.           No Third Party Rights. Nothing expressed in or to be implied from this Note is intended to give, or shall be construed to give, any person, other than the parties hereto and their permitted successors and assigns, any benefit or legal or equitable right, remedy or claim under or by virtue of this Note.

14.           Replacement of Note. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (or any security issued on conversion of this Note), the Company will issue a replacement instrument, at Holder’s expense, in lieu of the lost, stolen, destroyed or mutilated instrument, provided that Holder indemnifies the Company for any losses incurred by the Company with respect to this Note.

15.           Amendment. Except as expressly provided herein, neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Note and signed by the Company and Holder.

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16.           Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the United States of America and the State of California, without application of conflicts of law principles.

IN WITNESS WHEREOF, the Company has executed and delivered this Note as of the day and year and at the place first above written.

HAWKER ENERGY, INC.
By:	/s/ Darren Katic
	Darren Katic, President

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Exhibit A

Form of Warrant

(see attached)

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN ISSUED PURSUANT TO REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  AS SUCH, THE SECURITIES REPRESENTED BY THIS WARRANT ARE “RESTRICTED SECURITIES” AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF OTHER THAN (A) (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT UNDER THE SECURITIES ACT, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (B) PURSUANT TO THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF APPLICABLE STATE, PROVENTIAL AND FOREIGN SECURITIES LAWS OR PURSUANT TO ONE OR MORE EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS, AND (C) IF THE CORPORATION REQUESTS, BASED ON AN OPINION SATISFACTORY TO THE CORPORATION WITH RESPECT TO FOREGOING (A) AND (B) HAS BEEN RENDERED BY COUNSEL.  THE HOLDER HEREOF AGREES THAT (X) ANY HEDGING TRANSACTION WITH RESPECT TO THE SECURITIES REPRESENTED BY THIS WARRANT WILL BE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT AND (Y) IT WILL DELIVER, OR CAUSE TO BE DELIVERED, TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS WARRANT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

WARRANT

(Non-U.S. Investor)

Warrant Certificate No.: [●]

Original Issue Date: [●]

FOR VALUE RECEIVED, Hawker Energy, Inc., a Nevada corporation (the “Company”), hereby certifies that _________________, a ______________, or its permitted registered assigns (the “Holder”), is entitled to purchase from the Company _____________ (_________) duly authorized, validly issued, fully paid and nonassessable shares of Common Stock at a purchase price per share of $0.25 (subject to adjustment as provided herein, the “Exercise Price”), all subject to the terms, conditions and adjustments set forth below in this Warrant. Certain capitalized terms used in this Warrant are defined in Section 1.

This Warrant has been issued pursuant to the terms of that certain Second Amended and Restated Secured Convertible Promissory Note, dated as of September __, 2014 (the “Convertible Note”), issued by the Company in favor of the Holder.

1.             Definitions. As used in this Warrant, the following terms have the respective meanings set forth below:

“$” means United States dollars.

“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3, multiplied by (b) the Exercise Price in effect as of the Exercise Date.

“Board” means the board of directors of the Company.

“Business Day” means any day, except a Saturday, Sunday or legal holiday on which banking institutions in the city of Los Angeles, California, are authorized or obligated by law or executive order to close.

“Common Stock” means the common stock, par value $0.001 per share, of the Company, and any capital stock into which such Common Stock shall have been converted, exchanged or reclassified following the Original Issue Date.

“Company” has the meaning set forth in the preamble of this Warrant.

“Convertible Note” has the meaning set forth in the preamble of this Warrant.

“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.

“Exercise Date” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., Los Angeles, California time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Agreement, this Warrant and the Aggregate Exercise Price.

“Exercise Agreement” means an Exercise Agreement in the form attached to this Warrant as Exhibit A.

“Exercise Period” has the meaning set forth in Section 2.

“Exercise Price” has the meaning set forth in the preamble of this Warrant.

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“Fair Market Value” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Stock for such day on all domestic securities exchanges on which the Common Stock may at the time be listed; (b) if there have been no sales of the Common Stock on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Stock on all such exchanges at the end of such day; (c) if on any such day the Common Stock is not listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the OTC Bulletin Board or similar quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC Bulletin Board or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided, that if the Common Stock is listed on any domestic securities exchange, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Stock is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board or similar quotation system or association, the “Fair Market Value” of the Common Stock shall be the fair market value per share as determined by the Board in its reasonable discretion.

“Holder” has the meaning set forth in the preamble of this Warrant.

“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

“Original Issue Date” has the meaning set forth on the cover page to this Warrant.

“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

“Sale Event”means (i) any sale of Common Stock (excluding issuances of Common Stock by the Company) in a single transaction or a series of related transactions in which the holders of Common Stock immediately prior to such sale of Common Stock do not, directly or indirectly, own at least a majority of the Common Stock outstanding immediately after such sale of Common Stock, (ii) any merger, consolidation, reorganization or other business combination of the Company with or into any other corporation or other entity in which the holders of Common Stock immediately prior to such merger, consolidation, reorganization or business combination do not, directly or indirectly, own capital stock of the entity surviving such merger, consolidation, reorganization or business combination representing at least a majority of the combined voting power of the outstanding securities of such entity immediately after such merger, consolidation, reorganization or business combination, or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company to an unrelated person or entity by means of a single transaction or a series of related transactions.

“Securities Act” has the meaning set forth in the legend endorsed on the cover page of this Warrant.

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“Warrant” means this Warrant and all warrants issued upon division or combination of, or in substitution for, this Warrant.

“Warrant Shares” means the shares of Common Stock or other securities then purchasable upon exercise of this Warrant, as the same may be adjusted in accordance with the terms of this Warrant.

2.             Term of Warrant. Subject to the terms and conditions of this Warrant, at any time or from time to time after the date hereof and prior to 5:00 p.m., Los Angeles, California time, on the five (5) year anniversary of the Original Issue Date or, if such day is not a Business Day, on the next preceding Business Day (the “Exercise Period”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder.

3.             Exercise of Warrant.

(a)           Exercise Procedure. This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:

(i)           surrender of this Warrant to the Company at its then principal executive offices (or an indemnification in accordance with Section 9 in the case of the loss, theft, destruction or mutilation of this Warrant), together with a duly completed (including specifying the number of Warrant Shares for which this Warrant is being exercised) and executed Exercise Agreement; and

(ii)           payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b).

(b)           Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price.

(c)           Delivery of Stock Certificates. Upon receipt by the Company of the Exercise Agreement, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with Section 3(a)), the Company shall, as promptly as reasonably practicable, and in any event within ten (10) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, together with cash in lieu of any fraction of a share, as provided in Section 3(d). The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Agreement and shall be registered in the name of the Holder or, subject to compliance with Section 7, such other Person’s name as shall be designated in the Exercise Agreement. This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or (subject to compliance with Section 7) any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

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(d)           Fractional Shares. The Company shall not be required to issue a fractional Warrant Share upon exercise of this Warrant. As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

(e)           Delivery of New Warrant. Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with Section 3(c) hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

(f)           Valid Issuance of Warrant and Warrant Shares; Payment of Taxes. With respect to the exercise of this Warrant, the Company hereby represents, covenants and agrees that:

(i)           This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

(ii)           All Warrant Shares issuable upon the exercise of this Warrant in compliance with the terms of this Warrant shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all taxes, liens and charges.

(iii)           The Company shall use commercially reasonable efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any domestic securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares are listed at the time of such exercise.

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(iv)           The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to the Holder or to any other Person permitted to receive Warrant Shares upon exercise of this Warrant, and no such issuance or delivery shall be made unless and until the Holder or such Person has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

(g)           Conditional Exercise. Notwithstanding any other provision of this Warrant, if an exercise of any portion of this Warrant is to be made in connection with a public offering or a Sale Event, such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

(h)           Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant, and the par value per Warrant Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Warrant Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

4.             Adjustment to Exercise Price and Number of Warrant Shares. The Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 4.

(a)           Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Stock. If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Stock or any other capital stock of the Company payable in shares of Common Stock or in Options or Convertible Securities, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, then the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 4(a) shall become effective concurrent at the time such dividend, subdivision or combination becomes effective.

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(b)           Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than (x) a change in par value, from par value to no par value, or from no par value to par value, or (y) as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 4(a)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise; and, in such case, appropriate adjustment (in form and substance determined by the Board in its reasonable discretion) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Stock reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 4(b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. Subject to Section 5, the Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. With respect to any corporate event or other transaction contemplated by the provisions of this Section 4(b), the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 3 instead of giving effect to the provisions contained in this Section 4(b) with respect to this Warrant.

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(c)           Certain Events. If any event of the type contemplated by the provisions of this Section 4 but not expressly provided for by such provisions occurs, then the Board shall make an appropriate adjustment in the Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant so as to protect the rights of the Holder in a manner consistent with the provisions of this Section 4; provided, that no such adjustment pursuant to this Section 4(c) shall increase the Exercise Price or decrease the number of Warrant Shares issuable as otherwise determined pursuant to this Section 4.

(d)           Certificate as to Adjustment.

(i)           As promptly as reasonably practicable following any adjustment of the Exercise Price that results in an increase or decrease of the Exercise Price of $0.01 or more, but in any event not later than twenty (20) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

(ii)           As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than ten (10) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant; provided that the Holder may only exercise its rights pursuant to this Section 4(d)(ii) once during any twelve consecutive month period.

(e)           Notices. In the event:

(i)           that the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(ii)           of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person; or

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(iii)           of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 then, and in each such case, the Company shall send or cause to be sent to the Holder at least twenty (20) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution or other right or action, and a description of such dividend, distribution or other right, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.

5.             Sale Event.  Notwithstanding anything in this Warrant to the Contrary, the Company shall have the right (exercisable in the sole and absolute discretion of the Board), but not the obligation, in connection with a Sale Event to make or provide for a cash payment to Holder, in exchange for the cancellation of this Warrant, in an amount equal to the difference between (a) the value as determined by the Board of the consideration payable, or otherwise to be received by stockholders, per share of Common Stock pursuant to a Sale Event multiplied by the number of Warrant Shares then issuable under this Warrant and (b) the Aggregate Exercise Price of all such Warrant Shares, subject to the other terms and conditions of the Sale Event (such as representations and warranties, holdback and escrow amounts, indemnification obligations and purchase price adjustments) to the extent applicable to Common Stock holders.

6.             Restrictions on Exercise.  Notwithstanding anything in this Warrant to the contrary, this Warrant may not be exercised if the issuance of Warrant Shares upon such exercise or if the method of payment for such Warrant Shares would constitute a violation of any applicable laws or regulations, including, without limitation, applicable United States, foreign, provincial and state securities laws and regulations.  The Company may require Holder to make any representations and warranties to the Company as may be required by any applicable law or regulation (including, without limitation, applicable United States, foreign, provincial and state securities laws and regulations) before allowing this Warrant to be exercised.  Without limiting the generality of the foregoing, Warrant Shares issued upon exercise of this Warrant may not be issued in the name of any Person other than Holder unless the transfer conditions referred to in the legend endorsed on the cover page of this Warrant have been complied with to the satisfaction of the Company.  In addition, no Warrant Shares will be issued pursuant to the exercise of this Warrant unless such issuance and such exercise comply with all relevant requirements of any stock exchange upon which the Common Stock may then be listed.

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7.             Transfer of Warrant. Subject to the transfer conditions referred to in the legend endorsed on the cover page of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B, together with funds sufficient to pay any transfer taxes described in Section 3(f)(iv) in connection with the making of such transfer. Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

8.             Holder Not Deemed a Stockholder; Limitations on Liability. Prior to the issuance to the Holder of the Warrant Shares to which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

9.             Replacement on Loss; Division and Combination.

(a)           Replacement of Warrant on Loss. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to the Company and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided, that, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

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(b)           Division and Combination of Warrant. Subject to compliance with the applicable provisions of this Warrant as to any transfer or other assignment that may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders. Subject to compliance with the applicable provisions of this Warrant as to any transfer or assignment that may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

10.            Compliance with the Securities Act.

(a)           Agreement to Comply with the Securities Act; Legend. The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 10 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that that Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act or applicable United States, foreign, provincial or state securities laws and regulations. This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN ISSUED PURSUANT TO REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  AS SUCH, THE SECURITIES REPRESENTED BY THIS WARRANT ARE “RESTRICTED SECURITIES” AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF OTHER THAN (A) (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT UNDER THE SECURITIES ACT, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (B) PURSUANT TO THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF APPLICABLE STATE, PROVENTIAL AND FOREIGN SECURITIES LAWS OR PURSUANT TO ONE OR MORE EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENT, AND (C) IF THE CORPORATION REQUESTS, BASED ON AN OPINION SATISFACTORY TO THE CORPORATION WITH RESPECT TO FOREGOING (A) AND (B) HAS BEEN RENDERED BY COUNSEL.  THE HOLDER HEREOF AGREES THAT (X) ANY HEDGING TRANSACTION WITH RESPECT TO THE SECURITIES REPRESENTED BY THIS WARRANT WILL BE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT AND (Y) IT WILL DELIVER, OR CAUSE TO BE DELIVERED, TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS WARRANT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN REGULATION S UNDER THE SECURITIES ACT.”

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(b)           Representations of the Holder. In connection with the issuance of this Warrant and each exercise of this Warrant, the Holder specifically represents, as of the Original Issue Date and each Exercise Date, to the Company as follows:

(i)           The Holder (A) is not a “U.S. Person” as defined in Rule 902 of Regulation S promulgated under the Securities Act and (B) is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and all Warrant Shares issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.

(ii)           The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Regulation S and Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

(iii)           The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. Subject to Section 10(b)(iv), the Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

(iv)           The Holder acknowledges and agrees that neither the Company, nor any officer, director, employee or representative of the Company, nor any other Person has made or is making any representations or warranties of any kind or nature whatsoever, express or implied, beyond those expressly given by the Company in this Warrant and in the Convertible Note.

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11.           Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of this Warrant and any transfers of this Warrant. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

12.           Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF (or similar electronic format) document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the fourth day after the date mailed, by USPS certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12).

If to the Company:	Hawker Energy, Inc. 326 South Pacific Coast Highway Suite 102 Redondo Beach, CA 90277 E-mail: dkatic@hawkerenergyllc.com Attn:  President
with a copy to (which shall not constitute notice):	Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400 Costa Mesa, CA 92626 E-mail: gamber@rutan.com Attn:  Gregg Amber, Esq. and E-Mail: gsleichter@rutan.com Attn: Garett Sleichter, Esq.
If to the Holder:	E-mail:   Attn:

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13.           Cumulative Remedies. The rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

14.           Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

15.           Entire Agreement. This Warrant, together with the Convertible Note, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the provisions of this Warrant and the provisions of the Convertible Note, the provisions of this Warrant shall control.

16.           Successor and Assigns. This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

17.           No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

18.           Headings. The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

19.           Amendment and Modification; Waiver. This Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

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20.           Severability. If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

21.           Governing Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Nevada.

22.           Submission to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of California in each case located in the city of Los Angeles and County of Los Angeles, California, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

23.           Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, to the fullest extent permitted by law, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

24.           Counterparts. This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

25.           No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

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[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.

Hawker Energy, Inc.

By:

Name:

Title:

Accepted and agreed,

[HOLDER NAME]

By:

Name:

Title:

Signature Page to Warrant

EXHIBIT A

EXERCISE AGREEMENT

TO:           HAWKER ENERGY, INC.

The undersigned Holder hereby exercises the right to purchase _______________ shares of Common Stock of the Company pursuant to the terms of the attached Warrant.

The Aggregate Exercise Price for the purchase of such shares of Common Stock calculated in accordance with the Warrant equals: $_______________.  The undersigned Holder has either (a) enclosed herewith a certified or official bank check payable to the order of the Company in the full amount of such Aggregate Exercise Price or (b) prior to or on the date of this Exercise Agreement paid the full amount of such Aggregate Exercise Price by wire transfer of immediately available funds to an account designated in writing by the Company.

Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

The undersigned Holder represents that it is acquiring the shares upon exercise of the Warrant for its own account and not with a view toward, or for resale in connection with, the public sale or distribution of those shares, except pursuant to sales registered or exempted under the Securities Act of 1933, as amended (the “Securities Act”), and that as of the date hereof, the undersigned (A) is not a “U.S. Person” as defined in Rule 902 of Regulation S promulgated under the Securities Act and (B) is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act.

Name of Holder:

Signature of Holder:

Name of Authorized

Signatory (if an entity):

Title of Authorized

Signatory (if an entity):  

Dated:

EXHIBIT B

ASSIGNMENT

(To Be Signed Only On Transfer Of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees” the right represented by the within Warrant to purchase shares of Common Stock of Hawker Energy, Inc. into which the within Warrant relates specified under the headings “Number of Warrants Transferred,” respectively, opposite the name(s) of such person(s) and appoints each and any officer of the Corporation as attorney to transfer the undersigned’s respective right on the register of warrants maintained by the Corporation with full power of substitution in the premises.

Transferees Address Number of Warrants Transferred

Dated:	(Signature must conform to name of Holder as specified on the face of the Warrant)
	Address:
	Signature Guarantee

ACCEPTED AND AGREED:

[TRANSFEREE]

(Name)

The signature of the Holder to this Assignment must correspond exactly with the name of the Holder as set forth on the face of the Warrant in every particular and the signature must be guaranteed by a U.S. chartered bank or by a medallion signature guarantee from a member of a recognized Signature Medallion Guarantee Program.

EX-10.8

Exhibit 10.8

THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

$350,000	Redondo Beach, California
	September 18, 2014

SECOND AMENDED AND RESTATED

SECURED CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned, HAWKER ENERGY, INC., a Nevada corporation (the “Company”), promises to pay to Oceanside Strategies (“Holder”), at Georgetown, Grand Cayman, or at such other location as is designated by Holder in writing hereunder, the sum of $350,000, bearing simple interest on the unpaid principal balance of this Note, from the date of this Note until this Note is paid in full, at the rate of 12% per annum. Interest shall accrue until the Due Date (as defined below). All principal and accrued but unpaid interest will be due and payable on November 30, 2014 (the “Due Date”). All payments shall be made in lawful money of the United States, without offset, deduction, or counterclaim of any kind.

1.             Prior Note. This Note supersedes and replaces in its entirety the Amended and Restated Secured Convertible Promissory Note dated June 25, 2014 (“Prior Note”), which Prior Note shall be automatically cancelled and of no further force and effect upon execution of this Note by the Company and delivery of the executed original of this Note to Holder.

2.             Prepayment. This Note may be prepaid, in whole or in part, by the Company at any time without penalty or premium.

3.             Events of Default. Any of the following events shall constitute an “Event of Default” under this Note:

(a)           Failure to Pay. The Company fails to pay all amounts owed on the Due Date as required under the terms of this Note.

(b)           Voluntary Bankruptcy or Insolvency Proceedings. The Company (i) applies for or consents to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property, (ii) is unable, or admit in writing its inability, to pay its debts generally as they come due, (iii) makes a general assignment for the benefit of its creditors, (iv) is dissolved or liquidated in full or in part, (v) commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary case or other proceeding commenced against it, or (vi) takes any action for the purpose of effecting any of the foregoing, and an order for relief entered or the proceeding is not dismissed, discharged or stayed within 45 days of commencement.

(c)           Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator or custodian of the Company or all or a substantial part of the property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization or other relief with respect to the Company or the debts thereof under any bankruptcy, insolvency or other similar law now or hereafter in effect are commenced, and an order for relief entered or the proceeding is not dismissed, discharged or stayed within 45 days of commencement.

(d)           Breach. Any material breach by the Company of this Note.

4.             Acceleration. If an Event of Default (other than an Event of Default specified in Section 3(b) or (c)) with respect to the Company occurs and is continuing, then Holder may declare the outstanding principal and accrued interest on this Note and all other payments payable hereunder to be forthwith due and payable immediately, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company, to the fullest extent permitted by applicable law. If an Event of Default specified in Section 3(b) or (c) occurs and continues, then the outstanding principal and accrued interest on this Note and all other payments payable hereunder shall become and be immediately due and payable without any declaration or other act on the part of Holder. Holder by notice to the Company may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived. No rescission shall affect any subsequent default or impair any right thereto.

5.             Use of Proceeds. The Company shall use the proceeds of this Note to allow its subsidiary, Tapia Holdings, LLC, to advance funds to TEG Oil & Gas USA, Inc., a Colorado corporation (“TEG”), pursuant to a Secured Subordinated Note due December 29, 2014 secured by a second priority security interest in all of TEG’s personal property assets (the “Deposit”). If, at any time, the Deposit is repaid to the Company in immediately available funds (e.g., cash), the Company shall immediately use the proceeds of that repayment to prepay this Note.

6.             Conversion of Note. This Note is convertible into units consisting of shares of Common Stock and Warrants to purchase Common Stock of the Company, in substantially the form attached as Exhibit A hereto (“Conversion Units”), upon the terms and conditions set forth below.

(a)           Voluntary Conversion. All or any portion of the then outstanding principal and accrued interest under this Note may be converted, at any time at the option of Holder, into a number of Conversion Units computed by dividing that amount by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events, the “Conversion Rate”) to arrive at the number of shares of Common Stock to be issued, and for each share of Common Stock received, Holder shall also receive a Warrant to purchase one-half (1/2) share of Common Stock for an exercise price of $0.25 per share.

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(b)           Conversion Procedure. Before Holder is entitled to receive certificate for Conversion Units, or any other instruments in connection with a conversion hereunder, Holder shall surrender the original of this Note, duly endorsed, at the principal office of the Company. At its expense, the Company shall, as soon as practicable thereafter, issue and deliver to Holder at the principal office certificates for the number of Conversion Units to which Holder is entitled upon conversion (bearing any legends that are required by the terms of the conversion and applicable state and federal securities law in the opinion of counsel to the Company), together with any other securities and property to which Holder is entitled upon conversion under the terms of this Note and, if the conversion is for less than all of the then outstanding balance of principal and interest on this Note, a replacement Note of like tenor in the proper denomination.

(c)           No Fractional Shares. No fractional shares shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to Holder upon the conversion of this Note, the Company shall pay to Holder an amount in cash equal to the product obtained by multiplying the Conversion Rate applied to effect the conversion by the fraction of a share not issued pursuant to the previous sentence. Upon conversion of all principal of and accrued interest on this Note and/or payment of all principal and accrued interest, the Company shall be forever released from all its obligations and liabilities under this Note.

(d)           Reservation of Stock Issuable Upon Conversion and Upon Exercise. The Company shall at all times reserve and keep available out of its authorized but unissued shares solely for the purpose of effecting the conversion of the Note such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of the Note and the exercise of the Warrants issued upon conversion of this Note; and if at any time the number of authorized but unissued shares of Common Stock is not sufficient to effect the conversion of this Note and the exercise of the Warrants, then, in addition to any other remedies available to Holder, the Company will use its best efforts to take whatever corporate action is, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to a number of shares of Common Stock sufficient for those purposes.

(e)           Adjustment to Number of Conversion Units.

(i)            In order to prevent dilution of the conversion rights granted under this Note, the number of Conversion Units issuable upon conversion of this Note shall be subject to adjustment from time to time as provided in this Section 6(e) (in each case, after taking into consideration any prior adjustments pursuant to this Section 6(e)).

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(ii)           Except in the case of an event described in Section 6(e)(iii), if the Company shall, at any time or from time to time after the date of this Note, issue or sell any Common Stock (which, for avoidance of doubt, includes any bundling of securities of the Company that are in part comprised of Common Stock), or any security of the Company that is readily convertible into Common Stock, without consideration or for consideration per share of Common Stock less than the Conversion Rate, then immediately upon such issuance or sale, the Conversion Rate in effect immediately prior to such issuance or sale shall be reduced (and in no event increased) to a Conversion Rate equal to the lowest price per share of Common Stock at which any such share has been issued or sold; provided, that if such issuance or sale was without consideration, then the Company shall be deemed to have received consideration of $0.01 per share.

(iii)          There shall be no adjustment to the Conversion Rate with respect to any security of the Company  issued or sold:

(A)           upon conversion of this Note;

(B)           to officers, directors or employees of, or consultants to, the Company pursuant to stock option or stock purchase plans or agreements on terms approved by the Board of Directors of the Company;

(C)           as a dividend or distribution on Common Stock;

(D)           upon exercise or conversion of option or warrants outstanding as of the date of this Note;

(E)           upon any stock split, stock combination or other capital reorganization or the Company;

(F)           upon consolidation or merger of the Company with or into another person;

(G)           upon or in connection with the sale of all or substantially all of the assets of the Company to another person; or

(H)           upon or in connection with any lender financing, equipment leasing or similar transaction.

(f)           Beneficial Ownership. The Company shall not effect any conversion of this Note, and Holder shall not have the right to convert any portion of this Note pursuant to Section 6(a), to the extent that after giving effect to such conversion, Holder (together with Holder's affiliates) would beneficially own in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by Holder and its affiliates includes, without limitation, the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination of such sentence is being made, but excludes the number of shares of Common Stock that would be issuable upon (i) conversion of the remaining, nonconverted portion of this Note beneficially owned by Holder or any of its affiliates, and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other convertible notes or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 6(f), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. 

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7.             Security Interest. The Company hereby grants to Holder a security interest in and to all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter from time to time arising or acquired:

(a)           all fixtures and personal property of every kind and nature including all accounts, goods (including inventory and equipment), documents (including, if applicable, electronic documents), instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, general intangibles (including all payment intangibles), money, deposit accounts, and any other contract rights or rights to the payment of money; and

(b)           all proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all proceeds of any insurance, indemnity, warranty or guaranty payable to the Company from time to time with respect to any of the foregoing.

8.             Attorneys’ Fees. If any action is instituted on this Note, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which the party or parties may be entitled. Diligence, demand, presentment, notice of dishonor, and protest are waived by the Company, and any and all makers, sureties, guarantors, and endorsers of this Note, and their successors and assigns. Time is of the essence for every obligation under this Note.

9.             Usury. It is the express intent of the Company and Holder that the payment of all or any portion of the outstanding principal amount of and accrued interest under this Note be exempt from the application of any applicable usury or similar laws under any state, federal or foreign jurisdiction. The Company hereby irrevocably waives, to the fullest extent permitted by law, any objection or defense which the Company may now or hereafter have to the payment when due of any and all Note principal or accrued interest arising out of or relating to a claim of usury or similar laws and the Company hereby agrees that neither it nor any of its affiliates shall in the future bring, commence, maintain, prosecute or voluntarily aid in any action at law, proceeding in equity or other legal proceeding against Holder based on a claim that the Company’s payment obligations under this Note violate the usury or similar laws of any state, federal or foreign jurisdiction. Notwithstanding the foregoing, if any interest paid on this Note is deemed to be in excess of the then legal maximum rate, that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

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10.           Unconditional Obligation; Waivers.

(a)           No forbearance, indulgence, delay or failure to exercise any right or remedy with respect to this Note shall operate as a waiver, nor as an acquiescence in any default, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof.

(b)           The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, notice of dishonor, protest, notice of protest, bringing of suit, and diligence in taking any action to collect amounts called for hereunder, and shall be directly and primarily liable for the payment of all sums owing and to be owing hereon, regardless of and without any notice, diligence, act or omission with respect to the collection of any amount called for hereunder or in connection with any right at any and all times which Holder had or is existing hereunder.

11.           Notices. All notices and other communications provided for hereunder shall be in writing and delivered, mailed or transmitted by any standard form of electronic communication. Notices and other communications to the Company shall be directed to it at 326 S. Pacific Coast Highway, Suite 102, Redondo Beach, California 90277, attention: Darren Katic, President, dkatic@hawkerenergyllc.com; and notices and other communications to Holder shall be directed to it at its address at __________________________________, _______@_______.com; or, as to each party, at such other address as shall be designated by that party in a written notice to the other party pursuant hereto. Any notice or other communication shall be deemed to have been duly given (a) when sent by Federal Express or other overnight delivery service of recognized standing, on the business day following deposit with that service; (b) when mailed by registered or certified mail, first class postage prepaid and addressed as aforesaid through the United States Postal Service, upon receipt; (c) when delivered by hand, upon delivery; and (d) when e-mailed, upon confirmation of receipt. Any party may by notice so given change its address for future notice hereunder.

12.           Payment. Payment shall be made in lawful tender of the United States.

13.           No Third Party Rights. Nothing expressed in or to be implied from this Note is intended to give, or shall be construed to give, any person, other than the parties hereto and their permitted successors and assigns, any benefit or legal or equitable right, remedy or claim under or by virtue of this Note.

14.           Replacement of Note. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note (or any security issued on conversion of this Note), the Company will issue a replacement instrument, at Holder’s expense, in lieu of the lost, stolen, destroyed or mutilated instrument, provided that Holder indemnifies the Company for any losses incurred by the Company with respect to this Note.

15.           Amendment. Except as expressly provided herein, neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Note and signed by the Company and Holder.

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16.           Governing Law. This Note and all actions arising out of or in connection with this Note shall be governed by and construed in accordance with the laws of the United States of America and the State of California, without application of conflicts of law principles.

IN WITNESS WHEREOF, the Company has executed and delivered this Note as of the day and year and at the place first above written.

HAWKER ENERGY, INC.
By:	/s/ Darren Katic
	Darren Katic, President

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Exhibit A

Form of Warrant

(see attached)

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THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN ISSUED PURSUANT TO REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  AS SUCH, THE SECURITIES REPRESENTED BY THIS WARRANT ARE “RESTRICTED SECURITIES” AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF OTHER THAN (A) (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT UNDER THE SECURITIES ACT, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (B) PURSUANT TO THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF APPLICABLE STATE, PROVENTIAL AND FOREIGN SECURITIES LAWS OR PURSUANT TO ONE OR MORE EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS, AND (C) IF THE CORPORATION REQUESTS, BASED ON AN OPINION SATISFACTORY TO THE CORPORATION WITH RESPECT TO FOREGOING (A) AND (B) HAS BEEN RENDERED BY COUNSEL.  THE HOLDER HEREOF AGREES THAT (X) ANY HEDGING TRANSACTION WITH RESPECT TO THE SECURITIES REPRESENTED BY THIS WARRANT WILL BE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT AND (Y) IT WILL DELIVER, OR CAUSE TO BE DELIVERED, TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS WARRANT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

WARRANT

(Non-U.S. Investor)

Warrant Certificate No.: [●]

Original Issue Date: [●]

FOR VALUE RECEIVED, Hawker Energy, Inc., a Nevada corporation (the “Company”), hereby certifies that _________________, a ______________, or its permitted registered assigns (the “Holder”), is entitled to purchase from the Company _____________ (_________) duly authorized, validly issued, fully paid and nonassessable shares of Common Stock at a purchase price per share of $0.25 (subject to adjustment as provided herein, the “Exercise Price”), all subject to the terms, conditions and adjustments set forth below in this Warrant. Certain capitalized terms used in this Warrant are defined in Section 1.

This Warrant has been issued pursuant to the terms of that certain Second Amended and Restated Secured Convertible Promissory Note, dated as of September __, 2014 (the “Convertible Note”), issued by the Company in favor of the Holder.

Signature Page to Warrant

1.             Definitions. As used in this Warrant, the following terms have the respective meanings set forth below:

“$” means United States dollars.

“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Warrant Shares in respect of which this Warrant is then being exercised pursuant to Section 3, multiplied by (b) the Exercise Price in effect as of the Exercise Date.

“Board” means the board of directors of the Company.

“Business Day” means any day, except a Saturday, Sunday or legal holiday on which banking institutions in the city of Los Angeles, California, are authorized or obligated by law or executive order to close.

“Common Stock” means the common stock, par value $0.001 per share, of the Company, and any capital stock into which such Common Stock shall have been converted, exchanged or reclassified following the Original Issue Date.

“Company” has the meaning set forth in the preamble of this Warrant.

“Convertible Note” has the meaning set forth in the preamble of this Warrant.

“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.

“Exercise Date” means, for any given exercise of this Warrant, the date on which the conditions to such exercise as set forth in Section 3 shall have been satisfied at or prior to 5:00 p.m., Los Angeles, California time, on a Business Day, including, without limitation, the receipt by the Company of the Exercise Agreement, this Warrant and the Aggregate Exercise Price.

“Exercise Agreement” means an Exercise Agreement in the form attached to this Warrant as Exhibit A.

“Exercise Period” has the meaning set forth in Section 2.

“Exercise Price” has the meaning set forth in the preamble of this Warrant.

“Fair Market Value” means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Stock for such day on all domestic securities exchanges on which the Common Stock may at the time be listed; (b) if there have been no sales of the Common Stock on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Stock on all such exchanges at the end of such day; (c) if on any such day the Common Stock is not listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the OTC Bulletin Board or similar quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC Bulletin Board or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which “Fair Market Value” is being determined; provided, that if the Common Stock is listed on any domestic securities exchange, the term “Business Day” as used in this sentence means Business Days on which such exchange is open for trading. If at any time the Common Stock is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board or similar quotation system or association, the “Fair Market Value” of the Common Stock shall be the fair market value per share as determined by the Board in its reasonable discretion.

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“Holder” has the meaning set forth in the preamble of this Warrant.

“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.

“Original Issue Date” has the meaning set forth on the cover page to this Warrant.

“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.

“Sale Event”means (i) any sale of Common Stock (excluding issuances of Common Stock by the Company) in a single transaction or a series of related transactions in which the holders of Common Stock immediately prior to such sale of Common Stock do not, directly or indirectly, own at least a majority of the Common Stock outstanding immediately after such sale of Common Stock, (ii) any merger, consolidation, reorganization or other business combination of the Company with or into any other corporation or other entity in which the holders of Common Stock immediately prior to such merger, consolidation, reorganization or business combination do not, directly or indirectly, own capital stock of the entity surviving such merger, consolidation, reorganization or business combination representing at least a majority of the combined voting power of the outstanding securities of such entity immediately after such merger, consolidation, reorganization or business combination, or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company to an unrelated person or entity by means of a single transaction or a series of related transactions.

“Securities Act” has the meaning set forth in the legend endorsed on the cover page of this Warrant.

“Warrant” means this Warrant and all warrants issued upon division or combination of, or in substitution for, this Warrant.

“Warrant Shares” means the shares of Common Stock or other securities then purchasable upon exercise of this Warrant, as the same may be adjusted in accordance with the terms of this Warrant.

2.             Term of Warrant. Subject to the terms and conditions of this Warrant, at any time or from time to time after the date hereof and prior to 5:00 p.m., Los Angeles, California time, on the five (5) year anniversary of the Original Issue Date or, if such day is not a Business Day, on the next preceding Business Day (the “Exercise Period”), the Holder of this Warrant may exercise this Warrant for all or any part of the Warrant Shares purchasable hereunder.

3.             Exercise of Warrant.

(a)           Exercise Procedure. This Warrant may be exercised from time to time on any Business Day during the Exercise Period, for all or any part of the unexercised Warrant Shares, upon:

(i)            surrender of this Warrant to the Company at its then principal executive offices (or an indemnification in accordance with Section 9 in the case of the loss, theft, destruction or mutilation of this Warrant), together with a duly completed (including specifying the number of Warrant Shares for which this Warrant is being exercised) and executed Exercise Agreement; and

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(ii)           payment to the Company of the Aggregate Exercise Price in accordance with Section 3(b).

(b)           Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made by delivery to the Company of a certified or official bank check payable to the order of the Company or by wire transfer of immediately available funds to an account designated in writing by the Company, in the amount of such Aggregate Exercise Price.

(c)           Delivery of Stock Certificates. Upon receipt by the Company of the Exercise Agreement, surrender of this Warrant and payment of the Aggregate Exercise Price (in accordance with Section 3(a)), the Company shall, as promptly as reasonably practicable, and in any event within ten (10) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the Warrant Shares issuable upon such exercise, together with cash in lieu of any fraction of a share, as provided in Section 3(d). The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Agreement and shall be registered in the name of the Holder or, subject to compliance with Section 7, such other Person’s name as shall be designated in the Exercise Agreement. This Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or (subject to compliance with Section 7) any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.

(d)           Fractional Shares. The Company shall not be required to issue a fractional Warrant Share upon exercise of this Warrant. As to any fraction of a Warrant Share that the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash (by delivery of a certified or official bank check or by wire transfer of immediately available funds) equal to the product of (i) such fraction multiplied by (ii) the Fair Market Value of one Warrant Share on the Exercise Date.

(e)           Delivery of New Warrant. Unless the purchase rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares being issued in accordance with Section 3(c) hereof, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unexpired and unexercised Warrant Shares called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

(f)            Valid Issuance of Warrant and Warrant Shares; Payment of Taxes. With respect to the exercise of this Warrant, the Company hereby represents, covenants and agrees that:

(i)            This Warrant is, and any Warrant issued in substitution for or replacement of this Warrant shall be, upon issuance, duly authorized and validly issued.

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(ii)           All Warrant Shares issuable upon the exercise of this Warrant in compliance with the terms of this Warrant shall be, upon issuance, and the Company shall take all such actions as may be necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all taxes, liens and charges.

(iii)          The Company shall use commercially reasonable efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any domestic securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares are listed at the time of such exercise.

(iv)           The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of this Warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to the Holder or to any other Person permitted to receive Warrant Shares upon exercise of this Warrant, and no such issuance or delivery shall be made unless and until the Holder or such Person has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

(g)           Conditional Exercise. Notwithstanding any other provision of this Warrant, if an exercise of any portion of this Warrant is to be made in connection with a public offering or a Sale Event, such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

(h)           Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant, and the par value per Warrant Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Warrant Shares receivable upon the exercise of this Warrant above the Exercise Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

4.             Adjustment to Exercise Price and Number of Warrant Shares. The Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 4.

(a)           Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Stock. If the Company shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any other distribution upon the Common Stock or any other capital stock of the Company payable in shares of Common Stock or in Options or Convertible Securities, or (ii) subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, then the Exercise Price in effect immediately prior to any such dividend, distribution or subdivision shall be proportionately reduced and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased. Any adjustment under this Section 4(a) shall become effective concurrent at the time such dividend, subdivision or combination becomes effective.

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(b)           Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than (x) a change in par value, from par value to no par value, or from no par value to par value, or (y) as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Section 4(a)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under this Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised this Warrant in full immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise; and, in such case, appropriate adjustment (in form and substance determined by the Board in its reasonable discretion) shall be made with respect to the Holder’s rights under this Warrant to insure that the provisions of this Section 4 hereof shall thereafter be applicable, as nearly as possible, to this Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Warrant (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Stock reflected by the terms of such consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Warrant Shares acquirable upon exercise of this Warrant without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 4(b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. Subject to Section 5, the Company shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, by written instrument substantially similar in form and substance to this Warrant, the obligation to deliver to the Holder such shares of stock, securities or assets which, in accordance with the foregoing provisions, such Holder shall be entitled to receive upon exercise of this Warrant. With respect to any corporate event or other transaction contemplated by the provisions of this Section 4(b), the Holder shall have the right to elect prior to the consummation of such event or transaction, to give effect to the exercise rights contained in Section 3 instead of giving effect to the provisions contained in this Section 4(b) with respect to this Warrant.

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(c)           Certain Events. If any event of the type contemplated by the provisions of this Section 4 but not expressly provided for by such provisions occurs, then the Board shall make an appropriate adjustment in the Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant so as to protect the rights of the Holder in a manner consistent with the provisions of this Section 4; provided, that no such adjustment pursuant to this Section 4(c) shall increase the Exercise Price or decrease the number of Warrant Shares issuable as otherwise determined pursuant to this Section 4.

(d)           Certificate as to Adjustment.

(i)            As promptly as reasonably practicable following any adjustment of the Exercise Price that results in an increase or decrease of the Exercise Price of $0.01 or more, but in any event not later than twenty (20) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer setting forth in reasonable detail such adjustment and the facts upon which it is based and certifying the calculation thereof.

(ii)           As promptly as reasonably practicable following the receipt by the Company of a written request by the Holder, but in any event not later than ten (10) Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the number of Warrant Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Warrant; provided that the Holder may only exercise its rights pursuant to this Section 4(d)(ii) once during any twelve consecutive month period.

(e)           Notices. In the event:

(i)            that the Company shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon exercise of the Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(ii)           of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person; or

(iii)          of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

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 then, and in each such case, the Company shall send or cause to be sent to the Holder at least twenty (20) days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for such dividend, distribution or other right or action, and a description of such dividend, distribution or other right, or (B) the effective date on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Warrant and the Warrant Shares.

5.             Sale Event.  Notwithstanding anything in this Warrant to the Contrary, the Company shall have the right (exercisable in the sole and absolute discretion of the Board), but not the obligation, in connection with a Sale Event to make or provide for a cash payment to Holder, in exchange for the cancellation of this Warrant, in an amount equal to the difference between (a) the value as determined by the Board of the consideration payable, or otherwise to be received by stockholders, per share of Common Stock pursuant to a Sale Event multiplied by the number of Warrant Shares then issuable under this Warrant and (b) the Aggregate Exercise Price of all such Warrant Shares, subject to the other terms and conditions of the Sale Event (such as representations and warranties, holdback and escrow amounts, indemnification obligations and purchase price adjustments) to the extent applicable to Common Stock holders.

6.             Restrictions on Exercise.  Notwithstanding anything in this Warrant to the contrary, this Warrant may not be exercised if the issuance of Warrant Shares upon such exercise or if the method of payment for such Warrant Shares would constitute a violation of any applicable laws or regulations, including, without limitation, applicable United States, foreign, provincial and state securities laws and regulations. The Company may require Holder to make any representations and warranties to the Company as may be required by any applicable law or regulation (including, without limitation, applicable United States, foreign, provincial and state securities laws and regulations) before allowing this Warrant to be exercised.  Without limiting the generality of the foregoing, Warrant Shares issued upon exercise of this Warrant may not be issued in the name of any Person other than Holder unless the transfer conditions referred to in the legend endorsed on the cover page of this Warrant have been complied with to the satisfaction of the Company.  In addition, no Warrant Shares will be issued pursuant to the exercise of this Warrant unless such issuance and such exercise comply with all relevant requirements of any stock exchange upon which the Common Stock may then be listed.

7.             Transfer of Warrant. Subject to the transfer conditions referred to in the legend endorsed on the cover page of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment in the form attached hereto as Exhibit B, together with funds sufficient to pay any transfer taxes described in Section 3(f)(iv) in connection with the making of such transfer. Upon such compliance, surrender and delivery and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.

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8.             Holder Not Deemed a Stockholder; Limitations on Liability. Prior to the issuance to the Holder of the Warrant Shares to which the Holder is then entitled to receive upon the due exercise of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

9.             Replacement on Loss; Division and Combination.

(a)           Replacement of Warrant on Loss. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to the Company and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company at its own expense shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided, that, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

(b)           Division and Combination of Warrant. Subject to compliance with the applicable provisions of this Warrant as to any transfer or other assignment that may be involved in such division or combination, this Warrant may be divided or, following any such division of this Warrant, subsequently combined with other Warrants, upon the surrender of this Warrant or Warrants to the Company at its then principal executive offices, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the respective Holders. Subject to compliance with the applicable provisions of this Warrant as to any transfer or assignment that may be involved in such division or combination, the Company shall at its own expense execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants so surrendered in accordance with such notice. Such new Warrant or Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall be exercisable in the aggregate for an equivalent number of Warrant Shares as the Warrant or Warrants so surrendered in accordance with such notice.

10.           Compliance with the Securities Act.

(a)           Agreement to Comply with the Securities Act; Legend. The Holder, by acceptance of this Warrant, agrees to comply in all respects with the provisions of this Section 10 and the restrictive legend requirements set forth on the face of this Warrant and further agrees that that Holder shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act or applicable United States, foreign, provincial or state securities laws and regulations. This Warrant and all Warrant Shares issued upon exercise of this Warrant (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

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“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN ISSUED PURSUANT TO REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  AS SUCH, THE SECURITIES REPRESENTED BY THIS WARRANT ARE “RESTRICTED SECURITIES” AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF OTHER THAN (A) (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT UNDER THE SECURITIES ACT, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (B) PURSUANT TO THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF APPLICABLE STATE, PROVENTIAL AND FOREIGN SECURITIES LAWS OR PURSUANT TO ONE OR MORE EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENT, AND (C) IF THE CORPORATION REQUESTS, BASED ON AN OPINION SATISFACTORY TO THE CORPORATION WITH RESPECT TO FOREGOING (A) AND (B) HAS BEEN RENDERED BY COUNSEL.  THE HOLDER HEREOF AGREES THAT (X) ANY HEDGING TRANSACTION WITH RESPECT TO THE SECURITIES REPRESENTED BY THIS WARRANT WILL BE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT AND (Y) IT WILL DELIVER, OR CAUSE TO BE DELIVERED, TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS WARRANT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN REGULATION S UNDER THE SECURITIES ACT.”

(b)           Representations of the Holder. In connection with the issuance of this Warrant and each exercise of this Warrant, the Holder specifically represents, as of the Original Issue Date and each Exercise Date, to the Company as follows:

(i)            The Holder (A) is not a “U.S. Person” as defined in Rule 902 of Regulation S promulgated under the Securities Act and (B) is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. The Holder is acquiring this Warrant and all Warrant Shares issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.

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(ii)           The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Regulation S and Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

(iii)          The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. Subject to Section 10(b)(iv), the Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.

(iv)           The Holder acknowledges and agrees that neither the Company, nor any officer, director, employee or representative of the Company, nor any other Person has made or is making any representations or warranties of any kind or nature whatsoever, express or implied, beyond those expressly given by the Company in this Warrant and in the Convertible Note.

11.           Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of this Warrant and any transfers of this Warrant. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.

12.           Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by e-mail of a PDF (or similar electronic format) document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient; or (d) on the fourth day after the date mailed, by USPS certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the addresses indicated below (or at such other address for a party as shall be specified in a notice given in accordance with this Section 12).

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If to the Company:	Hawker Energy, Inc. 326 South Pacific Coast Highway Suite 102 Redondo Beach, CA 90277 E-mail: dkatic@hawkerenergyllc.com Attn:  President
with a copy to (which shall not constitute notice):	Rutan & Tucker, LLP 611 Anton Blvd., Suite 1400 Costa Mesa, CA 92626 E-mail: gamber@rutan.com Attn:  Gregg Amber, Esq. and E-Mail: gsleichter@rutan.com Attn: Garett Sleichter, Esq.
If to the Holder:	E-mail:   Attn:

13.           Cumulative Remedies. The rights and remedies provided in this Warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.

14.           Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this Warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

15.           Entire Agreement. This Warrant, together with the Convertible Note, constitutes the sole and entire agreement of the parties to this Warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the provisions of this Warrant and the provisions of the Convertible Note, the provisions of this Warrant shall control.

16.           Successor and Assigns. This Warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and permitted assigns of the Holder. Such successors and/or permitted assigns of the Holder shall be deemed to be a Holder for all purposes hereunder.

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17.           No Third-Party Beneficiaries. This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

18.           Headings. The headings in this Warrant are for reference only and shall not affect the interpretation of this Warrant.

19.           Amendment and Modification; Waiver. This Warrant may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Warrant shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

20.           Severability. If any term or provision of this Warrant is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Warrant or invalidate or render unenforceable such term or provision in any other jurisdiction.

21.           Governing Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Nevada.

22.           Submission to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Warrant or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of California in each case located in the city of Los Angeles and County of Los Angeles, California, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

23.           Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Warrant is likely to involve complicated and difficult issues and, therefore, to the fullest extent permitted by law, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Warrant or the transactions contemplated hereby.

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24.           Counterparts. This Warrant may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Warrant.

25.           No Strict Construction. This Warrant shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original Issue Date.

Hawker Energy, Inc.

By:

Name:

Title:

Accepted and agreed,

[HOLDER NAME]

By:

Name:

Title:

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EXHIBIT A

EXERCISE AGREEMENT

TO:           HAWKER ENERGY, INC.

The undersigned Holder hereby exercises the right to purchase _______________ shares of Common Stock of the Company pursuant to the terms of the attached Warrant.

The Aggregate Exercise Price for the purchase of such shares of Common Stock calculated in accordance with the Warrant equals: $_______________.  The undersigned Holder has either (a) enclosed herewith a certified or official bank check payable to the order of the Company in the full amount of such Aggregate Exercise Price or (b) prior to or on the date of this Exercise Agreement paid the full amount of such Aggregate Exercise Price by wire transfer of immediately available funds to an account designated in writing by the Company.

Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

The undersigned Holder represents that it is acquiring the shares upon exercise of the Warrant for its own account and not with a view toward, or for resale in connection with, the public sale or distribution of those shares, except pursuant to sales registered or exempted under the Securities Act of 1933, as amended (the “Securities Act”), and that as of the date hereof, the undersigned (A) is not a “U.S. Person” as defined in Rule 902 of Regulation S promulgated under the Securities Act and (B) is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act.

Name of Holder:

Signature of Holder:

Name of Authorized

Signatory (if an entity):

Title of Authorized

Signatory (if an entity):  

Dated:

EXHIBIT B

ASSIGNMENT

(To Be Signed Only On Transfer Of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees” the right represented by the within Warrant to purchase shares of Common Stock of Hawker Energy, Inc. into which the within Warrant relates specified under the headings “Number of Warrants Transferred,” respectively, opposite the name(s) of such person(s) and appoints each and any officer of the Corporation as attorney to transfer the undersigned’s respective right on the register of warrants maintained by the Corporation with full power of substitution in the premises.

Transferees Address Number of Warrants Transferred

Dated:	(Signature must conform to name of Holder as specified on the face of the Warrant)
	Address:
	Signature Guarantee

ACCEPTED AND AGREED:

[TRANSFEREE]

(Name)

The signature of the Holder to this Assignment must correspond exactly with the name of the Holder as set forth on the face of the Warrant in every particular and the signature must be guaranteed by a U.S. chartered bank or by a medallion signature guarantee from a member of a recognized Signature Medallion Guarantee Program.

EX-10.12

Exhibit 10.12

SARA CREEK GOLD CORP.

STOCK OPTION AGREEMENT

Sara Creek Gold Corp., a Nevada corporation (the “Company”), hereby grants to the optionee listed below (“Optionee”), an option (this “Option”) to purchase the number of shares of the Company’s common stock set forth below (the “Shares”), subject to the terms and conditions of this Stock Option Agreement. This Option is granted in connection with the termination of the Company 2014 Stock Plan Stock Option Agreement, dated May 14, 2014, by and among the Company and Kristian Andresen, and the cancellation of the options granted thereunder.

I. NOTICE OF STOCK OPTION GRANT

Optionee:		SMED CAPITAL CORP.
Date of Grant:		July 17, 2014
Exercise Price per Share:		$0.10
Total Number of Shares Granted:		1,000,000
Type of Shares:		Common Stock
Expiration Date:		May 13, 2024
Vesting Schedule:	This Option will vest in full on December 15, 2014.  The vesting of this Option is subject to the Continuous Service of Mr. Kristian Andresen (“Andresen”), an individual and beneficial owner of Optionee, as a Service Provider.

II. AGREEMENT

1.             Definitions. Any capitalized term used but not otherwise defined in this Stock Option Agreement shall have the meaning ascribed such term in this Section 1.

(a)           “Affiliate” means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under common control with, the Company.

(b)           “Board” means the Board of Directors of the Company.

(c)           “Cause” means:

(i)           With respect to any Employee or Consultant: (A) If the Employee or Consultant is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Cause, the definition contained therein; or (B) If no such agreement exists, or if such agreement does not define Cause: (1) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate; (2) conduct that results in or is reasonably likely to result in harm to the reputation or business of the Company or any of its Affiliates; (3) gross negligence or willful misconduct with respect to the Company or an Affiliate; or (4) material violation of state or federal securities laws.

(ii)           With respect to any Director, a determination by a majority of the disinterested Board members that the Director has engaged in any of the following:(A) malfeasance in office; (B) gross misconduct or neglect; (C) false or fraudulent misrepresentation inducing the Director’s appointment; (D) willful conversion of corporate funds; or (E) repeated failure to participate in Board meetings on a regular basis despite having received proper notice of the meetings in advance.

(iii)           The Company, in its absolute discretion shall determine the effect of all matters and questions relating to whether a Service Provider has been discharged for Cause.

(d)           “Code” means the Internal Revenue Code of 1986, as amended.

(e)           “Common Stock” means the Common Stock of the Company.

(f)           “Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to that entity.

(g)           “Continuous Service” means that the Service Provider’s service with the Company or an Affiliate, whether as an Employee, Consultant or Director, is not interrupted or terminated. The Service Provider’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Service Provider renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Service Provider’s Continuous Service; provided further that if this Option is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an Employee of the Company to a Director of an Affiliate will not constitute an interruption of Continuous Service. The Committee or its delegate, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal or family leave of absence.

(h)           “Director” means a member of the Board.

(i)           “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(j)           “Employee” means any person, including officers, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

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(k)           “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(l)           “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i)           If the Common Stock is listed on any established stock exchange or a national market system, including without limitation The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Company deems reliable;

(ii)           If the Common Stock is regularly quoted by OTCQB or other recognized marketplace or securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination; or

(iii)           In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Company.

(m)           “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(n)           “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(o)           “Sale Event”means (i) any sale of Common Stock (excluding issuances of Common Stock by the Company) in a single transaction or a series of related transactions in which the holders of Common Stock immediately prior to such sale of Common Stock do not, directly or indirectly, own at least a majority of the Common Stock outstanding immediately after such sale of Common Stock, (ii) any merger, consolidation, reorganization or other business combination of the Company with or into any other corporation or other entity in which the holders of Common Stock immediately prior to such merger, consolidation, reorganization or business combination do not, directly or indirectly, own capital stock of the entity surviving such merger, consolidation, reorganization or business combination representing at least a majority of the combined voting power of the outstanding securities of such entity immediately after such merger, consolidation, reorganization or business combination, or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company to an unrelated person or entity by means of a single transaction or a series of related transactions.

(p)           “Securities Act means the Securities Act of 1933, as amended.

(q)           “Service Provider” means an Employee, Director or Consultant.

(r)           “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

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2.             Grant of Option.  The Company hereby grants to Optionee an Option to purchase the number of Shares set forth in the Notice of Stock Option Grant above, at the exercise price per Share set forth in the Notice of Stock Option Grant (the “Exercise Price”).

3.             Exercise of Option.  This Option is exercisable as follows:

(a)           Right to Exercise.

(i)           This Option shall be exercisable according to the vesting schedule set forth in the Notice of Stock Option Grant. For purposes of this Stock Option Agreement, Shares subject to this Option shall vest based on the Continuous Service of Andresen as a Service Provider.

(ii)           This Option may not be exercised for a fraction of a Share.

(iii)           In the event of Andresen’s death, Disability or other termination of Andresen’s status as a Service Provider, the exercisability of this Option shall be governed by Sections 8, 9 and 10 below, as applicable.

(iv)           In no event may this Option be exercised after 5:00 p.m. California time on the Expiration Date set forth in the Notice of Stock Option Grant.

(v)           The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Shares upon exercise of this Option; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Shares to Optionee or to any other person permitted to receive Shares upon exercise of this Option, and no such issuance or delivery shall be made unless and until Optionee or such person has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.

(b)           Method of Exercise.  This Option shall be exercisable by written notice (substantially in the form of Exhibit A, the “Exercise Notice”). The notice must state the number of Shares for which this Option is being exercised and contain representations and agreements with respect to the Shares required pursuant to the provisions of the Plan or otherwise requested by the Company. The Exercise Notice must be signed by Optionee and delivered in person or by certified mail to the President of the Company and, regardless of the method of delivery, received by the Company no later than 5:00 p.m. California time on the Expiration Date. The Exercise Notice must be accompanied by payment of the Exercise Price.

(c)           Conditional Exercise. Notwithstanding any other provision of this Stock Option Agreement, if an exercise of any portion of this Option is to be made in connection with a public offering or a Sale Event, such exercise may at the election of Optionee be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

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(d)           Reservation of Shares. For so long as this Option is exercisable, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the purpose of issuance upon the exercise of this Option, the maximum number of Shares issuable upon the exercise of this Option, and the par value per Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Shares receivable upon the exercise of this Option above the Exercise Price then in effect, and shall take all actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Option.

4.             Adjustment to Exercise Price and Number of Shares; Sale Event. The Exercise Price and the number of Shares issuable upon exercise of this Option shall be subject to adjustment from time to time as provided in this Section 4.

(a)           Adjustment to Exercise Price and Warrant Shares Upon Dividend, Subdivision or Combination of Common Stock.  If the Company, at any time or from time to time after the date of this Stock Option Agreement, (i) pays a dividend or make any other distribution upon the Common Stock or any other capital stock of the Company payable in shares of Common Stock or in options or convertible securities, or (ii) subdivides (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, then the Exercise Price in effect immediately prior to the dividend, distribution or subdivision shall be proportionately reduced and the number of Shares issuable upon exercise of this Option shall be proportionately increased. If the Company at any time combines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to the combination shall be proportionately increased and the number of Shares issuable upon exercise of this Option shall be proportionately decreased. Any adjustment under this Section 4(a) shall become effective concurrent at the time the dividend, subdivision or combination becomes effective.

(b)           Adjustment to Exercise Price and Warrant Shares Upon Reorganization, Reclassification, Consolidation or Merger.  In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than (x) a change in par value, from par value to no par value, or from no par value to par value, or (y) as a result of a stock dividend or subdivision, split-up or combination of shares), (iii) consolidation or merger of the Company with or into another person, (iv) sale of all or substantially all of the Company’s assets to another person or (v) other similar transaction (other than any such transaction covered by Section 4(a)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Option shall, immediately after the reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Shares then exercisable under this Option, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor person resulting from such transaction to which Optionee would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if Optionee had exercised this Option in full immediately prior to the time of the reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Shares then issuable hereunder as a result of the exercise; and, in such case, appropriate adjustment (in form and substance determined by the Board in its reasonable discretion) shall be made with respect to Optionee’s rights under this Option to insure that the provisions of this Section 4 shall thereafter be applicable, as nearly as possible, to this Option in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of this Option (including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing person is other than the Company, an immediate adjustment in the Exercise Price to the value per share for the Common Stock reflected by the terms of the consolidation, merger, sale or similar transaction, and a corresponding immediate adjustment to the number of Shares acquirable upon exercise of this Option without regard to any limitations or restrictions on exercise, if the value so reflected is less than the Exercise Price in effect immediately prior to such consolidation, merger, sale or similar transaction). The provisions of this Section 4(b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. Subject to Section 4(f), the Company shall not effect any reorganization, reclassification, consolidation, merger, sale or similar transaction unless, prior to the consummation thereof, the successor person (if other than the Company) resulting from the reorganization, reclassification, consolidation, merger, sale or similar transaction, assumes, by written instrument substantially similar in form and substance to this Option, the obligation to deliver to Optionee the shares of stock, securities or assets which, in accordance with the foregoing provisions, Optionee shall be entitled to receive upon exercise of this Option. With respect to any corporate event or other transaction contemplated by the provisions of this Section 4(b), Optionee shall have the right to elect prior to the consummation of the event or transaction, to give effect to the exercise rights contained in Section 3 instead of giving effect to the provisions contained in this Section 4(b) with respect to this Option.

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(c)           Certain Events. If any event of the type contemplated by the provisions of this Section 4 but not expressly provided for by these provisions occurs, then the Board shall make an appropriate adjustment in the Exercise Price and the number of Shares issuable upon exercise of this Option so as to protect the rights of Optionee in a manner consistent with the provisions of this Section 4; provided, that no such adjustment pursuant to this Section 4(c) shall increase the Exercise Price or decrease the number of Shares issuable as otherwise determined pursuant to this Section 4.

(d)           Certificate as to Adjustment.

(i)           As promptly as reasonably practicable following any adjustment of the Exercise Price that results in an increase or decrease of the Exercise Price of $0.01 or more, but in any event not later than 20 business days thereafter, the Company shall furnish to Optionee a certificate of an executive Officer setting forth in reasonable detail the adjustment and the facts upon which it is based and certifying the calculation thereof.

(ii)           As promptly as reasonably practicable following the receipt by the Company of a written request by Optionee, but in any event not later than 10 business days thereafter, the Company shall furnish to Optionee a certificate of an executive Officer certifying the Exercise Price then in effect and the number of Shares or the amount, if any, of other shares of stock, securities or assets then issuable upon exercise of the Option; provided that Optionee may only exercise its rights pursuant to this Section 4(d)(ii) once during any 12 consecutive month period.

(e)           Notices. In the event:

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(i)           that the Company takes a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon exercise of the Option) for the purpose of entitling or enabling them to receive any dividend or other distribution, to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(ii)           of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another person, or sale of all or substantially all of the Company’s assets to another person; or

(iii)           of the voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 then, and in each such case, the Company shall send or cause to be sent to Optionee at least 20 days prior to the applicable record date or the applicable expected effective date, as the case may be, for the event, a written notice specifying, as the case may be, (A) the record date for the dividend, distribution or other right or action, and a description of the dividend, distribution or other right, or (B) the effective date on which the reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is proposed to take place, and the date, if any is to be fixed, as of which the books of the Company shall close or a record shall be taken with respect to which the holders of record of Common Stock (or the other capital stock or securities at the time issuable upon exercise of the Option) shall be entitled to exchange their shares of Common Stock (or other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, and the amount per share and character of the exchange applicable to the Option and the Shares.

(f)           Sale Event.  Notwithstanding anything in this Stock Option Agreement to the contrary, the Company shall have the right (exercisable in the sole and absolute discretion of the Board), but not the obligation, in connection with a Sale Event to make or provide for a cash payment to Optionee, in exchange for the cancellation of this Option, in an amount equal to the difference between (i) the value as determined by the Board of the consideration payable, or otherwise to be received by stockholders, per share of Common Stock pursuant to a Sale Event multiplied by the number of Shares then issuable under this Option and (b) the aggregate Exercise Price of all the Shares, subject to the other terms and conditions of the Sale Event (such as representations and warranties, holdback and escrow amounts, indemnification obligations and purchase price adjustments) to the extent applicable to Common Stock holders.

5.             Lock-Up Period.  Optionee agrees, if so requested by the Company or an underwriter of shares of stock in connection with any public offering of the Company, not to directly or indirectly offer, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of or otherwise dispose of or transfer any shares of stock held by it for that period, not to exceed 180 days following the effective date of the relevant registration statement filed under the Act.  The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of the 180-day period.

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6.             Method of Payment.  Payment of the Exercise Price shall be paid:

(a)           In cash, by certified check, or by wire transfer of immediately available funds;

(b)           Through the delivery of shares of stock that have been purchased by Optionee on the open market or that are beneficially owned by Optionee and are not then subject to restrictions under any Company plan or agreement; provided that if the surrendered shares were acquired directly from the Company, those shares have (i) been owned by the Optionee for more than six months as of the date of surrender, and (ii) a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is being exercised;

(c)           If expressly authorized by the Company upon the request of Optionee (which authorization may be granted or withheld in the Company’s sole and absolute discretion), by Optionee delivering to the Company a properly executed Exercise Notice together with irrevocable instructions to a broker to promptly deliver to the Company the purchase price in cash, by cashier’s check payable to the Company, or by wire transfer of immediately available funds; provided that if Optionee chooses to pay the purchase price in this manner, Optionee and the broker shall comply with procedures and enter into agreements of indemnity and other agreements prescribed by the Company as a condition of the payment procedure;

(d)           By a “net cashless exercise” arrangement pursuant to which the Company will reduce the number of Shares issuable upon exercise of this Option by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate Exercise Price; or

(e)           Any combination of the foregoing methods of payment (subject to approval or authorization of the Company).

7.             Restrictions on Exercise.  Notwithstanding anything herein to the contrary, this Option may not be exercised if the issuance of Shares upon exercise or if the method of payment for the Shares would constitute a violation of any applicable laws or regulations, including, without limitation, applicable federal and state securities laws and regulations.  The Company may require Optionee to make any representations and warranties to the Company required by any applicable law or regulation before allowing this Option to be exercised.  Shares issued upon exercise of this Option may not be issued in the name of any person or entity other than Optionee unless Optionee and/or the person or entity in whose name the Shares are proposed to be issued have delivered to the Company all information and documents the Company deems relevant in connection therewith, including, without limitation, information with respect to the person or entity in whose name the Shares are proposed to be issued, representations regarding exemptions from registration under applicable federal and state securities laws (and, if requested by the Company, an opinion of legal counsel of Optionee and/or the person or entity in whose name the Shares are proposed to be issued, which counsel shall be reasonably acceptable to the Company, regarding exemptions from registration under applicable federal and state securities laws), and the person or entity in whose name the Shares are proposed to be issued agreeing in writing to the terms and conditions of this Stock Option Agreement concerning the issuance of any Shares.  No Shares will be issued pursuant to the exercise of this Option unless the issuance and the exercise comply with all relevant requirements of any stock exchange upon which the Shares may then be listed.

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8.             Termination of Relationship. Upon a cessation of Andresen’s Continuous Service (other than by reason of termination for Cause or Andresen’s death or Disability), then to the extent (a) not vested as of the date on which Andresen ceases to be a Service Provider, the unvested portion of this Option shall immediately terminate, and (b) vested as of the date on which Andresen ceases to be a Service Provider (taking into account any vesting that may occur in connection with termination), the vested portion of this Option shall remain exercisable for a period of six months immediately following the date of termination (but in no event later than 5:00 p.m. California time on the Expiration Date set forth in the Notice of Stock Option Grant). If Optionee does not exercise the vested portion of this Option within the time specified in this Section 8, the vested portion of this Option shall terminate.

9.             Termination for Cause.  Upon a cessation of Andresen’s Continuous Service by reason of termination for Cause, this Option shall terminate in full as of the start of business on the date of Andresen’s termination, regardless of whether this Option is then vested and/or exercisable with respect to any Shares.

10.           Disability or Death of Andresen.  Upon a cessation of Andresen’s Continuous Service as a result of Disability or as a result of Andresen’s death, then to the extent (a) not vested as of the date on which Andresen ceases to be a Service Provider due to Disability or death, the unvested portion of this Option shall immediately terminate, and (b) vested as of the date on which Andresen ceases to be a Service Provider due to Disability or death, the vested portion of this Option shall remain exercisable for a period of six months immediately following the date of termination (but in no event later than 5:00 p.m. California time on the Expiration Date set forth in the Notice of Stock Option Grant). If Optionee does not exercise the vested portion of this Option within the time specified in this Section 10, the vested portion of this Option shall terminate.

11.           Compliance with Securities Act.

(a)           Optionee, by acceptance of this Option, agrees to comply in all respects with the provisions of this Section 11 and the restrictive legend requirements set forth below and further agrees that Optionee shall not offer, sell or otherwise dispose of this Option or any Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act or applicable United States, foreign, provincial or state securities laws and regulations. This Option and all Shares issued upon exercise of this Option (unless registered under the Securities Act) shall be stamped or imprinted with a legend in substantially the following form:

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“THIS OPTION AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS OPTION HAVE BEEN ISSUED PURSUANT TO REGULATION S PROMULGATED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  AS SUCH, THE SECURITIES REPRESENTED BY THIS OPTION ARE “RESTRICTED SECURITIES” AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF OTHER THAN (A) (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES ISSUABLE UPON EXERCISE OF THIS OPTION UNDER THE SECURITIES ACT, (II) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (B) PURSUANT TO THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF APPLICABLE STATE, PROVINCIAL AND FOREIGN SECURITIES LAWS OR PURSUANT TO ONE OR MORE EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENT, AND (C) IF THE COMPANY REQUESTS, BASED ON AN OPINION SATISFACTORY TO THE COMPANY WITH RESPECT TO FOREGOING (A) AND (B) HAS BEEN RENDERED BY COUNSEL.  THE HOLDER HEREOF AGREES THAT (X) ANY HEDGING TRANSACTION WITH RESPECT TO THE SECURITIES REPRESENTED BY THIS OPTION WILL BE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT AND (Y) IT WILL DELIVER, OR CAUSE TO BE DELIVERED, TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS OPTION ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE RESPECTIVE MEANINGS ASSIGNED TO THEM IN REGULATION S UNDER THE SECURITIES ACT.”

(b)           In connection with the issuance of this Option, Optionee specifically represents to the Company as follows:

(i)           Optionee (A) is not a “U.S. Person” as defined in Rule 902 of Regulation S promulgated under the Securities Act and (B) is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act. Optionee is acquiring this Option and all Shares issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Option or the Shares, except pursuant to sales registered or exempted under the Securities Act.

(ii)           Optionee understands and acknowledges that this Option and the Shares to be issued upon exercise hereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, Optionee represents that it is familiar with Regulation S and Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

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(iii)           Optionee acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Option and the Shares. Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Option and the business, properties, prospects and financial condition of the Company.

(iv)           Optionee acknowledges and agrees that neither the Company, nor any Officer, Director, Employee or representative of the Company, nor any other person has made or is making any representations or warranties of any kind or nature whatsoever, express or implied, beyond those expressly given by the Company in this Option.

(c)           If the Shares purchasable pursuant to the exercise of this Option have not been registered under the Act or any applicable state laws at the time this Option is exercised, Optionee or the holder of this Option shall, concurrently with the exercise of all or any portion of this Option, deliver to the Company an executed Investment Representation Statement in the form of Exhibit B and shall make any other written representations and warranties deemed necessary or appropriate by the Company or the Company’s counsel.

12.           Transferability of Option.  Prior to this Option vesting in full, neither this Option nor the rights herein may be sold, pledged, assigned, hypothecated, transferred or otherwise disposed of except by laws of descent.  Once this Option has vested in full, subject in all respects to Section 11, Optionee may freely sell, pledge, assign, hypothecate, transfer or otherwise dispose of this Option and any rights herein.  This Stock Option Agreement and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors and assigns of the Company and of Optionee.

13.           Term of Option.  Subject to earlier termination in accordance with Sections 8, 9 and 10, this Option may be exercised only prior to 5:00 p.m. California time on the Expiration Date set forth in the Notice of Stock Option Grant.

14.           Construction.  The titles of Sections in this Stock Option Agreement are used for convenience only and are not, and shall not be, considered in construing or interpreting this Stock Option Agreement.  The words “include,” “includes,” and “including” when used herein are deemed in each case to be followed by the words “without limitation.”  Words (including defined terms) in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender or neutral gender as the context requires.  The terms “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise expressly specified, be construed to refer to this Stock Option Agreement as a whole and not to any particular provision of this Stock Option Agreement.

15.           No Third-Party Beneficiaries; No Right to Employment.  This Option is for the sole benefit of the Optionee and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Option. Nothing in this Stock Option Agreement confers upon Andresen any right to continue as an employee, officer, director or consultant of the Company or any Parent, Subsidiary or other Affiliate of the Company, or interferes with or restricts in any way the rights of the Company or any Parent, Subsidiary or other Affiliate of the Company, which are hereby expressly reserved, to discharge Andresen at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written employment agreement, or written consulting agreement, between Andresen and the Company or any Parent, Subsidiary or other Affiliate of the Company.

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16.           Headings. The headings in this Stock Option Agreement are for reference only and shall not affect the interpretation of this Stock Option Agreement.

17.           Amendment and Modification; Waiver. This Stock Option Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or Optionee of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Stock Option Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

18.           Severability. If any term or provision of this Stock Option Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Stock Option Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

19.           Governing Law. This Stock Option Agreement shall be governed by and construed in accordance with the internal laws of the State of Nevada without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Nevada.

20.           Submission to Jurisdiction. Any legal suit, action or proceeding arising out of or based upon this Stock Option Agreement or the transactions contemplated hereby may be instituted in the federal courts of the United States of America or the courts of the State of California in each case located in the city of Los Angeles and County of Los Angeles, California, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of process, summons, notice or other document by certified or registered mail to such party’s address set forth herein shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or any proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

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21.           Counterparts. This Stock Option Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Stock Option Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Stock Option Agreement.

(Signature Page Follows)

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This Stock Option Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which shall constitute one document. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

SARA CREEK GOLD CORP.
By:	/s/ Darren Katic
Name:  Darren Katic
Title:    President

Optionee hereby accepts this Option subject to all of the terms and provisions of this Stock Option Agreement. Optionee has reviewed this Stock Option Agreement in its entirety, has had an opportunity to obtain the advice of counsel prior to executing this Stock Option Agreement and fully understands all provisions of this Stock Option Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Company upon any questions arising under this Stock Option Agreement.

Dated:	July 17, 2014	SMED CAPITAL CORP.
		By:	/s/ Kristian Andresen
		Name: Kristian Andresen
		Its: President and Director

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EXHIBIT A

SARA CREEK GOLD CORP.

STOCK OPTION EXERCISE NOTICE

Sara Creek Gold Corp.

1.           Exercise of Option.  Effective as of today, _______________, the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase _____ shares of common stock (the “Shares”) of Sara Creek Gold Corp., a Nevada corporation (the “Company”), under the Stock Option Agreement dated ____________ (the “Option Agreement”). Capitalized terms used herein without definition shall have the meanings given in the Option Agreement.

Date of Grant:
Number of Shares Exercised:
Exercise Price per Share:	$
Total Exercise Price:	$
Method of Payment of Exercise Price:
Certificate to be issued in name of:

2.           Rights as Stockholder.  Optionee shall have the rights of a stockholder only as to Shares acquired upon the exercise of the Option and not as to unexercised Shares.  No Shares shall be “acquired” for purposes of the Option Agreement unless and until the Option has been properly exercised pursuant to the terms of the Option Agreement, the Company has issued and delivered a certificate representing the Shares, and the name of the holder of such Shares has been entered on the books of the Company as a stockholder.

3.           Tax Consultation.  Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company or any of its agents or representatives for any tax advice.

Date:	Submitted by:
	OPTIONEE
	By:
	Name:
	Title

Exhibit A

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:
COMPANY:	SARA CREEK GOLD CORP.
SECURITY:	COMMON STOCK
AMOUNT:
DATE:

In connection with the purchase of the above-listed shares of common stock (the “Shares”) of Sara Creek Gold Corp., a Nevada corporation (the “Company”), the undersigned (“Optionee”) represents and warrants to the Company as follows:

(a)           Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. Optionee is acquiring the Shares for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Act”).

(b)           Optionee acknowledges and understands that the Shares constitute “restricted securities” under the Act and have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. Optionee understands that the Shares must be held indefinitely unless they are subsequently registered under the Act or an exemption from registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Shares. Optionee understands that the certificate evidencing the Shares will be imprinted with a legend which prohibits the transfer of the Shares unless they are registered or registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable state securities laws.

(c)           Optionee is familiar with the provisions of Rule 144 promulgated under the Act, which, in substance, permits limited public resale of “restricted securities” acquired directly or indirectly from the issuer in a non-public offering subject to the satisfaction of certain conditions.  Optionee further understands that if all of the applicable requirements of Rule 144 are not satisfied, registration under the Act or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering or pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for the offers or sales, and that the persons and their respective brokers who participate in the transactions do so at their own risk. Optionee understands that no assurances can be given that any other registration exemption will be available in that event.

Exhibit B

(d)           Optionee understands and acknowledges that the Company will rely upon the accuracy and truth of the foregoing representations and Optionee hereby consents to that reliance.

Date: Signature of Optionee:

 B-2

EX-10.20

Exhibit 10.20

THIRD AMENDED AND RESTATED SECURITY AGREEMENT

This THIRD AMENDED AND RESTATED SECURITY AGREEMENT, dated as of August 29, 2014 (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof, this “Agreement”), made by and among TEG Oil & Gas USA, Inc., a Colorado corporation (the “Debtor”), in favor of Tapia Holdings, LLC, a Delaware limited liability company, (the “Secured Party”).

WHEREAS, the Debtor and the Secured Party are parties to a Second Amended and Restated Security Agreement dated June 27, 2014 (as amended, the “Original Security Agreement”);

WHEREAS, the Debtor has requested that the Secured Party advance additional funds to the Debtor; and

WHEREAS, the Secured Party is willing to advance additional funds on condition that the Debtor execute and deliver this Agreement, which shall supersede in its entirety the Original Security Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.             Definitions.

(a)           Unless otherwise specified herein, all references to Sections are to Sections of this Agreement.

(b)           Unless otherwise defined in this Agreement, terms that are defined in the UCC shall have the meanings assigned to them in the UCC. However, if a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified in Article 9.

(c)           For purposes of this Agreement, the following terms have the following meanings:

“Acquisition Proposal” means any offer or proposal, including any proposal made under Section 363 of the Bankruptcy Code or as part of a Plan of Reorganization under the Bankruptcy Code, concerning any (i) merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, share exchange, business combination or similar transaction involving Sefton or the Debtor, (ii) sale, lease or other disposition of assets of Sefton or the Debtor representing 50% or more of the assets of Sefton or the Debtor, (iii) issuance or sale by Sefton or the Debtor of equity interests representing 50% or more of the voting power (or 50% or more of the aggregate number of all outstanding shares or capital stock) of Sefton or the Debtor, (iv) transaction in which any Person will acquire beneficial ownership or the right to acquire beneficial ownership or any group has been formed which beneficially owns or has the right to acquire beneficial ownership of, equity interests representing 50% or more of the voting power (or 50% or more of the aggregate number of all outstanding shares of capital stock) of Sefton or the Debtor or (v) any combination of the foregoing (in each case, other than by the Secured Party or an affiliate of the Secured Party).

“Alternative Acquisition Agreement” has the meaning set forth in Section 7(a)(ii).

“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.), as amended, and any successor or similar foreign statute or law pertaining to the relief of debtors.

“Collateral” has the meaning set forth in Section 2.

“Event of Default” means any of the following:

(i)             the failure of the Debtor to pay any part of the principal of, or interest on, the Note, when due, whether at stated maturity, by acceleration or otherwise;

(ii)            a breach by the Debtor of any representation, warranty or covenant made by the Debtor under this Agreement;

(iii)           any default under, breach of any provisions pertaining to, or acceleration of any Superior Indebtedness;

(iv)            all or substantially all of the assets of the Debtor, or the Collateral or any material portion thereof, is attached, seized, subject to a writ of distress warrant, or levied upon, or comes into the possession of any receiver, trustee, custodian or assignee for the benefit of creditors without being vacated, stayed, dismissed or set aside within 30 days after the occurrence thereof;

(v)            Sefton ceases to own at least 51% of the outstanding equity securities and voting power of the Debtor;

(vi)           The Debtor or Sefton (A) applies for or consents to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (B) makes a general assignment for the benefit of its creditors, (C) commences a voluntary case under the Bankruptcy Code (as now or hereafter in effect), (D) files a petition seeking to take advantage of any other law providing for the relief of debtors, (E) fails to controvert in a timely or appropriate manner, or acquiesces in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code, (F) takes any action under the laws of its jurisdiction of organization analogous to any of the foregoing or (G) takes any requisite action for the purpose of effecting any of the foregoing; or

(vii)          a proceeding or case is commenced, without the application or consent of the Debtor or Sefton in any court of competent jurisdiction, seeking (A) the liquidation, reorganization, dissolution, winding up, or composition or readjustment of its debts, (B) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets or (C) similar relief in respect of it, under any law providing for the relief of debtors, and the proceeding or case continues undismissed, or unstayed and in effect, for a period of 45 days against the Debtor or Sefton; or action under the laws of the jurisdiction of organization of the Debtor or Sefton analogous to any of the foregoing is taken with respect to the Debtor or Sefton and continues undismissed, or unstayed and in effect, for a period of 45 days.

2

“Loans” means all advances under the Note and any other loans or extensions of credit made by the Secured Party to the Debtors, including any loans or advances that may be made after the date hereof.

“Note” means the Secured Subordinated Note Due December 29, 2014, dated June 27, 2014 made by the Debtor in favor of the Secured Party.

“Notice Period” has the meaning set forth in Section 7(a)(iv)(A).

“Other Interested Party” has the meaning set forth in Section 7(a)(iii).

“Person” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization or other entity.

“Proceeds” means “proceeds” as that term is defined in Section 9102 of the UCC and, in any event, includes, without limitation, all dividends or other income from the Collateral, collections thereon or distributions with respect thereto.

“Representatives” means a party’s directors, officers, employees, accountants, consultants, legal counsel, advisors, agents and other representatives.

“Secured Obligations” has the meaning set forth in Section 3.

“Secured Party’s Proposal” means the proposal by the Secured Party to acquire the assets of the Debtor as evidenced by the letter of intent dated April 8, 2014 between the Debtor and the Secured Party, as it has been and may be revised to reflect structuring changes due to tax, accounting or other concerns, as well as economic changes resulting from due diligence and production conditions since that date.

“Sefton” means Sefton Resources, Inc., a British Virgin Islands corporation and the parent company of the Debtor.

“Superior Indebtedness” has the meaning set forth in the Note.

“Superior Proposal” means a written and bona fide Acquisition Proposal made by a third party that Sefton’s board of directors has determined in its good faith judgment, after consultation with its outside legal counsel and with its financial advisors, is reasonably likely to be consummated in accordance with its terms, taking into account all legal, financial (including the availability of committed financing) and regulatory aspects of the proposal and the Person making the proposal and would, if consummated, result in a transaction that is more favorable to Sefton’s shareholders, from a financial point of view, than the Secured Party’s Proposal (after giving effect to all adjustments to the terms thereof that may be irrevocably offered by the Secured Party).

3

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of California or, when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial Code as in effect from time to time in that state.

2.             Grant of Security Interest. The Debtor hereby reaffirms its pledge and grant of a security interest under the Original Security Agreement, and pledges and grants to the Secured Party, and hereby creates a continuing lien and security interest in favor of the Secured Party in and to all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter from time to time arising or acquired (collectively, the “Collateral”):

(a)           all fixtures and personal property of every kind and nature including all accounts, goods (including inventory and equipment), documents (including, if applicable, electronic documents), instruments, promissory notes, chattel paper (whether tangible or electronic), letters of credit, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), securities and all other investment property, general intangibles (including all payment intangibles), money, deposit accounts, and any other contract rights or rights to the payment of money; and

(b)           all Proceeds and products of each of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions to, substitutions and replacements for, and rents, profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to the Debtor from time to time with respect to any of the foregoing.

3.             Secured Obligations. The Collateral secures the payment and performance of:

(a)           the obligations of the Debtor from time to time arising under the Note, this Agreement or otherwise with respect to the due and punctual payment of (i) the principal of and premium, if any, and interest on the Loans (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations, including fees, costs, attorneys’ fees and disbursements, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Debtor under the Loan Agreement and this Agreement; and

(b)           the due and punctual performance of all covenants, agreements, duties, debts, obligations and liabilities of the Debtor under or pursuant to the Note and this Agreement (all such obligations, liabilities, sums and expenses set forth in Section 3 being herein collectively called the “Secured Obligations”).

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4.             Perfection of Security Interest and Further Assurances.

(a)           The Debtor shall, from time to time, as may be required by the Secured Party with respect to all Collateral, immediately take all actions as may be requested by the Secured Party to perfect the security interest of the Secured Party in the Collateral, including, with respect to all Collateral over which control may be obtained within the meaning of Sections 8106, 9104, 9105, 9106 and 9107 of the UCC, as applicable, the Debtor shall, upon the request of the Secured Party, take all actions as may be requested from time to time by the Secured Party so that control of such Collateral is obtained and at all times held by the Secured Party. All of the foregoing shall be at the sole cost and expense of the Debtor.

(b)           The Debtor hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, including any financing or continuation statements or other documents for the purpose of perfecting, confirming, continuing, enforcing or protecting the security interest granted by the Debtor hereunder, without the signature of the Debtor where permitted by law, including the filing of a financing statement describing the Collateral as all assets now owned or hereafter acquired by the Debtor, or words of similar effect. The Debtor shall provide all information required by the Secured Party pursuant to this Section 4(b) promptly to the Secured Party upon request.

(c)           If the Debtor at any time holds or acquires any certificated securities, promissory notes, tangible chattel paper, negotiable documents or warehouse receipts relating to the Collateral, the Debtor shall endorse, assign and deliver those documents or instruments to the Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Secured Party may from time to time specify.

(d)           If any Collateral is at any time in the possession of a bailee, the Debtor shall promptly notify the Secured Party and, at the Secured Party’s request and option, shall promptly obtain an acknowledgment from the bailee, in form and substance satisfactory to the Secured Party, that the bailee holds that Collateral for the benefit of the Secured Party and the bailee agrees to comply, without further consent of the Debtor, at any time with instructions of the Secured Party as to that Collateral.

(e)           The Debtor shall, at any time and from time to time, at the expense of the Debtor, promptly execute and deliver all further instruments and documents, obtain such agreements from third parties, and take all further action, that may be necessary or desirable, or that the Secured Party may reasonably request, in order to perfect and protect any security interest granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder or under any other agreement with respect to any Collateral.

5.             Representations and Warranties. The Debtor represents and warrants as follows:

(a)           (i) the Debtor’s exact legal name is that indicated on the signature page, (ii) the Debtor is a Colorado corporation, and (iii) the Debtor’s place of business (or, if more than one, its chief executive office), and its mailing address are as set forth on the signature page.

(b)           None of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of the Collateral.

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(c)           The Debtor has at all times operated its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

(d)           At the time the Collateral becomes subject to the lien and security interest created by this Agreement, the Debtor will be the sole, direct, legal and beneficial owner thereof, free and clear of any lien, security interest, option, adverse claim, setoff, default, defense, condition precedent or other encumbrance except for the security interest created by this Agreement and liens securing Superior Indebtedness.

(e)           The pledge of the Collateral pursuant to this Agreement creates a valid and perfected security interest in the Collateral, securing the payment and performance when due of the Secured Obligations.

(f)           It has full power, authority and legal right to borrow the Loans and pledge the Collateral pursuant to this Agreement.

(g)           Each of this Agreement and the Note has been duly authorized, executed and delivered by the Debtor and constitutes a legal, valid and binding obligation of the Debtor enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and subject to equitable principles (regardless of whether enforcement is sought in equity or at law).

(h)           No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the borrowing of the Loans and the pledge by the Debtor of the Collateral pursuant to this Agreement or for the execution and delivery of the Note and this Agreement by the Debtor or the performance by the Debtor of its obligations thereunder.

(i)           The execution and delivery of the Note and this Agreement by the Debtor and the performance by the Debtor of its obligations under the Note and this Agreement will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, applicable to the Debtor or any of its property, or the organizational or governing documents of the Debtor or any agreement or instrument to which the Debtor is party or by which it or its property is bound.

6.             Receivables. If any Event of Default has occurred and is on-going, the Secured Party may, or at the request and option of the Secured Party the Debtor shall, notify account debtors and other persons obligated on any of the Collateral of the security interest of the Secured Party in any account, chattel paper, general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Secured Party.

7.             Covenants. The Debtor covenants as follows:

(a)           The Debtor acknowledges that the Loans are being made in contemplation of, and as partial consideration for, the Secured Party’s Proposal. Except as permitted by this Section 7(a), the Debtor will, and it will cause its Representatives to:

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(i)            (A) immediately cease and cause to be terminated any solicitation, encouragement, activities, discussions or negotiations with any Persons that may be ongoing with respect to any Acquisition Proposal, (B) take the necessary steps to promptly inform such Persons of the obligations set forth in this Section 7(a), (C) immediately instruct each Person that has previously executed a confidentiality agreement in connection with that Person’s consideration of an Acquisition Proposal to return to the Debtor or destroy any non-public information previously furnished to such Person or to any Person’s Representatives by or on behalf of the Debtor, and (D) enforce (and not release, waive, amend or modify the provisions of) any confidentiality, non-solicit, non-use or standstill agreements entered into with any Person; and

(ii)            not, directly or indirectly: (A) solicit, initiate, seek or knowingly encourage or facilitate or take any action to solicit, initiate or seek or knowingly encourage or facilitate any inquiry, expression of interest, proposal or offer that constitutes or would reasonably be expected to lead to an Acquisition Proposal, (B) enter into, participate in, maintain or continue any discussions or negotiations relating to, any Acquisition Proposal with any Person other than the Secured Party, (C) furnish to any Person other than the Secured Party any information that the Debtor believes or should reasonably expect would be used in connection with, or for the purposes of formulating, any Acquisition Proposal, (D) enter into any agreement, letter of intent, memorandum of understanding, agreement in principle or contract providing for or otherwise relating to any Acquisition Proposal (each, an “Alternative Acquisition Agreement”) or (E) submit any Acquisition Proposal or any matter related thereto to the vote of the stockholders of the Company.

(iii)           From and after the date of this Agreement, the Debtor will promptly (and in any event within 24 hours) provide the Secured Party with: (A) a written description of any inquiry, expression of interest, proposal or offer relating to an Acquisition Proposal (including any modification thereto), or any request for information that would reasonably be expected to lead to an Acquisition Proposal, that is received by the Debtor or any of its Representatives from any Person (other than the Secured Party) including in the description the identity of the Person from which the inquiry, expression of interest, proposal, offer or request for information was received (the “Other Interested Party”); and (B) a copy of each material written communication and a summary of each material oral communication transmitted by or on behalf of the Other Interested Party or any of its Representatives to the Debtor or any of its Representatives or transmitted on behalf of the Debtor or any of its Representatives to the Other Interested Party or any of its Representatives. Without limiting the foregoing, the Debtor will promptly (and in any event within 24 hours) notify the Secured Party orally and in writing if the Debtor determines to begin providing information or to engage in discussions or negotiations concerning an Acquisition Proposal.

(iv)           Notwithstanding anything to the contrary contained in this Section 7(a), if the Debtor has received a bona fide written Acquisition Proposal from a third party that was not solicited, initiated, encouraged or facilitated in material breach of the provisions of this Agreement and that Sefton’s board of directors determines in good faith, after consultation with outside counsel and its financial advisors, constitutes a Superior Proposal, after giving effect to all of the adjustments to the terms and conditions of this Agreement that have been delivered to the Debtor by the Secured Party in writing during the Notice Period provided pursuant to this Section 7(a)(iv), that are binding and have been irrevocably committed to by the Secured Party in writing, then the Debtor may accept the Superior Proposal; provided that:

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(A)           the Debtor has provided prior written notice to the Secured Party, at least ten days in advance (the “Notice Period”), of the Debtor’s intention to take action with respect to the Superior Proposal, which notice will specify the material terms and conditions of the Superior Proposal, (including the identity of the party making the Superior Proposal) and the Debtor has contemporaneously provided a copy of the relevant proposed transaction agreements with the party making the Superior Proposal, including any definitive agreement with respect to the Superior Proposal; and

(B)           prior to entering into an Alternative Acquisition Agreement with respect to the Superior Proposal, the Debtor negotiates, and causes its Representatives to negotiate, with the Secured Party in good faith (to the extent the Secured Party desires to negotiate) to make such adjustments in the terms and conditions of Secured Party’s Proposal so that the Acquisition Proposal ceases to constitute a Superior Proposal;

(C)           after the expiration of the Notice Period, Sefton’s board of directors determines in good faith, after consultation with its financial advisors and its outside counsel, and after taking into account any amendments to the Secured Party’s Proposal that the Secured Party has irrevocably agreed in writing to make, that (x) the Acquisition Proposal constitutes a Superior Proposal and (y) causing the Debtor to enter into a definitive agreement with respect to the Superior Proposal is necessary in order for the members of Sefton’s board of directors to comply with their fiduciary duties under applicable law; and

(D)           at or prior to the Closing of the transaction constituting the Superior Proposal, the Debtor shall pay or cause to be paid to the Secured Party an amount in cash equal to the sum of (i) the full amount of Secured Obligations outstanding (which amount shall be applied to and shall retire the Note) and (ii) all reasonable out-of-pocket costs and expenses (including reasonable out-of-pocket legal fees, reserve engineering fees and other consulting fees) incurred by the Secured Party in connection with the Secured Party’s Proposal, including costs incurred in connection with due diligence, negotiation and preparation of all documents contemplated by the Secured Party’s Proposal.

(v)           The provisions of this Section 7(a) shall survive payment or prepayment in full of the Note and termination of any other provisions of this Agreement until December 29, 2014.

(b)           At the consummation of the acquisition transaction reflected in the Secured Party’s Proposal, the Secured Party shall be permitted to apply any or all of the then outstanding principal of and accrued interest on the Note towards the consideration for the acquisition transaction.

(c)           The Secured Party shall have the right and option, exercisable in whole or in part (including multiple partial exercises) at any time:

(i)             after the occurrence of an Event of Default;

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(ii)            that the Secured Party, in its reasonable judgment, believes that an event described in clause (vi) or (vii) of the definition of Event of Default is imminent and the Secured Party has indicated its willingness to provided debtor-in-possession financing, provided that the Secured Party provides the Debtor with at least ten days written notice of its intent to exercise;

(iii)           upon a bona fide refinancing of the Debtor’s indebtedness to Bank of the West has been proposed, in which case the Secured Party may exercise its option immediately prior to (or concurrent with) the closing of the refinancing; or

(iv)           on or after December 14, 2014 if the Debtor cannot provide to the Secured Party written evidence, reasonably satisfactory to the Secured Party, that the Debtor will be able to repay the Note in full on or before its maturity date.

to cause the Debtor to sell to the Secured Party LLC membership interests in the Secured Party’s subsidiary, Tapia, LLC, a California limited liability company (“Tapia”), representing up to 80.0% of the equity and voting interests of Tapia at the rate of $68,750 for each 1.0% of LLC membership interest in Tapia, in exchange for any combination of the following: (i) cancellation, in whole or in part, of outstanding principal of or accrued interest on this Note, (ii) cash payment (which, in the Secured Party’s sole and absolute discretion, may be paid directly to the holder(s) of Superior Indebtedness to reduce the amount of the Superior Indebtedness and (iii) delivery of the Secured Party’s parent company’s $3,000,000 promissory note (which amount shall be subject to a working capital adjustment that shall initially be based upon a preliminary working capital estimate upon the initial closing date of the Secured Party’s exercise of the option described above, and the principal amount being increased or reduced by the amount of the a preliminary working capital estimate when subtracted from $775,000) bearing interest at 6.0% per annum and amortizing at a rate of $250,000 per quarter. Upon the Secured Party’s initial exercise of the option described above, the entire promissory note (as adjusted) will be issued to the Debtor. In connection with any transaction described above, the Debtor shall cause all of its assets to be contributed to Tapia (and the Debtor shall use its commercially reasonably best efforts to cause this contribution, including all lessor and other consents required in connection with the contribution, to occur not more than one week after notification by the Secured Party that it intends to exercise the option described above) immediately prior to the LLC membership interest purchase by the Secured Party.

(d)           The Debtor will not, without providing at least 30 days’ prior written notice to the Secured Party, change its legal name, identity, type of organization, jurisdiction of organization, corporate structure, location of its chief executive office or its principal place of business or its organizational identification number. The Debtor will, prior to any change described in the preceding sentence, take all actions required by the Secured Party to maintain the perfection of the Secured Party’s security interest in the Collateral.

(e)           The Debtor shall, at its own cost and expense, defend title to the Collateral and the lien and security interest of the Secured Party therein against the claim of any person claiming against or through the Debtor and shall maintain and preserve such perfected security interest for so long as this Agreement remains in effect.

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(f)           The Debtor will not sell, offer to sell, dispose of, convey, assign or otherwise transfer, grant any option with respect to, restrict, or grant, create, permit or suffer to exist any mortgage, pledge, lien, security interest, option, right of first offer, encumbrance or other restriction or limitation of any nature whatsoever on, any of the Collateral or any interest therein.

(g)           The Debtor will keep the Collateral in good order and repair and will not use the Collateral in violation of law or any policy of insurance thereon. The Debtor will permit the Secured Party, or its designee, to inspect the Collateral at any reasonable time, wherever located.

(h)           The Debtor will pay promptly when due all taxes, assessments, governmental charges, and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred in connection with this Agreement.

(i)           The Debtor will continue to operate its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

(j)           The Debtor shall not enter into (or renew or amend), directly or indirectly, or permit any subsidiary (if any) to enter into (or renew or amend), directly or indirectly, any transaction with any officer, director, employee, shareholder or affiliate (including Sefton) of the Debtor, or any relative of any officer, director, shareholder or affiliate of the Debtor, except transactions made in the ordinary course of business and upon fair and reasonable terms which are no less favorable to the Debtor than would be obtained in a comparable arm’s-length transaction with a person not an affiliate of the Debtor and are fully disclosed to Lender in advance; or pay, or permit any subsidiary to pay, compensation or fees (including, without limitation, management fees) to any shareholder or affiliate of the Debtor.

(k)           The Debtor shall not, and shall not permit any subsidiary (if any) to, directly or indirectly, declare or pay any dividends, or purchase or otherwise acquire for value any of its equity interests now or hereafter outstanding, or make any distribution of assets to its equityholders prior to the repayment in full of the Note, except that any wholly-owned subsidiary of the Debtor may pay dividends and make distributions to, or purchase its outstanding equity interests from, the Debtor or any other wholly-owned subsidiary of the Debtor.

(l)           The Debtor shall not enter into, or permit any subsidiary to enter into, any transaction of merger or consolidation, and will not, and will not cause or permit any subsidiary to, liquidate, wind up or dissolve itself (or permit any liquidation or dissolution), or convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, property or assets (including, without limitation, sale and leaseback arrangements and the sale or discount of its accounts receivable), whether now owned or hereafter acquired, or acquire by purchase or otherwise all or substantially all of the business, property or assets of, or any shares or other evidence of beneficial interest in, any Person; provided that the Debtor and its subsidiaries (if any) may sell or otherwise dispose of obsolete or worn-out property in the ordinary course of business and fixtures and furnishings of the Debtor’s offices which may be closed in the ordinary course of business. If any such transaction is permitted by Lender, all cash proceeds of the transaction shall be immediately paid to Lender and applied to the Note, and any non-cash proceeds of the transaction shall be immediately pledged to Lender as additional Collateral.

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(m)           The Debtor shall not make or permit to exist, or permit any subsidiary to make or permit to exist, loans to any person or entity or investments in any person or entity, except investments in (i) direct obligations of the United States Government maturing not more than six months after acquisition thereof, (ii) certificates of deposit, bankers acceptances and other obligations, each maturing not more than one year after acquisition thereof, issued by a domestic bank which is a member of the Federal Reserve System and has total capital and surplus and undivided profits in excess of $500,000,000 or (iii) commercial paper maturing not more than one year after the date of acquisition thereof assigned the highest credit rating by Moody’s Investors Service, Inc. or Standard and Poor’s Corporation.

(n)           The Debtor will pay its lease royalty payments and lease operating expenses currently and in the ordinary course out of cash revenues collected for oil sales. Any remaining cash balances will be used to the extent required to reserve for or make the next contractual payment for both current interest and principal reduction to Bank of the West pursuant to the Extension Stipulation dated June 27, 2014. To the extent that excess cash balances exist after making or reserving for the next contractual payment to Bank of the West, then such cash may be upstreamed to Sefton for other corporate purposes provided that the Secured Party is informed of the intent and provided a schedule of uses of such excess cash by Sefton prior to the upstreaming of the cash and its expenditure by Sefton.

(o)           At any time that any Secured Obligations remain outstanding, upon the request of the Secured Party, the Debtor shall execute, notarize and deliver to the Secured Party, in form and substance suitable for recording in the appropriate jurisdictions, Deeds of Trust covering the Debtor’s oil and gas leases and the production therefrom (including as extracted collateral) as additional collateral security for repayment of the Secured Obligations.

8.             Secured Party Appointed Attorney-in-Fact. The Debtor hereby appoints the Secured Party the Debtor’s attorney-in-fact, with full authority in the place and stead of the Debtor and in the name of the Debtor or otherwise, from time to time during the continuance of an Event of Default in the Secured Party’s discretion to take any action and to execute any instrument that the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement (but the Secured Party shall not be obligated to and shall have no liability to the Debtor or any third party for failure to do so or take action). This appointment, being coupled with an interest, shall be irrevocable. The Debtor hereby ratifies all that the attorneys-in-fact shall lawfully do or cause to be done by virtue of this appointment.

9.             Secured Party May Perform. If the Debtor fails to perform any obligation contained in this Agreement, the Secured Party may itself perform, or cause performance of, such obligation, and the expenses of the Secured Party incurred in connection therewith shall be payable by the Debtor; provided that the Secured Party shall not be required to perform or discharge any obligation of the Debtor.

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10.           Reasonable Care. The Secured Party shall have no duty with respect to the care and preservation of the Collateral beyond the exercise of reasonable care. The Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Secured Party accords its own property, it being understood that the Secured Party shall not have any responsibility for (a) ascertaining or taking action with respect to any claims, the nature or sufficiency of any payment or performance by any party under or pursuant to any agreement relating to the Collateral or other matters relative to any Collateral, whether or not the Secured Party has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against any parties with respect to any Collateral. Nothing set forth in this Agreement, nor the exercise by the Secured Party of any of the rights and remedies hereunder, shall relieve the Debtor from the performance of any obligation on the Debtor’s part to be performed or observed in respect of any of the Collateral.

11.           Remedies Upon Default. If any Event of Default has occurred and is on-going:

(a)           The Secured Party, without any other notice to or demand upon the Debtor, may assert all rights and remedies of a secured party under the UCC or other applicable law, including, without limitation, the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral. If notice prior to disposition of the Collateral or any portion thereof is necessary under applicable law, written notice mailed to the Debtor at its notice address as provided in Section 15 ten days prior to the date of such disposition shall constitute reasonable notice, but notice given in any other reasonable manner shall be sufficient. So long as the sale of the Collateral is made in a commercially reasonable manner, the Secured Party may sell such Collateral on such terms and to such purchaser(s) as the Secured Party in its absolute discretion may choose, without assuming any credit risk and without any obligation to advertise or give notice of any kind other than that necessary under applicable law. Without precluding any other methods of sale, the sale of the Collateral or any portion thereof shall have been made in a commercially reasonable manner if conducted in conformity with reasonable commercial practices of creditors disposing of similar property. At any sale of the Collateral, if permitted by applicable law, the Secured Party may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Secured Obligations as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted by applicable law, the Debtor waives all claims, damages and demands it may acquire against the Secured Party arising out of the exercise by it of any rights hereunder. The Debtor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Secured Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Secured Party or any custodian may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. Neither the Secured Party nor any custodian shall be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing, nor shall it be under any obligation to take any action whatsoever with regard thereto.

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(b)           Any cash held by the Secured Party as Collateral and all cash Proceeds received by the Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied in whole or in part by the Secured Party to the payment of expenses incurred by the Secured Party in connection with the foregoing, including reasonable attorneys’ fees, and the balance of such proceeds shall be applied or set off against all or any part of the Secured Obligations in such order as the Secured Party elects. Any surplus of cash or cash Proceeds held by the Secured Party and remaining after payment in full of all the Secured Obligations shall be paid over to the Debtor or to whomsoever may be lawfully entitled to receive the surplus. The Debtor shall remain liable for any deficiency if the cash and cash Proceeds of any sale or other realization of the Collateral are insufficient to pay the Secured Obligations and the fees and other charges of any attorneys employed by the Secured Party to collect such deficiency.

(c)           If the Secured Party decides to exercise its rights to sell all or any of the Collateral pursuant to this Section 11, the Debtor will, upon request of the Secured Party and at its own expense, do or cause to be done all such acts and things as may be necessary to make the sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

12.           No Waiver and Cumulative Remedies. The Secured Party shall not by any act (except by a written instrument pursuant to Section 14), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law.

13.           Security Interest Absolute. All rights of the Secured Party and liens and security interests hereunder, and all Secured Obligations of the Debtor hereunder, shall be absolute and unconditional irrespective of:

(a)           any illegality or lack of validity or enforceability of any Secured Obligation or any related agreement or instrument;

(b)           any change in the time, place or manner of payment of, or in any other term of, the Secured Obligations, or any rescission, waiver, amendment or other modification of the Note, this Agreement or any other agreement, including any increase in the Secured Obligations resulting from any extension of additional credit or otherwise;

(c)           any taking, exchange, substitution, release, impairment or non-perfection of any Collateral or any other collateral, or any taking, release, impairment, amendment, waiver or other modification of any guaranty, for all or any of the Secured Obligations;

(d)           any manner of sale, disposition or application of proceeds of any Collateral or any other collateral or other assets to all or part of the Secured Obligations;

(e)           any default, failure or delay, wilful or otherwise, in the performance of the Secured Obligations;

(f)           any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to, or be asserted by, the Debtor against the Secured Party; or

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(g)           any other circumstance (including, without limitation, any statute of limitations) or manner of administering the Loans or any existence of or reliance on any representation by the Secured Party that might vary the risk of the Debtor or otherwise operate as a defense available to, or a legal or equitable discharge of, the Debtor or any other grantor, guarantor or surety.

14.           Amendments. None of the terms or provisions of this Agreement may be amended, modified, supplemented, terminated or waived, and no consent to any departure by the Debtor therefrom shall be effective unless the same shall be in writing and signed by the Secured Party and the Debtor, and then such amendment, modification, supplement, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given.

15.           Addresses For Notices. All notices and other communications provided for in this Agreement shall be in writing and shall be given in the manner and become effective as set forth in the Note, and addressed to the respective parties at their addresses as specified on the signature page or as to either party at such other address as shall be designated by that party in a written notice to the other party.

16.           Continuing Security Interest; Further Actions. This Agreement shall create a continuing lien and security interest in the Collateral and shall (a) subject to Section 17, remain in full force and effect until payment and performance in full of the Secured Obligations, (b) be binding upon the Debtor, its successors and assigns, and (c) inure to the benefit of the Secured Party and its successors, transferees and assigns; provided that the Debtor may not assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the Secured Party. Without limiting the generality of the foregoing clause (c), any assignee of the Secured Party’s interest in any agreement or document which includes all or any of the Secured Obligations shall, upon assignment become vested with all the benefits granted to the Secured Party with respect to the Secured Obligations.

17.           Termination; Release. On the date on which all Secured Obligations have been paid and performed in full, the Secured Party will, at the request and sole expense of the Debtor, (a) duly assign, transfer and deliver to or at the direction of the Debtor (without recourse and without any representation or warranty) such of the Collateral as may then remain in the possession of the Secured Party, together with any monies at the time held by the Secured Party hereunder, and (b) execute and deliver to the Debtor a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement.

18.           Original Security Agreement. Effective upon full execution and delivery of this Agreement by the Secured Party and the Debtor, the Original Security Agreement shall be superseded in its entirety by this Agreement, at and after which time the Original Security Agreement shall cease to have any force and effect.

19.           Governing Law. This Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of California.

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20.           Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement and the Note constitute the entire contract among the parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto.

[SIGNATURES ON FOLLOWING PAGE]

15

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

TEG Oil & Gas USA, Inc., a

Colorado corporation, as the Debtor

By:__/s/ Tom Milne___________

       Tom Milne, Director

Sefton Resources Inc.

100% owner of TEG Oil & Gas

USA, Inc.

Address for Notices:

21 S. California St., #305

Ventura, California 93001

With a copy to:

Kris Short, Business Manager

Sefton Resources, Inc.

2050 S. Oneida St., Suite 102

Denver, Colorado 80224

Tapia Holdings, LLC, a Delaware

limited liability company

By: Sara Creek Gold Corp., its sole

member

By: ___/s/ Darren Katic_____

Darren Katic, President

Address for Notices:

326 S. Pacific Coast Hwy, Suite 102

Redondo Beach, CA 90277

 16

EX-21

Exhibit 21

Subsidiaries

SCNRG, LLC, a California limited liability company

Hawker Energy (Rincon), LLC, a California limited liability company (formerly Hawker Energy, LLC)

Tapia Holdings, LLC, a Delaware limited liability company

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS

     We hereby consent to the references to our firm in this Annual Report on Form 10-K filed by Hawker Energy, Inc. to our estimates of reserves and value of reserves and our report on reserves as of September 1, 2014 for the D.E.E.P. Property, Midway-Sunset Field prepared for SCNRG, LLC.  We also consent to the inclusion of our report dated September 1, 2014 as an exhibit included in such Annual Report.

Chapman Petroleum Engineering Ltd.

/s/ C.W. Chapman, P. Eng. 

C.W. Chapman, P. Eng.

President

445, 708 11th Avenue S.W., Calgary, Alberta

November 20, 2014

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to Hawker Energy, Inc.’s (formerly known as Sara Creek Gold Corp.) use of our report dated November 21, 2014, relating to the consolidated financial statements, which appears in this Form 10-K.

/s/ L.L. Bradford & Company, LLC

L.L. Bradford & Company, LLC

November 21, 2014

EX-31

Exhibit 31

CERTIFICATION

I, Darren Katic, certify that:

1. I have reviewed this annual report on Form 10-K of Hawker Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. As the registrant’s sole certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. As the registrant’s sole certifying officer, I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 21, 2014	/s/ Darren Katic
	Darren Katic Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Hawker Energy, Inc. (the “Company”) on Form 10-K for the year ended August 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Darren Katic, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 21, 2014	/s/ Darren Katic
	Darren Katic Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer)

EX-99.1

Exhibit 99.1

RESERVE AND ECONOMIC EVALUATION

OIL PROPERTY

D.E.E.P. PROPERTY, MIDWAY – SUNSET FIELD

CALIFORNIA, USA

Prepared for

HAWKER ENERGY INC.

September 1, 2014

October 31, 2014

Hawker Energy Inc.

102, 326 South Pacific Coast Highway

Redondo Beach, CA

USA  90277

Attention:  Mr. Darren Katic

Dear Sir:

Re:	Reserve and Economic Evaluation – Hawker Energy Inc.
	D.E.E.P. Property, Midway-Sunset Field, California, USA – September 1, 2014

In accordance with your authorization we have prepared a reserve and economic evaluation of an oil property located in California, USA, for Hawker Energy Inc. (the "Company") for an effective date of September 1, 2014.

This evaluation has been carried out in accordance with the guidelines of Regulation S-X, Rule 4 -10 (a) of the Securities Exchange Act, with respect to the classification of Reserves.  The report has been prepared and/or supervised by a "Qualified Reserves Evaluator" as demonstrated on the accompanying Certificate of Qualification of the author(s).

The SCOPE OF REPORT contains the authorization and purpose of the report and describes the methodology and economic parameters used in the preparation of this report.

The SUMMARY OF RESERVES AND ECONOMICS includes values at the property level and the consolidated cash flows for each accumulating reserve category, and contains the results of the economic forecasts using pricing guidelines as defined in Regulation S-X 210.4-10 22 (v), and expressed in United States dollars, as applicable for SEC filing.  The net present values presented in this report do not necessarily represent the fair market value of the reserves evaluated in this report.

The DISCUSSION contains a description of the interests and burdens, reserves and geology, production forecasts, product prices, capital and operating costs and a map of each major property.  The economic results and cash flow forecasts (before income tax) are also presented on an entity and property summary level.

A REPRESENTATION LETTER from the Company, confirming that to the best of their knowledge all the information they provided for our use in the preparation of this report was complete and accurate as of the effective date, is enclosed following the Glossary.

Because the reserves data are based on judgments regarding future events, actual results will vary and the variations may be significant.  We have no responsibility to update our report for events and circumstances which may have occurred since the preparation date of this report.

Prior to public disclosure of any information contained in this report, or our name as author, our written consent must be obtained, as to the information being disclosed and the manner in which it is presented.  This report may not be reproduced, distributed or made available for use by any other party without our written consent and may not be reproduced for distribution at any time without the complete context of the report, unless otherwise reviewed and approved by us.

We consent to the submission of this report, in its entirety, to securities regulatory agencies and stock exchanges, by the Company.

It has been a pleasure to prepare this report and the opportunity to have been of service is appreciated.

Yours very truly,

Chapman Petroleum Engineering Ltd.

[Original Signed By:]

C.W. Chapman

C.W. Chapman, P.Eng.,

President

[Original Signed By:]

M. Stromar

M. Stromar, M.Sc., P.Eng.,

Associate

PERMIT TO PRACTICE CHAPMAN PETROLEUM ENGINEERING LTD.
Signature		[Original Signed By:] C.W. Chapman
Date	October 31, 2014
PERMIT NUMBER: P 4201 The Association of Professional Engineers and Geoscientists of Alberta

CERTIFICATE OF QUALIFICATION

I, C. W. CHAPMAN, P. Eng., Professional Engineer of the City of Calgary, Alberta, Canada, officing at Suite 445, 708 – 11th Avenue S.W., hereby certify:

1. THAT I am a registered Professional Engineer in the Province of Alberta and a member of the Australasian Institute of Mining and Metallurgy.

2. THAT I graduated from the University of Alberta with a Bachelor of Science degree in Mechanical Engineering in 1971.

3. THAT I have been employed in the petroleum industry since graduation by various companies and have been directly involved in reservoir engineering, petrophysics, operations, and evaluations during that time.

4. THAT I have in excess of 25 years in the conduct of evaluation and engineering studies relating to oil & gas fields in Canada and around the world.

5. THAT I participated directly in the evaluation of these assets and properties and preparation of this report for Hawker Energy Inc., dated October 31, 2014 and the parameters and conditions employed in this evaluation were examined by me and adopted as representative and appropriate in establishing the value of these oil and gas properties according to the information available to date.

6. THAT I have not, nor do I expect to receive, any direct or indirect interest in the properties or securities of Hawker Energy Inc. its participants or any affiliate thereof.

7. THAT I have not examined all of the documents pertaining to the ownership and agreements referred to in this report, or the chain of Title for the oil and gas properties discussed.

8. A personal field examination of these properties was considered to be unnecessary because the data available from the Company's records and public sources was satisfactory for our purposes.

[Original Signed By:]

C.W. Chapman

C.W. Chapman, P.Eng.

President

PERMIT TO PRACTICE CHAPMAN PETROLEUM ENGINEERING LTD.
Signature		[Original Signed By:] C.W. Chapman
Date	October 31, 2014
PERMIT NUMBER: P 4201 The Association of Professional Engineers and Geoscientists of Alberta

CERTIFICATE OF QUALIFICATION

I, HAROLD J. RYAN, P. Geol., Professional Geologist of the City of Calgary, Alberta, Canada, officing at Suite 445, 708 – 11th Avenue S.W., hereby certify:

1. THAT I am a registered Professional Geologist in the Province of Alberta, a Fellow of the Geological Association of Canada and a Fellow of the Geological Society of London.

2. THAT I graduated from the University of Calgary with a Bachelor of Science degree in Geology in 1983.

3. THAT I have been employed in the petroleum industry since graduation by various companies and have been directly involved in petroleum geology, petrophysics, operations, and evaluations during that time.

4. THAT I have in excess of 15 years of experience in the conduct of evaluation and geological studies relating to oil and gas fields in Canada and internationally.

5. THAT I participated directly in the evaluation of these assets and properties and preparation of this report for Hawker Energy Inc., dated October 31, 2014 and the parameters and conditions employed in this evaluation were examined by me and adopted as representative and appropriate in establishing the value of these oil and gas properties according to the information available to date.

6. THAT I have not, nor do I expect to receive, any direct or indirect interest in the properties or securities of Hawker Energy Inc., its participants or any affiliate thereof.

7. THAT I have not examined all of the documents pertaining to the ownership and agreements referred to in this report, or the chain of Title for the oil and gas properties discussed.

8. A personal field examination of these properties was considered to be unnecessary because the data available from the Company’s records and public sources was satisfactory for our purposes.

[Original Signed By:]

Harold J. Ryan

Harold J. Ryan, P.Geol.

Manager Geoscience

CERTIFICATE OF QUALIFICATION

I, MIRO STROMAR, M. Sc., P. Eng., Professional Engineer of the City of Calgary, Alberta, Canada, officing at Suite 445, 708 – 11th Avenue S.W., hereby certify:

1. THAT I am a registered Professional Engineer in the Province of Alberta.

2. THAT I graduated from the University of Zagreb with a Masters of Science degree in Chemical Engineering in 1974.

3. THAT I have been employed in the petroleum industry since graduation by various companies and have been directly involved in reservoir engineering, petrophysics, operations, and evaluations during that time.

4. THAT I have in excess of 20 years in the conduct of evaluation and engineering studies relating to oil & gas fields in Canada and around the world.

5. THAT I participated directly in the evaluation of these assets and properties and preparation of this report for Hawker Energy Inc., dated October 31, 2014 and the parameters and conditions employed in this evaluation were examined by me and adopted as representative and appropriate in establishing the value of these oil and gas properties according to the information available to date.

6. THAT I have not, nor do I expect to receive, any direct or indirect interest in the properties or securities of Hawker Energy Inc., its participants or any affiliate thereof.

7. THAT I have not examined all of the documents pertaining to the ownership and agreements referred to in this report, or the chain of Title for the oil and gas properties discussed.

8. A personal field examination of these properties was considered to be unnecessary because the data available from the Company's records and public sources was satisfactory for our purposes.

[Original Signed By:]

M. Stromar

M. Stromar, M.Sc., P.Eng.,

Associate

RESERVE AND ECONOMIC EVALUATION

OIL PROPERTY

D.E.E.P. PROPERTY, MIDWAY – SUNSET FIELD

CALIFORNIA, USA

Prepared for

HAWKER ENERGY INC.

September 1, 2014

TABLE OF CONTENTS

Scope of Report

Authorization

Purpose

Reserve Definitions

Barrels of Oil Equivalent

Sources of Information

Product Prices

Product Sales Arrangements

Capital Expenditures and Operating Costs

Income Tax Parameters

Abandonment and Restoration

Economics

Constant Price Parameters

Orientation Map

Product Price Forecast

Discussion

CALIFORNIA, USA

D.E.E.P. Property, Midway – Sunset Field

Glossary

Company Representation Letter

SCOPE OF REPORT

Authorization

This evaluation has been authorized by Mr. Darren Katic, on behalf of Hawker Energy Inc.   The engineering analysis has been performed during the month of September 2014.

Purpose

The purpose of this report was to prepare a third party independent appraisal of the oil reserves owned by Hawker Energy Inc. for the Company's financial planning.

The values in this report do not include the value of the Company's undeveloped land holdings nor the tangible value of their interest in associated plant and well site facilities they may own.  The cash flow forecasts account for well and/or facility abandonment and reclamation costs and the offsetting salvage value of the tangible equipment after abandonment.

Reserve Definitions

Proved and probable reserves as classified in the report have been based on Rule 4-10(a) of Regulation S-X of the Securities Exchange Act:

Classification of Reserves

Proved Oil and Gas Reserves.

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i)  The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:

(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

Probable Reserves

Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.

(i) When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates.

(ii) Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir.

(iii) Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.

Possible Reserves

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves.

(i) When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.

(ii) Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geoscience and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project.

(iii) Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.

(iv) The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.

(v) Possible reserves may be assigned where geoscience and engineering data identify directly adjacent portions of a reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than formation thickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir.

(vi) Pursuant to paragraph (a)(22)(iii) of this section, where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.

Barrel of Oil Equivalent

If at any time in this report reference is made to “Barrels of Oil Equivalent” (BOE), the conversion used is 6 Mscf : 1 STB (6 Mcf : 1 bbl).

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf : 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent value equivalency at the well head.

Sources of Information

Source of the data used in the preparation of this report are as follows:

i) Ownership and Burdens have been derived from the Company's land records and other information from the Company as required for clarification

ii) Production data is acquired from public data sources, except for very recent data or certain wells which are provided directly by the Company

iii) Well data is accessed from the Company's well files and from public data sources

iv) Operating Costs are based on actual revenue and expense statements provided by the Company for established properties or from discussions with the Company and our experience in the area for new properties

v) Price differentials are derived from revenue statements, compared to actual posted prices for the appropriate benchmark price over a period of several months

vi) Timing of Development Plans and Capital estimates are normally determined by discussions with the Company together with our experience and judgement

Product Prices

The price used for each area in this report, in accordance with SEC regulation S-X rule 4-10, was the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month, within such period, unless prices are defined by contractual arrangements, excluding escalations based on future conditions.

Adjustments for crude quality, gas heating value and NGL trucking and fractionation have still been applied to the average prices to reflect actual prices being received.  In addition, no escalation has been applied to either the capital expenditures or operating costs.

The average price shown in the cash flows may differ from year to year due to variations in the proportionate production volumes from each property relative to the total.

For the purpose of US Security Exchange Commission filing, the results of the Constant Prices and Cost case for proved and probable reserves are expressed in United States dollars are presented in the Summary of Reserves and Economics (SEC).

Product Sales Arrangements

The Company does not have any "hedge" contracts in place at this time.

Capital Expenditures and Operating Costs

Operating costs and capital expenditures have been based on historical experience and analogy where necessary and have not been escalated.

Income Tax Parameters

Net cash flows after consideration of corporate income tax have not been included in this report.

Abandonment and Restoration

Abandonment and restoration costs, net of salvage, have been included in the cash flows for the final event of any particular well.  The abandonment cost does not impact the economic limit and is included in the final year of production automatically by ERGO.  For marginal wells nearing the end of their economic life, these costs may result in a negative net present value.

In this report, we have account for these costs for only the wells which are being included and have not included other shut-in or suspended wells in the Company's inventory or their facilities and pipelines.

Economics

The results of the before tax economic analysis, which are presented for each entity and property summary, are in a condensed form presented on one page for simplicity in analyzing the cash flows, however, if for any reason more extensive breakdown of the cash flow is required, a separate schedule can be provided showing the full derivation and breakdown of any or all of the columns on the summary page.

The economic presentation shows the gross property and company gross and net (before and after royalty) production of oil gas and each NGL product along with the product prices adjusted for oil quality and heating value of gas.  Oil prices also include the deduction for trucking costs where applicable for royalty deductions.

The second level includes the revenues, royalties, operating costs, processing income, abandonment costs, capital and cash flow of the property.   Operating costs are presented for the gross property and the company share, split between variable and fixed costs, and the effective cost per BOE.

Net revenues are presented annually and as a net back in $/BOE @ 6 Mscf/STB.  Revenue from custom processing of oil or gas is presented separately.

The third level of data presents the cumulative cash flow values (present worth) for various discount rates. Also, the net cash flow breakdown is presented.  The project profitability criteria are summarized on the bottom right of the page.  These data are not relevant in the case of corporate evaluations but are useful in assessing individual capital projects.

Constant Price Parameters

The Constant Price values utilized in this report are the latest prices being received posted prices for oil by the Company.

Adjustments for crude quality, gas heating value and NGL trucking and fractionation have still been applied to the average prices to reflect actual prices being received.  In addition, no escalation has been applied to either the capital expenditures or operating costs.

In the Constant Price cash flows the magnitude of the gross and net reserves will not change except where production forecasts have been truncated or extended due to economic limits being reached earlier or later in the life of the properties than in the forecast price case, and due to the impact of royalties which are price related.

The average price shown in the cash flows may differ from year to year due to variations in the proportionate production volumes from each property relative to the total.

D.E.E.P. PROPERTY, MIDWAY – SUNSET FIELD

CALIFORNIA, USA

INDEX

Discussion

Ownership

Geology

Reserves

Production

Product Prices

Capital Expenditures

Operating Costs

Economics

Attachments

Figure 1:    Land and Well Map

Table 1:     Schedule of Lands, Interests and Royalty Burdens

Figure 2:    Geological Maps and Figures

a) Table of Formations

b) Isopach Total Net Monarch Oil Sand

c) Isopach of Top Oil Sand

Table 2:     Summary of Reserves

Summary of Reserves and Reservoir Parameters

Proved Developed Non-Producing

a) D.E.E.P. Lease – Monarch SS

Figure 3:    Production History Graphs

a) Proved Developed Producing

b) Proved plus Probable

Table 3:     Summary of Anticipated Capital Expenditures

a) Development

b) Abandonment and Restoration

Table 4:     Summary of Company Reserves and Economics

Consolidated Cash Flows

a) 6 Wells, Monarch SS and Top Oil – Proved Developed Producing

b) D.E.E.P. Lease, California – Total Proved

c) D.E.E.P. Lease, California – Total Proved Plus Probable

Individual Cash Flows

Proved Undeveloped

d) 12 Wells, Monarch SS

Proved Plus Probable Developed Producing

e) 6 Wells, Monarch SS and Top Oil

Proved Plus Probable Undeveloped

f) 12 Wells, Monarch SS

Figure 4:    Production History and Forecast – Company Share

D.E.E.P. PROPERTY, MIDWAY – SUNSET FIELD

CALIFORNIA, USA

INDEX

Ownership

The Company owns a 100 percent working interest in 40 acres of land containing three producing and three shut in heavy oil wells, as shown on the map, Figure 1.  Production is subject to a 20.9 percent freehold royalty.

A detailed description of the lands, interests and royalty burdens is presented in Table 1.

Geology

The San Joaquin Basin is a deep asymmetric synclinal downwarp that underlies the Central Valley of California. The basin is a prolific oil-producing area that originated in the Late Mesozoic. The Midway-Sunset Oil Field is located along the southwestern flank of the basin, as shown on the orientation map illustrated in Figure 1. It is the largest field in the southern portion of San Joaquin Basin and has produced over 2 billion barrels of oil.

There are two productive zones on the Company property. The Monarch Sand is a submarine fan sandstone of Miocene Age encapsulated within the Belridge Diatomite Member of the Monterey Formation. The Top Oil Sand is the basal unit of the San Joaquin Formation of Pliocene Age. Both these units are shown on the Table of Formations chart illustrated in Figure 2a.

The Monarch Sand is found at an average depth of 1600 feet on the Company property. It is a silty fine to very fine grained sandstone containing heavy oil within a stratigraphic-structural trap. A map of total net oil sand is illustrated in Figure 2b. The thickness is up to over 55 feet within an upper “A” and lower “B” sandstone unit.

An additional potential of this property is the Top Oil Sand is found at an average depth of 1400 feet on the Company property and is a fine to very fine grained sand with silt and shale inclusions, heavy oil is stratigraphically trapped within this unit which can be up to over 35 feet in thickness on the Company land, as shown on the isopach map illustrated in Figure 2c.

Reserves

Total gross remaining proved developed producing heavy oil reserves of 4.1 MSTB have been estimated for the Monarch and Top Oil zones in three producing wells based on decline analysis of their production performance.

Total proved undeveloped heavy oil reserves of 335 MSTB have been estimated for the same zones in twelve future locations in anticipation of steam assisted recovery based on geological mapping and reservoir parameters derived from log analysis, and analogy to successful steam scheme recoveries in immediate vicinity of the lands.

Incremental probable producing reserves of 2.2 MSTB have been assigned to the five producing wells in anticipation of a better performance than in the proved case.

Incremental probable undeveloped reserves of 167 MSTB have been assigned to the same twelve locations in anticipation of a better recovery than in the proved case.

A summary of reserves is presented in Table 2, and the reserves and reservoir parameters are presented in table 2a.

Production

Production from the area currently averages 4.2 STB/d and is expected to gradually decline to economic limits.

The non-producing probable reserves are expected to commence production in 2015 on a steam cycling scheme, i.e. super heated steam injection into two diagonally opposed wells (A locations) for a month, then producing them while injecting steam into B locations.  This would be an alternating scheme on one month cycles, so at any given time, six wells would be producing.  The wells are expected to commence production at initial rates of 8 STB/d per well, peak at 15 STB/d per well in 2016, then commence a gradual decline.

In the proved plus probable scenario, all those rates are expected to be 50 percent higher.

A production history graph is shown on Figure 3a for the proved case and Figure 3b for the proved plus probable case.

Product Prices

An average 2014 price of $92.02/STB of heavy oil has been utilized based on production and revenue statements provided by the Company. The Company receives a price that is $7.96 less  relative to the SEC price of $99.98.

Capital Expenditures

Total development expenditures of $5,240,000 have been anticipated for this project as detailed in Table 3a.

Total abandonment and restoration liabilities of $300,000 have been anticipated for this project as detailed in Table 3b.

Operating Costs

Operating costs of $1,500 per producing well per month as well as $7.00 per STB and $3,000 per future wells per month plus $20.00/STB, which includes the cost of steam generation, have been estimated based on production and revenue statements provided by the Company, and our experience and judgement for the steam generation aspects.

Economics

An economic summary is presented in Table 4, and the results of our economic analysis are presented in Table 4a through 4f.

The Company’s total historical production together with our proved producing and proved plus probable forecast is presented on Figure 4.

Table 2

Summary of Reserves

September 1, 2014

D.E.E.P Lease, Kern Co., California

			Current or
			Initial		API		Ultimate		Cumulative		Remaining
			Rate		Gravity		ROIP		Production		ROIP
Description			STB/d		(Deg)		(MSTB)		(MSTB)		(MSTB)		Reference
Heavy Oil
Proved Developed Producing
Six Wells	Monarch and Top Oil			4.2		15		126.3		122.2		4.1	Figure 3a
	Total Proved Developed Producing			4.2				126.3		122.2		4.1
Proved Undeveloped
Thermal Project - Development	Monarh SS					15		335.0		0.0		335.0	Table 2a
	Total Proved Undeveloped							335.0		0.0		335.0
	Total Proved							461.3		122.2		339.1
Probable
Six Wells	Monarch and Top Oil	(incr.)				15		2.2		0.0		2.2	Figure 3b
Thermal Project - Development	Monarh SS	(incr.)				15		167.0		0.0		167.0	Table 2a
	Total Probable							169.2		0.0		169.2
	Total Proved Plus Probable							630.5		122.2		508.3

Table  3a

Summary of Anticipated Capital Expenditures

Development

September 1, 2014

HAWKER ENERGY INC.

D.E.E.P Lease, Kern Co., California

			Capital		Gross		Net
			Interest		Capital		Capital
Description	Date	Operation	%		$M		$M
Proved Undeveloped
Drill twelwe wells	2015	Drill twelwe wells		100.0000		4,600		4,600
Upgrade facilities	2016	Expand facilities		100.0000		640		640
		Total Proved Undeveloped				5,240		5,240
		Total Proved				5,240		5,240

Note:   The above capital values are expressed in terms of current dollar values without escalation.

Table 3b

Summary of Anticipated Capital Expenditures

Abandonment and Restoration

September 1, 2014

HAWKER ENERGY INC.

D.E.E.P Lease, Kern Co., California

			Working			Gross		Net
			Interest			Capital		Capital
Well location	Operation	Year	%			$M		$M
Abandon wells and future locations	Abandon 17 wells			100.0000			300.0		300.0
					Total		300.0		300.0

Note:   The above capital values are expressed in terms of current dollar values without escalation.

Table 4	Contant Prices & Costs
Summary of Company Reserves and Economics
Before Income Tax
September 1, 2014
Hawker Energy Inc.
D.E.E.P. LEASE, CALIFORNIA

			N e t  T o  A p p r a i s e d  I n t e r e s t
			Reserves																Cumulative Cash Flow (BIT) - M$
			Light and Medium Oil				Heavy Oil				Sales Gas				NGL
			MSTB				MSTB				MMscf				Mbbls				Discounted at:
Description			Gross		Net		Gross		Net		Gross		Net		Gross		Net		Undisc.		5%/year		10%/year		15%/year		20%/year
Proved Developed Producing
Total	Monarch SS and Top Oil			0		0		4		3		0		0		0		0		100		93		88		83		79
Total Proved Developed Producing				0		0		4		3		0		0		0		0		100		93		88		83		79
Proved Undeveloped
12 Wells	Monarch SS			0		0		335		265		0		0		0		0		8,682		6,157		4,313		2,945		1,917
Total Proved Undeveloped				0		0		335		265		0		0		0		0		8,682		6,157		4,313		2,945		1,917
Total Proved				0		0		339		268		0		0		0		0		8,782		6,250		4,401		3,028		1,996
Probable
Probable Developed Producing
Total	Monarch SS and Top Oil	Incr.		0		0		2		2		0		0		0		0		54		45		39		34		29
Total Probable Developed Producing				0		0		2		2		0		0		0		0		54		45		39		34		29
Probable Undeveloped
12 Wells	Monarch SS	Incr.		0		0		167		132		0		0		0		0		8,766		7,041		5,755		4,777		4,022
Total Probable Undeveloped				0		0		167		132		0		0		0		0		8,766		7,041		5,755		4,777		4,022
Total Probable				0		0		170		134		0		0		0		0		8,820		7,086		5,794		4,811		4,051
Total Proved Plus Probable				0		0		509		402		0		0		0		0		17,602		13,337		10,195		7,839		6,047

M$ means thousands of United States dollars

Gross reserves are the total of the Lease's working and/or royalty interest share before deduction of royalties owned by others.

Net reserves are the total of the Lease's working and/or royalty interest share after deducting the amounts attributable to royalties owned by others.

Columns may not add precisely due to accumulative rounding of values throughout the report.

Table 5

CHAPMAN PETROLEUM ENGINEERING LTD.

CRUDE OIL

HISTORICAL, CONSTANT, CURRENT AND FUTURE PRICES

September 1, 2014

				AB Synthetic	Western Canada	Exchange
		WTI [1]	Brent Spot (ICE)[2]	Crude Price [3]	Select [4]	Rate
Date		$US/STB	$US/STB	$CDN/STB	$CDN/STB	$US/$CDN
HISTORICAL PRICES
2004		41.48	38.03	52.89	37.52	0.77
2005		56.62	55.28	69.16	43.25	0.83
2006		65.91	66.09	72.88	50.40	0.88
2007		72.35	72.74	75.57	53.17	0.94
2008		99.70	98.33	102.98	83.88	0.94
2009		61.64	62.52	76.77	53.04	0.88
2010		79.42	80.22	80.56	66.58	0.97
2011		95.03	109.67	102.45	77.43	1.01
2012		94.16	108.75	92.56	71.70	1.00
2013		97.93	108.68	100.17	75.76	0.97
2014	8 mos	100.57	107.95	109.08	87.72	0.91
CONSTANT PRICES (The average of the first-day-of-the-month price for the preceding 12 months-SEC)
		99.98	108.68	104.72	81.78	0.93
FORECAST PRICES
2014	4 mos	100.00	110.00	110.11	83.68	0.90
2015		96.00	106.00	105.67	80.31	0.90
2016		94.00	101.50	103.44	78.62	0.90
2017		95.00	100.00	104.56	79.46	0.90
2018		97.00	102.00	106.78	81.15	0.90
2019		98.00	103.00	107.89	82.00	0.90
2020		100.00	105.00	110.11	83.68	0.90
2021		100.00	105.00	110.11	83.68	0.90
2022		102.00	107.00	112.33	85.37	0.90
2023		104.04	109.04	114.60	87.10	0.90
2024		106.12	111.12	116.91	88.85	0.90
2025		108.24	113.24	119.27	90.65	0.90
2026		110.41	115.41	121.68	92.47	0.90
2027		112.62	117.62	124.13	94.34	0.90
2028		114.87	119.87	126.63	96.24	0.90
2029		117.17	122.17	129.18	98.18	0.90
Constant thereafter
Notes:	[1]	West Texas Intermediate quality (D2/S2) crude (40API)landed in Cushing, Oklahoma.
	[2]	The Brent Spot price is estimated based on historic data.
	[3]	Equivalent price for Light Sweet Crude (D2/S2) & Synthetic Crude (34API)landed in Edmonton.
	[4]	Western Canada Select (20.5API), spot price for B.C., Alberta, Saskatchewan, and Manitoba.

GLOSSARY OF TERMS

(Abbreviations & Definitions)

General

BIT	-	Before Income Tax
AIT	-	After Income Tax
M$	-	Thousands of Dollars
Effective Date	-	The date for which the Present Value of the future cash flows and reserve categories are established
$US	-	United States Dollars
WTI	-	West Texas Intermediate – the common reference for crude oil used for oil price comparisons
ARTC	-	Alberta Royalty Tax Credit
GRP	-	Gas Reference Price

Interests and Royalties

BPO	-	Before Payout
APO	-	After Payout
APPO	-	After Project Payout
Payout	-	The point at which a participant’s original capital investment is recovered from its net revenue
GORR	-	Gross Overriding Royalty – percentage of revenue on gross revenue earned (can be an interest or a burden)
NC	-	New Crown – crown royalty on petroleum and natural gas discovered after April 30, 1974
SS 1/150 (5%-15%) Oil	-	Sliding Scale Royalty – a varying gross overriding royalty based on monthly production.  Percentage is calculated as 1-150th of monthly production with a minimum percentage of 5% and a maximum of 15%
FH	-	Freehold Royalty
P&NG	-	Petroleum and Natural Gas
Twp	-	Township
Rge	-	Range
Sec	-	Section

Technical Data

psia	-	Pounds per square inch absolute
MSTB	-	Thousands of Stock Tank Barrels of oil (oil volume at 60 F and 14.65 psia)
MMscf	-	Millions of standard cubic feet of gas (gas volume at 60 F and 14.65 psia)
Bbls	-	Barrels
Mbbls	-	Thousands of barrels
MMBTU	-	Millions of British Thermal Units – heating value of natural gas
STB/d	-	Stock Tank Barrels of oil per day – oil production rate
Mscf/d	-	Thousands of standard cubic feet of gas per day – gas production rate
GOR (scf/STB)	-	Gas-Oil Ratio (standard cubic feet of solution gas per stock tank barrel of oil)
mKB	-	Metres Kelly Bushing – depth of well in relation to the Kelly Bushing which is located on the floor of the drilling rig.  The Kelly Bushing is the usual reference for all depth measurements during drilling operations.
EOR	-	Enhanced Oil Recovery
GJ	-	Gigajoules
Marketable or Sales Natural Gas	-	Natural gas that meets specifications for its sale, whether it occurs naturally or results from the processing of raw natural gas.  Field and plant fuel and losses to the point of the sale must be excluded from the marketable quantity.  The heating value of marketable natural gas may vary considerably, depending on its composition; therefore, quantities are usually expressed not only in volumes but also in terms of energy content.  Reserves are always reported as marketable quantities.
NGLs	-	Natural Gas Liquids – Those hydrocarbon components that can be recovered from natural gas as liquids, including but not limited to ethane, propane, butanes, pentanes plus, condensate, and small quantities of non-hydrocarbons.
Raw Gas	-	Natural gas as it is produced from the reservoir prior to processing.  It is gaseous at the conditions under which its Volume is measured or estimated and may include varying amounts of heavier hydrocarbons (that may liquefy at atmospheric conditions) and water vapour; may also contain sulphur and other non-hydrocarbon compounds.  Raw natural gas is generally not suitable for end use.
EUR	-	Estimated Ultimate Recovery

11/3, 2014

Chapman Petroleum Engineering Ltd.

445, 708 - 11 Avenue SW

Calgary, AB

T2R 0E4

Dear Sir:

Re: Company Representation Letter 

Regarding the evaluation of our Company's oil and gas reserves and independent appraisal of the economic value of these reserves for the year ended August 31, 2014, (the effective date), we herein confirm to the best of our knowledge and belief as of the effective date of the reserves evaluation, and as applicable, as of today, the following representations and information made available to you during the conduct of the evaluation:

1. We, Hawker Energy Inc., (the Client) have made available to you, Chapman Petroleum Engineering Ltd. (the Evaluator) certain records, information, and data relating to the evaluated properties that we confirm is, with the exception of immaterial items, complete and accurate as of the effective date of the reserves evaluation, including the following:

· Accounting, financial, tax and contractual data

· Asset ownership and related encumbrance information;

· Details concerning product marketing, transportation and processing arrangements;

· All technical information including geological, engineering and production and test data;

· Estimates of future abandonment and reclamation costs.

2. We confirm that all financial and accounting information provided to you is, to the best of our knowledge, both on an individual entity basis and in total, entirely consistent with that reported by our Company for public disclosure and audit purposes.

3. We confirm that our Company has satisfactory title to all of the assets, whether tangible, intangible, or otherwise, for which accurate and current ownership information has been provided.

4. With respect to all information provided to you regarding product marketing, transportation, and processing arrangements, we confirm that we have disclosed to you all anticipated changes, terminations, and additions to these arrangements that could reasonably be expected to have a material effect on the evaluation of our Company's reserves and future net revenues.

5. With the possible exception of items of an immaterial nature, we confirm the following as of the effective date of the evaluation:

· For all operated properties that you have evaluated, no changes have occurred or are reasonably expected to occur to the operating conditions or methods that have been used by our Company over the past twelve (12) months, except as disclosed to you.  In the case of non-operated properties, we have advised you of any such changes of which we have been made aware.

· All regulatory, permits, and licenses required to allow continuity of future operations and production from the evaluated properties are in place and, except as disclosed to you, there are no directives, orders, penalties, or regulatory rulings in effect or expected to come into effect relating to the evaluated properties.

· Except as disclosed to you, the producing trend and status of each evaluated well or entity in effect throughout the three-month period preceding the effective date of the evaluation are consistent with those that existed for the same well or entity immediately prior to this three-month period.

· Except as disclosed to you, we have no plans or intentions related to the ownership, development or operation of the evaluated properties that could reasonably be expected to materially affect the production levels or recovery of reserves from the evaluated properties.

· If material changes of an adverse nature occur in the Company's operating performance subsequent to the effective date and prior to the report date, we will inform you of such material changes prior to requesting your approval for any public disclosure of reserves information.

6. We hereby confirm that our Company is in material compliance with all Environmental Laws and does not have any Environmental Claims pending.

Between the effective date of the report and the date of this letter, nothing has come to our attention that has materially affected or could affect our reserves and economic value of these reserves that has not been disclosed to you.

Yours very truly,

/s/ Darren Katic

President and Chief Executive Officer & Chief Financial Officer

XML

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

XML

CONVERTIBLE NOTES PAYABLE, SHORT TERM (Summary of Changes in Convertible Notes Payable) (Details) (USD $)	12 Months Ended
	Aug. 31, 2014		Aug. 31, 2013
Debt Instrument [Line Items]
Convertible notes payable	$ 221,000
Accrued interest payable	5,876
Convertible notes payable, short term	951,599
Convertible Notes Payable [Member]
Debt Instrument [Line Items]
Convertible notes payable	930,000
Accrued interest payable	21,599
Convertible notes payable, short term	50,000
CNP 1 [Member]
Debt Instrument [Line Items]
Maturity date	Nov. 30, 2014
Convertible notes payable	350,000	[1],[2],[3]		[1],[2],[3]
CNP 2 [Member]
Debt Instrument [Line Items]
Maturity date	Nov. 30, 2014
Convertible notes payable	250,000	[1],[2],[3]		[1],[2],[3]
CNP 3 [Member]
Debt Instrument [Line Items]
Maturity date	Jun. 30, 2015
Convertible notes payable	100,000	[1],[3],[4]		[1],[3],[4]
CNP 4 [Member]
Debt Instrument [Line Items]
Maturity date	Jul. 10, 2015
Convertible notes payable	100,000	[1],[2],[3],[4],[5]		[1],[2],[3],[4],[5]
CNP 5 [Member]
Debt Instrument [Line Items]
Maturity date	May 13, 2016
Convertible notes payable	50,000	[6]		[6]
CNP 6 [Member]
Debt Instrument [Line Items]
Maturity date	Jul. 25, 2015
Convertible notes payable	50,000	[1],[2],[3],[4]		[1],[2],[3],[4]
CNP 7 [Member]
Debt Instrument [Line Items]
Maturity date	Jul. 25, 2015
Convertible notes payable	$ 30,000	[1],[2],[3],[4]		[1],[2],[3],[4]

[1] Convertible at any time at the option of the investor into "Conversion Units." Each Conversion Unit consists of one share of common stock of Hawker and one warrant to purchase one-half share of common stock of Sara Creek at an exercise price of $0.25 per share. The number of Conversion Units into which the note is convertible is computed by dividing all of the then outstanding principal and accrued interest under the note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Each warrant has a five-year life from the date the convertible note payable was issued. In the event Hawker sells common stock for less than $0.10 per share, the conversion rate for CNP 1 shall be adjusted to that price. In the case of CNP 1 and 2, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion.

[2] Hawker granted a security interest to the investor in all of its assets.

[3] The proceeds were required to be used solely for the purpose of allowing Tapia Holdings to make advances to TEG under the terms of the secured subordinated loan receivable described in Note 7. Any repayment of such advances by TEG to Tapia Holdings must be used by us to immediately first repay convertible notes payable to the holder of CNP 1 and 2, and second to repay other convertible notes payable pro rata.

[4] Conversion of unpaid principal into Conversions Units pursuant to the terms in (1) above is mandatory in the event Hawker closes the Proposed TEG Acquisition described in Note 7. Conversion of unpaid interest into Conversion Units is at the election of Hawker.

[5] The holder is related to Darren Katic, who is an officer, director and significant shareholder.

[6] Unpaid principal and accrued interest is convertible at any time at the option of the holder into Conversion Units in an amount computed by dividing the amount converted by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Repayment of the convertible note payable is required on collection of the secured subordinated loan receivable described in Note 7 if earlier than the maturity date above. As Hawker expects to receive repayment on the secured subordinated loan receivable within one year, this convertible note payable has been classified as a short term liability.

XML

SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Narrative) (Details) (USD $)	0 Months Ended	1 Months Ended	12 Months Ended		4 Months Ended					0 Months Ended		12 Months Ended		0 Months Ended	1 Months Ended
	Jun. 02, 2014	Jun. 18, 2014	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014 Tapia Holdings, LLC [Member]	Oct. 02, 2014 Tapia Holdings, LLC [Member] Subsequent Event [Member]	Sep. 24, 2014 Tapia Holdings, LLC [Member] Subsequent Event [Member]	Sep. 01, 2014 Tapia Holdings, LLC [Member] Subsequent Event [Member]	Jun. 18, 2014 Tapia Holdings, LLC [Member] TEG [Member]	Jun. 18, 2014 Tapia Holdings, LLC [Member] TEG [Member] Tapia Canyon field [Member] item	Jun. 18, 2014 Tapia Holdings, LLC [Member] TEG [Member] West of the Tapia Canyon field [Member] item	Aug. 31, 2014 Secured Subordinated Loan Receivable, Short Term [Member]	Aug. 31, 2013 Secured Subordinated Loan Receivable, Short Term [Member]	Jun. 18, 2014 Secured Subordinated Loan Receivable, Short Term [Member] Tapia Holdings, LLC [Member]	Oct. 31, 2014 Secured Subordinated Loan Receivable, Short Term [Member] Tapia Holdings, LLC [Member] TEG [Member] Subsequent Event [Member]
Debt Instrument [Line Items]
Potential acquisition of membership interest		80.00%
Acquisition purchase price		$ 2,500,000
Promissory note		3,000,000
Amortization period of cash received upon sale of common membership interests														3 years
Number of oil and gas leases contributed										4	1
Non-controlling interest			55,000		55,000	145,000	65,000	145,000
Future commitment to participate in the note payable					144,000	145,000
Members' equity (as a percent)					4.80%	4.83%		4.83%	20.00%
Total advances			221,000	17,500	1,290,727
Promissory note receivable			1,500,000
Interest rate												3.00%		6.00%
Outstanding advances												1,290,727			196,625
Current period interest												7,595
Rate of membership interests	$ 68,750

XML

ASSET RETIREMENT OBLIGATION (Details) (USD $)	12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
ASSET RETIREMENT OBLIGATION [Abstract]
Asset retirement obligations, beginning	$ 103,299	$ 95,206
Liabilities acquired during the period	53,963
Liabilities settled during the period
Current period accretion	10,848	8,093
Asset retirement obligations, ending	$ 168,110	$ 103,299

XML

ACQUISITION OF HAWKER ENERGY, LLC (Schedule of Assets and Liabilities Acquired) (Details) (USD $)	Oct. 25, 2013	Jan. 01, 2014 Hawker Energy Rincon Llc [Member]
Business Acquisition [Line Items]
Cash	$ 6,004	$ 1,214
Prepaid expenses		16,625
Accounts payable and accrued liabilities	(37,431)	(123,413)
Loan payable to related party, short term		(29,625)
Net liabilities assumed		$ 135,199

XML

ASSET RETIREMENT OBLIGATION (Tables)

12 Months Ended

Aug. 31, 2014

ASSET RETIREMENT OBLIGATION [Abstract]

Schedule of Changes in Asset Retirement Obligation

The following shows the changes in asset retirement obligations for the years ended August 31, 2014 and 2013:

	August 31,		August 31,
	2014		2013
Asset retirement obligations, beginning	$	103,299	$	95,206
Liabilities acquired during the period		53,963		-
Liabilities settled during the period		-		-
Current period accretion		10,848		8,093
Asset retirement obligations, ending	$	168,110	$	103,299

XML

NET PROFITS INTEREST ("NPI") PAYABLE (Schedule of Changes in NPI Liability) (Details) (USD $)	12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
NET PROFITS INTEREST ("NPI") PAYABLE [Abstract]
NPI liability, beginning of period	$ 124,597	$ 135,640
Liabilities assumed in connection with acquisition of additional DEEP lease working interests	58,847
Current period accretion	14,104	12,865
Payments made	(28,444)	(23,908)
NPI liability, end of period	169,104	124,597
Less: current portion	20,065	12,109
NPI liability: long-term portion	$ 149,039	$ 112,488

XML

SUBSEQUENT EVENTS

12 Months Ended

Aug. 31, 2014

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

19.              SUBSEQUENT EVENTS

Secured Subordinated Loan Receivable From TEG

On September 30, 2014, October 2, 2014, and October 31, 2014, Tapia Holdings advanced to TEG a further $196,625 pursuant to the secured subordinated loan receivable described in Note 7, bringing the balance to $1,487,352 plus accrued interest.

Loans Payable To Related Parties, Short Term

Subsequent to August 31, 2014, we received additional cash proceeds of $95,000, converted an accounts payable of $3,525 into a loan payable, and repaid $10,000 as follows:

• Manhattan advanced a further $30,000 on September 29, 2014, with a maturity date of January 31, 2014, and concurrently agreed to extend the maturity date on a prior $60,000 to January 31, 2015;
• Mr. Andresen advanced $15,000 on September 29, 2014, and on November 10, 2014 agreed to convert a $3,525 amount payable to him for business expenses into a loan, for a total loan balance of $18,525 with a maturity date of January 31, 2015;
• Mr. Tywoniuk advanced $50,000 on October 31, 2014, with a maturity date of January 31, 2015; and 
• On September 16, 2014, we repaid a $10,000 portion of the loan to Mr. Katic.

All loan amounts bear interest at 10% per annum, and are unsecured.  See also Note 9.

Convertible Notes Payable

• On September 26, 2014, we received $25,000 pursuant to a convertible promissory note with terms identical to CNP 3 set forth in Note 10, except that the maturity date is September 26, 2015; and
• On November 3, 2014, we received $25,000 pursuant to a convertible promissory note with terms identical to the CNP 1 set forth in Note 10, except that the maturity date is May 3, 2015. 

In the case of CNP 1 and 2 set forth in Note 10, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion.

Additional Unit Sales

Subsequent to August 31, 2014, Sara Creek issued an aggregate of 500,000 Units to three investors in consideration of an aggregate of $50,000 in cash received prior to August 31, 2014, and shown as common stock payable as of that date. No commissions were paid or payable. The price of each Unit was $0.10. Each Unit was comprised of one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock on payment of $0.20 per share. The warrants expire five years from the closing date.

Non Controlling Interest

On October 2, 2014, Mr. Moore invested an additional $25,000 for additional equity of Tapia Holdings, LLC.  In addition, the other investor in Tapia Holdings, LLC funded an aggregate of $65,000 of its prior commitment on September 2 and 24, 2014.  Including these funding amounts, a cumulative amount of $145,000 has been funded to date, leaving $145,000 of future commitment to participate in the note payable to Sefton on closing of the Tapia, LLC acquisition.  The Tapia Holdings, LLC operating agreement was also amended.  As a result of the additional investment and revision to the operating agreement, non-controlling interest at closing of the acquisition is expected to now represent 4.83% of the total outstanding equity of Tapia Holdings, LLC. 

See also Note 2, Non-Controlling Interest, and Note 17, Related Party Transactions.

Amendment Of HERLLC Option Agreement

On October 10, 2014, Hawker authorized an amendment (the “Amendment”) to the Amended and Restated Option Agreement (“Option Agreement”) dated November 20, 2013, among Hawker, Darren Katic (a director, officer and significant stockholder of Hawker), and Charles Moore (a significant stockholder of Hawker).  Under the original terms of the Option Agreement (see Note 5), Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock upon the consummation of certain Potential Follow-on Transactions. The Amendment waived all of the follow-on transaction requirements and authorized the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we hold 19,000,000 shares in escrow, to be released as follows: (i) 10,000,000 shares upon completion of the acquisition of the assets of TEG Oil & Gas, Inc. (located in the Tapia Field, Los Angeles County, California), and (ii) 9,000,000 shares upon completion, on or before December 31, 2017, of any one of the transactions evaluated by HERLLC, our wholly-owned subsidiary, prior to its reorganization with Hawker, including a transaction resulting in Hawker ownership of oil and gas lease interests in any one of the following unique oil fields: Cat Canyon (leases Tognazzini, Wickenden, Los Alamos, GWP, and those immediately adjacent to, in each case, in Santa Barbara County), Santa Maria (T 11N, R 36W extending southeast through T9N R33W in Santa Barbara County), Casmalia (leases Tompkins, Peshine, and those immediately adjacent to, in each case, in Santa Barbara County), North Lost Hills (Sections 12 & 13, T25S, R19E, and Sections 7 & 18, T25S, R 20E, totaling 1,500 acres in Kern County CA), Maricopa (McFarland and Jameson leases totaling 40 acres in Kern County), Pine Meadows (Section 1 Township 31 South Range 22E in Kern County) or Torrance (Joughin and South Torrance Units in totaling 900 acres in Los Angeles County). Waiver of the follow-on transaction requirements and the immediate issuance of the remaining shares 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 October 10, 2014, amendment, an expense will be recorded based on the fair value of the shares at the date of issuance.  With respect to the 19,000,000 share of our common stock that are in escrow, an expense will be recorded based on the par value of the shares at the date of issuance.  As and when subsequently released from escrow, an expense will be recorded based on the fair value of the shares (less amounts previously expensed based on par value) concurrently with consummation of the applicable follow-on transaction.  All of these amounts are not considered for accounting purposes to be incremental consideration for our acquisition of HERLLC.

Pursuant to a separate agreement dated November 13, 2014, between Messrs. Katic, Moore and Tywoniuk, Mr. Tywoniuk (a significant shareholder) holds warrants to acquire 9.7222% of any shares acquired by Messrs. Katic and Moore pursuant to the agreement above.  This agreement amended a December 27, 2013, agreement entitling Mr. Tywoniuk to acquire 5% of any shares acquired by Messrs. Katic and Moore pursuant to the Option Agreement.

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MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES (Details) (USD $)	Aug. 31, 2014	Aug. 31, 2013
Machinery and equipment and capitalized oil and gas properties [Line Items]
Cost	$ 850,113	$ 385,803
Accumulated Depletion, Depreciation and Amortization	105,798	75,057
Net Book Value	744,315	310,746
Machinery and equipment [Member]
Machinery and equipment and capitalized oil and gas properties [Line Items]
Cost	33,874	28,335
Accumulated Depletion, Depreciation and Amortization	19,605	15,179
Net Book Value	14,269	13,156
Capitalized oil and gas properties [Member]
Machinery and equipment and capitalized oil and gas properties [Line Items]
Cost	816,239	357,468
Accumulated Depletion, Depreciation and Amortization	86,193	59,878
Net Book Value	$ 730,046	$ 297,590

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GOING CONCERN (Details) (USD $)	12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
GOING CONCERN
Total current assets	$ 1,382,825	$ 36,775
Working capital deficit	1,109,153
Net loss attributable to the Company	(1,696,236)	(41,991)
Accumulated net loss	$ (2,047,462)	$ (351,226)

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Aug. 31, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

Schedule of future minimum payments under operating leases

Future minimum payments under operating leases for the next five years total $86,450, and are as follows:

Year Ended August 31		Amount
2015	$	38,827
2016		32,758
2017		14,865
2018		-
2019		-
	$	86,450

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LOANS PAYABLE TO RELATED PARTIES (Schedule of Loans from Related Parties) (Details) (USD $)	Aug. 31, 2014	Aug. 31, 2013
Loans payable to related parties, short term
Total long-term loans	$ 221,000
Accrued interest payable	5,876
Loans Payable, Current	226,876
Loans payable to related parties, long term
Total long-term loans		89,833
Less - current maturities
Long-term loans from related parties		89,833
Darren Katic [Member]
Loans payable to related parties, short term
Total long-term loans	161,000
Loans payable to related parties, long term
Total long-term loans		38,500
Manhattan Holdings, LLC [Member]
Loans payable to related parties, short term
Total long-term loans	60,000
Loans payable to related parties, long term
Total long-term loans		38,500
Gerald Tywoniuk [Member]
Loans payable to related parties, long term
Total long-term loans		$ 12,833

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SUBSEQUENT EVENTS (Narrative) (Details) (USD $)	12 Months Ended			0 Months Ended	12 Months Ended							0 Months Ended				0 Months Ended			1 Months Ended					0 Months Ended
	Aug. 31, 2014	Sep. 18, 2013	Aug. 31, 2013	Aug. 30, 2014 Common Stock Payable [Member]	Aug. 31, 2014 Common Stock Payable [Member]	Aug. 31, 2014 Secured Subordinated Loan Receivable, Short Term [Member]	Aug. 31, 2013 Secured Subordinated Loan Receivable, Short Term [Member]	Aug. 31, 2014 Manhattan Holdings Llc [Member]	Aug. 31, 2013 Manhattan Holdings Llc [Member]	Aug. 31, 2014 Darren Katic [Member]	Aug. 31, 2013 Darren Katic [Member]	Sep. 02, 2014 Subsequent Event [Member]	Aug. 31, 2014 Subsequent Event [Member]	Sep. 26, 2014 Subsequent Event [Member] Convertible Notes Payable Eight [Member]	Nov. 03, 2014 Subsequent Event [Member] Convertible Notes Payable Nine [Member]	Sep. 18, 2014 Subsequent Event [Member] Convertible Notes Payable One and Two [Member]	Sep. 02, 2014 Subsequent Event [Member] Common Stock Payable [Member] item	Oct. 31, 2014 Subsequent Event [Member] Secured Subordinated Loan Receivable, Short Term [Member]	Oct. 31, 2014 Subsequent Event [Member] TEG [Member] Tapia Holdings, LLC [Member] Secured Subordinated Loan Receivable, Short Term [Member]	Sep. 29, 2014 Subsequent Event [Member] Manhattan Holdings Llc [Member]	Nov. 10, 2014 Subsequent Event [Member] Kristian Andresen [Member]	Sep. 29, 2014 Subsequent Event [Member] Kristian Andresen [Member]	Oct. 31, 2014 Subsequent Event [Member] Gerald Tywoniuk [Member]	Sep. 16, 2014 Subsequent Event [Member] Darren Katic [Member]
Subsequent Event [Line Items]
Further advanced amount						$ 1,290,727													$ 196,625
Outstanding balance plus accrued interest	1,298,322																	1,487,352
Additional cash proceeds from related parties pursuant to loan payable current												0	95,000
Additional cash proceeds from related parties pursuant to convertible notes payable												0
Units issued (in shares)																	500,000
Number of investors whose units are issued																	3
Cash received from units issued	980,288			50,000
Addition cash proceeds received from additional units issued																	0
Commission paid																	0
Commission payable																	0
Share price (in dollars per share)	$ 0.10																$ 0.10
Unit comprised ratio into common stock																	1
Unit comprised ratio into additional common stock to acquire warrant																	0.5
Share price to acquire warrant (in dollars per share)																	$ 0.20
Warrants expire term																	5 years
Accounts payable converted into loan payable													3,525								3,525
Loan payable repaid													10,000											10,000
Loans advanced	221,000							60,000		161,000				25,000	25,000					30,000		15,000	50,000
Loan balance	$ 226,876																				$ 18,525
Interest rate	10.00%	1.66%						10.00%		10.00%			10.00%
Maximum beneficial ownership interest after conversion of debt (as a percent)																4.99%

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COMMITMENTS AND CONTINGENCIES (Narrative) (Details)	12 Months Ended
	Aug. 31, 2014 item	Aug. 31, 2014 DEEP Property [Member]	Dec. 01, 2009 DEEP Property [Member]
Long-term Purchase Commitment [Line Items]
Overriding royalty percentage	1.00%
Aggregate additional royalty percentage subject to production	19.92%
Total royalties	20.92%
Working interest		100.00%	66.67%
Number of non-cancellable operating leases	2

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ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE (Details) (USD $)	0 Months Ended
	May 15, 2014	Feb. 04, 2014	Aug. 31, 2014	Oct. 25, 2013	Dec. 01, 2009
Business Acquisition [Line Items]
Oil properties				$ 26,500
SCNRG [Member]
Business Acquisition [Line Items]
Ownership interest	87.18%		100.00%		66.67%
Cash paid for business acquisition	125,000	200,000
Machinery and equipment	2,010	3,529
Oil properties	166,071	266,200
Purchase price of entity	168,081	269,729
Contingent consideration liabilities	$ 43,081	$ 69,729
Acquisition of additional working interest in DEEP lease	12.8192%	20.5108%	33.33%
Acquisition of share interest				100.00%

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GOING CONCERN

12 Months Ended

Aug. 31, 2014

GOING CONCERN

GOING CONCERN

3. GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of August 31, 2014, the Company had total current assets of $1,382,825 but a working capital deficit in the amount of $1,109,153. The Company incurred a net loss of $1,696,236 during the year ended August 31, 2014 and an accumulated net loss of $2,047,462 since inception.  The Company has earned insufficient revenues since inception and its cash resources are insufficient to meet its planned business objectives.

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to obtain additional financing or sale of its common stock as may be required and ultimately to attain profitability.

Management's plan in this regard is to complete the acquisition of the Tapia and Eureka oilfields (see Note 7), which is depending on financing, and to raise capital through a combination of equity and debt financing sufficient to finance the continuing operations for the next twelve months.  However, there can be no assurance that the Company will be successful in completing such financing.

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COMMITMENTS AND CONTINGENCIES (Schedule of Future Minimum Payments Under Operating Leases) (Details) (USD $)	Aug. 31, 2014
Future minimum payments under operating leases [Abstract]
2015	$ 38,827
2016	32,758
2017	14,865
2018
2019
Total	$ 86,450

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ACQUISITION OF SCNRG (Narrative) (Details) (USD $)	12 Months Ended	1 Months Ended
	Aug. 31, 2014	Oct. 25, 2013 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	$ 1,626	$ 14,000
Acquisition of share interest		100.00%

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SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Tables)

12 Months Ended

Aug. 31, 2014

SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM [Abstract]

Schedule of Secured Subordinated Loan Receivable, Short Term

The following shows the changes in secured subordinated loan receivable, short term, for the years ended August 31, 2014 and 2013:

	August 31,		August 31,
	2014		2013
Secured subordinated loan receivable, short term, beginning	$	-	$	-
Loan made during the period		1,290,727		-
Current period interest		7,595		-
Secured subordinated loan receivable, short term, ending	$	1,298,322	$	-

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ACQUISITION OF HAWKER ENERGY, LLC (Tables) (Hawker Energy Rincon Llc [Member])

12 Months Ended

Aug. 31, 2014

Hawker Energy Rincon Llc [Member]

Business Acquisition [Line Items]

Schedule of Fair Value of the Assets Acquired and Liabilities Assumed

The assets and liabilities of HERLLC at the date of acquisition were recorded at their fair values of:

Cash	$	1,214
Prepaid expenses		16,625
Less:
Accounts payable		(123,413	)
Loan payable to related party, short term		(29,625	)
Net liabilities assumed	$	135,199

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NET PROFITS INTEREST ("NPI") PAYABLE (Narrative) (Details) (USD $)	0 Months Ended	12 Months Ended
	Dec. 01, 2009	Aug. 31, 2014	May 15, 2014	Oct. 25, 2013
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of monthly payments equal to net profit		40.00%
Stated minimum monthly payment		$ 2,978
Maturity date		Dec. 31, 2022
Interest rate utilizing a discount rate		10.00%
NPI payments		125,201
Minimum NPI payment requirement		347,000
Maximum NPI payment requirement		357,410
SCNRG [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Stated minimum monthly payment	$ 1,985	$ 2,596
Ownership interest	66.67%	100.00%	87.18%
Acquisition of share interest				100.00%

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ACQUISITION OF SCNRG (Schedule of Net Assets Acquired) (Details) (USD $)	Oct. 25, 2013
ACQUISITION OF SCNRG [Abstract]
Cash	$ 6,004
Accounts receivable	1,553
Oil properties	26,500
Deposit	5,000
Accounts payable and accrued liabilities	(37,431)
Net assets acquired	$ 1,626

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MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES (Tables)

12 Months Ended

Aug. 31, 2014

MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES

Schedule of asset categories of machinery and equipment and capitalized oil and gas properties

The asset categories of machinery and equipment and capitalized oil and gas properties at August 31, 2014 and August 31, 2013 were as follows:

	August 31, 2014
		Cost		Accumulated Depletion, Depreciation and Amortization		Net Book Value
Machinery and equipment		$	33,874	$	19,605	$	14,269
Capitalized oil and gas properties			816,239		86,193		730,046
Total		$	850,113	$	105,798	$	744,315

	August 31, 2013
		Cost		Accumulated Depletion, Depreciation and Amortization		Net Book Value
Machinery and equipment		$	28,335	$	15,179	$	13,156
Capitalized oil and gas properties			357,468		59,878		297,590
Total		$	385,803	$	75,057	$	310,746

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LOANS PAYABLE TO RELATED PARTIES (Tables)

12 Months Ended

Aug. 31, 2014

LOANS PAYABLE TO RELATED PARTIES [Abstract]

Schedule of loans payable to related parties, short term

Loans payable to related parties, short term, consist of the following at August 31, 2014, and August 31, 2013:

	August 31,		August 31,
	2014		2013
Darren Katic	$	161,000	$	-
Manhattan Holdings, LLC		60,000		-
Total long-term loans		221,000		-
Accrued interest payable		5,876		-
Loans payable to related parties, short term	$	226,876	$	-

Schedule of loans payable to related parties, long term

Loans payable to related parties, long term, consist of the following at August 31, 2014, and August 31, 2013:

	August 31,		August 31,
	2014		2013
Darren Katic	$	-	$	38,500
Manhattan Holdings, LLC		-		38,500
Gerald Tywoniuk		-		12,833
Total long-term loans		-		89,833
Accrued interest payable		-		-
Less current portion		-		-
Loans payable to related parties, long term	$	-	$	89,833

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Aug. 31, 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements and related notes present our consolidated financial position as of August 31, 2014 and 2013, and results of operations, changes in stockholders' equity and non-controlling interest, and cash flows for the years ended August 31, 2014, and 2013.  Comprehensive income is the same as net income (loss).

We have prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

The acquisition of SCNRG by Hawker on October 25, 2013, has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of Hawker.  Therefore, our condensed consolidated financial statements include the historic accounts of SCNRG, and consolidated with Hawker's beginning October 25, 2013. 

On January 1, 2014, we acquired all of the membership interests of Hawker Energy, LLC, which has a wholly-owned subsidiary Punta Gorda Resources, LLC (see Note 5).  Hawker Energy, LLC changed its name to Hawker Energy (Rincon), LLC on October 22, 2014.  Our condensed consolidated financial statements include the accounts of these entities beginning January 1, 2014. 

All significant intercompany balances and transactions have been eliminated. 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates included in the financial statements are: (1) depreciation and depletion; (2) accrued assets and liabilities; (3) asset retirement obligations; and (4) net profits interest payable.  Recorded amounts are based on estimates of oil reserves, retirement costs and date.  By their nature, these estimates including the estimates of future prices and costs, and the related future cash flows are subject to measurement uncertainly, and the impact in the consolidated financial statements of future periods could be material.  Although management believes these estimates are reasonable, changes in facts and circumstances or discovery of new information may result in revised estimates.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash is held in a business checking account with a major financial institution.  Our policy is to consider all highly liquid investment instruments purchased with original maturities of three months or less to be cash equivalents for purposes of the statements of cash flows and other statements.  On two occasions in the twelve months ended August 31, 2014, cash on deposit has exceeded federally insured limits for up to one week at a time.  We have not experienced any losses on such accounts and believe we are not exposed to any significant credit risk on cash and cash equivalents.

Accounts Receivable

Accounts receivable represent oil sales, and are collected by the operator in the month following sale.  After deducting and paying the appropriate royalties, the operator either promptly remits our share of the net proceeds to us, or offsets the net proceeds against joint interest billings for our share of production and other costs.  We regularly review receivables to insure that the amounts will be collected and establish or adjust an allowance for uncollectible amounts as necessary using the specific identification method.  There were no reserves for uncollectible amounts in the periods presented.

Inventory

Inventory consists of oil that has been produced and stored in a tank on the DEEP Lease property (see Note 6).  Inventory is valued at the lower of average cost and market.

Financial Instruments

Financial instruments consist of cash, accounts receivable, loan receivable, accounts payable, loans payable and convertible notes payable. Recorded values of cash, receivables, accounts payable and accrued liabilities approximate fair values due to the short maturities of such instruments.  Recorded values for loans and convertible notes payable approximate fair values, since their stated or imputed interest rates are commensurate with prevailing market rates for similar obligations.

Machinery and Equipment

Machinery and equipment are recorded at cost.  Depreciation is on a straight-line method using the estimated lives of the assets.  Expenditures for maintenance and repairs are charged to expense. 

Oil Properties

We follow the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize internal costs that can be directly identified with our acquisition, and exploration and development activities.  We do not capitalize any costs related to production, general corporate overhead or similar activities.  Surface equipment on a property is also part of the amounts capitalized.

Under the full-cost method, capitalized costs are depleted (amortized) on a composite unit-of-production method based on proved oil reserves.  If we maintain the same level of production year over year, the depletion expense may be significantly different if our estimate of remaining reserves changes significantly. Proceeds from the sale of properties are accounted for as reductions of capitalized costs unless such sales involve a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved properties, in which case a gain or loss is recognized. The costs of unproved properties are excluded from amortization until the properties are evaluated.  We review all of our unevaluated properties quarterly to determine whether or not and to what extent proved reserves have been assigned to the properties, and if impairment has occurred. Unevaluated properties are assessed individually when individual costs are significant.

We review the carrying value of our oil properties under the full-cost accounting rules of the Securities and Exchange Commission ("SEC") on a quarterly basis. This quarterly review is referred to as a ceiling test. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. In calculating future net revenues, current SEC regulations require us to utilize prices at the end of the appropriate quarterly period. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts, including the effects of derivatives qualifying as cash flow hedges. Two primary factors impacting this test are reserve levels and current prices, and their associated impact on the present value of estimated future net revenues. Revisions to estimates of oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Any excess of the net book value, less deferred income taxes, is generally written off as an expense. Under SEC regulations, the excess above the ceiling is not expensed (or is reduced) if, subsequent to the end of the period, but prior to the release of thefinancial statements, oilprices increase sufficiently such that an excess above the ceiling would have been eliminated (or reduced) if the increased prices were used in the calculations.

The estimates of proved crude oil reserves utilized in the preparation of the financial statements are estimated in accordance with guidelines established by the SEC and the Financial Accounting Standards Board (“FASB”), which require that reserve estimates be prepared under existing economic and operating conditions using a 12-month average price with no provision for price and cost escalations in future years except by contractual arrangements. Actual results could differ materially from these estimates. 

Long-Lived Assets

Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying value.  The carrying value of the assets is then reduced to their estimated fair value that is usually measured based on an estimate of future discounted cash flows.

Asset Retirement Obligations

Asset retirement obligations relate to the plug and abandonment costs when our wells are no longer useful, and for the cost of removing related surface facilities. We determine the value of the liability by reviewing operator estimates and estimate the increase we will face in the future. We then discount the future value based on an intrinsic interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the future, however, on a quarterly basis we monitor the costs of the abandoned wells and adjust this liability if necessary.

Non-Controlling Interest

We report non-controlling interest in Tapia Holdings, LLC in the financial statements pursuant to paragraph ASC No. 810-10-65-1.  The non-controlling interest of $55,000 reported on the balance sheet as of August 31, 2014, represents the non-controlling interest holders' proportionate share of the equity of the Tapia Holdings, LLC.  This amount was received on August 26 and 28, 2014, in contemplation of the pending acquisition of Tapia, LLC (Note 7).  In the year ended August 31, 2014, there was no amount to recognize for the non-controlling interest holders' proportionate share of the earnings or losses. Including the $55,000 funded to date, $65,000 in future funding, and $144,000 of future commitment to participate in the note payable to Sefton Resources Ltd. on closing of the Tapia, LLC acquisition, non-controlling interest at closing of the acquisition is expected to represent 4.80% of the total outstanding equity of Tapia Holdings, LLC, increased to 4.83% after August 31, 2014. See also Note 19, Subsequent Events.

Revenue Recognition

Oil revenues are recognized net of royalties when production is sold to a purchaser at a fixed or determinable price, when title has transferred, and if collection of the revenue is probable.

Equity Compensation Expense

We record equity compensation expense for stock option grants based on the estimated grant-date fair value over the period the officers or consultants are required to provide services to earn the awards. 

Net Profits Interest

A Net Profits Interest (“NPI”) on the DEEP Lease calls for 40% of the net cash flow, as defined in the Assignment of Net Profit Interest (see Note 12), to be paid each month to the owner of the NPI.  If net cash flow is negative, such losses carry forward to be deducted against future positive net cash flow.  Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG's December 1, 2009, acquisition date of a 66.67% working interest in the DEEP property, and this liability was increased pro rata when our working interest increased to 87.18% on February 1, 2014, and again on May 15, 2014, when our working interest increased to 100.0% (see Note 6).  The discount rate used in all cases was 10.0% per annum (see Note 12).

Income Taxes

Until October 25, 2013, SCNRG (the accounting acquirer of Hawker) was not a taxable entity for U.S. federal or California income tax purposes.  Taxes on its net income were borne by its members through the allocation of taxable income.  Until July 31, 2013, we were treated as a partnership for tax purposes.  On August 1, 2013, we elected to be treated as an S-Corp.  Upon completion of the reverse acquisition of Hawker, SCNRG became part of a consolidated taxable entity.  Due to a history of losses, we have a full valuation allowance for all net deferred tax assets, including our net operating loss.

Loss Per Share

Dilutive securities, including warrants to acquire common stock, shares issuable on conversion of notes payable and stock options, are excluded from the diluted weighted average shares of common stock outstanding computation in periods where they have an anti-dilutive effect, such as when we report a loss. Anti-dilutive securities omitted from the calculation for the year ended August 31, 2014 were 4,436,236 and none for the comparable 2013 period.

Concentrations

Pursuant to a January 13, 2010, Crude Oil Purchase Contract between the DEEP Lease operator and Plains Marketing L.P. (“PMLP”), all production from the DEEP Lease is sold to PMLP. The initial term of the agreement was for one year, expiring on December 31, 2010, and was automatically renewed for an additional one-year term that expired on December 31, 2011. Since January 1, 2012, the agreement has continued on a month-to-month basis and is cancellable upon thirty days' written notice by either party.

Changes in Accounting Policy

The Company has not had any changes in accounting policies during the year.

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-9, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to receive in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is not permitted. We are currently assessing the impact that this standard will have on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. Under GAAP, financial statements are prepared based on the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management's responsibility to evaluate whether there is substantial doubt about the organization's ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization's management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company has not conducted its analysis to determine whether it will adopt the new standard early or not.

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CONVERTIBLE NOTES PAYABLE, SHORT TERM (Tables)

12 Months Ended

Aug. 31, 2014

CONVERTIBLE NOTES PAYABLE, SHORT TERM [Abstract]

Summary of convertible notes payable, short term

Convertible notes payable, short term, consist of the following at August 31, 2014, and August 31, 2013; conversion features, security provisions and warrants to acquire common stock of Hawker are also set forth below:
 

	Issue Date	Maturity Date		August 31, 2014		August 31, 2013
CNP 1 (1) (2) (3)	June 25, 2014	November 30, 2014	$	350,000	$	-
CNP 2 (1) (2) (3)	May 30, 2014	November 30, 2014		250,000		-
CNP 3 (1) (3) (4)	July 17, 2014	June 30, 2015		100,000		-
CNP 4 (1) (2) (3) (4) (5)	July 17, 2014	July 10, 2015		100,000		-
CNP 5 (6)	May 13, 2014	May 13, 2016		50,000		-
CNP 6 (1) (2) (3) (4)	July 25, 2014	July 25, 2015		50,000		-
CNP 7 (1) (2) (3) (4)	August 28, 2014	July 25, 2015		30,000		-
				930,000		-
Accrued interest payable				21,599		-
Convertible notes payable, short term			$	951,599	$	-

(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 Hawker sells common stock for less than $0.10 per share, the conversion rate for CNP 1 shall be adjusted to that price.In the case of CNP 1 and 2, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion.

(2) Hawker granted a security interest to the investor in all of its assets.

(3) The proceeds were required to be used solely for the purpose of allowing Tapia Holdings to make advances to TEG under the terms of the secured subordinated loan receivable described in Note 7.  Any repayment of such advances by TEG to Tapia Holdings must be used by us to immediately first repay convertible notes payable to the holder of CNP 1 and 2, and second to repay other convertible notes payable pro rata.

(4) Conversion of unpaid principal into Conversions Units pursuant to the terms in (1) above is mandatory in the event Hawker closes the Proposed TEG Acquisition described in Note 7. Conversion of unpaid interest into Conversion Units is at the election of Hawker.

(5) The holder is related to Darren Katic, who is an officer, director and significant shareholder.

(6) Unpaid principal and accrued interest is convertible at any time at the option of the holder into Conversion Units in an amount computed by dividing the amount converted by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events).  Repayment of the convertible note payable is required on collection of the secured subordinated loan receivable described in Note 7 if earlier than the maturity date above.  As Hawker expects to receive repayment on the secured subordinated loan receivable within one year, this convertible note payable has been classified as a short term liability.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) (USD $)	12 Months Ended
	Aug. 31, 2014 item	Aug. 31, 2013	Aug. 31, 2014 Tapia Holdings, LLC [Member]	Oct. 02, 2014 Tapia Holdings, LLC [Member] Subsequent Event [Member]	Sep. 24, 2014 Tapia Holdings, LLC [Member] Subsequent Event [Member]	Sep. 01, 2014 Tapia Holdings, LLC [Member] Subsequent Event [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Number of occasions in the period in which cash on deposit has exceeded federally insured limits	2
Maximum period for which on deposit has exceeded federally insured limits on specified occasions	7 days
Non-Controlling Interest
Non-controlling interest	$ 55,000		$ 55,000	$ 145,000	$ 65,000	$ 145,000
Future funding commitments			65,000
Future commitment to participate in the note payable			$ 144,000	$ 145,000
Members' equity (as a percent)			4.80%	4.83%		4.83%

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CONVERTIBLE NOTES PAYABLE, SHORT TERM (Narrative) (Details) (USD $)					12 Months Ended	0 Months Ended
	Aug. 31, 2014	Sep. 18, 2013	Aug. 31, 2013	Aug. 31, 2014 Subsequent Event [Member]	Aug. 31, 2014 Convertible Notes Payable [Member]	Sep. 18, 2014 Convertible Notes Payable One and Two [Member] Subsequent Event [Member]
Debt Instrument [Line Items]
Interest rate	10.00%	1.66%		10.00%	12.00%
Warrant exercise price	$ 0.20				$ 0.25
Price per unit	$ 0.10				$ 0.10
Convertible notes payable, short term	$ 951,599				$ 50,000
Term of warrants					5 years
Maximum beneficial ownership interest after conversion of debt (as a percent)						4.99%

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CONSOLIDATED BALANCE SHEETS (USD $)	Aug. 31, 2014	Aug. 31, 2013
Current assets:
Cash	$ 13,207	$ 8,298
Accounts receivable	42,815	18,755
Inventory	6,092	7,064
Prepaid expenses	22,389	2,658
Secured subordinated loan receivable, short term	1,298,322
Total current assets	1,382,825	36,775
Fixed assets:
Machinery and equipment, net of accumulated depreciation of $19,605 and $15,179, respectively	14,269	13,156
Other assets:
Capitalized oil and gas properties, net of accumulated depletion of $86,193 and $59,878, respectively	730,046	297,590
Deposits	5,000
Total assets	2,132,140	347,521
Current liabilities:
Accounts payable and accrued expenses	813,438	31,018
Accrued bonuses	480,000
Net profits interest payable, current portion	20,065	12,109
Loans payable to related parties, short term	226,876
Convertible notes payable, short term	951,599
Total current liabilities	2,491,978	43,127
Long term liabilities:
Loans payable to related parties, long term		89,833
Asset retirement obligations	168,110	103,299
Net profits interest payable, long term portion	149,039	112,488
Total long term liabilities	317,149	305,620
Total liabilities	2,809,127	348,747
Stockholders' equity (deficit):
Common stock; $0.001 par value; 750,000,000 shares authorized, 41,174,703 and 0 shares issued and outstanding, respectively	41,175
Common stock payable	50,000
Additional paid in capital	1,224,300	350,000
Accumulated deficit	(2,047,462)	(351,226)
Total stockholders' equity (deficit)	(731,987)	(1,226)
Non-controlling interest	55,000
Total equity (deficit)	(676,987)	(1,226)
Total liabilities and equity (deficit)	$ 2,132,140	$ 347,521

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ACQUISITION OF HAWKER ENERGY, LLC (Narrative) (Details) (USD $)	12 Months Ended	0 Months Ended	12 Months Ended							0 Months Ended
	Aug. 31, 2014	Jan. 01, 2014 Hawker Energy Rincon Llc [Member]	Aug. 31, 2014 Hawker Energy Rincon Llc [Member]	Aug. 31, 2014 California Oil Independents [Member]	Aug. 31, 2014 South Coast Oil [Member]	Aug. 31, 2014 Christian Hall [Member]	Aug. 31, 2014 TEG Oil & Gas, Inc. [Member]	Aug. 31, 2014 Rincon Island Limited Partnership [Member]	Aug. 31, 2014 ExxonMobil [Member]	Jan. 01, 2014 Darren Katic [Member]	Oct. 10, 2014 Darren Katic [Member] Hawker Energy Rincon Llc [Member] Subsequent Event [Member]	Jan. 01, 2014 Sellers [Member]	Jan. 01, 2014 Charles Moore [Member]	Oct. 10, 2014 Charles Moore [Member] Hawker Energy Rincon Llc [Member] Subsequent Event [Member]	Oct. 10, 2014 Messrs. Katic and Moore [Member] Hawker Energy Rincon Llc [Member] Subsequent Event [Member]	Dec. 27, 2014 Mr. Tywoniuk [Member] Hawker Energy Rincon Llc [Member]	Dec. 27, 2014 Mr. Tywoniuk [Member] Hawker Energy Rincon Llc [Member] Subsequent Event [Member]	Nov. 30, 2014 Mr. Tywoniuk [Member] Hawker Energy Rincon Llc [Member] Subsequent Event [Member]	Nov. 13, 2014 Mr. Tywoniuk [Member] Hawker Energy Rincon Llc [Member] Subsequent Event [Member]
Business Acquisition [Line Items]
Number of shares issued for acquisition		3,000,000		2,000,000	2,000,000	5,000,000	10,000,000	7,000,000	7,000,000	1,500,000	16,500,000	3,000,000	1,500,000	16,500,000	33,000,000
Possible additional shares required to issue												33,000,000
Overriding royalty percentage	1.00%		24.50%
Par value			$ 138,199
Additional paid-in capital			$ 3,000
Shares to be held in escrow															19,000,000
Warrants to purchase percentage of shares of common stock held by a significant shareholder																5.00%	5.00%	9.7222%	9.7222%

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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, 2012	$ 40,765			$ 350,000	$ (309,235)
Balance, shares at Aug. 31, 2012
Stock compensation
Sale of non-controlling interest
Net loss	(41,991)				(41,991)
Balance at Aug. 31, 2013	(1,226)			350,000	(351,226)
Balance, shares at Aug. 31, 2013	0
Recapitalization on completion of acquisition of SCNRG	1,626	25,962	2,000	(26,336)
Recapitalization on completion of acquisition of SCNRG, shares		25,961,983	2,000,000
Issued to acquire Hawker	(135,199)	3,000		(138,199)
Issued to acquire Hawker, shares		3,000,000
Issuance of common stock payable		2,000	(2,000)
Issuance of common stock payable, shares		2,000,000	(2,000,000)
Net proceeds from unit offering	980,288	10,213		970,075
Net proceeds from unit offering, shares		10,212,720
Proceeds received for common stock payable	50,000		50,000
Proceeds received for common stock payable, shares			500,000
Stock compensation	68,760			68,760
Sale of non-controlling interest	55,000					55,000
Net loss	(1,696,236)				(1,696,236)
Balance at Aug. 31, 2014	$ (676,987)	$ 41,175	$ 50,000	$ 1,224,300	$ (2,047,462)	$ 55,000
Balance, shares at Aug. 31, 2014	41,174,703	41,174,703	500,000

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INCOME TAXES (Schedule of Significant Components of the Deferred Tax Assets and Liabilities) (Details) (USD $)	Aug. 31, 2014	Aug. 31, 2013
Deferred tax assets:
Accounts payable and accrued expenses	$ 504,765
Asset retirement obligations	5,992
Net operating loss carry-forward	477,153
Total deferred tax assets	987,910
Deferred tax liabilities:
Depreciation and basis differences	(37,088)
Net deferred tax assets	950,822
Valuation allowance	(950,822)
Net deferred tax assets

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INCOME TAXES (Tables)

12 Months Ended

Aug. 31, 2014

INCOME TAXES [Abstract]

Schedule of significant components of the deferred tax assets and liabilities

Significant components of the deferred tax assets and liabilities are as follows:

	Year Ended August 31,
	2014			2013
Deferred tax assets:
Accounts payable and accrued expenses	$	504,765		$	-
Asset retirement obligations		5,992			-
Net operating loss carry-forward		477,153			-
Total deferred tax assets		987,910			-
Deferred tax liabilities:
Depreciation and basis differences		(37,088	)		-
Net deferred tax assets		950,822			-
Valuation allowance		(950,822	)		-
Net deferred tax assets	$	-		$	-

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PRO FORMA FINANCIAL INFORMATION (Narrative) (Details) (SCNRG [Member])	Aug. 31, 2014	May 15, 2014	Feb. 04, 2014
SCNRG [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Acquisition of additional working interest in DEEP lease	33.33%	12.8192%	20.5108%

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STOCKHOLDERS' EQUITY

12 Months Ended

Aug. 31, 2014

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

16.              STOCKHOLDERS' EQUITY

Common Stock

The following common stock transactions occurred during the year ended August 31, 2014:

(a)  On October 25, 2013, we issued 14,000,000 shares of our common stock to the members of SCNRG to acquire 100% of the membership interests in SCNRG.  As described in Notes 1 and 4, the acquisition of SCNRG by Hawker has been accounted for as a recapitalization of Hawker for accounting purposes;

(b)  On January 1, 2014, we issued 3,000,000 shares of our common stock to acquire HERLLC as described in Note 5;

(c)  On January 8, 2014, we issued 2,000,000 shares of our common stock to Ryan Bateman to satisfy an obligation pursuant to a July 2013 purchase agreement for the Sawtelle well interest;

(d) Between January 10, 2014 and July 1, 2014, we issued an aggregate 10,212,720 units at a price of $0.10 per unit.  Each unit comprises one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock at $0.20 per share.  The warrants expire five years from each closing date.  Gross proceeds were $1,021,272, including $103,687 to settle certain loans payable to related parties and $188,185 to settle certain accounts payable.  No commissions were paid or are payable. Net proceeds after legal and other offering costs were $980,288.  No separate accounting was given to the warrants as the value is indeterminable, and any such allocation would be recorded to paid-in capital regardless, just as the excess over par value for the common stock was recorded.  

(e)  On August 27, 2014, we received an aggregate of $50,000 for the sale of 500,000 units on the same terms as set forth in (d) above.  Closing occurred in September 2014.  This amount is shown as common stock payable at August 31, 2014.

Related party transactions are set forth in Note 17.  Additional units were sold after August 31, 2014, as described in Note 19.

Shares of Common Stock Potentially Issuable Pursuant To Warrants, Convertible Notes Payable and Options 

Pursuant to warrants issued in our private placements of securities from January 10, 2014 through July 1, 2014, described above, up to 5,106,360 shares of our common stock would be issuable upon payment to us of $0.20 per share.  The warrants expire five years from the date of each private placement.

Up to 14,014,939 shares of common stock could be issued pursuant to the convertible notes payable described in Note 10, as follows:

• Up to 9,300,000 shares of common stock would be issuable if investors elect or are required to convert all of the $930,000 aggregate principal amount on or prior to maturity, with the number of shares issuable on conversion computed at a rate of $0.10 per share;
• Up to an additional 4,400,000 shares of common stock would be issuable pursuant to warrants created if investors elect or are required to convert certain convertible note payables prior to or on maturity (which notes payable are included in the preceding paragraph) and pay us $0.25 per share on exercise; and
• An additional amount of up to approximately 215,987 shares of common stock would be issuable determined based on the amount of any accrued interest payable as of August 31, 2014, if investors elect or are required to convert their notes payable into common stock, based on a conversion rate of $0.10 per share.  Conversion of accrued interest into common stock would create warrants to acquire up to a further 98,952 shares at an exercise price of $0.25 per share.

On May 14, 2014, 5,950,000 common stock options were issued to our officers and other key consultants. 

• Each option has a life of 10 years and a strike price of $0.10 per share.  One million stock options vest on December 15, 2014, with the balance of 4,950,000 stock options vesting one-third on each of May 13, 2015, 2016 and 2017.  There are no other options outstanding, and no options have vested to date. 
• These options were granted pursuant to the 2014 Stock Plan approved by written consent of a majority of our stockholders on March 18, 2014, which authorized 15% of our outstanding shares of common stock to be available for grant in the form of options or stock purchase rights.  At August 31, 2014, 15% of our outstanding common stock is 6,176,205, of which we granted 5,950,000 stock options as stated above.
• The fair value of each stock option award was estimated on the date of grant using the Black-Scholes option pricing method.  Compensation costs related to the options granted are recognized on a straight-line basis over the vesting period.  The expected life assumption was 10 years, the same as the contract life, as we do not have historical data upon which to base an expected term assumption.  No forfeitures were assumed, as we have no historical data.  Expected volatility was based on historical volatility of our common stock.  The risk-free interest rate was derived from the U.S. Treasury yields in effect at the time of grant and the dividend yield was zero, based on historical experience and expected future changes.  
• Equity compensation expense was $68,760 for the period from the date of grant on May 14, 2014, to August 31, 2014.  The total compensation cost relating to unvested stock option grants not yet recognized at August 31, 2014, was $342,000, and the weighted average period over which this cost is expected to be recognized, as of August 31, 2014, is approximately 2.5 years. 

See Note 19 for Subsequent Events.

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FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Aug. 31, 2014

FAIR VALUE MEASUREMENTS [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

	Fair Value Measurement
	Level 1		Level 2		Level 3
August 31, 2014
Assets:
Secured subordinate loan receivable	$	-	$	-	$	1,298,322
Capitalized oil and gas properties, net						730,046
Liabilities:
Loans payable to related parties, short term						(226,876	)
Convertible notes payable, short term						(951,599	)
Net profit interest liability		-		-		(169,104	)
Asset retirement obligation						(168,110	)
Total	$	-	$	-	$	512,679
August 31, 2013
Assets:
Capitalized oil and gas properties, net	$	-	$	-	$	297,590
Liabilities:
Net profit interest liability		-		-		(124,597	)
Asset retirement obligation		-		-		(103,299	)
Total	$	-	$	-	$	69,694

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PRO FORMA FINANCIAL INFORMATION

12 Months Ended

Aug. 31, 2014

PRO FORMA FINANCIAL INFORMATION [Abstract]

PRO FORMA FINANCIAL INFORMATION

18.               PRO FORMA FINANCIAL INFORMATION

The following table presents unaudited pro forma consolidated information, adjusted for the reverse acquisition of Hawker (Note 4) and the acquisition of an additional 33.33% interest in DEEP Lease (Note 6), as if the acquisitions had occurred on September 1, 2012:

	Year Ended August 31,
	2014			2013
Revenue	$	150,802		$	125,116
Net loss	$	(1,712,728	)	$	(184,149	)
Loss per share	$	(0.05	)	$	(0.01	)

These amounts have been calculated after applying our accounting policies and adjusting the results to reflect the recapitalization of Hawker.  The unaudited pro forma adjustments are based on available information and certain assumptions we believe are reasonable.  It was determined that HERLLC was not a business and therefore there is no pro forma adjustment for the acquisition of HERLLC (Note 5).

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SUBSEQUENT EVENTS (Additional Narrative) (Details) (USD $)				0 Months Ended				12 Months Ended					0 Months Ended							0 Months Ended				0 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014 Tapia Holdings LLC [Member]	Jan. 01, 2014 Darren Katic [Member]	Jan. 01, 2014 Charles Moore [Member]	Jan. 01, 2014 Hawker Energy (Rincon), LLC [Member]	Dec. 27, 2014 Hawker Energy (Rincon), LLC [Member] Mr. Tywoniuk [Member]	Aug. 31, 2014 TEG Oil & Gas, Inc. [Member]	Oct. 02, 2014 Subsequent Event [Member] Tapia Holdings LLC [Member]	Sep. 24, 2014 Subsequent Event [Member] Tapia Holdings LLC [Member]	Sep. 01, 2014 Subsequent Event [Member] Tapia Holdings LLC [Member]	Oct. 02, 2014 Subsequent Event [Member] Charles Moore [Member] Tapia Holdings LLC [Member]	Oct. 10, 2014 Subsequent Event [Member] Hawker Energy (Rincon), LLC [Member] Messrs. Katic and Moore [Member]	Oct. 10, 2014 Subsequent Event [Member] Hawker Energy (Rincon), LLC [Member] Darren Katic [Member]	Oct. 10, 2014 Subsequent Event [Member] Hawker Energy (Rincon), LLC [Member] Charles Moore [Member]	Dec. 27, 2014 Subsequent Event [Member] Hawker Energy (Rincon), LLC [Member] Mr. Tywoniuk [Member]	Nov. 30, 2014 Subsequent Event [Member] Hawker Energy (Rincon), LLC [Member] Mr. Tywoniuk [Member]	Nov. 13, 2014 Subsequent Event [Member] Hawker Energy (Rincon), LLC [Member] Mr. Tywoniuk [Member]	Oct. 10, 2014 Subsequent Event [Member] Option Agreement [Member]	Oct. 10, 2014 Subsequent Event [Member] Option Agreement [Member] Hawker Energy (Rincon), LLC [Member]	Oct. 10, 2014 Subsequent Event [Member] Option Agreement [Member] Hawker Energy (Rincon), LLC [Member] Kern County CA [Member] acre	Oct. 10, 2014 Subsequent Event [Member] Option Agreement [Member] Hawker Energy (Rincon), LLC [Member] Kern County [Member] acre	Oct. 10, 2014 Subsequent Event [Member] Option Agreement [Member] Hawker Energy (Rincon), LLC [Member] Los Angeles County [Member] acre	Oct. 10, 2014 Subsequent Event [Member] Option Agreement [Member] Hawker Energy (Rincon), LLC [Member] Messrs. Katic and Moore [Member]	Oct. 10, 2014 Subsequent Event [Member] Option Agreement [Member] Hawker Energy (Rincon), LLC [Member] Darren Katic [Member]	Oct. 10, 2014 Subsequent Event [Member] Option Agreement [Member] Hawker Energy (Rincon), LLC [Member] Charles Moore [Member]	Dec. 27, 2014 Subsequent Event [Member] Option Agreement [Member] Hawker Energy (Rincon), LLC [Member] Mr. Tywoniuk [Member]	Nov. 30, 2014 Subsequent Event [Member] Option Agreement [Member] Hawker Energy (Rincon), LLC [Member] Mr. Tywoniuk [Member]	Oct. 10, 2014 Subsequent Event [Member] Option Agreement [Member] TEG Oil & Gas, Inc. [Member]
Subsequent Event [Line Items]
Number of shares issued for acquisition				1,500,000	1,500,000	3,000,000		10,000,000					33,000,000	16,500,000	16,500,000									33,000,000	16,500,000	16,500,000
Shares to be held in escrow													19,000,000											19,000,000
Shares to be held in escrow till acquisition																													10,000,000
Shares to be held in escrow till on or before December 31, 2017																			9,000,000
Area of land																					1,500	40	900
Stock issued (in shares)																				14,000,000
Warrants to purchase percentage of shares of common stock held by a significant shareholder							5.00%									5.00%	9.7222%	9.7222%									5.00%	9.7222%
Equity funding	$ 55,000		$ 55,000						$ 145,000	$ 65,000	$ 145,000	$ 25,000
Future commitment to participate in the note payable			$ 144,000						$ 145,000
Members' equity (as a percent)			4.80%						4.83%		4.83%

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DESCRIPTION OF BUSINESS

12 Months Ended

Aug. 31, 2014

DESCRIPTION OF BUSINESS [Abstract]

DESCRIPTION OF BUSINESS

1.              DESCRIPTION OF BUSINESS

Hawker Energy, Inc. (“we”, “our”, “us”, “Hawker” or “the Company”) was incorporated under the laws of the State of Nevada on June 12, 2006, under the name of Uventus Technologies Corp. On September 23, 2009, we merged with our wholly owned subsidiary and changed our name to Sara Creek Gold Corp.  Subsequently, on September 11, 2014, we changed our name to Hawker Energy, Inc.

On October 25, 2013, we closed on the Agreement and Plan of Reorganization with SCNRG, LLC (“SCNRG”), a California limited liability company, whereby we acquired 100% of the membership interest in SCNRG, resulting in SCNRG becoming our wholly-owned subsidiary, in exchange for 14.0 million shares of our common stock issued to the members of SCNRG (see Note 4).  For accounting purposes, our acquisition of SCNRG has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of Hawker.  Accordingly, SCNRG is considered the acquirer for accounting purposes and, therefore, the historical financial statements of SCNRG are presented and consolidated with Hawker's beginning October 25, 2013.  As a result of this transaction, Hawker changed its business direction and is now in the oil and gas industry.   Our goal is to acquire and develop mature leases, interests and other rights to oil and gas producing properties with proven undeveloped potential. 

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Aug. 31, 2014	Aug. 31, 2013
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract]
Accumulated depreciation of machinery and equipment	$ 19,605	$ 15,179
Capitalized oil and gas properties accumulated depletion	$ 86,193	$ 59,878
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	750,000,000	750,000,000
Common stock, shares issued	41,174,703	0
Common stock, shares outstanding	41,174,703	0

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ASSET RETIREMENT OBLIGATION

12 Months Ended

Aug. 31, 2014

ASSET RETIREMENT OBLIGATION [Abstract]

ASSET RETIREMENT OBLIGATION

11.              ASSET RETIREMENT OBLIGATION 

Our asset retirement obligations relate to the abandonment of oil wells and related surface facilities. The amounts recognized are based on numerous estimates and assumptions, including future retirement costs, inflation rates and credit adjusted risk-free interest rates.

The following shows the changes in asset retirement obligations for the years ended August 31, 2014 and 2013:

	August 31,		August 31,
	2014		2013
Asset retirement obligations, beginning	$	103,299	$	95,206
Liabilities acquired during the period		53,963		-
Liabilities settled during the period		-		-
Current period accretion		10,848		8,093
Asset retirement obligations, ending	$	168,110	$	103,299

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Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Aug. 31, 2014	Nov. 13, 2014
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Aug. 31, 2014
Entity Registrant Name	HAWKER ENERGY, INC.
Entity Central Index Key	0001415286
Current Fiscal Year End Date	--08-31
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		74,674,703
Entity Current Reporting Status	Yes
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Public Float		$ 2.3

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NET PROFITS INTEREST ("NPI") PAYABLE

12 Months Ended

Aug. 31, 2014

NET PROFITS INTEREST ("NPI") PAYABLE [Abstract]

NET PROFITS INTEREST ("NPI") PAYABLE

12.              NET PROFITS INTEREST (“NPI”) PAYABLE

In connection with SCNRG's December 1, 2009 Purchase and Sale Agreement for the DEEP Lease, and as part of the purchase price consideration, SCNRG entered into an Assignment of Net Profit Interest with Christian Hall Petroleum. Pursuant to the agreement, SCNRG is required to make monthly payments to the holder in an amount equal to 40% of SCNRG's share of net profit (as defined in the agreement) from production. 

Until February 1, 2014, SCNRG's working interest in the DEEP property was 66.67%, and the NPI agreement called for a minimum monthly payment of $1,985 (SCNRG's 66.67% share).  Beginning February 1, 2014, SCNRG's working interest in the DEEP Lease increased to 87.18%, and its share of the minimum monthly payment became $2,596. Beginning May 15, 2014, SCNRG's working interest in the DEEP Lease increased to 100.0%, and its share of the minimum monthly payment became $2,978.  Payments are required until SCNRG and other working interest owners have made NPI payments in aggregate between $347,000 and $357,410 on or before December 31, 2022 (the actual maximum amount within this range is dependent on when SCNRG and other working interest owners satisfy their aggregate NPI payment obligations).  As of August 31, 2014, SCNRG and other working interest owners have made NPI payments totaling $125,201.  SCNRG has paid its 66.67% working interest share of this amount through February 1, 2014, its subsequent 87.18% share through May 15, 2014, and its subsequent 100.0% share through May 31, 2014.

Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG's December 1, 2009, acquisition date of a 66.67% working interest in the DEEP Lease, and this liability was increased pro rata when its working interest increased to 87.18% on February 1, 2014, and again on May 14, 2014 when its working interest increased to 100.0%.  The discount rate used in all cases was 10.0% per annum.

Changes in SCNRG's share of the NPI liability are as follows for the years ended August 31, 2014 and 2013: 

	August 31,			August 31,
	2014			2013
NPI liability, beginning of period	$	124,597		$	135,640
Liabilities assumed in connection with acquisition of additional DEEP Lease working interests		58,847			-
Current period accretion		14,104			12,865
Payments made		(28,444	)		(23,908	)
NPI liability, end of period		169,104			124,597
Less: current portion		20,065			12,109
NPI liability, long-term portion	$	149,039		$	112,488

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Revenue:
Oil revenues	$ 125,587	$ 80,792
Expenses:
Direct operating costs	62,505	58,797
Depletion, depreciation and amortization	41,680	25,695
Professional fees	837,127	16,790
Bonuses	480,000
General and administrative expenses	296,926	8,636
Equity compensation expense	68,760
Total expenses	1,786,998	109,918
Net operating (loss)	(1,661,411)	(29,126)
Other (income) expense:
Interest (income)	(7,609)
Interest expense	42,434	12,865
Total other expense	34,825	12,865
Loss before income taxes	(1,696,236)	(41,991)
Provision for income taxes
Net loss	(1,696,236)	(41,991)
Net loss attributable to non-controlling interests
Net loss attributable to the Company	$ (1,696,236)	$ (41,991)
Net loss per common share - basic and diluted	$ (0.05)	$ (0.01)
Weighted average common shares outstanding - basic and diluted	31,950,963	5,882,117

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ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE

12 Months Ended

Aug. 31, 2014

ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE [Abstract]

ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE

6.                ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE

As a result of two transactions (described below) through our wholly-owned subsidiary SCNRG, we acquired the remaining 33.33% working interest in the DEEP Lease.

On February 4, 2014, SCNRG completed the acquisition of additional 20.5108% working interest in the DEEP Lease for $200,000 in cash plus assumed asset retirement obligations and net profits interest liabilities aggregating to an estimated fair value of $69,729, for total consideration of $269,729.  SCNRG's working interest increased from 66.67% to 87.18% as a result of the purchase, effective February 1, 2014.  Our condensed consolidated financial statements include the increased working interest beginning February 1, 2014.  The purchase price was allocated $3,529 to machinery and equipment, and $266,200 to oil properties based on estimated fair values.

On May 15, 2014, SCNRG completed the acquisition of the remaining 12.8192% working interest in the DEEP Lease for $125,000 in cash plus assumed asset retirement obligations and net profits interest liabilities aggregating to an estimated fair value of $43,081, for total consideration of $168,081.  SCNRG's working interest increased from 87.18% to 100.0% as a result of the purchase, effective May 15, 2014.  Our condensed consolidated financial statements include the increased working interest beginning May 15, 2014.  The purchase price was allocated $2,010 to machinery and equipment, and $166,071 to oil properties based on estimated fair values.

The operator, Caleco, LLC, will continue to operate the DEEP Lease on SCNRG's behalf during a transitional period until SCNRG qualifies with the regulatory agency as an operator.

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ACQUISITION OF HAWKER ENERGY, LLC

12 Months Ended

Aug. 31, 2014

ACQUISITION OF HAWKER ENERGY (RINCON), LLC [Abstract]

ACQUISITION OF HAWKER ENERGY (RINCON), LLC

5.                ACQUISITION OF HAWKER ENERGY (RINCON), LLC 

On January 1, 2014, we exercised our option to acquire all of the membership interests in Hawker Energy (Rincon), LLC (“HERLLC”) from Darren Katic (who was also a seller in our transaction with SCNRG) and Charles Moore (collectively the “HERLLC Sellers”).  We issued 3,000,000 shares of our common stock to the HERLLC Sellers as consideration for the acquisition and, as described below, were required to issue up to an additional 33,000,000 shares of our common stock to the HERLLC Sellers upon us or HERLLC consummating certain follow-on transactions described below (“Potential Follow-On Transactions”).  In addition, we assumed $135,199 in net liabilities of HERLLC. 

HERLLC, through its wholly-owned subsidiary Punta Gorda Resources, LLC (“Punta Gorda”), claims oil production and development rights of coastal lease PRC 145.1 just offshore Ventura County in the Rincon Field and ownership rights to an associated on-shore drilling and production site, which rights are being challenged in court by the lease's operator of record (see Part I, Item 3, “Legal Proceedings”).  HERLLC has also engaged in preliminary discussions with various third parties concerning the Potential Follow-On Transactions, none of which were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of HERLLC) due to the preliminary status of those discussions and lack of certainty around HERLLC's or Hawker's ability to finance one or more of these Potential Follow-On Transactions.  Other than its contested interest in PRC 145.1 and its preliminary discussions concerning the Potential Follow-On Transactions, HERLLC had no assets or operations as of January 1, 2014.  PRC 145.1 and the Potential Follow-On Transactions are discussed in greater detail below.

PRC 145.1 is subject to 24.5% in overriding royalties, primarily to the State of California. A single active well on PRC 145.1 produced an average of 10 barrels of oil per day (gross production before royalties) for the eight months August 31, 2014. This lease has ten other non-active wells, one or more of which may be recompleted or re-drilled.  Although initial technical work has been done on PRC 145.1 to develop a preliminary understanding of the resource and opportunity, no reserve reports done to SEC standards have been completed to date.

All rights claimed by HERLLC to PRC 145.1 are being challenged in court by the lease's operator of record -- Case No. 56-2013-00440672-CU-BC-VTA pending in Ventura County Superior Court (see Part I, Item 3, “Legal Proceedings”).  HERLLC is currently not receiving any net proceeds from production on this lease pending resolution of this matter in our favor.

After we exercised our option to acquire HERLLC on January 1, 2014, the agreement provided that the HERLLC Sellers were entitled to additional shares of our common stock upon the consummation of Potential Follow-On Transactions as follows:

(a) 2,000,000 shares of our common stock shall be issued upon our or HERLLC's acquisition of California Oil Independents or its oil and gas interests being the “Doud” leases, comprised of approximately 340 acres, 20 wells and two tank batteries, located in the Monroe Swell Field, near Greenfield, California;

(b) 2,000,000 shares of our common stock shall be issued upon our or HERLLC's acquisition of a participation in South Coast Oil – Huntington Beach CA oil and gas interests comprised of approximately 340 acres, and 20 wells (of which 9 are active) and 4 tank batteries, and known as the “Town Lot”;

(c) 5,000,000 shares of our common stock shall be issued upon our or HERLLC's acquisition of all of the oil and gas leases held by Christian Hall (or affiliates) in the Midway-Sunset field located between the towns of Taft and McKittrick in Kern County, CA;

(d) 10,000,000 shares of our common stock shall be issued upon our or HERLLC's acquisition of TEG Oil & Gas USA, Inc. (or certain oil and gas interests held by it, being all leases located in the Tapia Field, Los Angeles County, California);

(e) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or HERLLC of certain assets and rights regarding PRC 145.1 Lease held by Rincon Island Limited Partnership or settlement in lieu of such conveyance (see Part I, Item 3, “Legal Proceedings”); and

(f) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or HERLLC of certain mineral rights regarding PRC 427 Lease held by ExxonMobil, a lease that is adjacent to PRC 145.1 Lease above.

The Potential Follow-On Transactions described above are dependent on a number of variables that are not within our control and, as a result, (i) as of August 31, 2014, we cannot state with a reasonable degree of certainty that any of the transactions will occur and (ii) none of the transactions were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of HERLLC) or August 31, 2014.  Each of the Potential Follow-On Transactions described above, if consummated, would constitute a transaction separate and independent from our acquisition of HERLLC pursuant to the option.  Any shares of our common stock that may be issued upon the consummation of any of the Potential Follow-On Transactions will constitute expensed costs incurred concurrently with consummation of the applicable follow-on transaction (as opposed to incremental consideration for our acquisition of HERLLC).

The assets and liabilities of HERLLC at the date of acquisition were recorded at their fair values of:

Cash	$	1,214
Prepaid expenses		16,625
Less:
Accounts payable		(123,413	)
Loan payable to related party, short term		(29,625	)
Net liabilities assumed	$	135,199

The $138,199 difference between the par value of the common stock issued, $3,000, and the net liabilities assumed, $135,199, was recorded to paid in capital as there is no objective evidence of the value of HERLLC's assets, which consist of the disputed claim to coastal lease PRC 145.1, and inability to determine a probability of success of the litigation.  As a result and in an effort to fairly represent and not overstate the consolidated assets of Hawker, a decrease in capital was deemed appropriate.

On October 10, 2014, Hawker authorized an amendment to the Potential Follow-On Transaction terms described above where Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock. The amendment waives all of the Potential Follow-On Transaction requirements and authorizes the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we will hold 19,000,000 shares in escrow, eligible to be released as set forth in Note 19, Subsequent Events.

Pursuant to a separate agreement dated November 13, 2014, between Messrs. Katic, Moore and Tywoniuk, Mr. Tywoniuk (a significant shareholder) holds warrants to acquire 9.7222% of any shares acquired by Messrs. Katic and Moore pursuant to amendment described in the prior paragraph.  This agreement amended a December 27, 2013, agreement entitling Mr. Tywoniuk to acquire 5% of any shares acquired by Messrs. Katic and Moore pursuant to the agreement above.

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RELATED PARTY TRANSACTIONS

12 Months Ended

Aug. 31, 2014

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

17.               RELATED PARTY TRANSACTIONS

The following information sets forth related party transactions, being transactions with:

• Mr. Kristian Andresen is a director of Hawker and a significant shareholder. Until October 25, 2013, he was also our CEO, and from October 25, 2013, until July 17, 2014, he was Secretary of Hawker. Mr. Andresen has been actively providing services to Hawker since October 25, 2013.
• Mr. Darren Katic is a director and Chief Executive Officer and Chief Financial Officer of Hawker. He was a member of SCNRG, which we acquired on October 25, 2013, and at which point Mr. Katic became a director, officer and a significant shareholder of Hawker.
• Manhattan Holdings, LLC (“Manhattan”) was a member of SCNRG, which Hawker acquired on October 25, 2013, at which point Manhattan became a significant shareholder.
• Mr. Charles Moore was a managing member of HERLLC until Hawker acquired his interest on January 1, 2014, at which point he became a significant shareholder of Hawker. Mr. Moore has been actively providing services to Hawker since that date.
• Mr. Gerald Tywoniuk was a member of SCNRG, which Hawker acquired on October 25, 2013, at which point he became a significant shareholder of Hawker. Mr. Tywoniuk has been actively providing services to Hawker since that date.

HERLLC

On January 1, 2014, Hawker exercised its option to acquire all of the membership interests in HERLLC from Mr. Katic and Mr. Moore (collectively the “HERLLC Sellers”), as described in Note 5.  Hawker issued 3,000,000 shares of our common to the HERLLC Sellers as consideration for the acquisition, 1,500,000 shares to each HERLLC Seller.  Hawker also assumed net liabilities of $135,199, including $29,625 owing to Mr. Katic.  Pursuant to the option agreement, Hawker is required to issue up to an additional 33,000,000 shares to Sellers upon Hawker or HERLLC consummating certain follow-on transactions.

The HERLLC option was originally entered into with Hawker on October 15, 2013 and amended on November 20, 2013 to (a) extend the term of the option, (b) revise the option consideration payable upon consummation of certain transactions described in the Agreement and (c) provide for additional option consideration in the event of the consummation of certain transactions not previously contemplated by the parties.

On October 10, 2014, the Board of Hawker waived all of the follow-on transaction requirements and authorized the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we hold 19,000,000 shares in escrow, to be released in accordance with the provisions described in Note 19, Subsequent Events. 

Loan From Related Parties, Short Term

As of August 31, 2014, we owed Mr. Katic $161,000.  This loan is unsecured, bears interest at 10% and is due on demand.  Total advances were $228,000 and repayments were $67,000 during the year ended August 31, 2014.  The maximum outstanding balance was $190,000.

As of August 31, 2014, we owed Manhattan $60,000.  This loan is unsecured, bears interest at 10% and is due January 31, 2015, pursuant to a promissory note amendment dated September 29, 2014, which amended the maturity date from October 31, 2014. 

Accrued interest payable as of August 31, 2014, on the above is $5,876.

See Note 19, Subsequent Events.

Loans From Related Parties, Long Term

SCNRG received various loans from its former members from its inception totaling $89,833 as of August 31, 2013: Mr. Katic $38,500, Manhattan $38,500 and Mr. Tywoniuk $12,833.  Each loan was originally unsecured, non-interest bearing and due on demand. On September 18, 2013, each loan was formalized through the issuance of an amended and restated promissory note to each former member. The amended and restated promissory notes were unsecured, bore interest at a rate of 1.66% per annum and matured no later than September 18, 2018. The unpaid principal and interest were payable upon the earlier of their maturity or upon the issuance of new debt or equity securities in a transaction or series of transactions resulting in aggregate gross proceeds to Hawker of a minimum of $5 million.  Hawker assumed these loans payable upon its acquisition of SCNRG on October 25, 2013.  On April 9, 2014, the related parties agreed to convert the short- and long-term loans payable to related parties into common stock and warrants on the same terms as the unit offering described in Note 16.

Convertible Notes Payable

As of August 31, 2014, pursuant to a convertible note payable, we owed a relative of Mr. Darren Katic, $100,000 plus accrued interest of $1,710, all as described in Note 10.

Unit Sales

The following unit sale transactions involved related parties:

• On January 10, 2014, Messrs. Katic and Tywoniuk purchased 380,000 and 500,000 units of Hawker for $38,000 and $50,000 respectively.  In addition, Manhattan acquired 900,000 units of Hawker for $90,000,
• On January 31, 2014, Mr. Andresen agreed to settle $15,000 owing to him by Hawker, as of the date of SCNRG's acquisition of Hawker, in exchange for 150,000 units, and on April 9, 2014, Mr. Katic agreed to settle $16,625 owing to him in exchange for 166,250 units. 
• On April 9, 2014, Mr. Katic, Manhattan and Mr. Tywoniuk agreed to settle SCRNG's “loans to related parties, long term” totaling $90,687 (see Note 9 and also referred to above in loans from related parties, long term), plus Mr. Katic agreed to settle a $13,000 amount owing to him from HERLLC at the January 1, 2014, acquisition date of HERLLC, for a total of $103,687 in exchange for 1,036,870 units.
• All of these amounts are a portion of the proceeds from unit sales described in Note 16.  Each unit comprises one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock at $0.20 per share.  The warrants expire five years from the closing date.   The price of each unit was $0.10 per unit.

As part of the common stock payable amounts outstanding on August 31, 2014, described in Note 16, $20,000 was received from each of Messrs. Katic and Tywoniuk. 

Stock Option Grant And Accrued Bonuses

See Note 16 for a description of the stock option grant that occurred on May 14, 2014.   Of the options granted, 600,000, 2,600,000 and 1,600,000 were granted to Messrs. Katic, Moore and Tywoniuk, respectively.  These options vesting over three years.  In addition, 1,000,000 options vesting December 15, 2014 were granted to SMED Capital Corp., an entity owned by Mr. Andresen.  Each of these options have an exercise price is $0.10 per unit, and a term of 10 years. 

At August 31, 2014, Hawker accrued bonuses of $120,000 each to Mr. Andresen, Katic, Moore and Tywoniuk, in recognition of services rendered.  These amounts will not be paid until Hawker has sufficient funds, to be determined by our Chief Financial Officer. The total amount payable of $480,000 is shown separately on the balance sheet, and the total expense is shown separately on the statement of operations.

None of these individuals was an employee of Hawker, nor did they receive any other consideration in the years ended August 31, 2013 and 2014.

Other

On closing of the Tapia, LLC acquisition, the non-controlling interest held by Mr Moore is expected to be 1.5 percentage points.  See Notes 7 and 19.

On behalf of a company controlled by Mr. Katic, the Company has been paying rent to a third party for its office space, beginning January 1, 2014.  No formal assumption agreement has been completed to reassign the leases with the landlord from Mr. Katic's company to Hawker. See Note 15.  Mr. Katic provided a personal guarantee to the landlord.  For the year ended August 31, 2014, these payments totaled $25,644.

See also Note 19, Subsequent Events.

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INCOME TAXES

12 Months Ended

Aug. 31, 2014

INCOME TAXES [Abstract]

INCOME TAXES

13.              INCOME TAXES

There was no current or deferred income tax expense (benefit) for the years ended August 31, 2014 and August 31, 2013. Accordingly, a reconciliation between the statutory rate and our effective rate has not been provided.

Significant components of the deferred tax assets and liabilities are as follows:

	Year Ended August 31,
	2014			2013
Deferred tax assets:
Accounts payable and accrued expenses	$	504,765		$	-
Asset retirement obligations		5,992			-
Net operating loss carry-forward		477,153			-
Total deferred tax assets		987,910			-
Deferred tax liabilities:
Depreciation and basis differences		(37,088	)		-
Net deferred tax assets		950,822			-
Valuation allowance		(950,822	)		-
Net deferred tax assets	$	-		$	-

At August 31, 2014, we have Federal and State net operating loss carry forwards of approximately $1,302,500 and $370,300 expiring in 2034 and 2024, respectively. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs (see Note 4). Therefore, the amount available to offset future taxable income is limited. A valuation allowance has been established against net operating losses where it is more likely than not that such losses will expire before they are utilized.

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LOANS PAYABLE TO RELATED PARTIES

12 Months Ended

Aug. 31, 2014

LOANS PAYABLE TO RELATED PARTIES [Abstract]

LOANS PAYABLE, RELATED PARTIES

9.              LOANS PAYABLE TO RELATED PARTIES 

Loan Payable To Related Parties, Short Term 

Loans payable to related parties, short term, consist of the following at August 31, 2014, and August 31, 2013:

	August 31,		August 31,
	2014		2013
Darren Katic	$	161,000	$	-
Manhattan Holdings, LLC		60,000		-
Total long-term loans		221,000		-
Accrued interest payable		5,876		-
Loans payable to related parties, short term	$	226,876	$	-

Loans payable to related parties are unsecured and bear interest at 10% per annum Mr. Katic's loan is due on demand. Manhattan Holdings, LLC's loan was originally due on October 31, 2014, but the maturity date was extended to January 31, 2015. Accordingly, the loans have been treated as short-term loans.  Mr. Katic is an officer, director and significant shareholder.  Manhattan Holdings, LLC is a significant shareholder.

In addition, as part of the acquisition of HERLLC on January 1, 2014, we assumed $29,625 loan payable to Mr. Katic (for both cash advanced to Hawker and expenses incurred on its behalf).  This loan was unsecured and non-interest bearing with no formal maturity date.  On April 9, 2014, Mr. Katic agreed to convert this amount into common stock and warrants on the same terms as the unit offering described in Note 16. 

Finally, as part of the acquisition of Hawker on October 25, 2013, we assumed a $15,000 amount owing to Kristian Andresen, a director and significant shareholder, and an officer at that time.  This amount was converted similarly to common stock and warrants on January 31, 2014.

See also Note 19, Subsequent Events.

Loan Payable To Related Parties, Long Term 

SCNRG received various loans from its former members from its inception totaling $0 as of August 31, 2014, and $89,833 as of August 31, 2013. Each loan was originally unsecured, non-interest bearing and due on demand. On September 18, 2013, each loan was formalized through the issuance of an amended and restated promissory note to each former member. The amended and restated promissory notes were unsecured, bore interest at a rate of 1.66% per annum and matured no later than September 18, 2018. The unpaid principal and interest were payable upon the earlier of their maturity or upon the issuance of new debt or equity securities in a transaction or series of transactions resulting in aggregate gross proceeds to Hawker of a minimum of $5 million.  Hawker assumed these loans payable upon its reverse merger with SCNRG on October 25, 2013.

On April 9, 2014, the related parties agreed to convert the long-term loans payable, including accrued interest, into common stock and warrants on the same terms as the unit offering described in Note 15. 

Loans payable to related parties, long term, consist of the following at August 31, 2014, and August 31, 2013:

	August 31,		August 31,
	2014		2013
Darren Katic	$	-	$	38,500
Manhattan Holdings, LLC		-		38,500
Gerald Tywoniuk		-		12,833
Total long-term loans		-		89,833
Accrued interest payable		-		-
Less current portion		-		-
Loans payable to related parties, long term	$	-	$	89,833

Gerald Tywoniuk is a significant shareholder of Hawker.  Mr. Katic's and Manhattan Holdings, LLC's relationship to Hawker is described above.

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FAIR VALUE MEASUREMENTS (Details) (USD $)	Aug. 31, 2014	Aug. 31, 2013
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Secured subordinate loan receivable
Capitalized oil and gas properties, net
Loans payable to related parties, short term
Convertible notes payable, short term
Net profit interest liability
Asset retirement obligation
Total
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Secured subordinate loan receivable
Capitalized oil and gas properties, net
Loans payable to related parties, short term
Convertible notes payable, short term
Net profit interest liability
Asset retirement obligation
Total
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Secured subordinate loan receivable	1,298,322
Capitalized oil and gas properties, net	730,046	297,590
Loans payable to related parties, short term	(226,876)
Convertible notes payable, short term	(951,599)
Net profit interest liability	(169,104)	(124,597)
Asset retirement obligation	(168,110)	(103,299)
Total	$ 512,679	$ 69,694

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SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM

12 Months Ended

Aug. 31, 2014

SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM [Abstract]

SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM

7.                SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM

Between April 18, 2014 and August 31, 2014, our subsidiary Tapia Holdings, LLC (“Tapia Holdings”) made a number of advances to TEG Oil & Gas USA, Inc. (“TEG”), pursuant to several secured subordinated notes and a related security agreement, both as amended and restated into a Secured Subordinated Note dated June 27, 2014 (the “Note”), and a Third Amended and Restated Security Agreement dated August 29, 2014 (the “Security Agreement”) (collectively, the “Loan Receivable Agreements”). The Loan Receivable Agreements and an Intercreditor Agreement (defined below) were entered into in connection with a proposal by Tapia Holdings to acquire a majority interest in the assets of TEG (the “Proposed TEG Acquisition”).  

TEG Nonbinding Letter of Intent

On June 18, 2014, we entered into a nonbinding letter of intent with Sefton (the “Sefton LOI”) concerning the principal terms upon which the Proposed TEG Acquisition might be consummated.  The principal terms of the Sefton LOI are as follows: (i) TEG would contribute all of its assets, including the Tapia Assets,the Eureka Assets (as these terms are defined below) and accompanying production equipment (collectively the "TEG Assets") to TEG's newly-formed wholly-owned subsidiary Tapia, LLC, and Tapia, LLC would assume specified liabilities of TEG, (ii) Tapia Holdings would acquire 80% of the common membership interests of Tapia, LLC for $2.5 million in cash and the issuance to TEG of a $3.0 million promissory note that would accrue 6% interest per annum and amortize quarterly on a straight line basis over the 12 quarters following closing, and (iii) TEG would retain the balance of the ownership interest in Tapia, LLC comprising the remaining 20% common membership interests of Tapia, LLC.  The note to TEG will be subject to adjustment based on the working capital of Tapia, LLC at closing.  The transactions contemplated by the Sefton LOI are subject to a number of conditions, contingencies and uncertainties inherent to any nonbinding preliminary terms, including, but not limited to, completion of definitive documentation, amending or refinancing the BOTW debt that encumbers TEG and its assets, our ability to finance the transaction, our satisfactory completion of due diligence concerning TEG's assets, and consummation of definitive agreements.  Sefton shareholders have voted in favor of the proposed transaction. As a result of a significant decrease in oil prices and other factors that have arisen since the date of the Sefton LOI, the parties are currently in discussions regarding possible adjustments to the transaction.

The TEG Assets that would be contributed by TEG to Tapia, LLC under the terms of the Proposed TEG Acquisition comprise four oil and gas leases encompassing the Tapia Canyon field (the “Tapia Assets”) and one lease west of the Tapia Canyon field, (the “Eureka Assets”), and the accompanying production equipment.

The Proposed TEG Acquisition (including, but not limited to, the transactions contemplated by the Sefton LOI) are subject to a number of conditions and contingencies outside of our control, all of which create a level of uncertainly concerning our ability to ultimately consummate the Proposed TEG Acquisition.  Even if the Proposed TEG Acquisition is ultimately consummated, it may be on terms materially different than the terms described. 

Tapia Holdings has outside equity investors, representing non-controlling interests.  Including amounts funded after August 31, 2014 (see Note 19), $145,000 has been funded by these parties to date, and $145,000 of future commitments have been made to participate in the note payable to Sefton Resources Ltd. on closing of the Proposed TEG Acquisition.  As a result, non-controlling interest at closing of the acquisition is expected to represent 4.83% of the total outstanding equity of Tapia Holdings.

Between April 18, 2014 and August 31, 2014, Tapia Holdings made a number of advances as described below, totaling $1,290,727 plus accrued interest, as of August 31, 2014, plus additional advances subsequent to August 31, 2014 as described in Note 19.  These advances will be credited against the $2.5 million cash payment noted above, at closing of the Proposed TEG Acquisition.

Secured Subordinated Loan Receivable, Short Term

Under the terms of the Loan Receivable Agreements, TEG agreed to pay Tapia Holdings the principal sum of $1,500,000, or such lesser amount as may be outstanding from time to time, with interest on the unpaid principal amount at the rate of 3.0% per annum. As of August 31, 2014, the amount of outstanding advances was $1,290,727, plus accrued interest of $7,595.  Further advances are subject to the sole and absolute discretion of Tapia Holdings. The loan receivable matures on December 29, 2014, at which time all outstanding principal and accrued interest is due and payable in full.  The personal property assets of TEG secure the Note.  These assets consist of all personal property assets located in the Tapia and Eureka Fields, Los Angeles and Ventura Counties, California. The Note and our security interest in the personal property assets of TEG are subordinate to senior indebtedness of TEG, pursuant to a Subordination and Intercreditor Agreement (“Intercreditor Agreement”) dated June 2, 2014, by and among Tapia Holdings, TEG, TEG's parent company Sefton Resources, Inc. (“Sefton”), TEG's affiliate TEG MidContinent, Inc., and Sefton's senior lender Bank of the West.

The Security Agreement also provides that if the transactions contemplated by the Proposed TEG Acquisition are consummated (such transactions, the “Acquisition”), Tapia Holdings may apply any or all of the outstanding principal and accrued interest on the Note towards the consideration for the Acquisition.  Further, under the terms of the Security Agreement, Tapia Holdings has the option, in the event of a default, upon a refinancing of TEG's bank loan or after December 14, 2014 if TEG cannot provide written evidence of its ability to repay the Note, to cause TEG to contribute its assets to Tapia, LLC (“Tapia, LLC”), a newly organized California limited liability company and wholly-owned subsidiary of TEG, and to sell, to Tapia Holdings, up to 80% of TEG's membership interests in Tapia, LLC at the rate of $68,750 for each 1.0% of membership interest in Tapia, LLC for cash or for such other consideration as set forth in the Security Agreement, including but not limited to, cancellation of outstanding amounts payable under the Note. TEG further agreed to cease and terminate any solicitation or encouragement of a third party acquisition proposal; provided, that, if TEG receives an unsolicited, bona fide acquisition proposal that is found to be superior to the Proposed TEG Acquisition terms, to the extent Tapia Holdings declines to renegotiate the Proposed TEG Acquisition terms or to otherwise match the terms of the third party acquisition proposal, TEG may pursue such third party acquisition proposal. The Security Agreement also contains other representations, warranties and covenants of both parties that are customary for an agreement of this type. 

The following shows the changes in secured subordinated loan receivable, short term, for the years ended August 31, 2014 and 2013:

	August 31,		August 31,
	2014		2013
Secured subordinated loan receivable, short term, beginning	$	-	$	-
Loan made during the period		1,290,727		-
Current period interest		7,595		-
Secured subordinated loan receivable, short term, ending	$	1,298,322	$	-

See also Note 19, Subsequent Events, for particulars of additional advances to TEG made subsequent to August 31, 2014.

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MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES

12 Months Ended

Aug. 31, 2014

MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES

MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES

8.               MACHINERY AND EQUIPMENT; CAPITALIZED OIL AND GAS PROPERTIES

The asset categories of machinery and equipment and capitalized oil and gas properties at August 31, 2014 and August 31, 2013 were as follows:

	August 31, 2014
		Cost		Accumulated Depletion, Depreciation and Amortization		Net Book Value
Machinery and equipment		$	33,874	$	19,605	$	14,269
Capitalized oil and gas properties			816,239		86,193		730,046
Total		$	850,113	$	105,798	$	744,315

	August 31, 2013
		Cost		Accumulated Depletion, Depreciation and Amortization		Net Book Value
Machinery and equipment		$	28,335	$	15,179	$	13,156
Capitalized oil and gas properties			357,468		59,878		297,590
Total		$	385,803	$	75,057	$	310,746

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CONVERTIBLE NOTES PAYABLE, SHORT TERM

12 Months Ended

Aug. 31, 2014

CONVERTIBLE NOTES PAYABLE, SHORT TERM [Abstract]

CONVERTIBLE NOTES PAYABLE, SHORT TERM

10.              CONVERTIBLE NOTES PAYABLE, SHORT TERM

Between May 13, 2014, and August 31, 2014, we issued a number of convertible notes payable("CNP").   All were issued in amounts equal to the cash we received, and bear simple interest on the unpaid principal balance at 12% per annum, which is payable on maturity.

Convertible notes payable, short term, consist of the following at August 31, 2014, and August 31, 2013; conversion features, security provisions and warrants to acquire common stock of Hawker are also set forth below:
 

	Issue Date	Maturity Date		August 31, 2014		August 31, 2013
CNP 1 (1) (2) (3)	June 25, 2014	November 30, 2014	$	350,000	$	-
CNP 2 (1) (2) (3)	May 30, 2014	November 30, 2014		250,000		-
CNP 3 (1) (3) (4)	July 17, 2014	June 30, 2015		100,000		-
CNP 4 (1) (2) (3) (4) (5)	July 17, 2014	July 10, 2015		100,000		-
CNP 5 (6)	May 13, 2014	May 13, 2016		50,000		-
CNP 6 (1) (2) (3) (4)	July 25, 2014	July 25, 2015		50,000		-
CNP 7 (1) (2) (3) (4)	August 28, 2014	July 25, 2015		30,000		-
				930,000		-
Accrued interest payable				21,599		-
Convertible notes payable, short term			$	951,599	$	-

(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 Hawker sells common stock for less than $0.10 per share, the conversion rate for CNP 1 shall be adjusted to that price.In the case of CNP 1 and 2, the notes were amended September 18, 2014, to limit the conversion of a part or all of the convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion.

(2) Hawker granted a security interest to the investor in all of its assets.

(3) The proceeds were required to be used solely for the purpose of allowing Tapia Holdings to make advances to TEG under the terms of the secured subordinated loan receivable described in Note 7.  Any repayment of such advances by TEG to Tapia Holdings must be used by us to immediately first repay convertible notes payable to the holder of CNP 1 and 2, and second to repay other convertible notes payable pro rata.

(4) Conversion of unpaid principal into Conversions Units pursuant to the terms in (1) above is mandatory in the event Hawker closes the Proposed TEG Acquisition described in Note 7. Conversion of unpaid interest into Conversion Units is at the election of Hawker.

(5) The holder is related to Darren Katic, who is an officer, director and significant shareholder.

(6) Unpaid principal and accrued interest is convertible at any time at the option of the holder into Conversion Units in an amount computed by dividing the amount converted by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events).  Repayment of the convertible note payable is required on collection of the secured subordinated loan receivable described in Note 7 if earlier than the maturity date above.  As Hawker expects to receive repayment on the secured subordinated loan receivable within one year, this convertible note payable has been classified as a short term liability.

We issued additional secured convertible notes payable in the amount of $50,000 subsequent to August 31, 2014, as described in Note 19, Subsequent Events.

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RELATED PARTY TRANSACTIONS (Details) (USD $)	0 Months Ended		1 Months Ended	12 Months Ended					4 Months Ended	0 Months Ended			0 Months Ended				12 Months Ended		0 Months Ended						0 Months Ended						0 Months Ended				0 Months Ended					0 Months Ended
	May 14, 2014	Apr. 09, 2014	Sep. 18, 2013	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014 Convertible notes payable	Aug. 31, 2013 Convertible notes payable	Aug. 31, 2014 Relative Of Darren Katic [Member] Convertible notes payable	Aug. 31, 2014 Tapia Holdings, LLC [Member]	Jan. 01, 2014 Hawker Energy (Rincon), LLC [Member]	Apr. 09, 2014 SCNRG [Member]	Aug. 31, 2014 Subsequent Event [Member]	May 14, 2014 Darren Katic [Member]	Apr. 09, 2014 Darren Katic [Member]	Jan. 10, 2014 Darren Katic [Member]	Jan. 01, 2014 Darren Katic [Member]	Aug. 31, 2014 Darren Katic [Member]	Aug. 31, 2013 Darren Katic [Member]	Apr. 09, 2014 Darren Katic [Member] Hawker Energy (Rincon), LLC [Member]	Oct. 10, 2014 Darren Katic [Member] Subsequent Event [Member] Hawker Energy (Rincon), LLC [Member]	Jan. 10, 2014 Manhattan Holdings, LLC [Member]	Aug. 31, 2014 Manhattan Holdings, LLC [Member]	Aug. 31, 2013 Manhattan Holdings, LLC [Member]	Sep. 29, 2014 Manhattan Holdings, LLC [Member] Subsequent Event [Member]	Jan. 01, 2014 Sellers [Member]	May 14, 2014 Gerald Tywoniuk [Member]	Jan. 10, 2014 Gerald Tywoniuk [Member]	Aug. 31, 2014 Gerald Tywoniuk [Member]	Aug. 31, 2013 Gerald Tywoniuk [Member]	Oct. 31, 2014 Gerald Tywoniuk [Member] Subsequent Event [Member]	May 14, 2014 Charles Moore [Member]	Jan. 01, 2014 Charles Moore [Member]	Aug. 31, 2014 Charles Moore [Member]	Aug. 31, 2014 Charles Moore [Member] Tapia Holdings, LLC [Member]	Oct. 10, 2014 Charles Moore [Member] Subsequent Event [Member] Hawker Energy (Rincon), LLC [Member]	May 14, 2014 Kristian Andresen [Member]	Jan. 31, 2014 Kristian Andresen [Member]	Aug. 31, 2014 Kristian Andresen [Member]	Sep. 29, 2014 Kristian Andresen [Member] Subsequent Event [Member]	Oct. 10, 2014 Messrs. Katic and Moore [Member] Subsequent Event [Member] Hawker Energy (Rincon), LLC [Member]
Related Party Transaction [Line Items]
Number of shares issued for acquisition										3,000,000						1,500,000				16,500,000					3,000,000							1,500,000			16,500,000					33,000,000
Shares to be held in escrow																																								19,000,000
Warrant exercise price				$ 0.20		$ 0.25
Price per unit				$ 0.10		$ 0.10
Possible additional shares required to issue																									33,000,000
Value of purchased units		$ 103,687									$ 90,687			$ 16,625	$ 38,000				$ 13,000		$ 90,000						$ 50,000										$ 15,000
Purchased units		1,036,870												166,250	380,000						900,000						500,000										150,000
Liabilities assumed										(135,199)
Due to related party																(29,625)
Options granted													600,000													1,600,000					2,600,000					1,000,000
Vesting period													3 years													3 years					3 years					3 years
Interest rate			1.66%	10.00%		12.00%						10.00%					10.00%					10.00%
Gross proceeds received to trigger repayment of loans to related party			5,000,000
Amount owed to related party				221,000		930,000		100,000									161,000					60,000		30,000						50,000									15,000
Total advances				221,000	17,500				1,290,727								228,000
Repayments of advances to related party																	67,000
Maximum outstanding balance																	190,000
Accrued interest payable				5,876		21,599		1,710
Common stock payable				50,000													20,000											20,000
Option exercise price	$ 0.10
Option term	P10Y
Accrued bonuses				480,000													120,000											120,000					120,000					120,000
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners																																		1.50%
Payments for Rent																	25,644
Loans payable					$ 89,833													$ 38,500					$ 38,500						$ 12,833

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PRO FORMA FINANCIAL INFORMATION (Schedule of Unaudited Pro Forma Consolidated Information) (Details) (USD $)	12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
PRO FORMA FINANCIAL INFORMATION [Abstract]
Revenue	$ 150,802	$ 125,116
Net loss	$ (1,712,728)	$ (184,149)
Loss per share	$ (0.05)	$ (0.01)

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STOCKHOLDERS' EQUITY (Details) (USD $)	0 Months Ended	12 Months Ended				0 Months Ended	6 Months Ended	12 Months Ended		0 Months Ended		1 Months Ended
	May 14, 2014	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014 Convertible Note [Member]	Aug. 31, 2014 Secured Convertible Note [Member]	Aug. 27, 2014 Common Stock [Member]	Jul. 01, 2014 Common Stock [Member]	Aug. 31, 2014 Common Stock [Member]	Aug. 31, 2014 Common Stock Payable [Member]	Jan. 01, 2014 Hawker Energy Rincon Llc [Member]	Jan. 08, 2014 Ryan Bateman [Member]	Oct. 25, 2013 SCNRG [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of shares issued for acquisition										3,000,000	2,000,000	14,000,000
Warrant exercise price		$ 0.20			$ 0.25			$ 0.25
Price per unit		$ 0.10					$ 0.10
Net proceeds from unit offering, shares						500,000	10,212,720	10,212,720
Gross proceeds from issuance of unit offering						$ 50,000	$ 1,021,272
Units issued to settle loans from related parties		103,687					103,687
Maximum number of shares covered by warrant		98,952
Units issued to settle accounts payable		188,185					188,185
Common stock issuable		5,106,360
Stock compensation		68,760
Unrecognized balance of compensation expenses		342,000
Expected life of options	10 years	2 years 6 months
Shares of stock issued for the conversion of debt		9,300,000		14,014,939
Potential additional warrants issuable					4,400,000
Convertible debt		930,000
Conversion price		$ 0.10
Options granted	5,950,000
Options outstanding		6,176,205
Stock options vesting first		1,000,000
Expected to vest		5,950,000
Stock options vesting in subsequent transactions		4,950,000
Net proceeds from unit offering		$ 738,416					$ 980,288
Acquisition of share interest												100.00%
Potential additional shares issuable		215,987

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NET PROFITS INTEREST ("NPI") PAYABLE (Tables)

12 Months Ended

Aug. 31, 2014

NET PROFITS INTEREST ("NPI") PAYABLE [Abstract]

Schedule of Changes in NPI Liability

Changes in SCNRG's share of the NPI liability are as follows for the years ended August 31, 2014 and 2013: 

	August 31,			August 31,
	2014			2013
NPI liability, beginning of period	$	124,597		$	135,640
Liabilities assumed in connection with acquisition of additional DEEP Lease working interests		58,847			-
Current period accretion		14,104			12,865
Payments made		(28,444	)		(23,908	)
NPI liability, end of period		169,104			124,597
Less: current portion		20,065			12,109
NPI liability, long-term portion	$	149,039		$	112,488

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LOANS PAYABLE TO RELATED PARTIES (Narrative) (Details) (USD $)	1 Months Ended						0 Months Ended
	Sep. 18, 2013	Aug. 31, 2014	Aug. 31, 2013	Aug. 31, 2014 Darren Katic [Member]	Jan. 01, 2014 Darren Katic [Member]	Aug. 31, 2013 Darren Katic [Member]	Jan. 31, 2014 Kristian Andresen [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Loans payable			$ 89,833			$ 38,500
Interest rate	1.66%	10.00%		10.00%
Gross proceeds received to trigger repayment of loans to related party	5,000,000
Due to related party					(29,625)
Conversion of debt							$ 15,000

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Aug. 31, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

15.              COMMITMENTS AND CONTINGENCIES

Commitments

Oil production from the DEEP Lease is subject to a 1% overriding royalty.  Additionally, production is also subject to an aggregate additional 19.92% royalty for total royalties of 20.92%.

Further, on December 1, 2009, SCNRG entered into an Operating Agreement with Caleco, LLC (“Caleco”) for a term equal to the life of the DEEP Lease wells.  As the operator, Caleco incurs production and other costs, which are subsequently billed to SCNRG for its share through a joint interest billing process; and the operator distributes to SCNRG its share of revenue received from production, less royalties and NPI obligations. All expenses and revenue presented by the operator represent the pro rata share of the revenue earned and expenses incurred.  In accordance with the terms of the agreement, the operator is entitled to a fee for services but has instead elected to bill SCNRG based on actual time and materials.  As described in Note 6, SCNRG increased its working interest in the DEEP Lease from 66.67% to 100.0% during the year ended August 31, 2014; Caleco continues to operate the DEEP Lease on SCNRG's behalf during a transitional period until SCNRG qualifies with the regulatory agency as an operator.  

Contingencies

We are subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the owners for the cost of pollution cleanup resulting from operations and subject the owners to liability for pollution damages. In some instances, the operator may be directed to suspend or cease operations in the affected area.  As of August 31, 2014, and August 31, 2013, we have no reserve for environmental remediation and are not aware of any environmental claims.

Contractual Obligations

On behalf of a related party, we have been making lease payments for two non-cancellable operating leases for its office space.  No formal assumption agreement has yet been completed with the third-party landlord.  See Note 17.  The leases have terms ending in 2015 and 2017. 

Future minimum payments under operating leases for the next five years total $86,450, and are as follows:

Year Ended August 31		Amount
2015	$	38,827
2016		32,758
2017		14,865
2018		-
2019		-
	$	86,450

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Aug. 31, 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying financial statements and related notes present our consolidated financial position as of August 31, 2014 and 2013, and results of operations, changes in stockholders' equity and non-controlling interest, and cash flows for the years ended August 31, 2014, and 2013.  Comprehensive income is the same as net income (loss).

We have prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation

Principles of Consolidation

The acquisition of SCNRG by Hawker on October 25, 2013, has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of Hawker.  Therefore, our condensed consolidated financial statements include the historic accounts of SCNRG, and consolidated with Hawker's beginning October 25, 2013. 

On January 1, 2014, we acquired all of the membership interests of Hawker Energy, LLC, which has a wholly-owned subsidiary Punta Gorda Resources, LLC (see Note 5).  Hawker Energy, LLC changed its name to Hawker Energy (Rincon), LLC on October 22, 2014.  Our condensed consolidated financial statements include the accounts of these entities beginning January 1, 2014. 

All significant intercompany balances and transactions have been eliminated. 

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates included in the financial statements are: (1) depreciation and depletion; (2) accrued assets and liabilities; (3) asset retirement obligations; and (4) net profits interest payable.  Recorded amounts are based on estimates of oil reserves, retirement costs and date.  By their nature, these estimates including the estimates of future prices and costs, and the related future cash flows are subject to measurement uncertainly, and the impact in the consolidated financial statements of future periods could be material.  Although management believes these estimates are reasonable, changes in facts and circumstances or discovery of new information may result in revised estimates.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash is held in a business checking account with a major financial institution.  Our policy is to consider all highly liquid investment instruments purchased with original maturities of three months or less to be cash equivalents for purposes of the statements of cash flows and other statements.  On two occasions in the twelve months ended August 31, 2014, cash on deposit has exceeded federally insured limits for up to one week at a time.  We have not experienced any losses on such accounts and believe we are not exposed to any significant credit risk on cash and cash equivalents.

Accounts Receivable

Accounts Receivable

Accounts receivable represent oil sales, and are collected by the operator in the month following sale.  After deducting and paying the appropriate royalties, the operator either promptly remits our share of the net proceeds to us, or offsets the net proceeds against joint interest billings for our share of production and other costs.  We regularly review receivables to insure that the amounts will be collected and establish or adjust an allowance for uncollectible amounts as necessary using the specific identification method.  There were no reserves for uncollectible amounts in the periods presented.

Inventory

Inventory

Inventory consists of oil that has been produced and stored in a tank on the DEEP Lease property (see Note 6).  Inventory is valued at the lower of average cost and market.

Financial Instruments

Financial Instruments

Financial instruments consist of cash, accounts receivable, loan receivable, accounts payable, loans payable and convertible notes payable. Recorded values of cash, receivables, accounts payable and accrued liabilities approximate fair values due to the short maturities of such instruments.  Recorded values for loans and convertible notes payable approximate fair values, since their stated or imputed interest rates are commensurate with prevailing market rates for similar obligations.

Machinery and Equipment

Machinery and Equipment

Machinery and equipment are recorded at cost.  Depreciation is on a straight-line method using the estimated lives of the assets.  Expenditures for maintenance and repairs are charged to expense. 

Oil Properties

Oil Properties

We follow the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize internal costs that can be directly identified with our acquisition, and exploration and development activities.  We do not capitalize any costs related to production, general corporate overhead or similar activities.  Surface equipment on a property is also part of the amounts capitalized.

Under the full-cost method, capitalized costs are depleted (amortized) on a composite unit-of-production method based on proved oil reserves.  If we maintain the same level of production year over year, the depletion expense may be significantly different if our estimate of remaining reserves changes significantly. Proceeds from the sale of properties are accounted for as reductions of capitalized costs unless such sales involve a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved properties, in which case a gain or loss is recognized. The costs of unproved properties are excluded from amortization until the properties are evaluated.  We review all of our unevaluated properties quarterly to determine whether or not and to what extent proved reserves have been assigned to the properties, and if impairment has occurred. Unevaluated properties are assessed individually when individual costs are significant.

We review the carrying value of our oil properties under the full-cost accounting rules of the Securities and Exchange Commission ("SEC") on a quarterly basis. This quarterly review is referred to as a ceiling test. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. In calculating future net revenues, current SEC regulations require us to utilize prices at the end of the appropriate quarterly period. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts, including the effects of derivatives qualifying as cash flow hedges. Two primary factors impacting this test are reserve levels and current prices, and their associated impact on the present value of estimated future net revenues. Revisions to estimates of oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Any excess of the net book value, less deferred income taxes, is generally written off as an expense. Under SEC regulations, the excess above the ceiling is not expensed (or is reduced) if, subsequent to the end of the period, but prior to the release of thefinancial statements, oilprices increase sufficiently such that an excess above the ceiling would have been eliminated (or reduced) if the increased prices were used in the calculations.

The estimates of proved crude oil reserves utilized in the preparation of the financial statements are estimated in accordance with guidelines established by the SEC and the Financial Accounting Standards Board (“FASB”), which require that reserve estimates be prepared under existing economic and operating conditions using a 12-month average price with no provision for price and cost escalations in future years except by contractual arrangements. Actual results could differ materially from these estimates. 

Long-Lived Assets

Long-Lived Assets

Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying value.  The carrying value of the assets is then reduced to their estimated fair value that is usually measured based on an estimate of future discounted cash flows.

Asset Retirement Obligations

Asset Retirement Obligations

Asset retirement obligations relate to the plug and abandonment costs when our wells are no longer useful, and for the cost of removing related surface facilities. We determine the value of the liability by reviewing operator estimates and estimate the increase we will face in the future. We then discount the future value based on an intrinsic interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the future, however, on a quarterly basis we monitor the costs of the abandoned wells and adjust this liability if necessary.

Non-Controlling Interest

Non-Controlling Interest

We report non-controlling interest in Tapia Holdings, LLC in the financial statements pursuant to paragraph ASC No. 810-10-65-1.  The non-controlling interest of $55,000 reported on the balance sheet as of August 31, 2014, represents the non-controlling interest holders' proportionate share of the equity of the Tapia Holdings, LLC.  This amount was received on August 26 and 28, 2014, in contemplation of the pending acquisition of Tapia, LLC (Note 7).  In the year ended August 31, 2014, there was no amount to recognize for the non-controlling interest holders' proportionate share of the earnings or losses. Including the $55,000 funded to date, $65,000 in future funding, and $144,000 of future commitment to participate in the note payable to Sefton Resources Ltd. on closing of the Tapia, LLC acquisition, non-controlling interest at closing of the acquisition is expected to represent 4.80% of the total outstanding equity of Tapia Holdings, LLC, increased to 4.83% after August 31, 2014. See also Note 19, Subsequent Events.

Revenue Recognition

Revenue Recognition

Oil revenues are recognized net of royalties when production is sold to a purchaser at a fixed or determinable price, when title has transferred, and if collection of the revenue is probable.

Equity Compensation Expense

Equity Compensation Expense

We record equity compensation expense for stock option grants based on the estimated grant-date fair value over the period the officers or consultants are required to provide services to earn the awards. 

Net Profits Interest

Net Profits Interest

A Net Profits Interest (“NPI”) on the DEEP Lease calls for 40% of the net cash flow, as defined in the Assignment of Net Profit Interest (see Note 12), to be paid each month to the owner of the NPI.  If net cash flow is negative, such losses carry forward to be deducted against future positive net cash flow.  Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG's December 1, 2009, acquisition date of a 66.67% working interest in the DEEP property, and this liability was increased pro rata when our working interest increased to 87.18% on February 1, 2014, and again on May 15, 2014, when our working interest increased to 100.0% (see Note 6).  The discount rate used in all cases was 10.0% per annum (see Note 12).

Income Taxes

Income Taxes

Until October 25, 2013, SCNRG (the accounting acquirer of Hawker) was not a taxable entity for U.S. federal or California income tax purposes.  Taxes on its net income were borne by its members through the allocation of taxable income.  Until July 31, 2013, we were treated as a partnership for tax purposes.  On August 1, 2013, we elected to be treated as an S-Corp.  Upon completion of the reverse acquisition of Hawker, SCNRG became part of a consolidated taxable entity.  Due to a history of losses, we have a full valuation allowance for all net deferred tax assets, including our net operating loss.

Loss per share

Loss Per Share

Dilutive securities, including warrants to acquire common stock, shares issuable on conversion of notes payable and stock options, are excluded from the diluted weighted average shares of common stock outstanding computation in periods where they have an anti-dilutive effect, such as when we report a loss. Anti-dilutive securities omitted from the calculation for the year ended August 31, 2014 were 4,436,236 and none for the comparable 2013 period.

Concentrations

Concentrations

Pursuant to a January 13, 2010, Crude Oil Purchase Contract between the DEEP Lease operator and Plains Marketing L.P. (“PMLP”), all production from the DEEP Lease is sold to PMLP. The initial term of the agreement was for one year, expiring on December 31, 2010, and was automatically renewed for an additional one-year term that expired on December 31, 2011. Since January 1, 2012, the agreement has continued on a month-to-month basis and is cancellable upon thirty days' written notice by either party.

Changes in Accounting Policy

Changes in Accounting Policy

The Company has not had any changes in accounting policies during the year.

New Accounting Pronouncements

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-9, Revenue From Contracts With Customers, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to receive in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is not permitted. We are currently assessing the impact that this standard will have on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. Under GAAP, financial statements are prepared based on the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, GAAP lacks guidance about management's responsibility to evaluate whether there is substantial doubt about the organization's ability to continue as a going concern or to provide related footnote disclosures. This ASU provides guidance to an organization's management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The new guidance is effective for the interim and annual periods beginning after December 15, 2016; early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company has not conducted its analysis to determine whether it will adopt the new standard early or not.

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SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Schedule of Secured Subordinated Loan Receivable, Short Term) (Details) (Secured Subordinated Loan Receivable, Short Term [Member], USD $)	12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Secured Subordinated Loan Receivable, Short Term [Member]
Debt Instrument [Line Items]
Secured subordinated loan receivable, short term, beginning
Loan made during the period	1,290,727
Current period interest	7,595
Secured subordinated loan receivable, short term, ending	$ 1,298,322

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Additional Narrative) (Details)	12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	Oct. 25, 2013 SCNRG [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Percentage of monthly payments equal to net profit	40.00%
Interest rate utilizing a discount rate	10.00%
Acquisition of share interest			100.00%
Shares with anti-dilutive effect excluded from the computation of Diluted EPS	4,436,236

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Cash flows from operating activities:
Net loss	$ (1,696,236)	$ (41,991)
Depletion, depreciation and amortization	30,832	17,602
Accretion of asset retirement obligation	10,848	8,093
Accretion of net profits interest liability	14,104	12,865
Stock compensation expense	68,760
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Accounts receivable	(22,507)	(5,201)
Inventory	5,150	1,456
Prepaid expenses	(3,106)	(654)
Accounts payable and accrued expenses	809,601	14,714
Accrued bonuses	480,000
Net cash (used in) provided by operating activities	(302,554)	6,884
Cash flows from investing activities:
Cash acquired in Sara Creek acquisition	6,004
Cash acquired in Hawker acquisition	1,214
Acquisition of an additional working interest in DEEP Lease	(325,000)
Secured subordinated loan receivable	(1,290,727)
Net cash (used in) investing activities	(1,608,509)
Cash flows from financing activities:
Loans from related parties	221,000	17,500
Net proceeds from unit offering	738,416
Payments on net profits interest agreement	(28,444)	(23,908)
Proceeds from convertible notes	930,000
Proceeds from sale of non-controlling interest	55,000
Net cash provided by (used in) financing activities	1,915,972	(6,408)
Net change in cash	4,909	476
Cash, beginning	8,298	7,822
Cash, end	13,207	8,298
Supplemental disclosure of cash flow information:
Interest paid	42,434	12,865
Units issued to settle loans from related parties	103,687
Units issued to settle accounts payable	$ 188,185

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ACQUISITION OF SCNRG

12 Months Ended

Aug. 31, 2014

ACQUISITION OF SCNRG [Abstract]

ACQUISITION OF SCNRG

4.                ACQUISITION OF SCNRG

As described in Note 1, on October 25, 2013, we acquired 100% of the membership interest in SCNRG, resulting in SCNRG becoming a wholly-owned subsidiary of Hawker, in exchange for 14.0 million shares of our common stock issued to the members of SCNRG.  For accounting purposes, the acquisition of SCNRG by Hawker has been accounted for as a reverse acquisition effectuating a recapitalization of SCNRG.   Accordingly, SCNRG is considered the acquirer for accounting purposes and, therefore, the historical financial statements of SCNRG are brought forward and consolidated with Hawker's beginning October 25, 2013.  

The 14.0 million common shares issued in the transaction had an estimated fair value of $14,000. The following is a summary of the fair value of consideration transferred in exchange for the estimated fair value of net assets acquired on October 25, 2013:

Fair value of consideration transferred:
14,000,000 shares of Hawker restricted common stock	$	14,000
Fair value of net assets acquired:
Cash	$	6,004
Accounts receivable		1,553
Oil properties		26,500
Deposit		5,000
Accounts payable and accrued liabilities		(37,431	)
Net assets acquired	$	1,626

The difference between the estimated fair value of the common shares issued and the net assets acquired was recorded to additional paid-in capital.

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INCOME TAXES (Narrative) (Details) (USD $)	12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
INCOME TAXES [Abstract]
Current income tax expense (benefit)	$ 0	$ 0
Deferred income tax expense (benefit)	0	0
Federal [member]
Operating Loss Carryforwards [Line Items]
Net operating loss carry forward	1,302,500
State [member]
Operating Loss Carryforwards [Line Items]
Net operating loss carry forward	$ 370,300

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ACQUISITION OF SCNRG (Tables) (SCNRG [Member])

12 Months Ended

Aug. 31, 2014

SCNRG [Member]

Business Acquisition [Line Items]

Schedule of Net Assets Acquired

The following is a summary of the fair value of consideration transferred in exchange for the estimated fair value of net assets acquired on October 25, 2013:

Fair value of consideration transferred:
14,000,000 shares of Hawker restricted common stock	$	14,000
Fair value of net assets acquired:
Cash	$	6,004
Accounts receivable		1,553
Oil properties		26,500
Deposit		5,000
Accounts payable and accrued liabilities		(37,431	)
Net assets acquired	$	1,626

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PRO FORMA FINANCIAL INFORMATION (Tables)

12 Months Ended

Aug. 31, 2014

PRO FORMA FINANCIAL INFORMATION [Abstract]

Schedule of Unaudited Pro Forma Consolidated Information

The following table presents unaudited pro forma consolidated information, adjusted for the reverse acquisition of Hawker (Note 4) and the acquisition of an additional 33.33% interest in DEEP Lease (Note 6), as if the acquisitions had occurred on September 1, 2012:

	Year Ended August 31,
	2014			2013
Revenue	$	150,802		$	125,116
Net loss	$	(1,712,728	)	$	(184,149	)
Loss per share	$	(0.05	)	$	(0.01	)

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FAIR VALUE MEASUREMENTS

12 Months Ended

Aug. 31, 2014

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

14.              FAIR VALUE MEASUREMENTS

We hold certain financial assets, which assets are required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“ASC Topic 820-10”).   ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  ASC Topic 820-10 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 on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability.

The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

• Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. We believe accounts receivable, accounts payable and accrued expenses and accrued bonuses approximate fair value at August 31, 2014 and August 31, 2013.

• Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs which are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

• Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider secured subordinated loan receivable, depleting assets, loans payable to related parties, convertible notes payable, asset retirement obligations and net profit interest liability to be Level 3. We determine the fair value of Level 3 assets and liabilities utilizing various inputs, including oil price quotations and contract terms

	Fair Value Measurement
	Level 1		Level 2		Level 3
August 31, 2014
Assets:
Secured subordinate loan receivable	$	-	$	-	$	1,298,322
Capitalized oil and gas properties, net						730,046
Liabilities:
Loans payable to related parties, short term						(226,876	)
Convertible notes payable, short term						(951,599	)
Net profit interest liability		-		-		(169,104	)
Asset retirement obligation						(168,110	)
Total	$	-	$	-	$	512,679
August 31, 2013
Assets:
Capitalized oil and gas properties, net	$	-	$	-	$	297,590
Liabilities:
Net profit interest liability		-		-		(124,597	)
Asset retirement obligation		-		-		(103,299	)
Total	$	-	$	-	$	69,694