UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~November~~February 3028, ~~2014~~2015

☐ 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 CA	90277
(Address of principal executive offices)	(Zip Code)

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

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 ☐ 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 ☐ No (Not required)

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 ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

☐ Yes ý No

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

7582,~~980~~737,~~403~~306 shares of common stock as of ~~January~~June 611, ~~2014~~2015.

HAWKER ENERGY, INC.

FOR THE FISCAL QUARTER ENDED

~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

INDEX TO FORM 10-Q

PART I		Page
Item 1	Condensed Consolidated Financial Statements (Unaudited)	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2733
Item 3	Quantitative and Qualitative Disclosures About Market Risk	3944
Item 4	Controls and Procedures	3944
PART II
Item 1	Legal Proceedings	4046
Item 1A	Risk Factors	4046
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	4146
Item 3	Defaults Upon Senior Securities	4146
Item 4	Mine Safety Disclosures	4146
Item 5	Other Information	4146
Item 6	Exhibits	4347
	Signatures	4449

PART I

Item 1

Financial Statements

HAWKER ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	November 30, 2014			August 31, 2014
	February 28, 2015			August 31, 2014
ASSETS
Current assets:
Cash	$	652,~~604~~815		$	13,207
Accounts receivable		4015,~~672~~855			42,815
Inventory		~~6,452~~-			6,092
Prepaid expenses		330,~~763~~897			22,389
Secured subordinated loan receivable, short term		~~1,505,451~~-			1,298,322
Total current assets		199,~~562,942~~567			1,382,825
Fixed assets:
Fixed assets, net of accumulated
depreciation of $20,815 and $19,605, respectively		22,311			14,269
depreciation of $31,863 and $19,605, respectively		2,114,174			14,269
Other assets:
Capitalized oil and gas properties, net of accumulated
depletion of $93,176 and $86,193, respectively		723,063			730,046
depletion of $114,323 and $86,193, respectively		11,507,874			730,046
Deposits		5,000			5,000
Intangible assets and other		180,000			5,000
Total assets	$	213,~~313~~901,~~316~~615		$	2,132,140
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	12,~~272~~096,~~854~~058		$	813,438
Accrued bonuses		~~480~~600,000			480,000
Net profits interest payable, current portion		20,570			20,065
Bank loan payable		4,022,704			-
Loans payable to related parties, short term		~~332~~470,~~182~~429			226,876
Convertible notes payable, short term		154,~~030,178~~784			~~951~~862,~~599~~450
Total current liabilities		3,135,784			2,491,978
Conversion option		-			122,045
Current portion of long term debt		208,346			20,065
Total current liabilities		7,452,321			2,524,874
Long term liabilities:
Asset retirement obligations		171,682			168,110
Long term debt		424,227			149,039
Net profits interest payable, long term portion		143,704			149,039
Conversion option		547,886			-
Total long term liabilities		315,386			317,149
Retirement liability		984,163			-
Total liabilities		3,451,170			2,809,127
Asset retirement obligations		1,921,438			168,110
Deferred income taxes		3,207,000			-
Total long term liabilities		7,084,714			317,149
Total liabilities		14,537,035			2,842,023
Stockholders' equity (deficit):
Preferred stock; $0.001 par value; 50,000,000
shares authorized, no shares issued and outstanding		-			-
Common stock; $0.001 par value; 750,000,000
shares authorized, 74,674,703 and 41,174,703
shares authorized, 80,130,403 and 41,174,703
shares issued and outstanding, respectively		7480,~~675~~130			41,175
Common stock payable		-378,027			50,000
Additional paid in capital		23,~~328~~900,~~899~~810			1,224,300
Accumulated deficit		(35,~~676~~139,~~897~~387	)		(2,~~047~~080,~~462~~358	)
Total stockholders' equity (deficit)		(1780,~~273,323~~420	)		(~~731~~764,~~987~~883	)
Non-controlling interest		~~135~~145,~~469~~000			55,000
Total equity (deficit)		(1635,~~137,854~~420	)		(~~676~~709,~~987~~883	)
Total liabilities and equity (deficit)	$	213,~~313~~901,~~316~~615		$	2,132,140

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

HAWKER ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	November 30, 2014			November 30, 2013
	February 28, 2015			February 28, 2014			February 28, 2015			February 28, 2014
Revenue:
Oil revenues	$	1091,~~294~~029		$	2518,~~764~~348		$	101,323		$	44,112
Expenses:
Direct operating costs		1590,~~996~~448			128,~~972~~020			106,444			20,992
Depletion, depreciation and amortization		1140,~~036~~578			87,~~110~~847			51,614			15,957
Professional fees		~~430~~181,~~563~~621			71121,~~071~~972			612,184			193,043
General and administrative expenses		74,527			6,231
Bonuses		240,000			-			240,000			-
Equity compensation expense		1,088,179			-
General and administrative expenses		99,508			53,665			174,035			59,896
Total expenses		1,620,301			98,384
Equity compensation expense		703,373			-			1,791,552			-
Net operating (loss)		(1,610,007	)		(72,620	)
Total expenses		1,355,528			191,504			2,975,829			289,888
Other (income) expense:
Net operating (loss)		(1,264,499	)		(173,156	)		(2,874,506	)		(245,776	)
Interest (income)		(10,504	)		-
Other (income) expense:
Interest expense		39,463			3,413
Interest (income)		(7,776	)		-			(18,280	)		-
Total other expense		28,959			3,413
Interest expense		136,710			3,335			229,663			6,748
Loss before income taxes		(1,638,966	)		(76,033	)
Change in fair value of conversion option		7,802			-			(26,860	)		-
Provision for income taxes		-			-
Total other expense		136,736			3,335			184,523			6,748
Net loss		(1,638,966	)		(76,033	)
Loss before income taxes		(1,401,235	)		(176,491	)		(3,059,029	)		(252,524	)
Net loss attributable to non-controlling interest		9,531			-
Provision for income taxes		-			-			-			-
Net loss attributable to the Company	$	(1,629,435	)	$	(76,033	)
Net loss		(1,401,235	)		(176,491	)		(3,059,029	)		(252,524	)
Net loss per common share - basic and diluted	$	(0.03	)	$	-
Net loss (income) attributable to non-controlling interest		(9,531	)		-			-			-
Weighted average common shares outstanding -
Net loss attributable to the Company	$	(1,410,766	)	$	(176,491	)	$	(3,059,029	)	$	(252,524	)
basic and diluted		60,064,813			17,654,293
Net loss per common share - basic and diluted	$	(0.02	)	$	(0.01	)	$	(0.04	)	$	(0.01	)
Weighted average common shares outstanding -
basic and diluted		77,291,310			31,376,427			68,630,474			24,477,454

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

HAWKER ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	For the Three Months Ended
	For the Six Months Ended
	November 30, 2014			November 30, 2013
	February 28, 2015			February 28, 2014
Cash flows from operating activities:
Net loss before loss attributable to
non-controlling interest	$	(13,~~638~~059,~~966~~029	)	$	(76252,~~033~~524	)
Depletion, depreciation and amortization		741,~~464~~844			511,~~915~~342
Accretion of asset retirement obligation		39,~~572~~770			24,~~195~~615
Accretion of net profits interest liability		48,~~104~~086			36,~~041~~009
Equity compensation expense		1,088,179			-
Accretion of discount		119,899			-
Other		13,000			-
Equity compensation expense		1,791,552			-
Change in fair value of conversion option		(26,860	)		-
Other		11,472			-
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Accounts receivable		226,~~143~~960			(18,~~493~~507	)
Inventory		~~369~~4,636			~~3,427~~714
Prepaid expenses		52,~~626~~269			21,~~295~~363
Accounts payable and accrued expenses		~~487~~440,~~717~~691			7116,~~101~~134
Net cash (used in) provided by operating activities		(26,792	)		10,448
Accrued bonuses		240,000			-
Net cash (used in) provided by operating activities		(388,710	)		(203,840	)
Cash flows from investing activities:
Cash acquired in Hawker acquisition		-			6,004
Purchase of fixed assets		(9,252	)		-
Cash acquired in HERLLC acquisition		-			1,214
Secured subordinated loan receivable		(196,625	)		-
Cash acquired in TEG acquisition		23,344			-
Net cash (used in) provided by investing activities		(205,877	)		6,004
Acquisition of an additional working interest in DEEP Lease		-			(200,000	)
Purchase of fixed assets		(9,253	)		-
Secured subordinated loan receivable		(346,625	)		-
Net cash (used in) provided by investing activities		(332,534	)		(192,782	)
Cash flows from financing activities:
Loans from related parties, short term		~~105~~233,~~000~~800			-
Repayment of loans from related parties, short term		(10,000	)		-
Payments on net profits interest agreement		(8,934	)		(5,957	)
Net proceeds from unit offering		114,920			434,524
Proceeds from convertible notes		50,000			-
Proceeds from unit offering to be closed		-			40,000
Payments on net profits interest agreement		(17,868	)		(11,913	)
Proceeds from convertible notes		300,000			-
Proceeds from long term note		50,000			-
Proceeds from sale of non-controlling interest		90,000			-
Net cash provided by (used in) financing activities		~~226~~760,~~066~~852			(5462,~~957~~611	)
Net change in cash		(639,~~603~~608	)		1065,~~495~~989
Cash, beginning		13,207			8,298
Cash, end	$	652,~~604~~815		$	1874,~~793~~287
Supplemental disclosure of cash flow information:
Interest paid	$	425,~~104~~229		$	36,~~041~~009
Common stock payable for general and administrative services	$	33,504		$	-
Convertible notes payable and accrued interest
converted to common stock payable	$	324,766		$	-
Units or stock issued to settle accounts payable	$	130,569		$	22,500
TEG acquisition:
Common stock and warrants issued	$	531,027		$	-
Secured subordinated loan receivable not settled prior to closing	$	1,663,227		$	-
Liabilities assumed	$	10,886,864		$	-

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

HAWKER ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
(Unaudited)

																				Total
	Common Stock				Common Stock and Warrants Payable						Additional			Accumulated			Non-Controlling			Total Equity
	Common Stock				Common Stock Payable						Additional			Accumulated			Non-Controlling			Equity
	Shares		Amount		Shares			Amount			Paid-in Capital			(Deficit)			Interest			(Deficit)
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 Energy (Rincon), LLC		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 option compensation		-		-		-			-			68,760			-			-			68,760
Sale of non-controlling interest		-		-		-			-			-			-			55,000			55,000
Net loss attributable to the Company		-		-		-			-			-			(1,~~696~~729,~~236~~132	)		-			(1,~~696~~729,~~236~~132	)
Balance, August 31, 2014		41,174,703		41,175		500,000			50,000			1,224,300			(2,~~047~~080,~~462~~358	)		55,000			(~~676~~709,~~987~~883	)
Proceeds received for common stock payable		500,000		500		(500,000	)		(50,000	)		49,~~420~~500			-			-			~~(80~~-	)
Equity compensation pursuant to HERLLC Option
Equity compensation pursuant to HERLLC Option Agreement		33,000,000		33,000		-			-			1,667,590			-			-			1,700,590
Agreement		33,000,000		33,000		-			-			997,500			-			-			1,030,500
Stock option compensation		-		-		-			-			90,961			-			-			90,961
Stock option compensation		-		-		-			-			57,679			-			-			57,679
Net proceeds from unit offering		1,150,000		1,150		-			-			113,770			-			-			114,920
Conversion of accounts and bonus payable into units		1,305,700		1,305		-			-			129,264			-			-			130,569
Common stock payable for general and administrative services		-		-		500,000			33,504			-			-			-			33,504
Issued to acquire TEG		3,000,000		3,000		-			-			528,027			-			-			531,027
Conversion of notes payable		-		-		3,247,658			324,766			-			-			-			324,766
Extinguishment of conversion option		-		-		-			-			97,398			-			-			97,398
Interest on note to be paid in shares and warrants		-		-		-			19,757			-			-			-			19,757
Sale of non-controlling interest		-		-		-			-			-			-			90,000			90,000
Net loss attributable to non-controlling interest		-		-		-			-			-			-			(9,531	)		(9,531	)
Net loss attributable to the Company		-		-		-			-			-			(3,059,029	)		-			(3,059,029	)
Net loss attributable to the Company		-		-		-			-			-			(1,629,435	)		-			(1,629,435	)
Balance, February 28, 2015		80,130,403	$	80,130		3,747,658		$	378,027		$	3,900,810		$	(5,139,387	)	$	145,000		$	(635,420	)
Balance, November 30, 2014		74,674,703	$	74,675		-		$	-		$	2,328,899		$	(3,676,897	)	$	135,469		$	(1,137,854	)

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

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

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.~~

We own interests in oil production properties located in California. Our goal is to acquire and develop mature leases, interests and other rights to oil and gas producing properties with proven undeveloped potential. The accompanying statements of operations and cash flows include the operations of our wholly-owned subsidiaries from the date of acquisition or formation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis Of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with ~~accounting principles generally accepted in the United States of America (“GAAP”)~~ and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information and reporting.

The unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, as amended, for the year ended August 31, 2014, which contains the ~~audited~~consolidatated financial statements and notes thereto for Hawker. The Company’s fiscal year-end is August 31st.

~~Certain~~These ~~information~~consolidated orfinancial ~~footnote~~statements ~~disclosures~~are ~~normally~~unaudited; ~~included~~however, in ~~financial~~the ~~statements~~opinion ~~prepared~~of inmanagement, ~~accordance~~they ~~with~~reflect ~~GAAP~~all ~~have~~adjustments ~~been~~necessary ~~omitted,~~for ~~pursuant~~a tofair ~~the~~statement ~~rules and regulations~~ of the ~~SEC~~results for ~~interim~~the ~~financial~~periods ~~reporting~~reported. ~~Accordingly,~~All ~~they~~such doadjustments ~~not~~are ~~include~~of ~~all~~a ~~the~~normal ~~information~~recurring ~~and~~nature ~~footnotes~~unless ~~necessary~~disclosed ~~for~~otherwise. These aconsolidated ~~comprehensive~~financial ~~presentation~~statements, ofincluding ~~financial position~~notes, ~~results~~have ofbeen ~~operations,~~condensed orand ~~cash~~do ~~flows. It~~not isinclude ~~management's~~all ~~opinion,~~of ~~however,~~the ~~that~~information ~~all~~and ~~material~~disclosures ~~adjustments~~required ~~(consisting~~by ofaccounting ~~normal~~principles ~~recurring~~generally ~~adjustments)~~accepted ~~have~~in ~~been~~the ~~made~~United ~~which~~States ~~are~~of ~~necessary~~America (“GAAP”) for acomplete ~~fair~~ financial ~~statement presentation~~statements. The interim results for the three and six months ended ~~November~~February 3028, ~~2014~~2015, are not necessarily indicative of results for the full fiscal year.

There have been no significant changes in the Company’s significant accounting policies for the six months ended February 28, 2015, as compared to the significant accounting policies described in the Annual Report on Form 10-K, as amended, for the year ended August 31, 2014 and in the Form 10-Q/A for the three months ended November 30, 2014, except for the addition of the following:

Overriding Royalty Interest Liability

Pursuant to an overriding royalty interest granted effective January 2015 to the Secured Convertible Note Payable holder, oil sales from the Tapia oil field are subject to an additional 2.5% or 3.5% overriding royalty interest, depending on the lease. Since this royalty interest was granted in connection with a loan, the loan proceeds were bifurcated and this royalty interest has been accounted for as a separate liability. Each reporting period, the liability’s estimated fair value is remeasured, with the change in fair value being reported in the consolidated statement of operations. Fair value determinations require estimates of future oil prices, reserves, oil sales and appropriate discount rates.

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.

On February 3, 2015, we acquired 100% of the stock of TEG Oil & Gas U.S.A., Inc., (“TEG”), and our condensed consolidated financial statements include the accounts of this entity from this date (see Note 4).

All significant intercompany balances and transactions have been eliminated.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

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) purchase price allocations; (2) depreciation and depletion; (23) accrued assets and liabilities; (34) asset retirement obligations; ~~and~~ (45) net profits interest payable; (6) conversion option values; (7) overriding royalty interest liability; and (8) stock-based compensation. Recorded amounts are based on estimates of asset values, oil reserves, asset retirement costs, asset lives and ~~dates~~equity values. By their nature, these estimates including the estimates of future prices and costs, and the related future cash flows are subject to measurement uncertainty,. The ~~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.

Changes In Accounting Policies

The Company has not had any changes in accounting policies during the three months ended November 30, 2014.

New Accounting Pronouncements

We consider the applicability and impact of all accounting standard updates (ASUs). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.

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.

3. GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of November 30, 2014, the Company had total current assets of $1,562,942 but a working capital deficit in the amount of $1,572,842. The Company incurred a net loss of $1,629,435 for the three months ended November 30, 2014 and an accumulated net loss of $3,676,897 since inception. The Company has earned insufficient revenues since inception and its cash resources are insufficient to meet its planned business objectives.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

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 February 28, 2015, we had cash and equivalents of $52,815 and total current assets of $99,567, but a working capital deficit in the amount of $7,352,754. The Company incurred a net loss of $1,410,766 and $3,059,029 for the three and six months ended February 28, 2015 and an accumulated net loss of $5,139,387 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~~Following ~~plan~~the incompletion ~~this~~of ~~regard is to complete~~ the acquisition of TEG Oil & Gas U.S.A., Inc. on February 3, 2015 (see Note 74), ~~the~~management’s ~~further~~plan ~~development of which~~ is ~~dependent on financing, and~~ to raise capital through a combination of equity and debt financing sufficient to finance continuing operations for the next twelve months and to begin further development of the acquired Tapia Assets (defined below), and to refinance by December 2015 the bank debt assumed with the acquisition. However, there can be no assurance that the Company will be successful in completing such financing.

4. ACQUISITION OF ~~SCNRG~~TEG OIL & GAS U.S.A., INC.

AsOn ~~described~~February in3, ~~Note~~2015 1,(but oneffective ~~October~~as 25of February 1, ~~2013~~2015), we ~~acquired~~completed ~~100%~~the acquisition of all of the ~~membership~~outstanding ~~interest~~common instock ~~SCNRG,~~of ~~resulting~~TEG inOil ~~SCNRG~~& ~~becoming~~Gas aU.S.A., ~~wholly-owned~~Inc. ~~subsidiary~~(“TEG”) offrom ~~Hawker~~Sefton Resources, inInc. ~~exchange~~(“Sefton”) ~~for~~(the 14“TEG Acquisition”).0 The ~~million~~purchase price was $1 plus the issuance of 3,000,000 shares of our common stock ~~issued~~and a five-year warrant (“Warrant”) to ~~the~~purchase ~~members~~up to an additional 5,000,000 shares of ~~SCNRG~~our common stock for $0. ~~For~~25 ~~accounting~~per ~~purposes~~share. In addition, ~~the~~between ~~acquisition~~April of2014 ~~SCNRG~~and byJanuary 2015, Hawker ~~has~~and ~~been~~its ~~accounted~~subsidiary ~~for~~Tapia asHoldings, aLLC ~~reverse~~made ~~acquisition~~advances ~~effectuating~~pursuant to a ~~recapitalization~~secured ofsubordinated ~~SCNRG~~loan agreement to TEG totaling approximately $1. ~~Accordingly~~6 million, ~~SCNRG~~including isaccrued ~~considered~~interest ~~the~~receivable ~~acquirer~~(Note 5). This amount constitutes additional consideration for ~~accounting~~the ~~purposes~~TEG ~~and~~Acquisition, ~~therefore,~~as this note receivable was not settled prior to the ~~historical~~closing ~~financial~~of ~~statements~~the TEG Acquisition. As a result of ~~SCNRG~~this ~~are~~transaction, ~~brought~~TEG ~~forward~~became ~~and~~a ~~consolidated~~wholly-owned ~~with~~subsidiary of Hawker’s. See ~~beginning~~also ~~October 25~~Note 18, ~~2013~~Subsequent Events.

~~The~~TEG ~~14.0~~is ~~million~~an ~~common~~energy ~~shares~~company ~~issued~~focused on exploitation and production of crude oil in Southern California. TEG’s assets comprise four oil and gas leases encompassing the ~~transaction~~Tapia ~~had~~Canyon anfield ~~estimated~~(the ~~fair~~“Tapia ~~value~~Assets”) and one lease west of ~~$14~~the Tapia Canyon field (the “Eureka Assets”),~~000~~ and the accompanying production equipment. The ~~following~~Tapia isAssets alocated ~~summary~~40 miles north of ~~the~~Los ~~fair~~Angeles, ~~value~~California, consist of ~~consideration~~four ~~transferred~~oil inleases ~~exchange~~covering ~~for~~262 ~~the~~gross ~~estimated~~acres. The ~~fair~~Eureka ~~value~~oil field covers an area of ~~net~~approximately ~~assets~~1,510 ~~acquired~~gross onacres ~~October~~located 25 miles west of the Tapia Canyon oil field in Ventura County, ~~2013:~~California. The acquisition significantly expanded our presence in Southern California.

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

A table of adjustments reflecting the allocation of the fair values is provided below. These adjustments reflect the elimination of the components of TEG’s historical stockholders’ equity, the estimated value of consideration paid by us in the acquisition using the estimated fair value of common stock on February 3, 2015 and any adjustments to the historical book values of TEG’s assets and liabilities to their estimated fair values, in accordance with acquisition accounting. Transaction costs relating to the TEG Acquisition were expensed as incurred. The initial accounting for the TEG Acquisition is preliminary, and adjustments to provisional amounts (such as fixed assets, oil properties, and certain liabilities), or recognition of additional assets acquired or liabilities assumed, may occur as additional information is obtained about facts and circumstances that existed as of the acquisition date. The evaluation of the assigned fair values is ongoing, as the transaction was recently completed. The Company expects the purchase price allocation will be finalized in the fourth fiscal quarter ended August 31, 2015. The Company believes these estimates are reasonable and the significant effects of the acquisition are properly reflected.

The difference between the estimated fair value of the common shares issued and the net assets acquired was recorded to additional paid-in capital.

5. ACQUISITION OF HAWKER ENERGY (RINCON), LLC

On January 1, 2014, we exercised our option to acquire all of the membership interests in Hawker Energy (Rincon), LLC (“HERLLC”) from Darren Katic (who was also a seller in our transaction with SCNRG) and Charles Moore (collectively the “HERLLC Sellers”), pursuant to an Amended and Restated Option Agreement (“Option Agreement”) dated November 20, 2013. We issued 3,000,000 shares of our common stock to the HERLLC Sellers as consideration for the acquisition and, as described below, were required to issue up to an additional 33,000,000 shares of our common stock to the HERLLC Sellers upon us or HERLLC consummating certain follow-on transactions described below (“Potential Follow-On Transactions”). In addition, we assumed $135,199 in net liabilities of HERLLC. The terms for the issuance of additional shares were revised on October 10, 2014 as described below.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

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

Purchase price:
Fair value of Hawker's common stock issued (1)	$	201,027
Fair value of common stock warrant issued by Hawker (2)		330,000
Loan made by Hawker group to TEG prior to closing		1,663,227
Total purchase price		2,194,254

Estimated fair value of liabilities assumed:
Loan payable to Bank of the West, plus accrued interest		4,011,882
Accounts payable		842,890
Accrued liabilities		83,063
Asset retirement obligation		1,743,558
Retirement liability		998,471
Deferred income taxes		3,207,000
Amount attributable to liabilities assumed		10,886,864

Total purchase price and assumed liabilities	$	13,081,118

Estimated fair value of assets acquired:
Cash	$	23,344
Other current assets		7,025
Fixed assets – operating machinery and equipment		2,069,792
Identifiable intangible asset		175,000
Oil properties - proven, full cost method		10,805,957
Amount attributable to assets acquired	$	13,081,118

~~PRC 145.~~(1 ~~is subject to 24.5% in overriding royalties~~) 3,000,000 ~~primarily~~shares ~~to the State~~ of ~~California.~~Hawker Acommon ~~single~~stock ~~active~~at ~~well on PRC 145~~$0.1067 ~~produced~~per anshare, ~~average~~being ofthe 11estimated ~~barrels~~fair ofvalue ~~oil~~implied ~~per~~by ~~day~~the ~~(gross~~sale ~~production~~of ~~before~~Units ~~royalties)~~described ~~for~~in ~~the~~Note ~~nine months September 30, 2014~~16. Our ~~This~~common ~~lease~~stock ~~has~~is ~~ten~~considered ~~other non~~“thinly-~~active~~traded” ~~wells,~~due ~~one~~to orthe ~~more~~extremely oflow ~~which~~level ~~may~~of betrading ~~recompleted~~activity or(many ~~re-drilled. Although~~days ~~initial~~have ~~technical~~no ~~work~~volume ~~has~~or ~~been~~volume ~~done~~less onthan ~~PRC 145.~~$1,000 toin ~~develop~~value), athe ~~preliminary~~estimated ~~understanding~~value of the ~~resource~~common ~~and~~stock ~~opportunity,~~based noon ~~reserve~~cash ~~reports~~sales ~~done~~ to ~~SEC~~third-parties ~~standards~~is ~~have~~significantly ~~been~~more ~~completed~~meaningful in regards to ~~date~~fair value.

~~All~~(2) 5 ~~rights~~year ~~claimed~~warrant byissued ~~HERLLC~~for to5 ~~PRC~~million ~~145.1~~shares ~~are~~of ~~being~~Hawker ~~challenged~~common instock ~~court~~at byan ~~the~~exercise ~~lease’s~~price ~~operator~~ of ~~record -- Case No~~$0.25 ~~56-2013-00440672-CU-BC-VTA~~per ~~pending~~share, infair ~~Ventura~~value ~~County~~based ~~Superior Court. HERLLC is currently not receiving any net proceeds from production~~ on ~~this~~using ~~lease~~the ~~pending~~Black-Scholes ~~resolution~~Option ofPricing ~~this matter in our favor~~Model.

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

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

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

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

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

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

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

The Potential Follow-On Transactions described above were dependent on a number of variables that were not within our control and, as a result, none of the transactions were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of HERLLC). Each of the Potential Follow-On Transactions described above, if consummated, would constitute a transaction separate and independent from our acquisition of HERLLC pursuant to the option. Any shares of our common stock that may be issued upon the consummation of any of the Potential Follow-On Transactions (or pursuant to the terms of the October 10, 2014, amendment described below) will constitute expensed costs incurred concurrently with consummation of the applicable follow-on transaction (as opposed to incremental consideration for our acquisition of HERLLC).

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

~~The~~As ~~assets~~of ~~and~~the ~~liabilities~~closing of ~~HERLLC~~the atTEG Acquisition, TEG was in default in its payment obligations to Bank of the ~~date~~West (“BOTW”), Sefton’s senior lender, in the aggregate amount of $4,011,882. BOTW consented to our acquisition ~~were~~of ~~recorded~~TEG and has agreed to forbear taking enforcement action against TEG on the senior loan provided that (i) Hawker lend TEG not less than $350,000 within 90 days of the TEG Acquisition, (ii) interest on TEG's obligations to BOTW be increased to 9%, with a monthly pay rate of 5% and the remaining deferred 4% of unpaid interest compounded monthly, (iii) the proceeds of any sale, assignment, licensing or other transfer of any real or personal property rights which serve as collateral for TEG's obligations to BOTW be remitted directly to BOTW, and (iv) commencing no later than the first month after which the California Midway-Sunset First Purchase Price as published by the U.S. Energy Information Administration exceeds $60 per barrel, TEG will begin making outstanding property tax payments to the County of Los Angeles of at ~~their~~least ~~fair~~$15,000 ~~values~~per month. See Note 6 for further description of: the BOTW loan.

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 results of operations of TEG from the February 1, 2015 effective closing date through February 28, 2015, have been included in Hawker’s consolidated statements of operations for the three and six months ended February 28, 2015.

The ~~$138,199~~following ~~difference~~unaudited ~~between~~pro ~~the~~forma ~~par~~combined ~~value~~results of operations are provided for the ~~common~~six ~~stock~~month ~~issued,~~periods $3ended February 28,~~000,~~ 2015 and 2014 as though the ~~net~~acquisition ~~liabilities~~had ~~assumed~~been completed as of the beginning of the earliest period presented, ~~$135~~or September 1,~~199,~~ ~~was~~2013. These ~~recorded~~pro toforma ~~paid~~combined inresults ~~capital~~of asoperations ~~there~~have isbeen noprepared ~~objective~~by ~~evidence~~adjusting the historical results of Hawker to include the ~~value~~historical results of ~~HERLLC’s~~TEG. These ~~assets,~~supplemental ~~which~~pro ~~consist~~forma results of ~~the~~operations ~~disputed~~are ~~claim~~provided tofor ~~coastal~~illustrative ~~lease~~purposes ~~PRC 145.1~~only, and ~~inability~~do tonot ~~determine~~purport ato ~~probability~~be indicative of ~~success~~the ofactual results that would have been achieved by the ~~litigation~~combined company for the periods presented or that may be achieved by the combined company in the future. AsThe apro forma results of operations do not include any cost savings or other synergies that resulted, or may result, ~~and~~from inthe anacquisition ~~effort~~or any estimated costs that will be incurred to ~~fairly~~integrate ~~represent~~TEG. Future ~~and~~results ~~not~~may ~~overstate~~vary significantly from the ~~consolidated~~results ~~assets~~reflected in this pro forma financial information because of ~~Hawker,~~future aevents ~~decrease~~and intransactions, ~~capital~~as ~~was~~well ~~deemed~~as ~~appropriate~~other factors.

On October 10, 2014, Hawker authorized an amendment (the “Amendment”) to the Option Agreement. Under the original terms of the Option Agreement, Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock upon the consummation of certain Potential Follow-on Transactions. The Amendment waived all of the follow-on transaction requirements and authorized the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we hold 19,000,000 shares in escrow, to be released as follows: (i) 10,000,000 shares upon completion of the acquisition of the assets of TEG Oil & Gas, Inc. (located in the Tapia Field, Los Angeles County, California), and (ii) 9,000,000 shares upon completion, on or before December 31, 2017, of any one of the transactions evaluated by HERLLC, our wholly-owned subsidiary, prior to its reorganization with Hawker, including a transaction resulting in Hawker ownership of oil and gas lease interests in any one of the following unique oil fields:

	Six Months Ended February 28,
	2015			2014
Revenues	$	1,002		$	2,413
Net (loss) income	$	(3,024	)	$	20
Net loss per share:
Basic and diluted	$	(0.04	)	$	-

~~(a)~~For ~~Cat~~the ~~Canyon~~three and six month periods ended February 28, 2015, the Company recognized $72,597 of sales of crude oil (~~leases~~net ~~Tognazzini~~of royalties) less production costs, ~~Wickenden~~professional fees and general and administrative costs of $79,776, ~~Los~~and ~~Alamos~~depletion, ~~GWP~~depreciation, and ~~those~~amortization ~~immediately~~of ~~adjacent~~$26,855 related to, properties acquired in ~~each~~the ~~case~~TEG acquisition, being the results from operations beginning with the closing of the acquisition effective February 1, 2015. In addition, interest expense was $28,263 on the BOTW loan. Additionally, non-recurring transaction costs of $71,819 and $280,884 related to the acquisition for the three and six month periods ended February 28, 2015, respectively, are included in ~~Santa~~the ~~Barbara~~Condensed ~~County)~~Consolidated Statements of Operations as professional fees; however, these non-recurring transaction costs have been excluded from the pro forma results in the above table.

~~(b)~~Historically, ~~Santa~~TEG’s ~~Maria~~fiscal (Tyear ~~11N~~end was December 31st and Hawker’s fiscal year end is August 31st. For the six months ended February 28, R2015 ~~36W~~and ~~extending~~2014, ~~southeast~~the ~~through~~operating ~~T9N~~results ~~R33W~~for TEG included in ~~Santa~~the ~~Barbara~~pro ~~County);~~forma financial information above are for the period from July 1 through December 31, 2014 and 2013.

(d) North Lost Hills (Sections 12 & 13, T25S, R19E, and Sections 7 & 18, T25S, R 20E, totaling 1,500 acres in Kern County CA);

(e) Maricopa (McFarland and Jameson leases totaling 40 acres in Kern County);

(f) Pine Meadows (Section 1 Township 31 South Range 22E in Kern County); or

(g) Torrance (Joughin and South Torrance Units totaling 900 acres in Los Angeles County).

Waiver of the Potential Follow-On Transaction requirements and the immediate issuance of the remaining shares is meant to simplify our common shareholding structure and share count and to assist in our capital raising efforts.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

With respect to 14,000,000 shares of our common stock that were issued as a result of the Amendment, an equity compensation expense of $1,011,500 recorded based on the fair value of the shares at the date of issuance5. ~~With~~ SECURED ~~respect~~SUBORDINATED toLOAN ~~the 19~~RECEIVABLE,~~000,000~~ ~~shares~~SHORT of our common stock that are in escrow, an equity compensation expense of $19,000 was recorded based on the par value of the shares at the date of issuance. Total expense was $1,030,500, which was recorded in the three months ended November 30, 2014. As and when subsequently released from escrow, a further expense will be recorded based on the fair value of the 19,000,000 shares (less amounts previously expensed based on par value) concurrently with consummation of the applicable follow-on transaction. All of these amounts are not considered for accounting purposes to be incremental consideration for our acquisition of HERLLC.TERM

~~Pursuant~~Between toApril a18, ~~separate~~2014 ~~agreement~~and ~~dated~~January ~~November 13~~31, ~~2014~~2015, ~~between~~we ~~Messrs.~~and ~~Katic,~~our ~~Moore~~wholly-owned ~~and Tywoniuk~~subsidiary, ~~Mr.~~Tapia ~~Tywoniuk~~Holdings, LLC (a“Tapia ~~significant~~Holdings”), ~~shareholder~~made a number of ~~Hawker)~~advances ~~holds~~to ~~warrants~~TEG, pursuant to ~~acquire~~several ~~9.7222%~~secured ofsubordinated ~~any~~notes ~~shares~~and ofrelated ~~Hawker~~security ~~acquired~~agreements, byall ~~Messrs.~~as ~~Katic~~amended and ~~Moore~~restated ~~pursuant~~into toa ~~the~~Secured ~~Amendment~~Subordinated ~~above. This~~Note ~~agreement~~dated ~~amended~~January 12, 2015 (the “Note”), and a ~~December~~Fourth 27Amended and Restated Security Agreement dated January 12, ~~2013~~2015, ~~agreement~~each ~~entitling~~executed ~~Mr.~~by ~~Tywoniuk~~TEG, toand ~~acquire~~a 5%Limited ofRecourse ~~any~~Guarantee ~~shares~~(“Guarantee”) ofand ~~Hawker~~a ~~acquired~~Pledge Agreement, each executed by ~~Messrs~~Sefton (collectively, the “Loan Receivable Agreements”). ~~Katic~~The Loan Receivable Agreements and ~~Moore~~an ~~pursuant~~Intercreditor toAgreement ~~the~~(defined ~~Option~~below) were entered into in connection with what ultimately became an executed Share Purchase Agreement to acquire TEG, which acquisition closed on February 3, 2015 (Note 4).

~~6. ACQUISITION~~Under OFthe ANterms ~~ADDITIONAL~~of 33the Loan Receivable Agreements, TEG agreed to pay us the principal sum of $2,100,000, or such lesser amount as may be outstanding from time to time, with interest on the unpaid principal amount at the rate of 3.330% ~~WORKING~~per ~~INTEREST~~annum. We INadvanced ~~DEEP~~$150,000 ~~LEASE~~and $346,625 to TEG during the three and five months ended January 31, 2015, for a total at January 31, 2015 of $1,663,227, including accrued interest. The loan receivable was to have matured on December 31, 2015, at which time all outstanding principal and accrued interest would have been due and payable in full. The assets of TEG secured the Note, which was also guaranteed on a limited recourse basis by Sefton. Sefton’s Guarantee was secured by a pledge of all of the outstanding shares of TEG. The Note and our security interest in the assets of TEG are subordinate to senior indebtedness of TEG, pursuant to an Amended and Restated Subordination and Intercreditor Agreement (“Intercreditor Agreement”) dated January 1, 2015, as amended, by and among Tapia Holdings, Hawker, TEG, Sefton, TEG’s affiliate TEG MidContinent, Inc. (“TEGMC”), BOTW, and us.

AsThe aAugust ~~result~~31, 2014 balance of ~~two~~the ~~transactions~~secured ~~(described~~subordinated ~~below)~~note ~~through~~receivable ~~our~~was ~~wholly-owned~~comprised ~~subsidiary~~of ~~SCNRG~~$1,290,727 wein ~~acquired~~principal ~~the~~and ~~remaining~~$7,595 ~~33.33%~~in ~~working~~accrued interest inreceivable, ~~the~~for ~~DEEP~~a ~~Lease~~total inof ~~the~~$1,298,322. As ~~year~~noted ~~ended~~above, ~~August~~the January 31, ~~2014~~2015 loan balance of $1,663,227 was not settled prior to the closing of the TEG Acquisition and this amount therefore constitutes additional consideration for the acquisition.

~~On February 4, 2014, SCNRG completed the acquisition of additional 20~~6.~~5108%~~ BANK ~~working~~LOAN 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.PAYABLE

OnAs ~~May~~discussed 15in Note 4, ~~2014~~on February 3, ~~SCNRG~~2015, ~~completed~~TEG became our wholly-owned subsidiary. At the ~~acquisition~~time of the ~~remaining~~acquisition, ~~12.8192%~~TEG, ~~working~~along ~~interest~~with inSefton ~~the~~and ~~DEEP~~its ~~Lease~~subsidiary ~~for $125~~TEGMC,~~000~~ were in ~~cash~~default ~~plus~~under ~~assumed~~the ~~asset~~terms ~~retirement~~of ~~obligations~~an Amended and ~~net~~Restated ~~profits~~Credit ~~interest~~Agreement ~~liabilities~~(as ~~aggregating~~amended, tothe an“Credit ~~estimated~~Agreement”), ~~fair~~dated ~~value~~October 1, of2008, ~~$43~~among TEG,~~081,~~ ~~for~~Sefton ~~total~~and ~~consideration~~TEGMC ofas ~~$168~~“Borrowers”,~~081~~ and BOTW. ~~SCNRG~~ Notwithstanding Borrowers’s ~~working~~default, ~~interest~~BOTW ~~increased~~had ~~from~~previously ~~87.18%~~agreed toon ~~100.0%~~numerous asoccasions ato ~~result~~forbear ofin ~~the~~exercising ~~purchase,~~certain ~~effective~~rights ~~May~~available ~~15,~~to ~~2014. Our~~it ~~condensed~~under ~~consolidated~~the ~~financial~~Credit ~~statements~~Agreement, ~~include~~in ~~the~~each ~~increased~~case, ~~working~~subject ~~interest~~to ~~beginning~~various ~~May~~terms ~~15,~~and ~~2014~~conditions. ~~The~~ ~~purchase~~BOTW’s ~~price~~agreement to forbear was ~~allocated~~memorialized ~~$2,010~~by toa ~~machinery~~Forbearance ~~and~~Agreement ~~equipment,~~among Borrowers and ~~$166~~BOTW,~~071~~ towhich ~~oil~~has ~~properties~~been ~~based~~amended on ~~estimated~~several ~~fair values~~occasions.

~~The~~On ~~operator~~January 1, ~~Caleco~~2015, ~~LLC~~in anticipation of our acquisition of TEG, ~~will~~we ~~continue~~entered into a Fifth Amendment to ~~operate~~Forbearance Agreement (“Fifth Amendment”) among Sefton, TEG, TEGMC, Hawker and BOTW. Under or in connection with the ~~DEEP~~Fifth ~~Lease~~Amendment, on(i) Hawker ~~SCNRG~~agreed to lend TEG not less than $350,000, (ii) Tapia Holdings, a subsidiary of Hawker, assigned to Hawker all of Tapia Holdings’s ~~behalf~~right, ~~during~~title and interest in outstanding loans made by Tapia Holdings to TEG evidenced by a ~~transitional~~Subordinated Note due December 29, 2014 in the original principal amount of $1,500,000, (iii) Hawker agreed not to contest or otherwise oppose an order appointing a receiver for the assets of TEG at the end of the period in which BOTW has agreed to forbear in exercising its rights under the Credit Agreement (the “Forbearance Period”), (iv) Tapia Holdings assigned to Hawker all of Tapia Holdings’ right to acquire 100% of the stock of TEG from Sefton, (v) effective as of January 1, 2015, the interest rate accruing on the principal of the Loan was increased to 9% with a monthly pay rate of 5% and the remaining 4% of unpaid interest to be accrued and compounded monthly until ~~SCNRG~~termination ~~qualifies~~of the Forbearance Period and full payment of the Loan, and the default rate was increased to 14%, (vi) Borrowers agreed that the proceeds from any sale, assignment, licensing or other transfer of real or personal property rights that serve as collateral for the Loan will be remitted directly to BOTW, and (vii) Borrowers agreed to pay at least $15,000 per month of outstanding property taxes, commencing with the ~~regulatory~~first ~~agency~~month in which the California Midway-Sunset First Purchase Price as anpublished ~~operator~~by the U.S. Energy Information Administration is greater than $60 per barrel. As and in consideration of the foregoing, under the Fifth Amendment, BOTW agreed to extend the Forbearance Period to December 31, 2015.

~~7. SECURED~~See ~~SUBORDINATED~~Note ~~LOAN~~18 ~~RECEIVABLE,~~for ~~SHORT~~a ~~TERM~~subsequent event concerning the loan payable to BOTW.

Between April 18, 2014 and January 15, 2015, we and our wholly-owned subsidiary, Tapia Holdings, LLC (“Tapia Holdings”), made a number of advances to TEG Oil & Gas U.S.A., Inc. (“TEG”), pursuant to several secured subordinated notes and related security agreements, all as amended and restated into a Secured Subordinated Note dated January 12, 2015 (the “Note”), and a Fourth Amended and Restated Security Agreement dated January 12, 2015 (the “Security Agreement”), each executed by TEG, and a Limited Recourse Guarantee (“Guarantee”) and a Pledge Agreement (“Pledge Agreement”), each executed by Sefton Resources, Inc. (“Sefton”) (collectively, the “Loan Receivable Agreements”). The Loan Receivable Agreements and an Intercreditor Agreement (defined below) were entered into in connection with what ultimately became an executed Share Purchase Agreement to acquire TEG.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

~~Share~~7. LOANS ~~Purchase~~PAYABLE ~~Agreement~~TO ToRELATED ~~Purchase~~PARTIES, ~~All~~SHORT ~~Of The Outstanding Shares Of Capital Stock Of TEG~~TERM

OnLoans ~~January~~payable ~~12, 2015, we entered into a Share Purchase Agreement (“Share Purchase Agreement”) with Sefton pursuant~~ to ~~which~~related ~~we agreed to purchase~~parties, ~~and~~short ~~Sefton agreed to sell~~term, ~~100%~~consist of the ~~issued~~following ~~and~~at ~~outstanding~~February ~~shares of capital stock of Sefton’s wholly-owned subsidiary~~28, ~~TEG. The principal terms of the Share Purchase Agreement are as follows: we will purchase all of the shares of TEG for $1.00 in cash plus the issuance of 3~~2015,~~000,000~~ ~~shares of our common stock~~ and aAugust ~~five-year warrant to purchase up to an additional 5~~31,~~000,000~~ ~~shares of our common stock for $0.25 per share.~~2014:

Between April 18, 2014 and January 15, 2015, we and our wholly-owned subsidiary, Tapia Holdings, made a number of advances to TEG, pursuant to the Loan Receivable Agreements. These advances totaled approximately $1,637,352 as of January 15, 2015 (described further under “Secured Subordinated Loan Receivable, Short Term” below), plus accrued interest. This amount constitutes additional consideration for the acquisition, as this loan receivable will not be settled prior to the closing of our acquisition of TEG.

	February 28,		August 31,
	2015		2014
Darren Katic	$	242,300	$	161,000
Manhattan Holdings, LLC		90,000		60,000
Gerald Tywoniuk		60,000		-
Kristian Andresen		56,025		-
Total short-term loans		448,325		221,000
Accrued interest payable		22,104		5,876
Loans payable to related parties, short term	$	470,429	$	226,876

~~The~~Loans ~~transactions~~payable ~~contemplated~~to byrelated parties are unsecured and bear interest at 10% per annum. Mr. Katic’s loan is due on demand. Of the ~~Share~~Manhattan ~~Purchase~~Holdings, ~~Agreement~~LLC ~~are~~loan ~~subject~~balance, to$60,000 ~~several~~was ~~customary~~originally ~~conditions~~due on October 31, ~~most~~2014, ~~notably~~but the maturity date on that ~~the~~portion ~~purchase~~was extended to January 31, 2015, in combination with an additional $30,000 loan. Other loans were due January 31, 2015. No arrangements have been made to date to deal with these past due maturity dates. All loans from related parties above have been treated as short-term loans. Mr. Katic is an officer, director and ~~sale~~significant ~~must~~shareholder. Manhattan beHoldings, ~~approved~~LLC byand ~~Sefton’s~~Gerald Tywoniuk are significant shareholders. Kristian Andresen is a director and significant shareholder.

Bank of the West (“BOTW”), Sefton’s senior lender, has consented to our acquisition of TEG and has agreed to forbear taking enforcement action against TEG on the senior loan provided that (i) Hawker lend TEG not less than $350,000 within 90 days, (ii) interest on TEG's obligations to BOTW be increased to 9%, with a monthly pay rate of 5% and the remaining deferred 4% of unpaid interest compounded monthly, (iii) the proceeds of any sale, assignment, licensing or other transfer of any real or personal property rights which serve as collateral for TEG's obligations to BOTW be remitted directly to BOTW, and (iv) commencing no later than the first month after which the California Midway-Sunset First Purchase Price as published by the U.S. Energy Information Administration exceeds $60 per barrel, TEG will begin making outstanding property tax payments to the County of Los Angeles of at least $15,000 per month.

As a result of a significant decline in oil prices and other factors, the transaction described above amends and replaces the transaction described in our Annual Report on Form 10-K filed November 24, 2014 to acquire 80% interest in the assets of TEG pursuant to a non-binding letter of intent dated June 18, 2014.

TEG’s assets comprise four oil and gas leases encompassing the Tapia Canyon field (the “Tapia Assets”) and one lease west of the Tapia Canyon field (the “Eureka Assets”), and the accompanying production equipment.

Secured Subordinated Loan Receivable, Short Term

Under the terms of the Loan Receivable Agreements, TEG agreed to pay us the principal sum of $2,100,000, or such lesser amount as may be outstanding from time to time, with interest on the unpaid principal amount at the rate of 3.0% per annum. We advanced $196,625 to TEG during the three months ended November 30, 2014, for a total at November 30, 2014, of $1,487,352, and an additional $150,000 subsequent to November 30, 2014, for a total at January 15, 2015 of $1,637,352, not including accrued interest. Further advances are subject to our sole and absolute discretion. The loan receivable matures on December 31, 2015, at which time all outstanding principal and accrued interest is due and payable in full. The assets of TEG secure the Note, which is also guaranteed on a limited recourse basis by Sefton. Sefton’s Guarantee is secured by a pledge of all of the outstanding shares of TEG. TEG’s assets are located in the Tapia and Eureka Fields, Los Angeles and Ventura Counties, California. The Note and our security interest in the assets of TEG are subordinate to senior indebtedness of TEG, pursuant to an Amended and Restated Subordination and Intercreditor Agreement (“Intercreditor Agreement”) dated January 1, 2015, as amended, by and among Tapia Holdings, Hawker, TEG, Sefton, TEG’s affiliate TEG MidContinent, Inc., BOTW, and us.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

The Security Agreement and the Pledge Agreement also provide that it is a default under those agreements if the transactions contemplated by the Share Purchase Agreement are not consummated by January 31, 2015 (including if Sefton’s shareholders have not approved the transactions by that date)8. CONVERTIBLE ~~TEG~~NOTES ~~further agreed to cease and terminate any solicitation or encouragement of a third party acquisition proposal; provided~~PAYABLE, ~~that,~~SHORT if TEG receives an unsolicited, bona fide acquisition proposal that is found to be superior to the terms of the Share Purchase Agreement, to the extent we decline to renegotiate the Share Purchase Agreement terms or to otherwise match the terms of the third party acquisition proposal, TEG may pursue such third party acquisition proposal. The Security Agreement, Pledge Agreement and Guarantee also contain other representations, warranties and covenants of both parties that are customary for agreements of these types.TERM

~~The~~Between ~~period~~May ~~end~~13, ~~balance~~2014, and February 28, 2015, we issued a number of convertible notes payable (“CNP”). All were issued in amounts equal to the ~~secured~~cash ~~subordinated~~we ~~note~~received, ~~receivable~~and isbear ~~comprised~~simple ofinterest on the ~~following:~~unpaid principal balance at 12% per annum, which is payable on maturity.

	November 30, 2014		August 31, 2014
Principal	$	1,487,352	$	1,290,727
Accrued interest		18,099		7,595
Total	$	1,505,451	$	1,298,322

Convertible notes payable, short term, consist of the following at February 28, 2015, and August 31, 2014; conversion features, security provisions and warrants to acquire common stock of Hawker are also set forth below:

	Issue Date	Maturity Date	February 28, 2015		August 31, 2014

CNP 1 (1) (2) (3)(7)	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		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
CNP 8 (1)(3)(4)(8)	September 26, 2014	September 26, 2015		-		-
CNP 9 (1)(2)(3)(7)(8)	November 3, 2014	May 3, 2015		-		-
				50,000		930,000
Less unamortized discount (7)				-		(89,149	)
Accrued interest payable				4,784		21,599

Convertible notes payable, short term			$	54,784	$	862,450

(1) Convertible at any time at the option of the investor into “Conversion Units.” Each Conversion Unit consists of one share of common stock of Hawker and one warrant to purchase one-half share of common stock of Hawker at an exercise price of $0.25 per share. The number of Conversion Units into which the note is convertible is computed by dividing all of the then outstanding principal and accrued interest under the note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Each warrant has a five-year life from the date the convertible note payable was issued. In the event Hawker sells common stock for less than $0.10 per share, the conversion rate for CNP 1 and 9 shall be adjusted to that price. In the case of CNP 1 and 2, the notes were amended September 18, 2014, to limit the conversion of a part or the entire convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. CNP 9, with a face amount of $25,000 is similarly limited to a 4.99% maximum beneficial ownership.

(2) Hawker granted a security interest to the investor in all of Hawker’s 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 5. Any repayment of such advances by TEG to Tapia Holdings must be used by us to immediately first repay convertible notes payable to the holder of CNP 1, 2 and 3, and second to repay other convertible notes payable pro rata.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

8(4) Conversion of unpaid principal into Conversion Units pursuant to the terms in (1) above was mandatory upon Hawker closing the TEG Acquisition in February 2015 as described in Note 4. ~~FIXED~~ Conversion ~~ASSETS;~~of ~~CAPITALIZED~~unpaid ~~OIL~~interest ~~AND~~into ~~GAS~~Conversion ~~PROPERTIES~~Units was at the election of Hawker, which election Hawker made.

(5) The ~~asset~~holder ~~categories~~is ofrelated ~~fixed~~to ~~assets~~Darren ~~and~~Katic, ~~capitalized~~who ~~oil~~is ~~and~~an ~~gas properties at November 30~~officer, ~~2014~~director and ~~August~~significant ~~31, 2014 were as follows:~~shareholder.

	November 30, 2014
	Cost		Accumulated Depletion, Depreciation and Amortization		Net Book Value
Machinery and equipment	$	33,874	$	20,815	$	13,059
Other fixed assets		9,252		-		9,252
Total fixed assets		43,126		20,815		22,311
Capitalized oil and gas properties		816,239		93,176		723,063
Total	$	859,365	$	113,991	$	745,374

(6) Unpaid principal and accrued interest is convertible at any time at the option of the holder into common shares 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 5 if earlier than the maturity date above. As Hawker expected to receive repayment on the secured subordinated loan receivable or close on the TEG acquisition within one year, this convertible note payable was classified as a short-term liability.

	August 31, 2014
	Cost		Accumulated Depletion, Depreciation and Amortization		Net Book Value
Fixed assets: 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

(7) The unamortized discount relates to CNP 1 ($350,000) and CNP 9 ($25,000). This is described further immediately below.

(8) Original principal amounts were $25,000 for CNP 8 and $25,000 for CNP 9.

CNP 1 (principal amount $350,000), CNP 2 (principal amount $250,000) and CNP 9 (principal amount $25,000) were considered extinguished for accounting purposes when they were rolled over into the long term Secured Convertible Note Payable described in Note 9.

9. LONG TERM DEBT

Long term debt is comprised of the following at February 28, 2015, and August 31, 2014:

	February 28, 2015			August 31, 2014
Convertible note payable, long term	$	134,127		$	-
Overriding royalty interest liability		274,710			-
Net profits interest payable		159,322			169,104
Note payable and other		64,414			-
Total long term debt		632,573			169,104
Less current portion		(208,346	)		(20,065	)
Long term debt, net of current portion	$	424,227		$	149,039

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

~~9. LOANS~~Convertible ~~PAYABLE~~Note ~~TO RELATED PARTIES~~Payable, ~~SHORT~~Long ~~TERM~~Term

~~Loans~~On ~~payable~~January to14, ~~related parties~~2015, ~~short~~we executed a term, ~~consist~~sheet ofto provide for a Third Amended and Restated Secured Convertible Promissory Note to an outside investor (the ~~following~~“Secured atConvertible ~~November~~Note 30Payable”), ~~2014~~in the aggregate principal amount of $1,000,000, ~~and~~to ~~August~~mature 31in two years. Completion of definitive documentation occurred on May 27, ~~2014:~~2015.

	November 30,		August 31,
	2014		2014
Darren Katic	$	151,000	$	161,000
Manhattan Holdings, LLC		90,000		60,000
Gerald Tywoniuk		60,000		-
Kristian Andresen		18,525		-
Total short-term loans		319,525		221,000
Accrued interest payable		12,657		5,876
Loans payable to related parties, short term	$	332,182	$	226,876

A Secured Convertible Note Payable was issued in consideration of additional proceeds to us in the amount of $250,000 (of which $200,000 was funded January 15, 2015, and $50,000 was funded February 26, 2015) and cancellation of previously issued notes to the investor in the amounts of $250,000, $350,000, and $25,000 (as well as accrued interest on each), the first two of which had maturity dates of November 30, 2014, and the latter of which had a maturity date of May 3, 2015. The holder has the option of advancing a further $125,000 by June 30, 2015. The maturity date of the note is December 31, 2016. The Secured Convertible Note Payable bears interest on the unpaid principal balance of the Secured Convertible Note Payable at the rate of 12% per annum. Interest payments become payable quarterly beginning July 31, 2015, accruing interest until then. The Secured Convertible Note Payable will be convertible at any time at the option of the investor into shares of Hawker common stock computed by dividing all of the then outstanding principal and accrued interest under the Secured Convertible Note Payable by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events) (the “Conversion Rate”). However, if we subsequently sell common stock or securities convertible into or exchangeable for common stock at a price lower than the Conversion Rate (subject to customary exclusions), then the Conversion Rate then in effect will be automatically reduced to the lower price. We will at all times reserve and keep available out of our authorized but unissued shares a sufficient number of shares of common stock to give effect to the conversion of the Secured Convertible Note Payable. Unless notified in advance by the investor, conversion of a part or the entire Secured Convertible Note Payable is limited at any one time to a maximum beneficial ownership interest in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. The proceeds from the Secured Convertible Note Payable are to be used for the purpose of allowing us to make advances to TEG, under the terms of a note receivable from TEG, and for general working capital. Any repayment by TEG of the advances under the terms of the note receivable must be used by us to immediately make repayment to the investor under the terms of the Secured Convertible Note Payable. To secure our obligations under the Secured Convertible Note Payable, we granted a security interest to the investor in all of our right, title and interest under the TEG note receivable, our second priority security interest in TEG’s assets and in the interest of our subsidiary SCNRG, LLC in the oil-producing property known as the DEEP Lease. The Secured Convertible Note Payable also contains other terms and covenants that are customary for a promissory note of this type. In addition, we granted to the investor a 2.5% or 3.5% overriding royalty interest, depending on the lease, in oil sales from the TEG Assets. Such amount accrues until TEG’s lender, BOTW, has been paid in full; however, payment of royalties shall begin by January 31, 2016 or an event of default under the Secured Convertible Note Payable will occur. While interest and royalties are being accrued, no cash payments can be made to repay loans made to Hawker by Mr. Katic, nor can Hawker repurchase any non-controlling interest owned by Mr. Moore nor pay any salaries to Messrs. Katic and Moore.

~~Loans~~The ~~payable~~Company toidentified ~~related~~an ~~parties~~embedded ~~are~~derivative ~~unsecured~~related ~~and~~to ~~bear~~the ~~interest~~Conversion atRate ~~10%~~reset ~~per annum~~provision. ~~Mr.~~ ~~Katic’s~~The ~~loan~~accounting istreatment ~~due~~of onderivative ~~demand. Of~~financial ~~the~~instruments ~~Manhattan~~requires ~~Holdings,~~that ~~LLC~~the ~~loan~~Company ~~balance,~~record ~~$60,000~~the ~~was~~fair ~~originally~~value ~~due~~of onthe ~~October~~derivative ~~31,~~as ~~2014,~~of ~~but~~ the ~~maturity~~ date onof ~~that~~each ~~portion~~advance ~~was~~under ~~extended~~the note and to ~~January~~adjust ~~31,~~the ~~2015,~~fair invalue ~~combination~~as ~~with~~of aneach ~~additional~~subsequent ~~$30,000~~balance ~~loan~~sheet date. ~~Other~~The ~~loans~~Company ~~are~~determined ~~due~~a ~~January~~fair 31value of $540,084 ~~2015. Accordingly~~of the embedded derivative, ~~all~~in ~~loans~~aggregate, ~~from~~for ~~related~~the ~~parties~~two ~~above~~advances ~~have~~made ~~been~~under ~~treated~~the asnote ~~short-term~~since ~~loans~~inception in January 2015. ~~Mr.~~See ~~Katic~~Note is10 anfor ~~officer,~~further ~~director~~discussion ~~and~~of ~~significant~~the ~~shareholder. Manhattan~~assumptions ~~Holdings,~~in ~~LLC~~determining this fair value and ~~Gerald~~subsequent ~~Tywoniuk~~adjustment ~~are~~of ~~significant~~fair ~~shareholders~~value at period end. ~~Kristian~~ The ~~Andresen~~initial isfair value of the embedded derivative creates a ~~director~~discount ~~and~~on ~~significant~~the ~~shareholder~~Secured Convertible Note Payable book balance.

In addition, the granting of the overriding royalty interest also requires the allocation of a portion of the proceeds received to a separate liability. This amount was estimated to be $263,759, see below for further discussion of the assumptions used. Such allocation also creates a discount on the Secured Convertible Note Payable book balance.

The total debt discount amounted to $803,843 and is being amortized using the effective interest method. We amortized $8,025 as interest expense due to the accretion of the discount between the dates of advances in January and February 2015 and February 28, 2015. The unamortized discount as of February 28, 2015 was $795,818 compared to none at August 31, 2014. The February 28, 2015 amount will be fully amortized by the December 31, 2016 maturity date of the Secured Convertible Note Payable. The effective rate of interest is 184% per annum, including the 12% cash coupon, the conversion option and the granting of the overriding royalty interest.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

10. CONVERTIBLE NOTES PAYABLE, SHORT TERM

	Six Months Ended February 28, 2015			Year Ended August 31, 2014
Secured Convertible Note Payable, beginning of period	$	-		$	-
Roll over prior advances into new note		625,000			-
Capitalization of interest at Jan. 1, 2015		39,896			-
Additional advances in January and February 2015		250,000			-
Total advances		914,896			-

Discount created by embedded derivative (conversion option)		(540,084	)		-
Discount created by granting of overriding royalty interest		(263,759	)		-
Total discount		(803,843	)		-
Amortization of discount		8,025			-
Unamortized discount		(795,818	)		-

Accrued interest payable		15,049			-

Carrying value of Secured Convertible Note Payable, end of period		134,127			-
Less current portion		(113,910	)		-
Secured Convertible Note Payable, long term portion, end of period	$	20,217		$	-

Between May 13, 2014, and November 30, 2014, we issued a number of convertible notes payable (“CNP”). All were issued in amounts equal to the cash we received, and bear simple interest on the unpaid principal balance at 12% per annum, which is payable on maturity.

Convertible notes payable, short term, consist of the following at November 30, 2014, and August 31, 2014; conversion features, security provisions and warrants to acquire common stock of Hawker are also set forth below:

	Issue Date	Maturity Date	November 30, 2014		August 31, 2014
CNP 1 (1) (2) (3)	June 25, 2014	November 30, 2014	$	350,000	$	350,000
CNP 2 (1) (2) (3)	May 30, 2014	November 30, 2014		250,000		250,000
CNP 3 (1) (3) (4)	July 17, 2014	June 30, 2015		100,000		100,000
CNP 4 (1) (2) (3) (4) (5)	July 17, 2014	July 10, 2015		100,000		100,000
CNP 5 (6)	May 13, 2014	May 13, 2016		50,000		50,000
CNP 6 (1) (2) (3) (4)	July 25, 2014	July 25, 2015		50,000		50,000
CNP 7 (1) (2) (3) (4)	August 28, 2014	July 25, 2015		30,000		30,000
CNP 8 (1)(3)(4)	September 26, 2014	September 26, 2015		25,000		-
CNP 9 (1)(2)(3)	November 3, 2014	May 3, 2015		25,000		-
				980,000		930,000
Accrued interest payable				50,178		21,599
Convertible notes payable, short term			$	1,030,178	$	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 and 9 shall be adjusted to that price. In the case of CNP 1 and 2, the notes were amended September 18, 2014, to limit the conversion of a part or the entire convertible note payable at any one time to a maximum beneficial ownership in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. CNP 9 is similarly limited.

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

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

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

~~(4)~~Overriding ~~Conversion~~Royalty ofInterest ~~unpaid~~Liability ~~principal into Conversions Units pursuant to the terms in~~ (1)“ORRI ~~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.~~Liability”)

Pursuant to an overriding royalty interest (5“ORRI”) effective January ~~The~~15, 2015 to the Secured Convertible Note Payable holder, isas ~~related~~described immediately above, oil sales from the Tapia oil field are subject to ~~Darren~~an ~~Katic~~additional 2.5% or 3.5% overriding royalty interest, ~~who~~depending ison anthe ~~officer~~lease. Since this royalty interest was granted in connection with a loan, ~~director~~the loan proceeds were bifurcated and ~~significant~~this ~~shareholder~~royalty interest has been accounted for as a separate liability.

~~(6)~~The ~~Unpaid~~ORRI ~~principal~~remains ~~and~~unrecorded ~~accrued~~with ~~interest~~Los isAngeles ~~convertible~~County atuntil ~~any time at~~ the ~~option~~BOTW ofloan ~~the~~is ~~holder~~repaid, ~~into~~and ~~Conversion~~royalties ~~Units~~accrue inand anare ~~amount~~not ~~computed~~paid byduring ~~dividing~~this ~~the~~period. ~~amount~~Upon ~~converted~~recordation, ~~by $0.10~~ (as1) ~~appropriately~~accrued ~~adjusted~~royalties ~~for~~shall ~~any~~be ~~stock~~paid ~~splits, stock combinations~~ or ~~similar~~added ~~events). Repayment~~to of the ~~convertible~~Secured ~~note~~Convertible ~~payable~~Note isPayable ~~required~~above onat ~~collection~~TEG’s ofoption ~~the~~and ~~secured~~(2) ~~subordinated~~current ~~loan~~royalties ~~receivable~~are ~~described~~due inand ~~Note~~payable 7monthly ifin ~~earlier than the maturity date above~~arrears. AsFailure ~~Hawker expects~~ to ~~receive~~record ~~repayment on~~ the ~~secured~~ORRI ~~subordinated~~by ~~loan~~January ~~receivable or close on the TEG acquisition within one year~~14, ~~this~~2016 ~~convertible~~will ~~note~~constitute ~~payable~~an ~~has~~event ~~been~~of ~~classified~~default asunder athe ~~short~~Secured ~~term~~Convertible ~~liability~~Note Payable.

~~See~~The ~~Note~~following 19assumptions ~~for~~were ~~subsequent~~used ~~events~~by ~~concerning~~management ~~convertible~~to ~~notes~~determine ~~payable.~~the fair value of the ORRI Liability:

11. ASSET RETIREMENT OBLIGATIONS


Oil price	$65/barrel
Resulting reserves were included as follows:
Proved developed producing		100	%
Proved developed non-producing		50	%
Proved undeveloped		0	%
Discount rate		35	%

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.

	Six Months Ended			Year Ended
	February 28,			August 31,
	2015			2014

ORRI Liability, beginning of period	$	-		$	-
ORRI granted to holder of long-term convertible note payable		263,759			-
Current period accretion		10,951			-
Change in estimated liability		-			-
Payments made		-			-
ORRI Liability, end of period		274,710			-
Less: current portion		(54,542	)		-
ORRI Liability, long-term portion	$	220,168		$	-

The following shows the changes in asset retirement obligations for the three months ended November 30, 2014 and the year ended August 31, 2014:

	Three Months Ended November 30, 2014		Year Ended August 31, 2014
Asset retirement obligations, beginning	$	168,110	$	103,299
Liabilities acquired during the period		-		53,963
Liabilities settled during the period		-		-
Current period accretion		3,572		10,848
Asset retirement obligations, ending	$	171,682	$	168,110

12. NET PROFITS INTEREST (“NPI”) PAYABLE

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

Until February 1, 2014, SCNRG’s working interest in the DEEP property was 66.67%, and the NPI agreement called for a minimum monthly payment of $1,985 (SCNRG’s 66.67% share). Beginning February 1, 2014, SCNRG’s working interest in the DEEP Lease increased to 87.18%, and its share of the minimum monthly payment became $2,596. Beginning May 15, 2014, SCNRG’s working interest in the DEEP Lease increased to 100.0%, and its share of the minimum monthly payment became $2,978. Payments are required until SCNRG and other working interest owners have made NPI payments in aggregate between $347,000 and $357,410 on or before December 31, 2022 (the actual maximum amount within this range is dependent on when SCNRG and other working interest owners satisfy their aggregate NPI payment obligations). As of November 30, 2014, SCNRG and other working interest owners have made NPI payments totaling $134,135. SCNRG has paid its 66.67% working interest share of this amount through February 1, 2014, its subsequent 87.18% share through May 15, 2014, and its subsequent 100.0% share through November 30, 2014.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

Net Profits Interest (“NPI”) Payable

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 February 28, 2015, SCNRG and other working interest owners have made NPI payments totaling $143,069. SCNRG has paid its 66.67% working interest share of this amount through February 1, 2014, its subsequent 87.18% share through May 15, 2014, and its subsequent 100.0% share through November 30, 2014.

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

Changes in SCNRG’s share of the NPI liability are as follows for the ~~three~~six months ended ~~November 30~~February 28, ~~2014~~2015 and the year ended August 31, 2014:

		Three Months Ended November 30, 2014				Year Ended August 31, 2014
	Six Months Ended				Year Ended
	February 28,				August 31,
	2015				2014
NPI liability, beginning of period		$	169,104			$	124,597
Liabilities assumed in connection with acquisition of additional DEEP Lease working interests			-				58,847
Current period accretion			48,~~104~~086				14,104
Payments made			(817,~~934~~868	)			(28,444	)
NPI liability, end of period			~~164~~159,~~274~~322				169,104
Less: current portion			20(21,~~570~~089	)			(20,065	)
NPI liability, long-term portion		$	~~143~~138,~~704~~233			$	149,039

13. INCOME TAXES

There was no current or deferred income tax expense (benefit) for the three months ended November 30, 2014 and 2013. A valuation allowance has been established against net operating losses where it is more likely than not that such losses will expire before they are utilized.

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 November 30, 2014 and August 31, 2014.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

§Note ~~Level~~Payable 2And - 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.Other

§Note 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.Payable

	Fair Value Measurement
	Level 1		Level 2		Level 3
November 30, 2014
Assets:
Secured subordinate loan receivable	$	-	$	-	$	1,505,451
Capitalized oil and gas properties, net		-		-		723.063
Liabilities:
Loans payable to related parties, short term		-		-		(332,182	)
Convertible notes payable, short term		-		-		(1,030,178	)
Net profit interest liability		-		-		(164,274	)
Asset retirement obligation		-		-		(171,682	)
Total	$	-	$	-	$	530,198

On January 16, 2015, a relative of Mr. Katic advanced $50,000 to Hawker, and made further advances of $20,000 on March 19, 2015, and $100,000 on March 25, 2015, all of which were documented in a note payable on the latter date. Principal is to be repaid at the rate of $7,083 per month beginning April 30, 2015 for 24 months.

	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

Interest on the note payable is comprised of a March 25, 2015 issuance of 510,000 shares of common stock plus a 5-year warrant to purchase up to 500,000 shares of common stock for $0.25 per share.

A discount of $19,757 based on advances to February 28, 2015 was recorded to reflect the pro rated value of the stock and warrants to be issued as interest. This discount will be amortized to interest expense over the term of the loan, using the effective interest method. The amortization of discount recorded through February 28, 2015 was $1,053. The effective rate of interest is 46.6%.

Other

Other long term debt represents an installment sales contract for the February 2015 purchase of a field vehicle, with 48 payments of $795 per month beginning April 4, 2015. The interest rate is 6.99%.

Total Note Payable and Other

	Six Months Ended February 28, 2015			Year Ended August 31, 2014
Balance, beginning of period	$	-		$	-
Note payable advance		50,000			-
Less unamortized discount		(18,704	)		-
		31,296			-
Installment sales contract liability		33,118			-
Total note payable and other		64,414			-
Less current portion		(18,805	)		-
Note payable and other, long term portion, end of period	$	45,609		$	-

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

10. CONVERSION OPTION

Conversion Option, Short Term

As described in Note 8, the Company identified an embedded derivative related to the Conversion Rate reset provision in the Short Term Secured Convertible Notes Payable. The repayment is subject to the convertible features of each note. Each creditor has a conversion option allowing it to choose to receive repayment of the stated principal either in cash or, at each creditor’s option the note is convertible into “Conversion Units.” Each Conversion Unit consists of one share of common stock of Hawker and one warrant to purchase one-half share of common stock of Hawker at an exercise price of $0.25 per share. The number of Conversion Units into which the note is convertible is computed by dividing all of the then outstanding principal and accrued interest under the note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). Each warrant has a five-year life from the date the convertible note payable was issued. Each note has an anti-dilution provision that allows for the automatic reset of the conversion price upon any future sale of common stock or instruments exchangeable for or convertible into common stock below the then current conversion price of the note.

The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivative as of the date of each note issuance and to adjust the fair value as of each subsequent balance sheet date. At the inception of the $350,000 and $25,000 notes, the Company determined a fair value of $139,051 and $7,418, respectively, of the embedded derivative. The fair value of the embedded derivative was determined using the Black-Scholes Pricing Model based on the following assumptions for each of the two notes:

Dividend yield:	0 and 0	%
Volatility	178 and 200	%
Risk free rate:	0.05 and 0.02	%

As discussed in Note 8, the Short Term Secured Convertible Notes Payable were considered extinguished on January 14, 2015 when their balances were rolled into a new Secured Convertible Note Payable. Accordingly, the $97,398 fair value of the short term conversion option at November 30, 2014 was recorded as additional paid in capital on January 14, 2015. The fair value of the described embedded derivative at that date was determined using the Black-Scholes Pricing Model with the following assumptions:

Dividend yield:	0	%
Volatility	214	%
Risk free rate:	0.025	%

The non-cash, non-operating gain resulting from the fair value accounting was $0 and $34,662 for the three and six months ended February 28, 2015.

The following table provides a summary of changes in fair value of the short term conversion option for the six months ended February 28, 2015 and the year ended August 31, 2014:

	Six Months Ended February 28, 2015			Year Ended August 31, 2014
Balance, beginning of period	$	122,045		$	-
Initial fair value of debt derivatives at advance dates		7,418			139,051
Initial fair value of debt derivative on accrual of interest		2,597			2,630
Change in fair value of debt derivatives		(34,662	)		(19,636	)
Extingushment of conversion option		(97,398	)		-
Balance, end of period	$	-		$	122,045

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED FEBRUARY 28, 2015

UNAUDITED

Conversion Option, Long Term

As described in Note 9, the Company identified an embedded derivative related to the Conversion Rate reset provision in the Secured Convertible Note Payable. The repayment is subject to the convertible features of the note. The Secured Convertible Note Payable can be convertible at any time at the option of the investor into shares of Hawker common stock computed by dividing all of the then outstanding principal and accrued interest under the Secured Convertible Note Payable by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events) (the “Conversion Rate”). However, if we subsequently sell common stock or securities convertible into or exchangable for common stock at a price lower than the Conversion Rate (subject to customary exclusions), then the Conversion Rate then in effect will be automatically reduced to the lower price.

The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivative as of the date of each advance under the note and to adjust the fair value as of each subsequent balance sheet date. The Company determined a fair value of $540,084 of the embedded derivative, in aggregate, for the two advances made under the note since inception in January 2015. The fair value of the embedded derivative was determined using the Black-Scholes Pricing Model based on the following assumptions for each of the two notes:

Dividend yield:	0 and 0	%
Volatility	236 and 252	%
Risk free rate:	0.51 and 0.63	%

The long term conversion option, being the fair value of the described embedded derivative, of $547,886 at February 28, 2015 compares to none at August 31, 2014, and was determined using the Black-Scholes Pricing Model with the following assumptions:

Dividend yield:	0	%
Volatility	252	%
Risk free rate:	0.63	%

At February 28, 2015, the Company adjusted the recorded fair value of the long term conversion option to market resulting in non-cash, non-operating loss of $7,802 for the quarter ended February 28, 2015. Together with the non-cash, non-operating gains on the short term conversion options described above, the total non-cash, non-operating gain (loss) was ($7,802) and $26,860 for the three and six months ended February 28, 2015. There were no such gains or losses in the three and six months ended February 28, 2014.

The following table provides a summary of changes in fair value of the long term conversion option for the six months ended February 28, 2015 and the year ended August 31, 2014:

	Six Months Ended February 28, 2015		Year Ended August 31, 2014
Balance, beginning of period	$	-	$	-
Initial fair value of debt derivatives at advance dates		540,084		-
Change in fair value of debt derivatives		7,802		-
Balance, end of period	$	547,886	$	-

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED FEBRUARY 28, 2015

UNAUDITED

11. EMPLOYEE RETIREMENT LIABILITY

A retirement benefit has been provided to two TEG employees with employment contracts. The retirement payment is based on the individual’s ending monthly salary at the date of retirement times a multiple for years of service. This multiple ranges from one month of base salary for two years of service or less, to two and a half times monthly salary for ten or more years of service. The retirement dates under the agreements are 2020 and 2022. No employees had this arrangement at August 31, 2014. The assumed discount rates used to measure the postemployment benefit liability were 4.48% and 4.56% at February 3, 2015, the TEG acquisition date, and 4.54% and 4.63% at February 28, 2015.

	Six Months Ended				Year Ended
	February 28,				August 31,
	2015				2014
Employee retirement obligations, beginning		$	-			$	-
Liabilities acquired during the period			998,471				-
Liabilities settled during the period			-				-
Current period expense (benefit)			(14,308	)			-
Employee retirement obligations, ending		$	984,163			$	-

12. ASSET RETIREMENT OBLIGATIONS

The following shows the changes in asset retirement obligations for the six months ended February 28, 2015 and the year ended August 31, 2014:

	Six Months Ended			Year Ended
	February 28,			August 31,
	2015			2014
Asset retirement obligations, beginning		$	168,110		$	103,299
Liabilities acquired during the period			1,743,558			53,963
Liabilities settled during the period			-			-
Current period accretion			9,770			10,848
Asset retirement obligations, ending		$	1,921,438		$	168,110

13. INCOME TAXES

There was no current or deferred income tax expense (benefit) for the three and six months ended February 28, 2015 and 2014. 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. Further, at the date of the TEG acquisition, TEG had a net operating loss carryover of approximately $16,905,000 available to offset future income for income tax reporting purposes, which will expire in various years through 2033, if not previously utilized. However, our ability to use the TEG carryover net operating loss may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382, which is applicable when there is a change of control.

The deferred tax liability arose on acquisition of TEG, as book basis exceeds tax basis for the net assets acquired. As this difference reverses over time, the associated deferred tax benefit will be recorded in the income statement.

The Company knows of no uncertain tax positions and has no unrecognized tax benefits for the six months ended February 28, 2015 or 2014.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED FEBRUARY 28, 2015

UNAUDITED

14. FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs.

The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of February 28, 2015 and August 31, 2014. As required by ASC 820, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. There were no transfers between fair value hierarchy levels for the three or six months ended February 28, 2015 and 2014.

The carrying amounts reported in the balance sheets for cash, accounts receivable, loan receivable, accounts payable and accrued expenses, and loans and notes payable, approximate their fair market value based on the short-term maturity of these instruments. Non-financial assets and liabilities of the Company measured at fair value include long-lived assets (e.g., Oil and Gas properties) that are impaired in a currently reported period.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED FEBRUARY 28, 2015

UNAUDITED

The following table presents assets and liabilities that are measured and recognized at fair value on a recurring basis, as of February 28, 2015 and August 31, 2014:

Assets and liabilities measured at fair
value on a recurring							Total
basis at February 28, 2015:							Carrying
	Level 1		Level 2		Level 3		Value

Total Assets	$	-	$	-	$	-	$	-

Liabilities
Overriding royalty interest liability	$	-	$	-	$	274,710	$	274,710
Conversion option – long term		-		-		547,886		547,886
Total Liabilities	$	-	$	-	$	822,596	$	822,596

Assets and liabilities measured at fair
value on a recurring							Total
basis at August 31, 2014:							Carrying
	Level 1		Level 2		Level 3		Value

Total Assets	$	-	$	-	$	-	$	-

Liabilities
Conversion option – short term	$	-	$	-	$	122,045	$	122,045
Total Liabilities	$	-	$	-	$	122,045	$	122,045

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the year ended August 31, 2014:

	Six Months Ended			Year Ended
	February 28,			August 31,
	2015			2014
Balance, beginning of period	$	122,045		$	-
Initial fair value of debt derivatives at note issuances		547,502			139,051
Initial fair value of additional derivative created through interest accrual		2,597			2,630
Extinguished derivative liability		(97.398	)		-
Initial fair value of overriding royalty interest liability		263,759			-
Mark-to-market at end of period - embedded debt derivatives		(26,860	)		(19,636	)
Accretion of discount on overriding royalty interest liability, equivalent to estimated change in market value		10,951			-
Balance, end of period	$	822,596		$	122,045

Net gain for the period included in earnings as change in fair value	$	26,860		$	19,636

There was no gain or loss included in earnings for the six months ended February 28, 2013.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED FEBRUARY 28, 2015

UNAUDITED

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%.~~Royalties

~~Further,~~Oil onproduction ~~December~~from ~~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~~is ~~the~~subject ~~operator, Caleco incurs production and other costs, which are subsequently billed~~ to ~~SCNRG for its share through~~ a ~~joint~~1% ~~interest~~overriding ~~billing process; and the operator distributes to SCNRG its share of revenue received from production, less royalties and NPI obligations~~royalty. ~~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~~ Additionally, ~~the~~production ~~operator~~ is ~~entitled~~also tosubject ~~a fee for services but has instead elected~~ to ~~bill~~an ~~SCNRG~~aggregate ~~based~~additional ~~on actual time and materials~~19. As92% ~~described~~royalty infor ~~Note~~total 6,royalties ~~SCNRG~~of ~~increased its working interest in the DEEP Lease from 66~~20.6792% ~~to 100~~.0% Revenues ~~during~~are ~~the~~shown ~~year~~net ~~ended~~of ~~August~~these ~~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~~royalties.

Oil production from the Tapia and Eureka Assets are subject to overriding royalties totaling approximately 6.14% (based on February 2015 revenue by lease) and 16.67%, respectively. Revenues are shown net of these royalties.

Pursuant to an overriding royalty interest granted to the Secured Convertible Note Payable holder described in Note 9, oil sales from the Tapia oil field are subject to an additional 2.5% or 3.5% overriding royalty interest, depending on the lease. Since this royalty interest was granted in connection with a loan, this royalty interest has been accounted for as a liability (see Note 9).

Operating Agreement

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. 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.

Common Shares

On October 10, 2014, Hawker authorized an amendment (the “Amendment”) to the Option Agreement pursuant to which Hawker acquired Hawker Energy (Rincon), LLC (“HERLLC”) on January 1, 2014. Under the original terms of the Option Agreement, Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock upon the consummation of certain potential follow-on acquisition 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 held 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, which shares were released from escrow following completion of that acquisition in February 2015 (see Note 4) and (ii) 9,000,000 shares upon completion, on or before December 31, 2017, of any one of the transactions evaluated by HERLLC, our wholly-owned subsidiary, prior to its reorganization with Hawker, including a transaction resulting in Hawker ownership of oil and gas lease interests in any one of the following unique oil fields:

(a)

Cat Canyon (leases Tognazzini, Wickenden, Los Alamos, GWP, and those immediately adjacent to, in each case, in Santa Barbara County);

(b)

Santa Maria (T 11N, R 36W extending southeast through T9N R33W in Santa Barbara County);

(c)

Casmalia (leases Tompkins, Peshine, and those immediately adjacent to, in each case, in Santa Barbara County);

(d)

North Lost Hills (Sections 12 & 13, T25S, R19E, and Sections 7 & 18, T25S, R 20E, totaling 1,500 acres in Kern County CA);

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED FEBRUARY 28, 2015

UNAUDITED

(e)

Maricopa (McFarland and Jameson leases totaling 40 acres in Kern County);

(f)

Pine Meadows (Section 1 Township 31 South Range 22E in Kern County); or

(g)

Torrance (Joughin and South Torrance Units totaling 900 acres in Los Angeles County).

Waiver of the Potential Follow-On Transaction requirements and the immediate issuance of the remaining shares was done to simplify our common shareholding structure and share count and to assist in our capital raising efforts.

With respect to 14,000,000 shares of our common stock that were issued as a result of the Amendment, an equity compensation expense of $1,011,500 recorded in the three months ended November 30, 2014, based on the fair value of the shares at the date of issuance. With respect to the 19,000,000 shares of our common stock that are in escrow, an equity compensation expense of $19,000 was initially recorded in October 2014 based on the par value of the shares at the date of issuance. Total expense of $1,030,500 was recorded in the three months ended November 30, 2014. On release of 10,000,000 shares of our common stock in February 2015 as described above, an additional expense of $670,090 was recorded, bringing the fiscal year-to-date expense to $1,700,590. As and when further shares are subsequently released from escrow, a further expense will be recorded based on the fair value of the 9,000,000 shares (less amounts previously expensed based on par value) concurrently with consummation of the applicable follow-on transaction. None of these amounts are considered for accounting purposes to be incremental consideration for our acquisition of HERLLC.

Contingencies

As of February 28, 2015 and August 31, 2014, there were no known environmental or other regulatory matters related to our operations that were reasonably expected to result in a material liability to us. We are subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the owners for the cost of pollution cleanup resulting from operations and subject the owners to liability for pollution damages. In some instances, the operator may be directed to suspend or cease operations in the affected area. ~~As of November 30, 2014, and August 31, 2014, we have no reserve for environmental remediation and are not aware of any environmental claims.~~

16. EQUITY

Common Stock

During the ~~three~~six months ended ~~November~~February 3028, 2014, we issued an aggregate of 500,000 Units to three investors in consideration of an aggregate of $50,000 in cash received prior to August 31, 2014, and shown as common stock payable as of that date. No commissions were paid or payable. Other transaction costs were $80. The price of each Unit was $0.10. Each Unit was comprised of one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock on payment of $0.20 per share. The warrants expire five years from the closing date.2015:

~~Related~~· ~~party~~We ~~transactions~~issued ~~are~~an ~~set~~aggregate ~~forth~~of 500,000 “Units” to three investors in ~~Note~~consideration ~~17. See~~of ~~also~~an ~~subsequent~~aggregate ~~events~~of $50,000 in ~~Note~~cash 19received prior to August 31, 2014, and shown as common stock payable as of August 31, 2014.

21· In addition, we issued an aggregate of 1,150,000 Units to two investors for $115,000.

No commissions were paid or payable. Other transaction costs were $80. The price of each Unit was $0.10. Each Unit comprised 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 each closing date.

In addition, during the six months ended February 28, 2015, we issued:

1,305,700 shares on conversion of $130,569 in accounts and bonus payable into common stock.

33,000,000 shares pursuant to the HERLLC Amendment described in Note 15.

Shares and warrants issued in the TEG Acquisition are set out in Note 4. See also Note 18, Subsequent Events.

Related party transactions are set forth in Note 17.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

Shares Of Common Stock Potentially Issuable Pursuant To Warrants, Convertible Notes Payable And Options

Pursuant to warrants issued in our private placements of securities from January 10, 2014 through ~~November~~February 3028, ~~2014~~2015, ~~described above,~~ up to 56,~~356~~584,~~360~~210 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.

UpPursuant to 15warrants issued in February 2015 on conversion of notes payable into units of common stock and warrants on closing of the TEG acquisition,~~186~~ up to 1,~~156~~623,829 shares of our common stock ~~could~~would be ~~issued~~issuable ~~pursuant~~upon payment to ~~the~~us ~~convertible~~of ~~notes~~$0.25 ~~payable~~per ~~described~~share. The inwarrants ~~Note~~expire 10February 3, ~~as follows:~~2020.

· Up to 9,~~800~~847,~~000~~290 shares of common stock ~~would~~could be ~~issuable~~issued ifpursuant ~~investors~~to ~~elect~~the orconvertible ~~are~~notes ~~required~~payable todescribed ~~convert~~in ~~all~~Notes of8 ~~the~~and ~~$980~~9,~~000~~ ~~aggregate~~if ~~principal~~investors ~~amount~~elect onto convert some or ~~prior~~all toof ~~maturity~~their principal and interest, with the number of shares issuable on conversion computed at a rate of $0.10 per share.

· Up to an additional 4,650,000 shares of common stock would be issuable pursuant to warrants created if investors elect or are required to convert certain convertible note payables prior to or on maturity (which notes payable are included in the preceding paragraph) and pay us $0.25 per share on exercise.

· An additional amount of up to approximately 501,784 shares of common stock would be issuable determined based on the amount of any accrued interest payable as of November 30, 2014, if investors elect or are required to convert their notes payable into common stock, based on a conversion rate of $0.10 per share. Conversion of accrued interest into common stock would create warrants to acquire up to a further 234,372 shares at an exercise price of $0.25 per share.

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

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

· ~~These~~All options other than a one million share option grant were granted pursuant to the 2014 Stock Plan approved by written consent of a majority of our stockholders on March 18, 2014, which authorized 15% of our outstanding shares of common stock to be available for grant in the form of options or stock purchase rights. At ~~November~~February 3028, ~~2014~~2015, 15% of our outstanding common stock is 1112,~~201~~019,~~205~~560 shares, of which we have granted 54,950,000 stock options as stated above. One million stock options were granted outside of the 2014 Stock Plan.

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

· Equity compensation expense relating to stock options was $5733,~~679~~283 and $90,962 for the three and six months ended ~~November~~February 3028, ~~2014~~2015. There was no equity compensation expense for the three ~~months ended November 30, 2013. The total compensation cost relating to unvested stock option grants not yet recognized at November 30, 2014, was $284,000,~~ and ~~the~~six ~~weighted~~months ~~average~~ended ~~period~~February ~~over which this cost is expected to be recognized~~28, ~~as of November 30,~~ 2014~~, is approximately 2~~.~~4 years.~~

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED FEBRUARY 28, 2015

UNAUDITED

The following is a summary of the Company’s stock option activity.

					Weighted-
			Weighted-		Average
			Average		Remaining		Aggregate
			Exercise		Contractual		Intrinsic
	Options		Price		Life (Years)		Value
Outstanding at August 31, 2014		5,950,000	$	0.10		9.7	$	410,632
Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding at February 28, 2015		5,950,000	$	0.10		9.1	$	410,632

Vested and exercisable at February 28, 2015		1,000,000	$	0.10		9.1	$	69,014

As of February 28, 2015, there were 4,950,000 unvested stock options and unrecognized stock option expense of $251,000, which is expected to be recognized over 2.2 years. The following table summarizes the information about stock options outstanding and exercisable at February 28, 2015.

Options Outstanding

Options Exercisable

Weighted-

Weighted

Average

Number of

Remaining

Exercise

Number of

Exercise

Life (Years)

Price

5,950,000

9.1

0.10

1,000,000

0.10

Non-Controlling Interest

We report ~~non-controlling interest~~ in ~~Tapia Holdings in~~ these unaudited interim financial statements non-controlling interest in Tapia Holdings pursuant to paragraph ASC No. 810-10-65-1. The non-controlling interest of $~~135~~145,~~469~~000 reported on the balance sheet as of ~~November~~February 3028, ~~2014~~2015, represents the non-controlling interest holders' proportionate share of the equity of the Tapia Holdings. ~~Of this amount, $145,000 represents capital contributions received, which has been reduced by $9,531 for the non-controlling interest share of losses for the three months ended November 30, 2014.~~

22The final form of acquisition of TEG was Hawker acquiring 100% of the stock of TEG, rather than an earlier proposed structure of Tapia Holdings acquiring an 80% membership interest in a newly-formed LLC which would hold the TEG Assets. As a result of the transaction structure changing, Tapia Holdings no longer holds any assets and it is expected that the non-controlling interest in Tapia Holdings will be restructured in the near term, the form of which has not yet been agreed.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

17. RELATED PARTY TRANSACTIONS

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

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

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

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

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

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

HERLLC

On January 1, 2014, Hawker exercised its option to acquire all of the membership interests in HERLLC from Mr. Katic and Mr. Moore (collectively the “HERLLC Sellers”), as described in Note 515. Hawker issued 3,000,000 shares of our common to the HERLLC Sellers as consideration for the acquisition, 1,500,000 shares to each HERLLC Seller. Hawker also assumed net liabilities of $135,199, including $29,625 owing to Mr. Katic.

The HERLLC option was originally entered into with Hawker on October 15, 2013 and amended on November 20, 2013 to (a) extend the term of the option, (b) revise the option consideration payable upon consummation of certain transactions described in the Agreement and (c) provide for additional option consideration in the event of the consummation of certain transactions not previously contemplated by the parties. On October 10, 2014, the Board of Hawker waived all of the follow-on transaction requirements and authorized the immediate issuance to Messrs. Katic and Moore of 33,000,000 shares (16,500,000 each). Of those shares, as of February 28, 2015, we hold 199,000,000 shares in escrow, to be released in accordance with the provisions described in Note ~~5, Acquisition of Hawker Energy (Rincon), LLC~~15.

Loan Payable To Related Parties, Short Term

The components of $~~332~~470,~~182~~429 of loans payable to related parties, short term, are disclosed in Note 97. Interest expense on such loans was $69,~~781~~447 and $016,227, respectively, for the three and six months ended ~~November~~February 3028, ~~2014~~2015 and ~~2013~~$0 ~~respectively~~for the same period in 2014.

2330

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED ~~NOVEMBER~~FEBRUARY 3028, ~~2014~~2015

UNAUDITED

Loans Payable To Related Parties, Long Term

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

Interest expense on such loans was $0 for the three and six months ended February 28, 2015 and $~~372~~368 and $739 for the three and six months ended ~~November~~February 3028, 2014 ~~and 2013~~ respectively.

Convertible Notes Payable

AsFrom ofJuly ~~November~~17, 302015 until February 3, ~~2014~~2015, pursuant to a convertible note payable, we owed a relative of Mr. Darren Katic, $100,000 plus accrued interest ~~of $4~~,~~701,~~ all as described in Note 108. As a result of the TEG Acquisition, this convertible note payable converted into Conversion Units.

Interest expense on this convertible note payable was $2,~~992~~104 and $5,096, respectively, for the three and six months ended ~~November~~February 3028, ~~2014~~2015.

Note Payable

See Note 9 for a description of a note payable to a relative of Mr. Katic.

Unit Issuances

As part of the common stock payable amounts outstanding on August 31, 2014 as described in Note 1615, $20,000 was received from each of Messrs. Katic and Tywoniuk, for which 200,000 Units were issued to each during the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015. The price of each Unit was $0.10. Each Unit was comprised of one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock on payment of $0.20 per share. The warrants expire five years from the closing date.

Other

A portion of the non-controlling interest in Tapia Holdings is held by Mr. Moore, being $45,000 out of the $145,000 of capital received. See Note 16.

On behalf of a company controlled by Mr. Katic, the Company has been paying rent to a third party for its office space, beginning January 1, 2014. No formal assumption agreement has been completed to assign the leases with the landlord from Mr. Katic’s company to Hawker. Mr. Katic provided a personal guarantee to the landlord. For the three and six months ended ~~November~~February 3028, ~~2014~~2015, these payments totaled $9,617 and $19,233 respectively.

2431

~~HAWKER ENERGY, INC~~18. SUBSEQUENT EVENTS

~~NOTES~~As TOa ~~THE~~result ~~CONDENSED~~of ~~CONSOLIDATED~~our ~~FINANCIAL~~acquisition ~~STATEMENTS~~of TEG, TEG is no longer affiliated with Sefton or TEGMC and, accordingly, Sefton and TEGMC requested that BOTW release them from any further liability under the Credit Agreement as Borrowers. On March 18, 2015, we entered into a Sixth Amendment to Forbearance Agreement (“Sixth Amendment”) among Sefton, TEG, TEGMC, Hawker and BOTW. Under the Sixth Amendment, BOTW released Sefton and TEGMC from all of their respective obligations under the Credit Agreement (other than any surviving obligations in respect of indemnification) and removed Sefton and TEGMC as Borrowers under the Credit Agreement. As and in consideration of that release, BOTW (i) was paid $400,000 by Sefton, which was applied against the amount outstanding under the loan from BOTW to TEG, and (ii) received a Collateral Assignment of Note, executed by Sefton in favor of BOTW and acknowledged and agreed to by Hawker, collaterally assigning to BOTW a Promissory Note dated March 18, 2015 in the principal amount of $400,000, issued by Hawker in favor of Sefton (the “Hawker Note”). In addition, under the terms of the Sixth Amendment, Sefton agreed to return to Hawker for cancellation (a) its Warrant to purchase up to an additional 5,000,000 shares of our common stock for $0.25 per share (which was issued as part of our acquisition of TEG), and (b) 1,500,000 shares of our common stock. The Hawker Note bears simple interest at the rate of 6% per annum and is due on the earlier to occur of (i) March 18, 2018, or (ii) expiration of certain of BOTW’s covenants to forbear in exercising its rights under the Credit Agreement. Upon payment in full of the loan obligations to BOTW, the Hawker Note will be returned to Hawker for cancellation.

~~THREE~~On ~~MONTHS~~January ~~ENDED~~16, ~~NOVEMBER~~2015, 30a relative of Mr. Katic advanced $50,000 ~~2014~~to Hawker, and made further advances of $20,000 on March 19, 2015, and $100,000 on March 25, 2015, all of which were documented in a note payable on the latter date. See Note 9 for a complete description.

~~UNAUDITED~~On June 10, 2015, TEG sold an easement underlying a third-party owned cell tower on its Tapia Canyon oil field property, and assigned the associated rental contract. Gross proceeds were $175,000. After deducting property tax payments and prorated rent, net proceeds of $157,792 were used to pay down the loan to BOTW.

~~18. PRO FORMA FINANCIAL INFORMATION~~32

The following table presents unaudited pro forma consolidated information, adjusted for the reverse acquisition of Hawker (Note 4) and the acquisition of an additional 33.33% interest in DEEP Lease (Note 6), as if the acquisitions had occurred on September 1, 2013:

	Three Months Ended November 30, 2013
Revenue	$	40,178
Net loss attributable to the Company	$	(89,670	)
Loss per share	$	-

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

19. SUBSEQUENT EVENTS

Share Purchase Agreement To Purchase All Of The Outstanding Shares Of Capital Stock Of TEG, And Secured Subordinated Loan Receivable, Short Term

On January 12, 2015, we entered into a Share Purchase Agreement with Sefton pursuant to which we agreed to purchase, and Sefton agreed to sell, 100% of the issued and outstanding shares of capital stock of Sefton’s wholly-owned subsidiary, TEG. The principal terms of the Share Purchase Agreement are as follows: we will purchase all of the shares of TEG for $1.00 in cash plus the issuance of 3,000,000 shares of our common stock and a five-year Warrant to purchase up to an additional 5,000,000 shares of our common stock for $0.25 per share.

Between April 18, 2014 and January 15, 2015, we and our wholly-owned subsidiary, Tapia Holdings, made a number of advances to TEG, pursuant to the Loan Receivable Agreements. These advances totaled approximately $1,637,352, not including accrued interest, as of January 15, 2015, including $150,000 advanced subsequent to November 30, 2014. This amount constitutes additional consideration for the TEG acquisition, as this loan receivable will not be settled prior to the closing of our acquisition of TEG.

The transactions contemplated by the Share Purchase Agreement are subject to several customary conditions, most notably that the purchase and sale must be approved by Sefton’s shareholders.

As a result of a significant decline in oil prices and other factors, the transaction described above amends and replaces the transaction described in our Annual Report on Form 10-K filed November 24, 2014 to acquire the assets of TEG pursuant to a non-binding letter of intent dated June 18, 2014.

See Note 7 for further information about the Loan Receivable Agreements and BOTW’s consent to our acquisition of TEG.

HAWKER ENERGY, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED NOVEMBER 30, 2014

UNAUDITED

Term Sheet For A Third Amended and Restated Secured Convertible Note Payable

On January 14, 2015, we executed a term sheet to provide for a Third Amended and Restated Secured Convertible Promissory Note to an outside investor (the “Secured Convertible Note Payable”), in the aggregate principal amount of $1,000,000, to mature in two years.

The Secured Convertible Note Payable will be issued in consideration of additional gross proceeds to us in the amount of up to $335,000 (of which $200,000 was funded January 15, 2015, and $135,000 is to be funded within 120 days at the investor’s option) and cancellation of previously issued notes to the investor in the amounts of $250,000, $350,000, and $25,000 (as well as accrued interest on each), the first two of which had maturity dates of November 30, 2014, and the latter of which had a maturity date of May 3, 2015. The Secured Convertible Note Payable will bear interest on the unpaid principal balance of the Secured Convertible Note Payable at the rate of 12% per annum. Interest payments will become payable quarterly on the six-month anniversary. The Secured Convertible Note Payable will be convertible at any time at the option of the investor into “Conversion Shares,” computed by dividing all of the then outstanding principal and accrued interest under the Secured Convertible Note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events) (the “Conversion Rate”). However, if we subsequently sell securities comprising the Conversion Shares at a price lower than the Conversion Rate (subject to customary exclusions), then the Conversion Rate then in effect will be automatically reduced to the lower price. We will at all times reserve and keep available out of our authorized but unissued shares a sufficient number of shares of common stock to give effect to the conversion of the Secured Convertible Note Payable. Unless notified in advance by the investor, conversion of a part or the entire Secured Convertible Note Payable is limited at any one time to a maximum beneficial ownership interest in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. The proceeds from the Secured Convertible Note Payable are to be used for the purpose of allowing us to make advances to TEG, under the terms of a note receivable from TEG, and for general working capital. Any repayment by TEG of the advances under the terms of the note receivable must be used by us to immediately make repayment to the investor under the terms of the Secured Convertible Note Payable. To secure our obligations under the Secured Convertible Note Payable, we will grant a security interest to the investor in all of our right, title and interest under the TEG note receivable, our second priority security interest in TEG’s assets and in the interest of our subsidiary SCNRG, LLC in the oil-producing property known as the DEEP Lease. The Secured Convertible Note Payable will also contain other terms and covenants that are customary for a promissory note of this type. In addition, we will grant to the investor a 2.5% or 3.5% overriding royalty interest, depending on the lease, in oil sales from the TEG Assets, effective with the closing of the acquisition. Such amount would be accrued until TEG’s lender, BOTW, has been paid in full; however, payment of royalties shall begin within twelve months or an event of default under the Secured Convertible Note Payable will occur. While interest and royalties are being accrued, no cash payments can be made to repay loans made to Hawker by Mr. Katic, nor can Hawker repurchase any non-controlling interest owned by Mr. Moore nor pay any salaries to Messrs. Katic and Moore.

Additional Unit Issuances

On December 12, 2014, Hawker and Kristian Andresen agreed to convert a $120,000 accrued bonus into Units on the same terms as described in Note 16, resulting in 1,200,000 shares of common stock being issued to Mr. Andresen, together with five-year warrants to acquire 600,000 shares upon payment of an exercise price of $0.20 per share. In addition, a vendor agreed to convert a $10,570 accounts payable balance into Units on the same terms as described in Note 16, resulting in 105,700 shares of common stock being issued, together with five-year warrants to acquire 52,850 shares upon payment of an exercise price of $0.20 per share.

On January 8, 2015, we received $115,000 in cash proceeds from two investors for Units on the same terms as described in Note 16, which, when closed, will result in 1,150,000 shares of common stock being issued, together with five-year warrants to acquire 575,000 shares upon payment of an exercise price of $0.20 per share.

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our unaudited interim financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Various statements have been made herein that may constitute “forward-looking statements”. Forward-looking statements may also be made in the Company’s other reports filed with or furnished to the United States Securities and Exchange Commission (the “SEC”) and in other documents. In addition, the Company through its management may make oral forward-looking statements.

Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from such statements. The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely” and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and, therefore, you should not put undue reliance upon them. Some of the statements that are forward-looking include: our ability to successfully implement our business plan; our ability to finance and consummate contemplated transactions; our estimates of revenues and of other expenses associated with our operations; our ability to explore and develop our properties; our reserve estimates; and our ability to generate sufficient cash flows and maintain adequate sources of liquidity to finance our ongoing operations and capital expenditures. We undertake no obligation to update any forward-looking statements.

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 II, Item 1, “Legal Proceedings”). HERLLC had also engaged in preliminary discussions with various third parties concerning potential acquisitions.

· On ~~January~~February 123, 2015, we ~~entered~~completed ~~into~~the aacquisition ~~Share~~of ~~Purchase~~all ~~Agreement (“Share Purchase Agreement”) with Sefton Resources, Inc. (“Sefton”) pursuant to which we agreed to purchase, and Sefton agreed to sell, 100%~~ of the ~~issued and~~ outstanding ~~shares~~common ~~of capital~~ stock of ~~Sefton’s wholly-owned subsidiary,~~ TEG Oil & Gas U.S.A., Inc. (“TEG”). ~~The~~from ~~principal~~Sefton ~~terms~~Resources, ofInc. ~~the~~(“Sefton”) ~~Share Purchase Agreement are as follows: we will purchase all of~~ (the ~~shares of~~ “TEG ~~for $1~~Acquisition”).00 inTEG ~~cash~~is ~~plus~~an ~~the~~energy ~~issuance~~company offocused ~~3,000,000~~on ~~shares~~exploitation ~~of our common stock~~ and aproduction ~~five-year Warrant to purchase up to an additional 5,000,000 shares~~ of ~~our~~crude ~~common~~oil ~~stock~~in ~~for~~Southern $0California.25 ~~per~~TEG’s ~~share.~~assets ~~The~~comprise ~~transactions~~four ~~contemplated~~oil byand ~~the~~gas ~~Share~~leases ~~Purchase~~encompassing ~~Agreement~~the ~~are~~Tapia ~~subject~~Canyon tofield ~~several customary conditions, most notably that~~ (the ~~purchase~~“Tapia Assets”) and ~~sale~~one ~~must~~lease bewest ~~approved by Sefton’s shareholders. As a result~~ of athe ~~significant~~Tapia ~~decline~~Canyon infield ~~oil~~(the ~~prices~~“Eureka ~~and other factors~~Assets”), ~~the transaction described above amends~~ and ~~replaces~~ the ~~transaction~~accompanying ~~described~~production inequipment. ~~our~~The ~~Annual~~Tapia ~~Report~~Assets onlocated ~~Form~~40 ~~10-K~~miles ~~filed~~north ~~November~~of 24Los Angeles, ~~2014~~California, toconsist ~~acquire an 80% interest in the assets~~ of ~~TEG~~four ~~pursuant~~oil toleases acovering ~~non-binding~~262 ~~letter~~gross ~~of intent dated June 18, 2014~~acres. ~~TEG~~The ~~owns~~Eureka ~~four~~ oil ~~and~~field ~~gas~~covers ~~producing~~an ~~leases~~area ~~encompassing~~of ~~the~~approximately ~~Tapia~~1,510 ~~Canyon~~gross ~~field~~acres ~~(“Tapia~~located ~~Assets”)~~25 ~~and~~miles ~~one development lease~~ west of the Tapia Canyon oil field ~~(“Eureka~~in ~~Assets”)~~Ventura County, ~~and~~California. ~~the~~The ~~accompanying~~acquisition ~~production~~significantly ~~equipment,~~expanded ~~all~~our ~~located~~presence in Southern California. See “Recent Business Developments” below.

2733

· WeDuring ~~have~~the ~~made~~three ~~advances~~months ofended ~~$1,637,352~~February ~~through January 15~~28, 2015, towe ~~TEG~~raised in$543,800 ~~connection~~as ~~with~~follows: ~~this~~$250,000 ~~proposed~~from ~~acquisition. Repayment of these advances is secured by~~ a ~~second~~new ~~priority~~convertible ~~security~~notes ~~interest in the Tapia Assets~~payable, ~~Eureka Assets and equipment described above~~$128,800 ~~subordinate~~of toadditional loans ~~made~~from torelated ~~Sefton~~parties, ~~by TEG’s senior lender~~$115,000 ~~Bank~~through of the ~~West~~sale ~~(“BOTW”).~~of ~~This~~additional ~~amount~~common ~~constitutes~~stock ~~additional~~and ~~consideration~~warrant ~~for~~units ~~the~~and ~~acquisition~~$50,000 asfrom ~~this~~a ~~loan~~long ~~receivable~~term ~~will~~note ~~not be settled prior to the closing of our acquisition of TEG~~payable.

· ~~During~~Finally, during the three months ended ~~November~~February 3028, ~~2014,~~2015: wecreditors ~~raised~~converted ~~additional funds as follows:~~ $50130,~~000~~569 of ~~additional~~amounts ~~convertible notes~~ payable, ~~$95,000~~into ofcommon ~~additional~~stock; ~~loans from related parties~~ and ~~$90,000~~on ~~from~~closing ~~the sale~~ of ~~non-controlling interest in our subsidiary Tapia Holdings, LLC (“Tapia Holdings”). Subsequent to November 30, 2014, we raised $115,000 through~~ the ~~sale~~TEG ~~of additional Units~~Acquisition, ~~creditors converted~~ $~~130~~324,~~570~~766 ofin ~~amounts~~notes payable ~~into~~automatically ~~Units~~pursuant ~~comprised of stock and warrants, and we executed a term sheet~~ to ~~provide~~their ~~for~~terms upconverted tointo ancommon ~~additional~~stock ~~$335,000 through an amended~~ and ~~restated~~warrant ~~convertible note payable~~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, Tapia Holdings’ results beginning with its formation in April 2014, and TEG’s results beginning with its acquisition effective February 1, 2015.

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.

Recent Business Developments

~~Share~~ Purchase ~~Agreement~~all Toof ~~Purchase~~the ~~All~~outstanding Ofshares ~~The~~of ~~Outstanding~~capital ~~Shares~~stock Ofof ~~Capital Stock Of~~ TEG

On January 12, 2015, we entered into a Share Purchase Agreement with Sefton pursuant to which we agreed to purchase, and Sefton agreed to sell, 100% of the issued and outstanding shares of capital stock of Sefton’s wholly-owned subsidiary, TEG. The ~~principal terms of the Share Purchase Agreement are as follows: we will~~ purchase ~~all~~price ofis ~~the shares of TEG for~~ $1.00 in cash plus the issuance of 3,000,000 shares of our common stock and a five-year warrant to purchase up to an additional 5,000,000 shares of our common stock for $0.25 per share.

Between April 18, 2014 and ~~January~~February 153, 2015, we and our wholly-owned subsidiary, Tapia Holdings, made a number of advances to TEG, pursuant to several secured subordinated notes and related security agreements, all as amended and restated into a Secured Subordinated Note dated January 12, 2015 (the “Note”), and a Fourth Amended and Restated Security Agreement dated January 12, 2015 ~~(the “Security Agreement”)~~, each executed by TEG, and a Limited Recourse Guarantee (“Guarantee”) and a Pledge Agreement ~~(“Pledge Agreement”)~~, each executed by Sefton (collectively, the “Loan Receivable Agreements”). These advances totaled approximately $1.6 million ~~as of January 15, 2015 (described further under “Secured Subordinated Loan Receivable, Short Term” below)~~. This amount constitutes additional consideration for the acquisition, as this loan receivable ~~will~~was not be settled prior to the closing of our acquisition of TEG.

~~The~~BOTW ~~transactions~~consented ~~contemplated~~to byour acquisition of TEG and agreed to forbear taking enforcement action against TEG on the ~~Share~~senior ~~Purchase~~loan ~~Agreement~~provided ~~are~~that ~~subject~~(i) Hawker lend TEG not less than $350,000 by March 31, 2015, (ii) interest on TEG's obligations to ~~several~~BOTW ~~customary~~be ~~conditions~~increased to 9%, ~~most~~with ~~notably~~a ~~that~~monthly ~~the~~pay ~~purchase~~rate of 5% and the remaining deferred 4% of unpaid interest compounded monthly beginning January 1, 2015, (iii) the proceeds of any sale, ~~must~~assignment, licensing or other transfer of any real or personal property rights which serve as collateral for TEG's obligations to BOTW be ~~approved~~remitted directly to BOTW, and (iv) commencing no later than the first month after which the California Midway-Sunset First Purchase Price as published by ~~Sefton’s~~the ~~shareholders~~U.S. Energy Information Administration exceeds $60 per barrel, TEG will begin making outstanding property tax payments to the County of Los Angeles of at least $15,000 per month.

~~BOTW~~On ~~has~~February ~~consented~~3, to2015 ~~our acquisition of TEG and has agreed to forbear taking enforcement action against TEG on the senior loan provided that~~ (~~i) Hawker~~but ~~lend~~effective ~~TEG~~as ~~not~~of ~~less~~February ~~than $350~~1,~~000~~ ~~within 90 days, (ii~~2015) ~~interest on TEG's obligations to BOTW be increased to 9%~~, ~~with~~we acompleted ~~monthly pay rate of 5% and~~ the ~~remaining~~acquisition ~~deferred 4%~~ of ~~unpaid~~all ~~interest compounded monthly, (iii) the proceeds~~ of any sale, assignment, licensing or other transfer of any real or personal property rights which serve as collateral for TEG's obligations to BOTW be remitted directly to BOTW, and (iv) commencing no later than the ~~first month after which the California Midway-Sunset First Purchase Price as published by the U.S. Energy Information Administration exceeds $60 per barrel, TEG will begin making~~ outstanding ~~property~~common ~~tax~~stock ~~payments to the County~~ of ~~Los Angeles of at least $15,000 per month~~TEG.

AsOn aMarch ~~result~~18, of2015, Sefton made a ~~significant~~principal ~~decline~~payment to BOTW in ~~oil~~the ~~prices~~amount of $400,000 in order for it and ~~other~~a ~~factors~~subsidiary to be released as co-borrowers under BOTW’s loan to TEG. Concurrently, ~~the~~Sefton ~~transaction~~agreed ~~described~~to ~~above~~return ~~amends~~to ~~and~~Hawker ~~replaces~~for ~~the~~cancellation ~~transaction~~(a) its ~~described~~Warrant into purchase up to an additional 5,000,000 shares of our ~~Annual~~common ~~Report~~stock onfor ~~Form~~$0.25 ~~10-K~~per ~~filed~~share, ~~November~~and 24(b) 1,500,000 ~~2014~~shares of our common stock. Finally, Hawker issued the “Hawker Note” in the principal amount of $400,000 to ~~acquire~~Sefton. anThe ~~80%~~Hawker Note bears simple interest inat the ~~assets~~rate of ~~TEG~~6% ~~pursuant~~per annum and is due on the earlier to aoccur ~~non-binding~~of ~~letter~~(i) March 18, 2018, or (ii) expiration of ~~intent~~certain ~~dated~~of ~~June~~BOTW’s 18covenants to forbear in exercising its rights under the Credit Agreement. Upon payment in full of TEG’s loan obligations to BOTW, ~~2014~~the Hawker Note will be returned to Hawker for cancellation.

2834

Secured Subordinated Loan Receivable, Short Term

The Security Agreement and the Pledge Agreement also provide that it is a default under those agreements if the transactions contemplated by the Share Purchase Agreement are not consummated by January 31, 2015 (including if Sefton’s shareholders have not approved the transactions by that date). TEG further agreed to cease and terminate any solicitation or encouragement of a third party acquisition proposal; provided, that, if TEG receives an unsolicited, bona fide acquisition proposal that is found to be superior to the terms of the Share Purchase Agreement, to the extent we decline to renegotiate the Share Purchase Agreement terms or to otherwise match the terms of the third party acquisition proposal, TEG may pursue such third party acquisition proposal. The Security Agreement, Pledge Agreement and Guarantee also contain other representations, warranties and covenants of both parties that are customary for agreements of these types.

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 Share Purchase Agreement transaction be consummated.

Description of Tapia Assets

The Tapia Canyon field covers an area of approximately ~~383~~262 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. The ~~Based on information provided to us by TEG, the~~ Tapia Assets produced 7963 barrels of oil per day (~~gross~~net) in ~~October~~February ~~2014~~2015 from 17 wells at a reservoir depth of just over 1,000 feet. The Tapia Assets benefit from relatively low royalty burdens, which average approximately six to 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~~A ~~on information provided to us by TEG, the field operator built a~~ small steam generator was built for testing purposes in 2007 and has completed 31 steam injection cycles of various sizes to assist in field modeling. The prior field operator ~~has~~ confirmed the value of thermal EOR (enhanced oil recovery) at Tapia. ~~According~~During ~~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~~510 acres located about 25 miles west of the Tapia Canyon field in Ventura County, California. ~~According~~The ~~to TEG, the~~ Eureka Assets produced ~~six~~four barrels of oil per day (~~gross~~net) in ~~October~~February ~~2014~~2015.

29All acreage and well information described for the Tapia Assets and Eureka Assets above are gross figures.

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.35

~~All~~Convertible ~~acreage~~Note Payable, ~~production~~Long ~~and well information described above are gross figures.~~Term

~~Term~~On ~~Sheet~~January ~~For~~14, A2015, we executed a term sheet to provide for a Third Amended and Restated Secured Convertible Promissory Note to an outside investor (the “Secured Convertible Note Payable”), in the aggregate principal amount of $1,000,000, to mature in two years. Completion of definitive documentation occurred on May 27, 2015.

OnA Secured Convertible Note Payable was issued in consideration of additional proceeds to us in the amount of $250,000 (of which $200,000 was funded January 1415, 2015, and $50,000 was funded February 26, 2015) and cancellation of previously issued notes to the investor in the amounts of $250,000, $350,000, and $25,000 (as well as accrued interest on each), the first two of which had maturity dates of November 30, 2014, and the latter of which had a maturity date of May 3, 2015. The holder has the option of advancing a further $125,000 by June 30, 2015. The maturity date of the note is December 31, 2016. The Secured Convertible Note Payable bears interest on the unpaid principal balance of the Secured Convertible Note Payable at the rate of 12% per annum. Interest payments become payable quarterly beginning July 31, 2015, accruing interest until then. The Secured Convertible Note Payable will be convertible at any time at the option of the investor into shares of Hawker common stock computed by dividing all of the then outstanding principal and accrued interest under the Secured Convertible Note Payable by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events) (the “Conversion Rate”). However, if we ~~executed~~subsequently sell common shares or securities convertible into or exchangeable or excercisable for a ~~term~~price ~~sheet~~lower than the Conversion Rate (subject to ~~provide~~customary exclusions), then the Conversion Rate then in effect will be automatically reduced to the lower price. We will at all times reserve and keep available out of our authorized but unissued shares a sufficient number of shares of common stock to give effect to the conversion of the Secured Convertible Note Payable. Unless notified in advance by the investor, conversion of a part or the entire Secured Convertible Note Payable is limited at any one time to a maximum beneficial ownership interest in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. The proceeds from the Secured Convertible Note Payable are to be used for the purpose of allowing us to make advances to TEG, under the terms of a ~~Third~~note ~~Amended~~receivable from TEG, and ~~Restated~~for general working capital. Any repayment by TEG of the advances under the terms of the note receivable must be used by us to immediately make repayment to the investor under the terms of the Secured Convertible ~~Promissory~~Note Payable. To secure our obligations under the Secured Convertible Note toPayable, anwe ~~outside~~granted a security interest to the investor (in all of our right, title and interest under the “TEG note receivable, our second priority security interest in TEG’s assets and in the interest of our subsidiary SCNRG, LLC in the oil-producing property known as the DEEP Lease. The Secured Convertible Note Payable”) also contains other terms and covenants that are customary for a promissory note of this type. In addition, we granted to the investor, retroactive to January 15, 2015, a 2.5% or 3.5% overriding royalty interest, depending on the lease, in oil sales from the ~~aggregate~~TEG ~~principal~~Assets. Such amount accrues until TEG’s lender, BOTW, has been paid in full; however, payment of $1royalties shall begin by January 31,~~000~~ 2016 or an event of default under the Secured Convertible Note Payable will occur. While interest and royalties are being accrued,~~000~~ no cash payments can be made to repay loans made to Hawker by Mr. Katic, nor can Hawker repurchase any non-controlling interest owned by Mr. Moore nor pay any salaries to ~~mature~~Messrs. inKatic ~~two~~and ~~years~~Moore.

~~The~~Sale ~~Secured Convertible Note Payable will be issued in consideration~~ of additional gross proceeds to us in the amount of up to $335,000 (of which $200,000 was funded January 15, 2015, and $135,000 is to be funded within 120 days at the option of the investor) and cancellation of previously issued notes to the investor in the amounts of $250,000, $350,000, and $25,000 (as well as accrued interest on each), the first two of which had maturity dates of November 30, 2014, and the latter of which had a maturity date of May 3, 2015. The Secured Convertible Note Payable will bear interest on the unpaid principal balance of the Secured Convertible Note Payable at the rate of 12% per annum. Interest payments will become payable quarterly on the six-month anniversary. The Secured Convertible Note Payable will be convertible at any time at the option of the investor into “Conversion Shares,” computed by dividing all of the then outstanding principal and accrued interest under the Secured Convertible Note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events) (the “Conversion Rate”). However, if we subsequently sell securities comprising the Conversion Shares at a price lower than the Conversion Rate (subject to customary exclusions), then the Conversion Rate then in effect will be automatically reduced to the lower price. We will at all times reserve and keep available out of our authorized but unissued shares a sufficient number of shares of common stock to give effect to the conversion of the Secured Convertible Note Payable. Unless notified in advance by the investor, conversion of a part or the entire Secured Convertible Note Payable is limited at any one time to a maximum beneficial ownership interest in Hawker of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. The proceeds from the Secured Convertible Note Payable are to be used for the purpose of allowing us to make advances to TEG, under the terms of a note receivable from TEG, and ~~for~~warrant general working capital. Any repayment by TEG of the advances under the terms of the note receivable must be used by us to immediately make repayment to the investor under the terms of the Secured Convertible Note Payable. To secure our obligations under the Secured Convertible Note Payableunits, weconvertible ~~will~~notes ~~grant~~payable ~~a security interest to the investor in all of our right, title~~ and interest under the TEG note receivable, our second priority security interest in TEG’s assets and in the interest of our subsidiary SCNRG, LLC in the oil-producing property known as the DEEP Lease. The Secured Convertible Note Payable will also contain other terms and covenants that are customary for a promissory note of this type. In addition, we will grant to the investor a 2.5% or 3.5% overriding royalty interest, depending on the lease, in oil sales from the TEG Assets, effective with the closing of the acquisition. Such amount would be accrued until TEG’s lender, BOTW, has been paid in full; however, payment of royalties shall begin within twelve months or an event of default under the Secured Convertible Note Payable will occur. While interest and royalties are being accrued, no cash payments can be made to repay loans made to Hawker by Mr. Katic, nor can Hawker repurchase any non-controlling interest owned by Mr. Moore nor pay any salaries to Messrs. Katic and Moore.financings

~~Although~~During the ~~term~~three ~~sheet~~months toended ~~provide~~February ~~for~~28, 2015, in addition to the $250,000 Secured Convertible Note Payable ~~sets~~proceeds ~~forth~~described ~~terms~~above, ~~that~~we ~~have~~closed ~~been~~private ~~negotiated~~placements ~~and~~for ~~agreed~~an ~~upon~~aggregate byof ~~the~~1,150,000 ~~parties~~units ~~and~~for ~~the~~gross ~~forms~~proceeds of ~~agreements have generally been prepared and agreed upon~~$115,000. The ~~the~~price ~~term~~of ~~sheet~~each ~~does~~unit ~~not~~was ~~represent~~$0.10. Each aunit ~~binding~~is ~~agreement~~comprised ~~or commitment~~ of ~~either~~one ~~party~~share ~~and no form~~ of ~~agreement~~our ~~has~~common ~~yet~~stock, ~~been~~together ~~signed.~~with ~~While~~a wewarrant ~~already~~to ~~received~~acquire ~~gross~~an ~~proceeds~~additional ofone-half ~~$200,000,~~share ~~as noted above, until the forms~~ of ~~agreements~~our ~~have~~common ~~been~~stock ~~executed~~at ~~there~~$0.20 ~~can~~per beshare. The nowarrants ~~assurance~~expire ~~that~~five ~~the~~years ~~proposed~~from ~~transaction~~each ~~will~~closing bedate. ~~consummated~~Net onproceeds ~~the~~were ~~terms described above~~$115,000.

30Also during the three months ended February 28, 2015, we raised $128,800 from additional loans from related parties, and $50,000 from a long term note payable.

~~Sale~~Total offunds ~~Common~~raised ~~Stock~~during ~~and~~the ~~Warrant~~three ~~Units,~~months ~~Convertible~~ended ~~Notes~~February ~~Payable~~28, ~~and~~2015 ~~Other~~were ~~Financings~~$543,800.

Between September 1 and November 30, 2014, we closed private placements for an aggregate of 500,000 units for gross proceeds of $50,000 which were received in August 2014 in advance of the closing. 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 were $50,000 less $80 of transaction costs.36

~~In addition~~Finally, during the ~~quarter~~three months ended ~~November~~February 3028, ~~2014,~~2015: wecreditors ~~issued~~converted ~~convertibles~~$130,569 ~~notes~~of amounts payable ~~for~~into ~~$50,000,~~Units as described above; and ~~received~~on aclosing of the TEG Acquisition, $95324,~~000~~766 in ~~short-term~~notes ~~loans~~payable ~~from~~automatically ~~related~~pursuant ~~parties~~to ~~(net~~their ofterms converted into units at a $rate of 10~~,000~~ ~~repayment)~~cents per unit, aswith ~~described~~each inunit ~~Notes~~consisting 9of ~~and~~one 10share of common stock together with a five-year warrant to ~~the~~acquire ~~unaudited~~one-half ~~interim~~share ~~financial~~of ~~statements~~common ~~included~~stock ~~elsewhere~~for in$0.25 ~~this~~per ~~report~~share.

WeIncluded ~~also sold additional non-controlling interest~~ in ~~our subsidiary Tapia Holdings for $90,000 during~~ the ~~three~~above ~~months~~financings ~~ended~~are ~~November~~various ~~30,~~related ~~2014,~~party transactions as ~~described~~set forth in Note 1617 to the unaudited interim financial statements included elsewhere in this report. See also Notes 7, 8 and 9 for further descriptions of loans payable to related parties, convertible notes payable (short term) and long term debt.

Subsequent to November 30, 2014, we received proceeds of $200,000 pursuant to a term sheet for an amended additional convertible note payable as described in “Term Sheet For A Third Amended And Restated Secured Convertible Note Payable” above, $115,000 for additional Units comprised of stock and warrants on the same terms as described above, and creditors converted $130,570 of amounts payable into Units comprised of stock and warrants also on the same terms as above.

Included in the above private placements and other financings are various related party transactions as set forth in Note 17 to the unaudited interim financial statements included elsewhere in this report.

Acquisition of Hawker Energy (Rincon), LLC

PRC 145.1 is subject to 24.5% in overriding royalties, primarily to the State of California. A single active well on PRC 145.1 produced an average of 11 barrels of oil per day (gross production before royalties) for the nine months ended September 30, 2014. This lease has ten other non-active wells, one or more of which may be recompleted or re-drilled. Although initial technical work has been done on PRC 145.1 to develop a preliminary understanding of the resource and opportunity, no reserve reports done to SEC standards have been completed to date.

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

On October 10, 2014, Hawker authorized an amendment (the “Amendment”) to the Option Agreement. Under the original terms of the Option Agreement, Messrs. Katic and Moore were entitled to, in the aggregate, up to 33,000,000 additional shares of our common stock upon the consummation of certain Potential Follow-On Transactions. The Amendment waived all of the follow-on transaction requirements and authorized the immediate issuance to Messrs. Katic and Moore of the full 33,000,000 shares (16,500,000 each). Of those shares, we hold 19,000,000 shares in escrow, to be released as follows: (i) 10,000,000 shares upon completion of the acquisition of the assets of TEG Oil & Gas, Inc. (located in the Tapia Field, Los Angeles County, California), and (ii) 9,000,000 shares upon completion, on or before December 31, 2017, of any one of the transactions evaluated by HERLLC, our wholly-owned subsidiary, prior to its reorganization with Hawker, including a transaction resulting in Hawker ownership of oil and gas lease interests in any one of the following unique oil fields:

(a) Cat Canyon (leases Tognazzini, Wickenden, Los Alamos, GWP, and those immediately adjacent to, in each case, in Santa Barbara County);

(b) Santa Maria (T 11N, R 36W extending southeast through T9N R33W in Santa Barbara County);

(d) North Lost Hills (Sections 12 & 13, T25S, R19E, and Sections 7 & 18, T25S, R 20E, totaling 1,500 acres in Kern County CA);

(e) Maricopa (McFarland and Jameson leases totaling 40 acres in Kern County);

(f) Pine Meadows (Section 1 Township 31 South Range 22E in Kern County); or

(g) Torrance (Joughin and South Torrance Units totaling 900 acres in Los Angeles County).

With respect to 14,000,000 shares of our common stock that were issued as a result of the Amendment, an equity compensation expense of $1,011,500 was recorded in the three months ended November 30, 2014 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 equity compensation expense of $19,000 was recorded based on the par value of the shares at the date of issuance. Total expense was $1,030,500 in the three months ended November 30, 2014. As and when subsequently released from escrow, a further expense will be recorded based on the fair value of the 19,000,000 shares (less amounts previously expensed based on par value) concurrently with consummation of the applicable follow-on transaction. All of these amounts are not considered for accounting purposes to be incremental consideration for our acquisition of HERLLC.

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.

As of January 6, 2015, Mr. Katic beneficially owns 25,397,365 shares (or 33.15%) of our outstanding common stock (including 9,500,000 shares held in escrow) and Mr. Moore beneficially owns 17,500,000 shares (or 23.03%) 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, but do include warrants exercisable within 60 days.

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

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 condensed consolidated financial statements of Hawker, including SCNRG, consist of SCNRG’s historical results consolidated with Hawker’s results beginning October 25, 2013. In addition, on January 1, 2014, we acquired all of the membership interests of HERLLC, and its wholly-owned subsidiary Punta Gorda Resources, LLC, and our condensed consolidated financial statements include the accounts of these entities beginning January 1, 2014. Finally, SCNRG increased its working interest in the oil-producing property known as the DEEP Lease from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014.

33In addition, on January 1, 2014, we acquired all of the membership interests of HERLLC, and its wholly-owned subsidiary Punta Gorda Resources, LLC, and our condensed consolidated financial statements include the accounts of these entities beginning January 1, 2014. SCNRG increased its working interest in the oil-producing property known as the DEEP Lease from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014. Finally, we acquired 100% of the stock of TEG effective February 1, 2015. Results of these acquisitions are included from the dates of acquisitions.

Three months ended ~~November~~February 3028, ~~2014~~2015 and ~~2013~~2014

Net loss attributable to the Company of $1,~~629~~410,~~435~~766 for the three months ended ~~November~~February 3028, ~~2014~~2015, was largely the result of: (1) being a development stage oil production company~~. The~~ ~~loss~~until isthe ~~largely~~acquisition ~~attributable~~of toTEG was completed on February 3, 2015; (2) a non-cash equity compensation expense of $1703,~~088~~373,~~179,~~ which includes $1670,~~030,500~~090 for stock issued to the HERLLC Sellers; asand ~~described~~(3) ~~above. In addition, we incurred~~ professional fees of $~~430~~181,~~563~~621 largely for pursuing the ~~Tapia~~TEG ~~and~~Acquisition ~~Eureka oil properties’ acquisition~~ and for the litigation described in Part II, Item 1 (“Legal Proceedings”). This loss compares to a $76176,~~033~~491 loss in the comparable prior year quarter.

Revenue was $1091,~~294~~029 for the three months ended ~~November~~February 3028, ~~2014~~2015, compared to $2518,~~764~~348 in the year ago quarter. TEG ~~Net~~revenue ~~oil sales~~ from ~~our~~the ~~working~~February ~~interest~~3, in2015 ~~the~~acquisition ~~DEEP~~date ~~Lease~~contributed to$72,598 ~~our~~net ~~account~~of ~~(after~~ royalties). Net ~~from~~production ~~the~~was ~~current~~67 ~~three producing wells averaged 2.6 net~~ barrels per day ~~for the three months ended November 30, 2014, and realized $71~~.05 ~~per~~Net ~~barrel~~oil ~~before~~sales ~~royalties,~~were ~~compared~~59 ~~to 2.7 net~~ barrels per day ~~to realize $91~~.12 per barrel for the three months ended November 30, 2013. Our working interest was greater in the 2014 period, more than offsetting lower gross production, but this benefit was offset by an inventory build in the 2014 period compared to 2013. ~~After~~The ~~considering~~average ~~the~~price ~~royalty~~realized ~~impact, the lower sales volume impact~~ was a $~~870~~43.73 ~~reduction~~per ~~in revenues, and the oil price reduction (due to a change in world oil price) meant a $6,357 reduction in revenues~~barrel. ~~Net~~Note ~~revenues~~that ~~for~~ the ~~three~~overriding ~~months ended November 30, 2014 also includes a reduction of $11,473 related to the operator’s~~ royalty ~~computations~~interest ~~for~~granted ~~prior fiscal year. Finally, oil sales revenue attributable~~ to a ~~2.5%~~convertible ~~working~~note ~~interest~~holder effective inJanuary ~~the~~2015 ~~DF#15~~is ~~well~~accounted ~~in the Sawtelle Field, Los Angeles, increased $3,230. The November 30, 2014 quarter includes this working interest~~ for ~~the~~as ~~entire quarter~~debt, ~~whereas~~and indoes ~~the~~not ~~comparable~~reduce ~~November~~net ~~30,~~revenue ~~2013~~(or ~~period,~~production ~~results~~or ~~reflect~~sales ~~only a partial period as Hawker was included in our results beginning October 25, 2013, when SCNRG acquired Hawker~~statistics).

~~Direct~~Net ~~operating~~oil ~~costs~~sales ~~were~~from ~~$15,996~~our working interest in the DEEP Lease to our account (after royalties) from the current three producing wells averaged 4.1 net barrels per day for the three months ended ~~November~~February 3028, ~~2014~~2015, and realized $33.34 per barrel before royalties, compared to 1.8 net barrels per day to realize $~~12,972~~90.51 per barrel for the three months ended ~~November~~February 3028, ~~2013~~2014. The ~~increase~~impact of lower prices offset the benefit of higher volumes. ~~corresponds~~Part toof the increase in volumes is due to increasing our working interest in the DEEP Lease from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014.

~~Depletion,~~Direct ~~depreciation~~operating ~~and~~costs ~~amortization expense~~ were $1190,~~036~~448 for the three months ended ~~November~~February 3028, ~~2014~~2015, compared to $8,~~110~~020 for the three months ended ~~November~~February 3028, ~~2013~~2014. ~~Depletion~~TEG’s ~~expense~~costs ~~varies~~were $64,238 beginning with ~~oil~~its ~~sales~~acquisition ~~volumes~~on February 3, 2015. InThe ~~addition,~~balance of the increase is due to the DEEP Lease: we increased our working interest in the DEEP Lease ~~increased~~ from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014, which ~~increases~~increased our share of ~~the~~DEEP ~~accretion~~Lease oncosts; ~~the~~and ~~asset~~there ~~retirement~~were ~~obligation. Finally,~~increased ~~our~~repair ~~2.5%~~costs ~~working interest~~ in ~~the~~this ~~DF#15~~year’s ~~well was included in our results beginning October 25, 2013~~period.

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.37

~~Professional~~Depletion, ~~fees~~depreciation and amortization expense was $40,578 for the three months ended ~~November~~February 3028, ~~2014~~2015, ~~were~~compared ~~$430,563,~~to ~~increased from~~ $717,~~071~~847 for the three months ended ~~November~~February 3028, ~~2013~~2014. ~~Included~~Inclusion inof ~~the~~TEG ~~2014~~from ~~period~~its isFebruary ~~$209~~1,~~065~~ ~~for~~2015 ~~litigation~~acquisition ~~costs~~date ~~associated~~added ~~with~~$26,855 ~~HERLLC’s~~in ~~claim to coastal lease PRC 145~~expense.1, In ~~$162~~addition,~~466~~ ~~legal,~~our ~~audit~~working ~~and diligence costs related to the potential acquisition of an~~ interest in the ~~assets~~DEEP ofLease ~~TEG~~increased ~~and~~from ~~related potential financing, and $59,032 for costs associated with being a public company including the annual audit and preparation of Form 10-K~~66. ~~Professional~~67% ~~fees for the 2013 period were primarily due~~ to ~~professional~~87.18% ~~fees~~on ~~incurred~~February in1, ~~connection with: the acquisition of~~2014, and ~~preparation~~to of100.0% ~~audited~~on ~~financial~~May ~~statements for~~15, ~~SCNRG; acquisition of HERLLC~~2014, ~~and~~which ~~start-up~~increases ~~expenses resulting from~~ our ~~acquisition~~share of ~~SCNRG,~~these ~~which closed October 25~~costs, ~~2013,~~ and ~~public~~DEEP ~~company~~Lease ~~costs~~expense ~~for~~further ~~the~~increased ~~period~~as ~~October~~a ~~25,~~result ~~2013~~of ~~through~~higher volumes ~~November~~in ~~30,~~the ~~2013. Professional~~2015 ~~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.~~

~~Other~~Revenue, ~~general~~direct ~~and~~operating ~~administrative~~costs, ~~expenses~~and ~~for~~depletion, ~~the~~depreciation ~~three~~and ~~months~~amortization ~~ended~~expenses ~~November~~vary ~~30,~~with ~~2014 were $74~~volume,~~527~~ ~~compared~~oil ~~to $6~~prices,~~231~~ ~~for the three months ended November 30~~downtime, ~~2013~~repair ~~reflecting~~and ~~investor~~other ~~relations~~operating ~~activities~~costs, ~~outsourced~~expensed ~~accounting~~workover ~~services~~programs, ~~costs~~investments ~~associated~~in ~~with~~drilling ~~being~~for anew ~~public~~production ~~company, rent~~ and ~~increased~~proved ~~activity~~reserve estimates.

~~Equity~~Professional ~~compensation~~fees ~~expense~~for ~~was~~the three months ended February 28, 2015, were $1181,~~088~~621,~~179~~ increased 49% or $59,649 from $121,972 for the three months ended ~~November~~February 3028, 2014, ~~compared~~largely due to TEG Acquisition costs of $071,819 ~~for~~in the ~~three~~2015 ~~months~~period, ~~ended~~offset ~~November~~partially 30by the absence of $25,261 ~~2013~~of professional fees related to the acquisition of additional working interests in the DEEP Lease incurred in the year ago period. ~~Included~~Also included in the ~~2014~~2015 period is $155,~~030,500~~197 principally for ~~non-cash~~litigation ~~equity~~costs ~~compensation~~associated ~~expense~~with ofHERLLC’s $claim to coastal lease PRC 145.1 compared to $49,~~030~~523 in the year ago period,~~500~~ and $42,274 for ~~stock~~costs ~~issued~~associated towith ~~the~~being ~~HERLLC~~a ~~Sellers~~public ascompany ~~described~~and ~~above~~tax work, ~~and~~compared to $5747,~~679~~188 ~~related~~a toyear ~~stock~~ago. Also ~~options~~included ~~granted~~in onthe ~~May~~three 14months ended February 28, ~~2014~~2015 was $12,331 mainly for TEG reserve engineering.

34Professional fees can vary substantially from period-to-period going forward depending on acquisition costs, 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.

~~Interest~~In ~~income of $10,504 for~~ the three months ended ~~November 30~~February 28, ~~2014~~2015, we accrued bonuses of $240,000, compared to $0zero ~~for~~in the prior year ~~ago period~~quarter. ~~Interest~~These ~~income~~amounts iswere ~~primarily~~unpaid ~~from~~at aFebruary ~~secured~~28, ~~subordinated~~2015 ~~loan~~and ~~receivable~~shall ~~from~~be ~~TEG~~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. ~~See~~No ~~Note~~salaries 7or consulting fees were paid to the ~~unaudited~~four ~~interim~~individuals ~~financial~~during ~~statements~~the ~~included~~six ~~elsewhere~~months inended ~~this~~February ~~report~~28, 2015.

~~Interest~~Other ~~expense~~general ~~amounted~~and toadministrative ~~$39,463~~expenses for the three months ended ~~November~~February 3028, ~~2014,~~2015 ~~compared~~were to $399,~~413 for the three months ended November 30~~508, ~~2013. Included~~an inincrease ~~the~~of ~~2014~~85% ~~amount~~or is $2845,~~579~~843 ~~for~~compared ~~interest expense on convertible notes payable, as described in Note 10~~ to ~~the unaudited interim financial statements included elsewhere in this report. There was no comparable amount in the 2013 period. Also included in the fiscal 2014 period is~~ $653,~~780~~665 for ~~interest accrued on loans payable to related parties, short term; there was none in~~ the ~~fiscal 2013 period. In addition, interest on loans payable to related parties, long term, was $0 and $372 for the~~ three months ended ~~November~~February 3028, 2014 ~~and 2013 respectively~~. ~~Finally,~~The ~~included~~increase inincludes ~~interest expense for the three month ended November 30, 2014 is~~ $421,~~104~~610 ~~compared to $3,041~~ for ~~the~~TEG’s ~~year~~general ~~ago~~and ~~period~~administrative ~~for~~costs ~~accretion~~beginning ofwith ~~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~~2015, ~~and~~as towell ~~100.0% on May 15, 2014~~ as aincreased ~~result~~costs offor ~~acquiring additional working interest. Going forward~~accounting, ~~interest~~investor ~~expense~~relations onand ~~the~~rental ~~NPI~~of ~~will~~office ~~remain~~space ~~relatively~~(rent ~~constant~~cost ~~unless~~began ~~there~~to isbe aincurred ~~reduction~~Jan. ~~in the expected timeframe for repayment of the NPI~~1, ~~which would cause interest accretion to accelerate~~2014).

~~The~~Equity ~~share~~compensation ofexpense ~~net~~was ~~loss attributable to non-controlling interest is~~ $9703,~~531~~373 for the three months ended ~~November~~February 3028, ~~2014~~2015, compared to ~~none~~$0 for the three months ended ~~November~~February 3028, ~~2013~~2014. ~~The~~Included ~~2014~~in ~~amount~~the ~~reflects~~2015 ~~the~~period is $670,090 for non-~~controlling~~cash ~~interest~~equity ~~share~~compensation ofexpense ~~the~~for ~~professional~~stock ~~fees~~released ~~expense~~from ~~incurred~~escrow into ~~pursuing~~the HERLLC Sellers on closing of the ~~Tapia~~TEG Acquisition, and ~~Eureka~~$33,283 ~~Assets~~related ~~acquisition~~to stock options granted on May 14, 2014.

Interest income of $7,776 for the three months ended February 28, 2015, compared to $0 for the year ago period. Interest income is primarily from the secured subordinated loan receivable from TEG until the date of closing on February 3, 2015. See Note 5 to the unaudited interim financial statements included elsewhere in this report.

Interest expense amounted to $136,710 for the three months ended February 28, 2015, compared to $3,335 for the three months ended February 28, 2014. Included in the 2015 amount is $93,965 for interest expense on convertible notes payable, as described in Notes 8 and 9 to the unaudited interim financial statements included elsewhere in this report. There was no comparable amount in the 2014 period. There was $27,966 interest on the bank loan assumed with the TEG Acquisition on February 3, 2015, and none of this interest expense in the prior year period. Also included in the fiscal 2015 period is $8,740 for interest accrued on loans payable to related parties, short term; there was none in the fiscal 2014 period. Also included in interest expense for the three month ended February 28, 2015 is $3,982 compared to $2,968 for the year ago 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, there was $2,057 and $367 of other interest for the three months ended February 28, 2015 and 2014 respectively.

Change in fair value of conversion option was $7,802 of expense for the three months ended February 28, 2015, compared to none in the comparable 2014 period. Due to the terms of certain convertible notes payable, the related conversion option was required to be bifurcated from the note payable and is shown as a separate liability on the balance sheet. It is marked to fair value each quarter end, with the change in fair value recorded in the income statement.

The share of earnings attributable to non-controlling interest is $9,531 for the three months ended February 28, 2015 compared to none for the three months ended February 28, 2014. The 2015 amount adjusts the year-to-date amount to zero given the changed deal structure for the TEG Acquisition. The final form of acquisition of TEG was Hawker acquiring 100% of the stock of TEG, rather than an earlier proposed structure of Tapia Holdings acquiring an 80% membership interest in a newly-formed LLC which would hold the TEG Assets. As a result of the transaction structure changing, Tapia Holdings no longer holds any assets and it is expected that the non-controlling interest in Tapia Holdings will be restructured in the near term, the form of which has not yet been agreed.

Six months ended February 28, 2015 and 2014

Net loss attributable to the Company of $3,059,029 for the six months ended February 28, 2015, was largely the result of: (1) being a development stage oil production company until the acquisition of TEG was completed on February 3, 2015; (2) a non-cash equity compensation expense of $1,791,552, which includes $1,700,590 for stock issued to the HERLLC Sellers; and (3) professional fees of $612,184 largely for pursuing the TEG Acquisition and for the litigation described in Part II, Item 1 (“Legal Proceedings”). This loss compares to a $252,524 loss in the comparable prior year period.

Revenue was $101,323 for the six months ended February 28, 2015, compared to $44,112 in the year ago period. TEG revenue from the February 3, 2015 acquisition date contributed $72,598 net of royalties. Net production was 67 barrels per day. Net oil sales were 59 barrels per day. The average price realized was $43.73 per barrel. Note that the overriding royalty interest granted to a convertible note holder effective January 2015 is accounted for as debt, and does not reduce net revenue (or production or sales statistics).

The increase in revenue from TEG was partially offset by a decrease at the DEEP Lease of $18,805. An increase in oil sales both from a higher working interest and from higher production was more than offset by lower oil prices and higher royalties. Our working interest in the DEEP Lease increased from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014. Net oil sales from our working interest in the DEEP Lease to our account (after royalties) from the current three producing wells averaged 3.3 net barrels per day for the six months ended February 28, 2015, and realized $48.00 per barrel before royalties, compared to 2.2 net barrels per day to realize $90.88 per barrel for the six months ended February 28, 2014. Net revenues for the six months ended February 28, 2015 also includes a reduction of $11,473 related to the operator’s royalty computations for prior fiscal year.

Direct operating costs were $106,444 for the six months ended February 28, 2015, compared to $20,992 for the six months ended February 28, 2014. TEG’s costs were $64,238 beginning with its acquisition on February 3, 2015. The balance of the increase is due to the DEEP Lease: we increased our working interest in the DEEP Lease from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014, which increased our share of DEEP Lease costs; and there were increased repair costs in this year’s period.

Depletion, depreciation and amortization expense was $51,614 for the six months ended February 28, 2015, compared to $15,957 for the six months ended February 28, 2014. Inclusion of TEG from its February 1, 2015 acquisition date added $26,855 in expense. In addition, our working interest in the DEEP Lease increased from 66.67% to 87.18% on February 1, 2014, and to 100.0% on May 15, 2014, which increases our share of these costs, and DEEP Lease expense further increased as a result of higher oil sales in the 2015 period.

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

Professional fees for the six months ended February 28, 2015, were $612,184, increased $419,141 from $193,043 for the six months ended February 28, 2014. Included in the 2015 period is: $280,884 legal, audit and diligence costs related to TEG Acquisition, compared to none in the prior year period; $217,663 for litigation costs associated with HERLLC’s claim to coastal lease PRC 145.1 compared to $49,523 in the prior year period subsequent to the acquisition of HERLLC on January 1, 2014; $101,305 for costs associated with being a public company including the annual audit and tax work, compared to $53,553 in the prior year period; $12,332 in the 2015 period for the TEG since the February 3, 2015 date of acquisition; and in the 2014 period only $89,967 for the costs of the reverse merger with SCNRG completed October 25, 2013.

Professional fees can vary substantially from period-to-period going forward depending on acquisition activity, 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 six months ended February 28, 2015, we accrued bonuses of $240,000, compared to zero in the prior year quarter. These amounts were unpaid at February 28, 2015 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. No salaries or consulting fees were paid to the four individuals during the six months ended February 28, 2015.

Other general and administrative expenses for the six months ended February 28, 2015 were $174,035 compared to $59,896 for the six months ended February 28, 2014 reflecting increased investor relations activities, additional outsourced accounting services due to a higher activity level, and increased rent expense (rent began January 1, 2014). In addition, TEG general and administrative costs of $21,762 were incurred beginning with TEG’s acquisition on February 3, 2015.

Equity compensation expense was $1,791,552 for the six months ended February 28, 2015, compared to $0 for the six months ended February 28, 2014. Included in the 2015 period is $1,700,590 for non-cash equity compensation for stock released from escrow to the HERLLC Sellers on closing of the TEG Acquisition, and $90,962 related to stock options granted on May 14, 2014.

Interest income of $18,280 for the six months ended February 28, 2015, compared to $0 for the year ago period. Interest income is primarily from the secured subordinated loan receivable from TEG through the date of closing of the TEG Acquisition on February 3, 2015. See Note 5 to the unaudited interim financial statements included elsewhere in this report.

Interest expense amounted to $229,663 for the six months ended February 28, 2015, compared to $6,748 for the six months ended February 28, 2014. Included in the 2015 amount is $176,034 for interest expense on convertible notes payable, as described in Notes 8 and 9 to the unaudited interim financial statements included elsewhere in this report. There was no comparable amount in the 2014 period. There was $27,966 interest on the bank loan assumed with the TEG Acquisition on February 3, 2015, and none of this interest expense in the prior year period. Also included in the fiscal 2015 period is $15,520 for interest accrued on loans payable to related parties, short term; there was none in the fiscal 2014 period. In addition, included in interest expense for the six month ended February 28, 2015 is $8,086 compared to $6,009 for the year ago 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, there was $2,057 and $739 of other interest expense for the six months ended February 28, 2015 and 2014 respectively.

Change in fair value of conversion option was $26,860 of income for the six months ended February 28, 2015, compared to none in the comparable 2014 period. Due to the terms of certain convertible notes payable, the related conversion option was required to be bifurcated from the note payable and is shown as a separate liability on the balance sheet. It is marked to fair value each quarter end, with the change in fair value recorded in the income statement.

Drop in Oil Prices

Our revenues, operating results, profitability, future rate of growth and the carrying value of our oil properties depend primarily upon the prevailing prices for oil. Historically, oil prices have been volatile and are subject to fluctuations in response to changes in supply and demand, market uncertainty and a variety of additional factors. During the last year, there has been a sudden and precipitous drop in prices of oil and gas, resulting in a great deal of uncertainty about the market in the future.

Cash Flows

Operating Activities

During the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015, we used cash in the amount of $26388,~~792~~710 for operating activities, compared to $10203,~~448~~840 cash ~~provided~~used byin operating activities in the corresponding year ago period. Although the loss increased from $76252,~~033~~524 to $13,~~638~~059,~~966 (before the loss attributable to non-controlling interest)~~029, $1,~~088~~791,~~179~~552 of equity compensation expense ~~(as discussed above)~~ in the current period did not involve a cash outlay. There were significant professional fees, $~~430~~612,~~563~~184, and we incurred other general administrative costs of $74174,~~527~~035, for the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015, both as discussed above; these amounts compare to $71193,~~071~~043 and $659,~~231~~896 respectively for the ~~three~~six months ended ~~November~~February 3028, ~~2013~~2014. However, these increases in cash expenses were mostly offset by an increase of $~~487~~440,~~717~~691 in accounts payable (largely for professional fees) for the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015, compared to an increase in accounts payable of $7116,~~101~~134 for the ~~three~~six months ended ~~November~~February 3028, ~~2013~~ 2014. We anticipate that the accounts payable will be paid from proceeds from private placements or other financings that we may undertake.

Investing Activities

Cash flows used in investing activities were $~~205~~332,~~877~~534 for the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015, compared to cash flows ~~provided~~used byin investing activities of $6192,~~004~~782 for the year ago period.

During the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015, we advanced a further $~~196~~346,625 to TEG pursuant to a secured subordinated loan and we launched our website costing $9,~~252~~253. These amounts were partially offset by cash acquired in the TEG Acquisition of $23,344. In the comparable ~~2013~~2014 period, the reverse merger of SCNRG with Hawker meant we acquired Hawker’s cash balance of $6,004, we acquired HERLLC and its cash balance of $1,214, and in addition we acquired an additional 20.5% working interest in the DEEP lease for $200,000.

Financing Activities

Cash flows provided by financing activities were $~~226~~760,~~066~~852 for the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015, compared to cash flows ~~used~~provided inby financing activities of $5462,~~957~~611 for the year ago period.

During the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015, we generated net cash proceeds of $~~105~~233,~~000~~800 from related party loans, $50300,000 from convertible notes payable, ~~and~~$114,920 from the sale of Units, $90,000 from the sale of a non-controlling interest in Tapia Holdings and $50,000 pursuant to a long term note payable. During the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015, we used cash of $10,000 for partial repayment of a loan from a related party and paid $817,~~934~~868 on the DEEP net profits interest liability. During the ~~three~~six months ended ~~November~~February 3028, ~~2013~~2014, we issued Units for $434,524, received $40,000 for Units not closed by February 28, 2014, and paid $511,~~957~~913 required under this same DEEP liability when our working interest was ~~66.67%~~less ~~compared~~than ~~to 100%~~ in the current ~~quarter~~period.

Liquidity and Financial Condition

As of ~~November~~February 3028, ~~2014~~2015, we had cash of $652,~~604~~815, current assets of $199,~~562~~567,~~942,~~ current liabilities of $37,~~135~~452,~~784~~321 and a working capital deficit of $17,~~572~~352,~~842~~754. During the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015, the Company had a net loss attributable to the Company of $13,~~629~~059,~~435~~029, largely attributable to:

· non-cash equity compensation expense of $1,~~030~~700,~~500~~590 for common stock issued to the HERLLC Sellers as described above;

· other non-cash equity compensation of $5790,~~679~~962 representing the periodic expense for stock options granted in the prior fiscal year;

· $~~430~~612,~~563~~184 in professional fees including $~~162~~280,~~466~~884 for the proposed TEG acquisition and $~~209~~217,~~065~~663 for HERLLC litigation; and

· ~~and~~ $74174,~~527~~035 of other general administrative costs.

Despite the large loss, cash flow used in operating activities was just $26,792, reflecting the non-cash nature of the equity compensation expense ($1,088,179 in total) and a growth in accounts payable and accrued expenses of $487,717.41

Despite the large loss, cash flow used in operating activities was $388,710, reflecting the non-cash nature of the equity compensation expense ($1,791,552 in total) and a growth in accounts payable and accrued expenses of $440,691.

To date, we have relied on investor capital to fund our operating and investing activities, as described in the cash flow discussion above, and also have seen a significant increase in our outstanding accounts payable balance.

InManagement’s ~~addition~~business toplan ~~completing~~for the ~~proposed~~balance ~~TEG~~of ~~acquisition~~the ~~and~~calendar ~~beginning~~year 2015 is to begin the further development of the Tapia Assets, ~~management’s~~(oil ~~business~~prices ~~plan~~permitting), ~~for fiscal 2015 is to~~ continue to pursue HERLLC’s claim to coastal lease PRC 145.1 (see Part II, Item 1, “Legal Proceedings”), conduct further technical work on the DEEP property if funds permit, 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 ~~Tapia Assets, the~~ Eureka Assets and the DEEP Lease, to exploit coastal lease PRC 145.1 (assuming we are successful in securing our claim in the lease) and close other acquisition 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 is likely to make it more difficult to obtain financing through the issuance of equity or debt securities. The current low oil price also makes fund raising more difficult, although it may result in new opportunities. 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 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, extended periods of low oil prices 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 or complete acquisitions. Equity financing could result in additional dilution to existing stockholders.

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

3642

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of ~~November~~February 3028, ~~2014~~2015, we had ~~total~~cash of $52,815, current assets of $199,~~562~~567,~~942~~ current liabilities of $7,452,321 and a working capital deficit inof $7,352,754. During the ~~amount~~six ofmonths $1ended February 28,~~572~~ 2015,~~842.~~ Wethe ~~incurred~~Company had a net loss attributable to the Company of $13,~~629~~059,~~435~~029, ~~during~~and ~~the~~at ~~three~~February ~~months ended November 30~~28, ~~2014~~2015, ~~and~~we had an accumulated net loss of $35,~~676~~139,~~897~~387 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.

Summary of Significant Accounting Policies

~~Our~~There ~~financial~~were ~~statements~~no ~~and~~changes ~~related~~to ~~public~~our ~~financial~~critical ~~information are based on the application of~~ accounting ~~principles~~policies ~~generally accepted~~ in ~~the~~this ~~United~~most ~~States~~recent ~~(“GAAP”).~~reporting ~~GAAP~~period ~~requires~~from ~~the~~those ~~use~~disclosed 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~~Form ~~disclosures~~10-Q/A ~~including~~for 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.~~three ~~Actual~~months ~~results~~ended ~~may~~November ~~differ~~30, ~~materially~~2014, ~~from~~except ~~these~~for ~~estimates under different assumptions or conditions. We continue to monitor significant estimates made during~~ the ~~preparation~~addition of ~~our~~the ~~financial statements.~~ following:

~~Our~~Overriding ~~significant~~Royalty ~~accounting~~Interest 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.Liability

WePursuant ~~believe~~to an overriding royalty interest granted effective January 2015 to the ~~following~~Secured ~~critical~~Convertible ~~accounting~~Note ~~policies~~Payable ~~and~~holder, ~~procedures~~oil sales from the Tapia oil field are subject to an additional 2.5% or 3.5% overriding royalty interest, ~~among~~depending ~~others~~on the lease. Since this royalty interest was granted in connection with a loan, ~~affect~~the ~~our~~loan ~~more~~proceeds ~~significant~~were ~~judgments~~bifurcated and ~~estimates~~this ~~used~~royalty interest has been accounted for as a separate liability. Each reporting period, the liability’s estimated fair value is remeasured, with the change in fair value being reported in the ~~preparation~~consolidated statement of ~~our~~operations. Fair ~~financial~~value ~~statements:~~determinations require estimates of future oil prices, reserves, oil sales and appropriate discount rates.

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.

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 15, 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. We also record equity compensation expense for shares issued to the HERLLC sellers as described above.

Recently Issued Accounting Pronouncements

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3

Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4

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 SEC’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.

39As 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 February 28, 2015.

AsIn ~~required~~connection bywith ~~Rule~~the ~~13a~~preparation and filing of our Form 10-15K/A ~~under~~for the ~~Exchange~~year ~~Act~~ended August 31, as2015, ofand our Form 10-Q/A for the ~~end~~three ofmonths ended November 30, 2014, the ~~period~~Company’s ~~covered~~management, byincluding ~~this~~our ~~report~~Chief Executive Officer (who is also our Chief Financial Officer), were-evaluated ~~have~~the ~~carried~~effectiveness ~~out~~of anour internal control over financial reporting as of August 31, 2014. This re-evaluation confirmed that the material weaknesses described in the Original Form 10-K continue to be material weaknesses as of the ~~effectiveness~~time of the ~~design~~re-evaluation, and ~~operation~~that some of ~~our~~these ~~disclosure~~same ~~controls~~material ~~and~~weaknesses ~~procedures~~contributed to a restatement of the financial statements included in those amended filings. ~~Under~~In addition, the ~~direction~~re-evaluation concluded that an additional material weakness existed relating to the calculation of ~~our~~derivative ~~Chief~~liability ~~Executive~~related ~~Officer~~to ~~and~~embedded ~~Chief~~conversion ~~Financial~~feature ~~Officer,~~in wetwo ~~evaluated~~of our ~~disclosure~~convertible ~~controls~~notes payable, and ~~procedures~~to ~~and~~the ~~internal~~fair ~~control~~value ~~over~~of financial ~~reporting~~instruments ~~and~~footnote ~~concluded~~disclosure, ~~that~~which also contributed to the restatement. As a result, our ~~disclosure~~management ~~controls~~continued ~~and~~to ~~procedures~~conclude ~~were~~that, because of the material weaknesses described below, the Company’s internal control over financial reporting was not effective as of ~~November~~August 3031, 2014.

~~Management~~A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In connection with our management’s evaluation of our internal control over financial reporting described above, our management has identified the following deficiencies that it believes constituted individually, and in the aggregate, material weaknesses in our internal control over financial reporting as of August 31, 2014:

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

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.

Lack of control procedures and documentation thereof.

As4. weError ~~increase~~in ~~the~~calculation ~~size~~of ~~and~~derivative ~~scale~~liability ofrelated ~~our~~to ~~operations,~~embedded weconversion ~~intend~~feature toin ~~remediate~~certain ~~the~~convertible ~~foregoing~~notes ~~material weaknesses~~payable.

Error in determination of fair value of financial instruments.

Until we increase the size and scale of our operations, the foregoing material weaknesses are expected to continue. We will however in the future engage outside accounting professionals, as may be necessary and advisable, to assist us in evaluating more complex accounting matters including derivatives and fair value accounting and disclosure, and we will increase our use of manual mitigating control procedures and employ any additional tools and resources deemed necessary to provide assurance that our financial statements be fairly stated in all material respects.

Changes in Internal Control over Financial Reporting

During the ~~first~~ quarter ended ~~November~~February 3028, ~~2014~~2015, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1

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 HERLLC) 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. Punta Gorda has been appointed as Special Administrator of the Garten Estate for the purpose of bringing the Garten interest into the litigation and making it subject to a judgment. 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 ~~March~~July 227, 2015. Trial is scheduled for March 23, 2016, although we expect the trial date to be continued to a later, yet to be determined date. 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 1A

Risk Factors

Not required for a smaller reporting company.

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended ~~November~~February 3028, ~~2014~~2015, we issued an aggregate of ~~500~~1,150,000 “Units” to ~~three~~two investors for gross proceeds of $50115,000, received in ~~August~~January ~~2014~~2015. ~~This~~ ~~amount includes $20,000 from each of Darren Katic, an officer, director and significant shareholder and Gerald Tywoniuk, a significant shareholder.~~ 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 half-share of our common stock on payment of $0.20 per share. The warrants expire five years from the closing date.

In addition, during the three months ended February 28, 2015, we ~~issued~~amended and combined several convertible notes payable ~~for~~into ~~$50,000~~a ~~and~~new ~~sold~~convertible ~~additional~~note ~~non-controlling~~payable ~~interest~~to inextend ~~our~~the ~~subsidiary~~maturity ~~Tapia~~date ~~Holdings~~and provide for additional funding to Hawker in the amount of $90250,000 as described in ~~notes~~note 109 ~~and 16~~ to the unaudited interim financial statements included in this report.

The issuances of the securities described above 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. The exemption was claimed on the basis that the transactions did not involve any public offering and the purchasers were accredited investors. In each case, appropriate investment representations were obtained and stock certificates were issued with restrictive legends.

Item 3

Defaults upon Senior Securities

None.

Item 4

Mine Safety Disclosures

Not applicable.

Item 5

Other Information

~~Material Agreements~~None.

As discussed elsewhere in this Form 10-Q, on January 12, 2015, (i) we entered into the Share Purchase Agreement with Sefton, and (ii) we and Tapia Holdings entered into or otherwise consummated or evidenced the transactions contemplated by the Loan Receivable Agreements. The foregoing disclosures are intended to meet our disclosure requirements under Current Report on Form 8-K, Item 1.01.46

Unregistered Sale of Equity Securities

On December 12, 2014, we issued an aggregate of 1,305,700 “Units” to two investors in consideration of extinguishment of $130,5700 of debt owing by us or our subsidiaries. 1,200,000 Units were issued to Kristian Andresen, one of our directors and significant stockholders. The price of each Unit (including the value used to determine the cancellation of debt) was $0.10. Each Unit was comprised of one share of our common stock, together with a warrant to acquire an additional half-share of our common stock on payment of $0.20 per share. The warrants expire five years from the closing date.

On January 8, 2015, we received proceeds of $115,000 from two investors for additional Units on the same terms as described above. On closing, 1,150,000 shares of common stock will be issued, together with warrants to acquire an additional 575,000 shares of our common stock on payment of $0.20 per share. The warrants expire five years from the closing date.

The foregoing disclosures are intended to meet our disclosure requirements under Current Report on Form 8-K, Item 3.02.

Item 6

Exhibits

Number	Exhibit
3.1	Articles of Incorporation (1), as amended by the Certificate of Amendment (2)
3.2	Bylaws (3)
10.1	Form of Warrant (U.S. Investor) for Unit Sale (4)
10.2	Form of Warrant (Non-U.S. Investor) for Unit Sale (5)
10.3	~~Second~~ Amended and Restated ~~Secured~~Subordination ~~Convertible~~and ~~Promissory~~Intercreditor ~~Note~~Agreement ~~issued~~ by and among Tapia Holdings, LLC, Hawker Energy, Inc., inTEG ~~favor~~Oil of& ~~Oceanside~~Gas ~~Strategies~~U.S.A., ~~dated~~Inc., ~~September~~Sefton 18Resources, ~~2014~~Inc., inTEG ~~the~~MidContinent, ~~aggregate~~Inc., ~~amount~~and Bank of ~~$250~~the West dated January 1,~~000~~ 2015 (6)
10.4	Second Amended and Restated Secured Convertible Promissory Note issued by Hawker Energy, Inc. in favor of Oceanside Strategies dated September 18, 2014 in the aggregate amount of $350,000
10.5	Share Purchase Agreement, dated January 12, 2015, by and among Hawker Energy, Inc., Sefton Resources, Inc. and TEG Oil & Gas U.S.A., Inc. (7)
10.5	Limited Recourse Guarantee by Sefton Resources, Inc. in favor of Hawker Energy, Inc. dated January 12, 2015.
10.6	Warrant, dated February 1, 2015, issued by Hawker Energy, Inc. to Sefton Resources, Inc. (8)
10.6	Third Amended and Restated Security Agreement, by and among Tapia Holdings, LLC and TEG Oil & Gas U.S.A., Inc. dated August 29, 2014 (6)
10.7	Limited Recourse Guarantee by Sefton Resources, Inc. in favor of Hawker Energy, Inc. dated January 12, 2015 (9)
10.7	Subordination and Intercreditor Agreement by and among Tapia Holdings, LLC, TEG Oil & Gas U.S.A., Inc., Sefton Resources, Inc., TEG MidContinent, Inc., and Bank of the West dated June 2, 2014 (7)
10.8	Pledge Agreement, dated January 12, 2015, made by Sefton Resources, Inc. in favor of Hawker Energy, Inc. (10)
10.8	Share Purchase Agreement, dated January 12, 2015, by and among Hawker Energy, Inc., Sefton Resources, Inc. and TEG Oil & Gas U.S.A., Inc.
10.9	Fourth Amended and Restated Security Agreement, dated January 12, 2015, made by TEG Oil & Gas U.S.A., Inc. in favor of Hawker Energy, Inc. (11)
10.9	Pledge Agreement, dated January 12, 2015, made by Sefton Resources, Inc. in favor of Hawker Energy, Inc.
10.10	Sixth Amendment to Forbearance Agreement, dated March 18, 2015, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc., Hawker Energy, Inc. and Bank of the West. (12)
10.10	Fourth Amended and Restated Security Agreement, dated January 12, 2015, made by TEG Oil & Gas U.S.A., Inc. in favor of Hawker Energy, Inc.
10.11	Promissory Note, dated March 18, 2015, in the aggregate principal amount of $400,000, issued by Hawker Energy, Inc. in favor of Sefton Resources, Inc. (13)
10.11	Amended and Restated Subordination and Intercreditor Agreement by and among Tapia Holdings, LLC, Hawker Energy, Inc., TEG Oil & Gas U.S.A., Inc., Sefton Resources, Inc., TEG MidContinent, Inc., and Bank of the West dated January 1, 2015
10.12	Amended and Restated Credit Agreement, dated as of October 21, 2008, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.
31	Rule 13a-14(a) Certification of Chief Executive and Chief Financial Officer
10.13	First Amendment of Amended and Restated Credit Agreement, Borrowing Base Redetermination and Limited Waiver, dated as of July 23, 2009, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.
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
10.14	Second Amendment of Amended and Restated Credit Agreement, Borrowing Base Redetermination and Forbearance Agreement, dated as of December 31, 2009, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.
101.INS*	XBRL Instance Document
10.15	Third Amendment of Amended and Restated Credit Agreement, Borrowing Base Redetermination and Limited Waiver, dated as of July 20, 2010, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.
101.SCH*	XBRL Taxonomy Extension Schema Document
10.16	Fourth Amendment of Amended and Restated Credit Agreement and Borrowing Base Redetermination, dated as of February 1, 2011, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
10.17	Fifth Amendment of Amended and Restated Credit Agreement and Borrowing Base Redetermination, dated as of September 1, 2011, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
10.18	Sixth Amendment of Amended and Restated Credit Agreement and Borrowing Base Redetermination, dated as of January 23, 2012, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
10.19	Seventh Amendment of Amended and Restated Credit Agreement, dated as of June 29, 2012, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
10.20	Eighth Amendment of Amended and Restated Credit Agreement, dated as of February 19, 2013, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.

(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 10.1 of the Company’s Current Report on Form 8-K filed on January 16, 2014.
(5)	Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on January 16, 2014.
(6)	Incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K filed on November 24, 2014.
(7)	Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on June 5, 2014.

10.21	Ninth Amendment of Amended and Restated Credit Agreement, dated as of May 13, 2013, by and among Sefton Resources, Inc., TEG Oil & Gas U.S.A., Inc., TEG MidContinent, Inc. and Bank of the West.
10.22	Third Amended and Restated Secured Convertible Promissory Note in the principal amount of $1 million issued by Hawker Energy, Inc. in favor or Oceanside Strategies, Inc. dated May 27, 2015.
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

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

(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 10.1 of the Company’s Current Report on Form 8-K filed on January 16, 2014.
(5)	Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on January 16, 2014.
(6)	Incorporated by reference to Exhibit 10.11 of the Company’s Quarterly Report on Form 10-Q filed on January 20, 2015.
(7)	Incorporated by reference to Exhibit 10.8 of the Company’s Quarterly Report on Form 10-Q filed on January 20, 2015.
(8)	Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on February 9, 2015.
(9)	Incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q filed on January 20, 2015.
(10)	Incorporated by reference to Exhibit 10.9 of the Company’s Quarterly Report on Form 10-Q filed on January 20, 2015.
(11)	Incorporated by reference to Exhibit 10.10 of the Company’s Quarterly Report on Form 10-Q filed on January 20, 2015.
(12)	Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on March 24, 2015.
(13)	Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on March 24, 2015.

SIGNATURES

Pursuant to the requirements of 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: January 16, 2015		/s/ Darren Katic
Date: June 18, 2015		/s/ Darren Katic
		Darren Katic Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer)

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