10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

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

 For the Fiscal Year Ended September 30, 2011

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

For the Transition Period From _____ to _____

 Commission File Number 000-52711

 JAYHAWK ENERGY, INC.

(Exact name of small business issuer as specified in its charter)

COLORADO	20-0990109
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
811 E. Sherman Avenue Coeur d'Alene, Idaho (Address of principal executive office)	83814 (Postal Code)
(208) 667-1328 (Issuer's telephone number)

SECURITIES REGISTERED UNDER SECTION 12(b) OF THE ACT:  

None

SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:

Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issued, as defined in Rule 405 of the Securities Act: Yes[ ] No [ x]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes[ X] No []

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.  Yes   [x]   No [   ]

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, 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 filed).    Yes  [X ]  No  [ ] (Not required)

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

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “Accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer  [ ]

 Accelerated Filer [ ]

 Non-Accelerated Filer [ ]

Smaller Reporting Company [x]

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

The aggregate market value of the Common Stock held by non-affiliates (as affiliates are defined in Rule 12b-2 of the Exchange Act) of the registrant, computed by reference to the average of the high and low sale price on October 31, 2010 was $8,871,001.

As of February 6, 2012 there were 59,381,895 shares of issuer’s common stock outstanding.

EXPLANATORY NOTE

The purpose of this Amendment No. 3 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2011, initially filed with the U.S. Securities and Exchange Commission on February 15, 2012, is to furnish Exhibit 101 to the Form 10-K as required by Rule 405 of Regulation S-T.

No other changes have been made to the Form 10-K. This Amendment No. 3 to the Form 10-K speaks as of the original filing date of the Form 10-K, does not reflect events that may have occurred subsequent to the original filing date of the Form 10-K, and does not modify or update in any way the disclosures included in the Form 10-K.

ITEM 15.  EXHIBITS.

Exhibit No. Description

3.1  Articles of Incorporation, filed as an exhibit to the registration statement on Form SB-2 filed with the Securities and Exchange Commission (the "Commission") on December 7, 2004, and incorporated herein by reference.

3.2  Certificate of Amendment to Articles of Incorporation, filed as an exhibit to the 8-K filed with the Commission on June 25, 2007, and incorporated herein by reference.

3.3 Bylaws, filed as an exhibit to the registration statement on Form SB-2 filed with the Commission on December 7, 2004, and incorporated herein by reference.

10.1 Promissory Note of April 12, 2007 with Berrigan Portfolio, Inc., filed as an exhibit to the 8-K filed with the Commission on April 17, 2007, and incorporated herein by reference.

10.2 Asset Purchase and Sale agreement of July 25, 2007 with Armstrong Investments, Inc., filed as an exhibit to the 8-K filed with the Commission on July 26, 2007, and incorporated herein by reference.

10.3	Form of Warrant Agreement of July 25, 2007 with Armstrong Investments, Inc. and Berrigan Portfolio, Inc., filed as an exhibit to the 8-K filed with the Commission on July 26, 2007, and incorporated herein by reference.
14.1	Code of Ethics, filed as an exhibit to the 8-K filed with the Commission on February 24, 2010, and incorporated herein by reference.
23.1	Consent of Independent Registered Public Accounting Firm
23.2	Consent of Auditor
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended

 31.2  Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended

 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)

 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)

101*	XBRL Exhibits
	*XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended and otherwise is not subject to liability under these sections.

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.

JAYHAWK ENERGY, INC.

Date:  October 15, 2012	By: /s/ LINDSAY E. GORRILL
	Lindsay E. Gorrill
	Chief Executive Officer and President

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

Name	Position	Date
By: /s/ LINDSAY E. GORRILL Lindsay E. Gorrill	Chief Executive Officer and President	October 15, 2012
By: /s/ KELLY J. STOPHER Kelly J. Stopher	Chief Financial Officer	October 15, 2012

EX-31

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of Sarbanes-Oxley Act

I, Lindsay E. Gorrill, certify that:

1. I have reviewed this annual report on Form 10-K/A of JayHawk Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) of the registrant, and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting.

5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date: October 15, 2012

/s/ LINDSAY E. GORRILL

Lindsay E. Gorrill

Chief Executive Officer

Exhibit 31.2

Certification of Chief Financial Officers

Pursuant to Section 302 of Sarbanes-Oxley Act

I, Kelly J. Stopher, certify that:

1. I have reviewed this annual report on Form 10-K/A of JayHawk Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) of the registrant, and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting.

5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Date: October 15, 2012

/s/ KELLY J. STOPHER

Kelly J. Stopher

Chief Financial Officer

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of JayHawk Energy, Inc. a Colorado corporation (the "Company") on Form 10-K/A for the year ending September 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Lindsay E. Gorrill, Chief Executive Officer of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to JayHawk Energy, Inc., and will be retained by JayHawk Energy, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ LINDSAY E. GORRILL

Lindsay E. Gorrill

Chief Executive Officer

October 15, 2012

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of JayHawk Energy, Inc. a Colorado corporation (the "Company") on Form 10-K/A for the year ending September 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Kelly J. Stopher, Chief Financial Officer of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to JayHawk Energy, Inc., and will be retained by JayHawk Energy, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ KELLY J. STOPHER

Kelly J. Stopher

Chief Financial Officer

October 15, 2012

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Extractive Industries

24 Months Ended

Sep. 30, 2012

Oil and Gas Exploration and Production Industries Disclosures [Abstract]

Oil and Gas Exploration and Production Industries Disclosures [Text Block]

NOTE 5 - UNPROVED PROPERTIES AND IMPAIRMENT 

The total of the Company's investment in unproved properties at September 30, 2011 and 2010, consists of the following capitalized costs respectively:

				2011		2010
						(Restated-Note 19)
UNPROVED AND DEVELOPED PROPERTIES
Kansas Girard Project
	Field equipment		$	615,953	$	705,903
	Capitalized drilling costs			662,899		662,899
		Subtotal		1,278,852		1,368,802
	Less accumulated DD&A			(458,765)		(130,364)
Net capitalized costs in Girard Project				820,087		1,238,438
Jayhawk Gas Transport Company
	Field equipment			2,605,871		2,605,871
	Less accumulated DD&A			(404,865)		(288,753)
Net capitalized costs in Jayhawk Gas Transport Company				2,201,006		2,317,118
Total unproved and developed properties			$	3,021,093	$	3,555,556
UNPROVED AND UNDEVELOPED PROPERTIES
Kansas Uniontown Project			$	-	$	1,020,479
Net investment in Uniontown Project				-		1,020,479
Unproved and undeveloped properties
Kansas Girard Project				1,403,444		1,652,283
	Less: accumulated amortization			(579,999)		(436,916)
Net investment in Girard Project				823,445		1,215,367
North Dakota Project				78,135		147,085
Net investment in North Dakota Project				78,135		147,085
Total unproved and undeveloped properties			$	901,580	$	2,382,931
TOTAL UNPROVED PROPERTIES			$	3,922,673	$	5,938,487

Abandonment of Uniontown:  In 2008, management made a review of the portfolio of leases acquired in the Uniontown transaction of July 2007 and decided, based on geology and proximity to the Company's pipeline, to permit only approximately one-third of the original leases acquired and allow the remainder to expire without renewal. Given the Company's inability at that time to fund development of any acreage, justification existed at the time to abandon those properties.  The abandonment was estimated at two-thirds, 67 percent, of the original investment.  Further evaluation by management during the year ended September 30, 2011 indicated the capital required to develop the Uniontown Project exceeded the Company's ability to fund the project and any capital raised would be better served being deployed on other opportunities. Thus, the remainder of the leases expired without renewal and the Company recognized an additional abandonment loss of $1,020,479 on the Uniontown project for the year ended September 30, 2011.

NOTE 6 - PROVED PROPERTIES AND IMPAIRMENT 

Net capitalized costs are comprised of the following; detailed by property:

			September 30,
Name			2011		2010
					(Restated-Note 19)
Crosby, North Dakota Properties		$		$
	Proved Reserves		2,357,753		2,357,753
	Field Equipment		1,200,245		1,224,580
	Capitalized Drilling Costs		416,429		1,929,410
	Subtotal		3,974,427		5,511,743
	Less: Impairments		(2,267,426)		(1,986,463)
	Less: Accumulated DD&A		(748,836)		(433,028)
Total Proved Oil and Gas Properties		$	958,165	$	3,092,252

During the year ended September 30, 2011, the Company impaired certain previously capitalized non-saleable assets of $1,301,422 at the Crosby, North Dakota property.

For the years ended September 30, 2011 and 2010, respectively, the Company performed an analysis to determine whether the carrying amounts in its financial statements exceeded the net present value of the reserve estimates for the Crosby, North Dakota property.  Management determined that the net values reflected in the financial statements did not exceed the net discounted present value of the reserves estimated by the independent reserve engineer.

Based upon estimates provided by independent reserve engineers, management has determined an impairment exists on the Crosby property. The impairment write-down was recognized at $280,963 for the year ended September 30, 2011 and $811,339 for the year ending September 30, 2010.

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Accounting Policies

24 Months Ended

Sep. 30, 2012

Accounting Policies

Significant Accounting Policies [Text Block]

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

This summary of significant accounting policies is presented to assist in understanding the financial statements.  These consolidated financial statements as of and for the years ended September 30, 2011 and 2010 are prepared using the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America ("US GAAP") and have been consistently applied in the preparation of the Consolidated Financial Statements.    

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary JayHawk Gas Transportation Company after elimination of the intercompany accounts and transactions.

Going Concern

As shown in the accompanying consolidated financial statements, the Company has incurred operating losses since inception.  As of September 30, 2011, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows.  As shown in the accompanying balance sheets and  statements of operations, the Company has an accumulated deficit of $18,414,890 and a net loss of $4,341,393 for the year ended September 30, 2011, and as of that date the Company's current liabilities exceeded its current assets by $2,209,359.  Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, to locate profitable energy properties and generate revenue from current and planned business operations, and control costs.  The Company  plans to fund its future operations by joint venturing, obtaining additional financing from investors, and attaining additional commercial production.  However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists.  The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern.

Fair Value of Financial Instruments

The Company's financial instruments include cash and cash equivalent, restricted cash, accounts receivable, investments, and accounts payable.  The carrying value of notes payable and convertible debentures approximate fair value based on the contractual terms of those instruments.

Joint Venture Operations

In instances where the Company’s oil and gas activities are conducted jointly with others, the Company’s accounts reflect only its proportionate interest in such activities.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the respective reporting periods.  Significant areas requiring the use of management assumptions and estimates relate to asset impairments, proved and unproved properties, asset retirement obligations, stock-based compensation, income taxes and derivatives.  Actual results may differ from these estimates and assumptions which could have a material effect on the Company's reported financial position and results of operations.

Income or Loss Per Common Share

Basic earnings per share ("EPS") is computed as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities.

The dilutive effect of convertible and outstanding securities as of September 30, 2011 and 2010, would be as follows:

		2011	2010
Stock Options		2,040,000	2,790,000
Convertible debt		10,658,333	4,990,000
Warrants		4,999,113	2,166,000
	Total Possible Dilution	17,697,446	9,946,000

At September 30, 2011 and 2010, the effect of the Company's outstanding options and common stock equivalents would have been anti-dilutive.

Revenue and Cost Recognition

The Company uses the sales method of accounting for oil and gas revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes the Company may be entitled to, based on the Company's individual interest in the property.  Periodically, imbalances between production and nomination volumes can occur for various reasons.  In cases where imbalances have occurred, a production imbalance receivable or liability will be recorded when determined.  Costs associated with production are expensed in the period in which they are incurred.

Cash Equivalents

The Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents.

Trade Accounts Receivable

Trade acccounts receivable are carried at original invoice amount less an estimate for doubtful accounts.  Management determines the allowance by regularly evaluating individual customer receivables and considering a customer's financial condition, credit history and current economic conditions.  Trade receivables are written off when deemed uncollectible.  Recoveries of receivables previously written off are recorded as income when received.

Concentrations

All of the Company’s direct operating revenues originate from oil production from its property in Crosby, North Dakota or from natural gas production from its property in Girard, Kansas. Each revenue stream is sold to a single customer through month to month contracts.  While this creates a customer concentration, there are alternate buyers of the production in the event the sole customer is unable or unwilling to purchase.

Property, Plant and Equipment

Acquisition costs associated with the acquisition of leases are capitalized when incurred.  These consist of costs incurred in obtaining a mineral interest or right in the property, such as a lease, concession, license, production sharing agreement, or other type of agreement granting such rights.  In addition, options to lease, brokers' fees, recording fees, legal costs, and other similar costs related to activities in acquiring property interests are capitalized. 

The Company follows the successful effort method of accounting for oil and gas property as promulgated in Accounting Standards Codification (ASC) Topic 932, "Extractive Activities – Oil and Gas".  Under this method of accounting, acquisition costs for proved and unproved properties are capitalized when incurred.  Exploration costs, including geological and geophysical costs, the costs of carrying and retaining unproved properties and exploratory dry hole drilling costs, are expensed.  Development costs, including the costs to drill and equip development wells, and successful exploratory drilling costs to locate proved reserves are capitalized.  Exploratory drilling costs are capitalized when incurred pending the determination of whether a well has found proved reserves.  A determination of whether a well has found proved reserves is made shortly after drilling is completed.  The determination is based on a process that relies on interpretations of available geologic, geophysics and engineering data.  If a well is determined to be successful, the capitalized drilling costs will be reclassified as part of the cost of the well.  If a well is determined to be unsuccessful, the capitalized drilling costs will be charged to expense in the period the determination is made.  If an exploratory well requires a  major capital expenditure before production can begin, the cost of drilling the exploratory well will continue to be carried as an asset pending determination of whether proved reserves have been found only as long as: i) the well has found a sufficient quantity of reserves to justify its completion as a producing well if the required capital expenditure is made and ii) drilling of the additional exploratory wells is under way or firmly planned for the near future.  If drilling in the area is not under way or firmly planned, or if the well has not found a commercially producible quantity of reserves, the exploratory well is assumed to be impaired and its costs are charged to expense. 

In the absence of a determination as to whether the reserves that have been found can be classified as proved, the costs of drilling such an exploratory well is not carried as an asset for more than one year following completion of drilling.  If, after that year has passed, a determination that proved reserves exist cannot be made, the well is assumed to be impaired, and its capitalized costs, net of salvage value are charged to expense.  Its costs can, however, continue to be capitalized if sufficient quantities of reserves are discovered in the well to justify its completion as a producing well and sufficient progress is made in assessing the reserves and the well's economic and operating feasibility. 

The Company calculates depletion, depreciation and amortization (DD&A) of capitalized cost of proved oil properties on a field-by-field basis using the units-of-production method based upon proved reserves. In computing DD&A the Company will take into consideration restoration, dismantlement and abandonment cost and the anticipated proceeds from equipment salvage.  When applicable, the Company will apply the provisions of ASC Topic 410, "Accounting for Asset Retirement Obligations", ("ASC 410") which provides guidance on accounting for dismantlement and abandonment cost (see Note 10).

Support equipment and other property, plant and equipment related to oil and gas production are depreciated on a straight-line basis over their estimated useful lives which range from 5 to 35 years.  Property, plant and equipment unrelated to oil and gas producing activities is recorded at cost and depreciated on a straight-line basis over the estimated useful lives of the assets, which range from 3 to 25 years.

The Company recognizes a gain or loss on sales or retirement of property, plant and equipment and includes the gain or loss in the results of operations.

Impairment of Long-Lived Assets

The Company performs separate impairment tests for proved and unproved properties.

Proved properties- The Company evaluates its proved properties for impairment when circumstances or events occur that may impact the fair value of the assets.  The fair value of property is primarily evaluated based upon the present value of expected revenues directly associated with those assets.  An impairment loss would be recognized if the carrying amount of a capitalized asset is not recoverable and exceeds its fair value. 

Unproved properties - Unproved properties are assessed periodically to determine whether they have been impaired.  A property may be considered impaired as the expiration of a lease term approaches and the Company has not begun drilling on the property or nearby properties and the possibility of partial or total impairment of the property increases.   If the property is found to be impaired, an impairment allowance is provided and a loss is charged to operations.  However, if the property is surrendered or the lease expires without identifying proved reserves, the cost of the property is charged against the impairment allowance already to the extent impairment has been recognized.  Any remaining cost is charged to operations.

Sales of Producing and Non-producing Property

The Company accounts for the sale of a partial interest in a proved property as normal retirement.   The Company accounts for the sale of a partial interest in an unproved property as a recovery of cost when substantial uncertainty exists as to recovery of the cost applicable to the interest retained.   The Company recognizes a gain or loss for all other sales of non-producing properties and include the gain or loss in the results of operations.

Fair Value Measures

ASC Topic 820 "Fair Value Measurements and Disclosures" ("ASC 820") requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value.  A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

                Level 1:  Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

                Level 2:  Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quote prices for similar assets or liabilities in active markets; quoted prices for    identical assets in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by,          observable market data.

                Level 3:  Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

Derivative Instruments

The Company has financing arrangements that consist of freestanding derivative instruments or are hybrid instruments that contained embedded derivative features.  In accordance with accounting principles generally accepted in the United States (“GAAP”), derivative instruments and hybrid instruments are recognized as either assets or liabilities in the Company’s balance sheet and are measured at fair value with gains or losses recognized in earnings depending on the nature of the derivative or hybrid instruments. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and recognized at fair value with changes in fair value recognized as either a gain or loss in earnings if they can be reliably measured. When the fair value of embedded derivative features cannot be reliably measured, the Company measures and reports the entire hybrid instrument at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using a Black Scholes model, giving consideration to all of the rights and obligations of each instrument and precluding the use of “blockage” discounts or premiums in determining the fair value of a large block of financial instruments. Fair value under these conditions does not necessarily represent fair value determined using valuation standards that give consideration to blockage discounts and other factors that may be considered by market participants in establishing fair value.

Asset Retirement Obligation

The Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred if a reasonable estimate of fair value can be made.  The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset.  The carrying value of a property associated with the capitalization of an asset retirement cost is included in proved oil and gas property in the balance sheets.  The future cash outflows for oil and gas properties associated with settling the asset retirement obligations is accrued in the balance sheets.  The asset retirement obligation consists of costs related to the plugging of wells and removal of facilities and equipment on its oil and gas properties (see Note 9). 

Income Tax and Accounting for Uncertainty

Income taxes are determined using the liability method in accordance with ASC Topic 740 "Income Taxes" ("ASC 740").  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.

ASC 740 recognizes that the ultimate deductibility of positions taken or expected to be taken on tax returns is often uncertain.  It provides guidance on when tax positions claimed by an entity can be recognized and guidance on the dollar amount at which those positions are recorded.  In order to recognize the benefits associated with a tax position taken the entity must conclude that the ultimate allowability of the deduction is more likely than not.  If the ultimate allowability of the tax position exceeds 50% (more likely than not), the benefit associated with the position is recognized at the largest dollar amount that has more than a 50% likelihood of being realized upon ultimate settlement.  Differences between tax positions taken in a tax return and recognized in accordance with the guidance will generally result in (1) an increase in income taxes currently payable or a reduction in an income tax refund receivable or (2) an increase in a deferred tax liability or a decrease in a deferred tax asset, or both (1) and (2).

Stock Options Granted to Employees and Non-Employees

The Company follows financial accounting standards that require the measurement of the value of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award.  Non-employee stock-based compensation is granted at the Board of Director’s discretion to award select consultants for exceptional performance.  Prior to issuance of the awards, the Company is not under any obligation to issue the stock options.  Subsequent to the award, the recipient is not obligated to perform any services.  Therefore, the fair value of these options is expensed on the grant date, which is also the measurement date.

The Company estimates the fair value of employee stock option awards on the date of grant using a Black-Scholes valuation model which requires management to make certain assumptions regarding: (i) the expected volatility in the market price of the Company's common stock; (ii) dividend yield; (iii) risk-free interest rates; and (iv) the period of time employees are expected to hold the award prior to exercised (referred to as the expected holding period).  The expected volatility under this valuation model is based on the current and historical implied volatilities of the Company's common stock.  The dividend yield is based on the approved annual dividend rate in effect and current market price of the underlying common stock at the time of grant.  The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for bonds with maturities ranging from one month to five years.  The expected holding period of the awards granted is estimated using the historical exercise behavior of employees.  In addition, the Company estimates the expected impact of forfeited awards and recognize stock-based compensation cost only for those awards expected to vest.  The Company utilizes historical experience to estimate projected forfeitures.  If actual forfeitures are materially different from estimates, stock-based compensation expense could be significantly different from what we have recorded in the current period.  The cumulative effect on current and prior periods of a change in the estimated forfeiture rate is recognized as compensation cost in the period of the revision.

Stock Granted to Employees and Non-Employees in Lieu of Cash Payments

The Company periodically issues shares of its common stock in lieu of cash payments to certain consultants, vendors and employees.  The Company follows financial accounting standards that require the measurement of the value of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award.

Reclassifications

Certain reclassifications have been made to the 2010 financial statements in order to conform to the 2011 presentation.  These reclassifications have no effect on net loss, total assets or accumulated deficit as restated except as otherwise described in Note 19 (Correction Of An Error In Previously Issued Financial Statements).

Accounting Changes and Error Corrections

Changes in accounting principle are reported through retrospective application of the new accounting principle to all prior periods. Errors in the financial statements of a prior period discovered subsequent to their issuance are reported as a prior-period adjustment restating the prior period.  As described in Note 19, financial information included for the year ended September 30, 2010 has been restated.

New Accounting Pronouncements

The FASB issued an ASU to amend existing oil and gas reserve accounting and disclosure guidance to align its requirements with the SEC's revised rules.  The significant revisions involve revised definitions of oil and gas producing activities, changing the pricing used to estimate reserves at period end to a twelve month arithmetic average of the first day of the month prices and additional disclosure requirements.  In contract to the SEC rule, the FASB does not permit the disclosure of probable and possible reserves in the supplemental oil and gas information in the notes to the financial statements.  The amendments are effective for annual reporting periods ending on or after December 31, 2009. 

In June 2011, the Financial Accounting Standards Board issued Accounting Standards Update No. 2011-05, "Presentation of Comprehensive Income" ("ASU 2011-05").  This standard will require entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income.  The option to present items of other comprehensive income in the statement of changes in equity is eliminated.  The new requirements are generally effective for public entities in fiscal years (including interim periods) beginning after December 15, 2011.  Management does not believe ASU 2011-05 will have a material effect on the Company's consolidated financial statements.

From time to time, new accounting guidance is issued by the FASB that the Company adopts as of the specified effective date.  If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on its financial statements upon adoption.

Nature of Operations [Text Block]

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

JayHawk Energy, Inc. (the Company or JayHawk) and its wholly owned subsidiary, is engaged in the acquisition, exploration, development, production and sale of natural gas, crude oil and natural gas liquids primarily from conventional reservoirs within North America.  The Company incorporated in Colorado on April 5, 2004 as Bella Trading Company, Inc.  During the third quarter ending June 30, 2007, the Company changed management and entered the oil and gas business, and ceased all activity in retail jewelry.  On June 21, 2007, the Company changed its name to JayHawk Energy, Inc.  Since then, the Company has devoted its efforts principally to the raising of capital, organizational infrastructure development, the acquisition of oil and gas properties and exploration activities.  To date, the Company has acquired three properties, the Uniontown in Kansas, the Crosby in North Dakota, and Girard in Kansas.  The Company also formed a wholly owned subsidiary to transport natural gas in Kansas called JayHawk Gas Transportation Corporation.

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Accounting Changes and Error Corrections

24 Months Ended

Sep. 30, 2012

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

NOTE 19 - CORRECTION OF ERROR IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Management has determined that certain errors were contained in the Company's financial statements for the year ended September 30, 2010.

The errors were related to an incorrect application of conversion option derivative and warrant derivative accounting related to convertible debentures entered into by the Company on or about December 14, 2009, April 23, 2010 and October 18, 2010 (Note 12).   As discussed in Note 2, embedded derivatives that are not clearly and closely related to the host contract are bifurcated and recognized at fair value with changes in fair value recognized as either a gain or loss in earnings if they can be reliably measured.

Management has also assessed undeveloped properties in both North Dakota and Kansas and determined restatement of financial statements is appropriate for the quarters ended June 30, 2011 and prior.   The Uniontown, Kansas project was acquired for $2,200,000 in 2007, and consisted of mineral leases covering approximately 35,000 acres in Bourbon County, KS.  During 2008, it was determined that the Company only actually permitted approximately one-third of the leases it had acquired initially, and therefore recognized an impairment for the remaining two-thirds of the original cost ($1,474,000).  Throughout 2007 and 2008, the Company paid approximately $295,000 to renew these leases, each for a term of three years.  The payments represented acquisition costs, and since the property was not yet in production the leases should not have been subject to amortization but is instead subjected to an annual impairment test, and consequently, the asset was understated by the accumulated amortization for the prior year ended September 30, 2010, of $256,486, amortization expense is overstated by the amount taken that year of $93,752.  

The adjustments required to appropriately record these adjustments are material to the previously filed financial statements, thus management is restating these financial statements.  The accompanying financial statements have been restated to reflect the corrections.  As discussed in Note 1, certain reclassifications have been made for comparative purposes.

The effects of the Company's previously issued 2010 audited financial statements are summarized as follows:

Balance sheet

					Previously reported			Increase (Decrease)			Restated
ASSETS
	CURRENT ASSETS
		Cash		$		56,280	$		-	$		56,280
		Trade receivables				225,415			-			225,415
		Other current assets				4,344			-			4,344
			TOTAL CURRENT ASSETS			286,039			-			286,039
	PLANT, PROPERTY AND EQUIPMENT
		Unproved oil and gas properties, net				2,126,445			3,812,042			5,938,487
		Proved and developed oil and gas properties, net				6,647,808			(3,555,556)			3,092,252
		Computers, office equipment and furniture, net				19,616			-			19,616
			NET PLANT, PROPERTY AND EQUIPMENT			8,793,869			256,486			9,050,355
	OTHER CURRENT ASSETS					56,900			-			56,900
TOTAL ASSETS				$		9,136,808	$		256,486	$		9,393,294
LIABILITIES AND STOCKHOLDERS' EQUITY
	CURRENT LIABILITIES
		Accounts payable		$		1,101,848	$		8	$		1,101,855
		Due to royalty and working interest holders				135,384			-			135,384
		Other payables, interest and taxes accrued				178,358			-			178,358
		Conversion option derivative				-			848,300			848,300
		Warrant derivative liability				-			498,180			498,180
		Notes payable in less than one year				227,914			-			227,914
			TOTAL CURRENT LIABILITIES			1,643,504			1,346,488			2,989,991
	LONG TERM LIABILITIES
		Asset Retirement Obligation				154,928			-			154,928
		Investment by joint venture partner				250,000			-			250,000
		Convertible debentures				1,497,000			-			1,497,000
			Less unamortized discount on debentures			(740,854)			(241,710)			(982,564)
			TOTAL LONG-TERM LIABILITIES			1,161,074			(241,710)			919,364
TOTAL LIABILITIES						2,804,578			1,104,778			3,909,355
STOCKHOLDERS' EQUITY
		Common stock				48,980			-			48,980
		Additional paid-in capital				17,108,319			2,400,136			19,508,456
		Accumulated deficit				(10,825,069)			(3,248,428)			(14,073,497)
			TOTAL STOCKHOLDERS' EQUITY			6,332,230			(848,292)			5,483,939
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY				$		9,136,808	$		256,486	$		9,393,294

Statement of Operation

						Previously reported			Increase (Decrease)			Restated
REVENUE
		Oil sales			$		612,607	$		-	$		612,607
		Natural gas sales					72,101			-			72,101
			TOTAL REVENUE				684,708			-			684,708
OPERATING EXPENSES
		Production costs - oil					286,464			-			286,464
		Production costs - natural gas					26,060			-			26,060
		Depreciation, depletion and amortization					986,245			(107,837)			878,408
		Loss on write-off and sales of leases and equipment					78,137			-			78,137
		Impairment of proved properties					811,339			-			811,339
		General and administrative					1,292,359			-			1,292,359
			TOTAL OPERATING EXPENSES				3,480,604			(107,837)			3,372,767
OPERATING LOSS							(2,795,896)			(107,837)			(2,688,059)
OTHER INCOME (EXPENSE)
		Interest and financing costs					(299,617)			49,218			(250,399)
		Loss on initial recording of derivatives					-			(4,914,580)			(4,914,580)
		Gain (loss) on extinguishment and conversion of debt					(1,466,978)			(2,100)			(1,469,078)
		Gain (loss) on change in fair value of conversion option derivative					-			2,249,400			2,249,400
		Gain (loss) on change in fair value of warrant derivative					-			(1,133,600)			(1,133,600)
		Amortization of discount on debentures					(759,146)			241,710			(517,436)
		Accretion of asset retirement obligation					-			(14,084)			(14,084)
		Other income (expense)					160,256			998			161,254
				TOTAL OTHER INCOME (EXPENSE)			(2,365,485)			(3,523,038)			(5,888,523)
	LOSS BEFORE INCOME TAX						(5,161,381)			(3,415,201)			(8,576,582)
	Provision for income tax						-			-			-
	NET LOSS				$		(5,161,381)	$		(3,415,201)	$		(8,576,582)

Statement of Cash Flow

					Previously reported		Increase (Decrease)		Restated
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(5,161,381)	$	(3,415,201)	$	(8,576,582)
	Adjustments to reconcile net loss to net cash used by operating activities:
		Depreciation, depletion and amortization			972,160		(93,752)		878,408
		Accretion of asset retirement obligation			14,084				14,084
		Amortization of discount on debenture			759,146		-		517,436
		Debt conversion expense			1,466,978				-
		Common stock issued for stock issuance costs			161,068				-
		Loss on extinguishment of debt			-				1,469,078
		Loss on initial recording of derivative			-				4,914,580
		Loss (gain) on conversion of debt			-				-
		Loss (gain) on change in fair value of conversion option derivative			-		(2,249,400)		(2,249,400)
		Loss (gain) on change in fair value of warrant derivative			-		1,133,600		1,133,600
		Common stock issued in consideration of services			50,083		(25,113)		24,970
		Common stock issued in lieu of interest			79,222		10,004		89,226
		Loss on write-off and sales of leases and equipment			78,137		-		78,137
		Impairment of proved properties			811,339		-		811,339
		Stock based compensation			200,560		-		200,560
	Changes in assets and liabilities
		Trade accounts receivable			68,092		-		68,092
		Other current assets and other long term assets			(3,600)		2		(3,598)
		Accounts payable			834,682		(17,188)		817,494
		Due to royalty and working interest holders			-		27,479		27,479
		Other payables, interest and taxes accrued			75,040		(75,040)		-
			Net cash provided (used) by operating activities		405,610		(190,707)		214,903
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of property and equipment
	Sale of joint interests in Kansas property				250,000		-		125,000
	Proceeds from sales of equipment				-		-		-
	Proved oil and gas additions				(1,953,743)		-		(1,652,831)
	Unproved oil and gas property additions				(148,245)		116,233		(32,012)
	Refund (deposit) on proved property development				-		(72,999)		(72,999)
			Net cash provided (used) by investing activities		(1,851,988)		(219,146)		(1,632,842)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from convertible debentures				1,500,000		-		1,500,000
	Principal payments on notes payable				(3,000)		(28,439)		(31,439)
			Net cash provided by financing activities		1,497,000		(28,439)		1,468,561
Net increase in cash and cash equivalents					50,622		-		50,622
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR					5,658		-		5,658
CASH AND CASH EQUIVALENTS AT END OF YEAR				$	56,280		-	$	56,280

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CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
ASSETS
Cash and cash equivalents	$ 52,912	$ 56,280	$ 5,658
Trade accounts receivable	146,560	68,092
Other current assets	10,162	4,344
TOTAL CURRENT ASSETS	141,929	286,039
Unproved properties, net of accumulated amortization of $1,443,629 and $856,033 respectively	3,922,673	5,938,487
Proved properties, net of accumulated DD&A of $748,836 and $433,028 respectively	958,165	3,092,252
Computers, office equipment, furniture and leasehold improvements, net of depreciation of $36,659 and $25,296 respectively	8,252	19,616
NET PROPERTY AND EQUIPMENT	4,889,090	9,050,355
OTHER LONG-TERM ASSETS	101,500	56,900
TOTAL ASSETS	5,132,519	9,393,294
Accounts payable	(206,180)	817,494
Due to royalty and working interest holders	45,983	27,479
Other payables, interest and taxes accrued	(46,300)	178,358
Conversion option derivative	286,498	848,300
Warrant derivative	299,947	498,180
Notes payable in less than one year		227,914
Convertible debentures	1,279,000	1,497,000
Less: unamortized discount on debentures	(316,625)	(982,564)
TOTAL CURRENT LIABILITIES	2,351,288	2,989,991
Asset retirement obligation	170,421	154,928
Investment by joint venture partner		250,000
TOTAL LONG-TERM LIABILITIES	170,421	919,364
TOTAL LIABILITIES	2,521,709	3,909,355
Common stock, $0.001 par value; 200,000,000 shares authorized, 58,236,245 and 48,980,326 shares issued and outstanding respectively	$ 58,236	$ 48,980
Additional paid-in capital	20,967,464	19,508,456
Accumulated deficit	(18,414,890)	(14,073,497)
TOTAL STOCKHOLDERS' EQUITY	2,610,810	5,483,939	7,505,386
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 5,132,519	$ 9,393,294

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Statement of Cash Flows, Supplemental Disclosures

24 Months Ended

Sep. 30, 2012

Supplemental Cash Flow Elements [Abstract]

Cash Flow, Supplemental Disclosures [Text Block]

NOTE 17 - SUPPLEMENTAL CASH FLOW AND OTHER DISCLOSURES

			Year ended September 30,
			2011		2010
Supplemental disclosures:
	Interest paid	$	155,082	$	111,476
	Income taxes paid		-		-
Noncash Financing and Investing Activities:
	Common stock issued for conversion of debentures	$	718,000	$	3,000
	Expiration of option to purchase unproved properties		116,233		-
	Cancelled proved property development		72,999		-
	Account payable for option to purchase unproved properties				(116,233)
	Account payable for option to purchase proved properties				(72,999)
	Account payable converted to note payable		254,135		227,914

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Related Party Disclosures

24 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 16 - RELATED PARTY TRANSACTIONS

On July 1, 2008, the Company subleased office space for $1,500 per month from Marlin Property Management, LLC an entity owned by the spouse of the Company's President, CEO and member of the board of directors.  On December 1, 2011, the Company subsequently entered into a four year lease with Marlin Property Management, LLC for $2,500 for office space at an alternate location in Coeur d'Alene, Idaho, at market rate on terms acceptable to the Company.

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Financial Services, Brokers and Dealers

24 Months Ended

Sep. 30, 2012

Brokers and Dealers [Abstract]

Brokers and Dealers Disclosure [Text Block]

NOTE 15 - BROKER AND SHARE PURCHASE WARRANTS

In conjunction with the issuance of the $1,500,000 convertible debentures described in Note 12, 166,000 warrants were issued for services provided in execution of the debentures. As discussed in Note 8, the share purchase and broker warrants are treated as derivatives.  The warrants were valued at $104,580 using the Black-Scholes option pricing model with the following assumptions:  risk free interest rate of 1.70%, volatility of 165.4%, exercise price of $0..45, current market price of $0.63 per share and an expected life of 3.5 years.  The warrants expire June 14, 2013. 

In conjunction with the issuance of the $500,000 convertible debentures on or about October 26, 2010, described in Note 12, 55,335 warrants were issued for services provided in execution of the debentures.  The warrants were valued at $8,854 using the Black-Scholes option pricing model with the following assumptions:  risk free interest rate of 0.59%, volatility of 159.6%, exercise price of $0.18, current market price of $0.16 per share and an expected life of 3.5 years.  The warrants expire April 26, 2014.

The fair value of the broker warrants were expensed as financing costs.

A summary of the Company's share purchase and broker warrants outstanding at September 30, 2011 is presented as follows:

		Broker warrants		Broker warrant exercise price		Share purchase warrants		Warrant exercise price
Balance outstanding, September 30, 2009			-				-
	Granted		166,000		$0.45		5,000,000		$0.45
	Exercised		-		-		(3,000,000)		$0.45
	Forfeited		-		-		-		-
Balance outstanding, September 30, 2010			166,000		$0.45		2,000,000		$0.45
	Granted		55,335		$0.18		2,777,778		$0.18
	Exercised		-				-
	Granted		-				-
Balance outstanding, September 30, 2011			221,335		$0.12 (1)		4,777,778		$0.12(1)

⁽¹⁾  Provisions allow for a reduction in exercise price based on equity issuances subsequent to warrant issuance.  See Notes 7 and 12.

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Organization, Consolidation and Presentation of Financial Statements

24 Months Ended

Sep. 30, 2012

Organization, Consolidation and Presentation of Financial Statements

Nature of Operations [Text Block]

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

JayHawk Energy, Inc. (the Company or JayHawk) and its wholly owned subsidiary, is engaged in the acquisition, exploration, development, production and sale of natural gas, crude oil and natural gas liquids primarily from conventional reservoirs within North America.  The Company incorporated in Colorado on April 5, 2004 as Bella Trading Company, Inc.  During the third quarter ending June 30, 2007, the Company changed management and entered the oil and gas business, and ceased all activity in retail jewelry.  On June 21, 2007, the Company changed its name to JayHawk Energy, Inc.  Since then, the Company has devoted its efforts principally to the raising of capital, organizational infrastructure development, the acquisition of oil and gas properties and exploration activities.  To date, the Company has acquired three properties, the Uniontown in Kansas, the Crosby in North Dakota, and Girard in Kansas.  The Company also formed a wholly owned subsidiary to transport natural gas in Kansas called JayHawk Gas Transportation Corporation.

Disclosure Text Block Supplement [Abstract]

Supplemental Balance Sheet Disclosures [Text Block]

NOTE 22 - SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (Unaudited)

In January 2010, the FASB issued an ASU to amend existing oil and gas reserve accounting and disclosure guidance to align its requirements with the SEC's revised rules discussed in Note 1.  The significant revisions involved revised definitions of oil and gas producing activities, changing the pricing used to estimate reserves the period end to a twelve month arithmetic average of the first day of the month prices and additional disclosure requirements.  In contrast to the SEC rule, the FASB does not permit the disclosure of probable and possible reserves in the supplemental oil and gas information in the notes to the financial statements.  The amendments are effective for annual reporting periods ending on or after December 31, 2009.  Application of the revised rules is prospective and companies are not required to change prior period presentation to conform to the amendments.  Application of the amended guidance has only resulted in changes to the prices used to determine proved reserves at December 31, 2009.  The new guidelines have expanded the definition of proved undeveloped reserves that can be recorded from an economic producer did not impact or prove undeveloped reserves. 

The Company follows the guidelines prescribed in ASC 932 for computing a standardized measure of future cash net cash flows and changes therein relating to estimated proved reserves.  Future cash inflows and future production and development costs are determined by applying prices and costs, including transportation, quality and basis differentials to the year-end estimated quantities of oil and gas to be produced in the future.  The resulting net cash flows are reduced to present value amounts by applying a ten percent annual discount factor.  Future operating costs are determined based on estimates of expenditures to be incurred in producing the proved oil and gas reserves in place at the end of the period using year-end costs and assuming continuation of existing conditions, plus Company overhead incurred.  Future development costs are determined based on estimates of capital expenditures to be incurred in developing proved oil and gas reserves. 

The assumptions used to compute the standardized measure are those prescribed by the FASB and the SEC.  The assumptions do not necessarily reflect the Company's expectations of actual revenues to be derived from these reserves, no their present value.  The limitations inherent in the reserve quantity estimation process, as discussed previously, are equally applicable to the standardized measure computations since these reserve quantity estimates are the basis for the valuation process.  The Company emphasizes that reserve estimates are inherently imprecise and that estimate of new discoveries and undeveloped locations are more imprecise than estimates of establishing proved producing oil properties.  Users of this information should be aware that the process of estimating quantities of “proved” and “proved-developed” oil reserves is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir.  The data for a given reservoir may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions.  As a result, revisions to existing reserve estimates may occur from time to time.  Although every reasonable effort is made to ensure reserve estimates reported represent the most accurate assessments possible, the subjective decisions and variances in available data for various resevoirs make these estimates generally less precise than other estimates included in the financial statements disclosures.

Proved oil reserve quantities at September 30, 2011 and 2010, and the related future net cash flows are based on the estimates prepared by independent petroleum engineers.  The following reserve quantity and future net cash flow information for 2011 and 2010 was prepared by McDaniel & Associates Consultants, Ltd and are consistent with internal estimates.  The Company provided McDaniel & Associates with engineering, geological and geophysical data, actual production histories and other information necessary for the reserve determination.  The reserve estimates were prepared based on economic and operating conditions existing at September 30, 2011 and 2010. 

All of the Company's oil reserves are within the continental United States in the states of North Dakota and Kansas.  Based on the evaluation described in the preceding paragraph, presented below (in barrels) is a summary of changes to the Company's net interest in proved developed and proved undeveloped reserves for the years ending September 30, 2011 and 2010:

		Crude Oil (Net Bbls)
September 30, 2009		148,900
	Revisions of previous estimates	(50,200)
	Purchase of minerals in place	-
	Production	(19,300)
September 30, 2010		79,400
	Revisions of previous estimates	2,700
	Purchase of minerals in place	8,400
	Production	(9,100)
September 30, 2011		81,400

Oil reserves

Based on the evaluation described in the preceding paragraph, presented below (in barrels) is a summary of changes to the Company’s net interest in proved undeveloped and proved developed producing and non-producing reserves for the years ending September 30, 2011 and 2010:

		2011	2010
		Oil (Bbls)	Oil (Bbls)
Proved developed producing		47,000	53,400
Proved developed non-producing		8,400	-
Proved undeveloped reserves		26,000	26,000
	Total proved reserves	81,400	89,400

The reserves in this report have been estimated using deterministic methods.  For wells classified as proved developed producing where sufficient production history existed, reserves were based on individual well performance evaluation and production decline curve extrapolation techniques.  For undeveloped locations and wells that lacked sufficient production history, reserves were based on analogy to producing wells within the same area exhibiting similar geologic and reservoir characteristics, combined with volumetric methods.  The volumetric estimates were based on geologic maps and rock and fluid properties derived from well logs, core data, pressure measurements, and fluid samples.  Well spacing was determined from drainage patterns derived from a combination of performance-based recoveries and volumetric estimates for each area or field.  Proved undeveloped locations were limited to areas of uniformly high quality reservoir properties, between existing commercial producers. 

Capitalized Costs Relating to Oil and Gas Producing Activities

Evaluated and unevaluated capitalized costs related to the Company's oil and natural gas producing activities are summarized as follow in $ thousands:

				Year Ended September 30,
				2011		2010
Unproved properties			$	3,976	$	4,294
Proved properties				2,358		2,358
Wells and equipment				5,501		7,128
		Total capitalized costs	$	11,835	$	13,780
Less:  Allowance for depreciation, depletion, amortization and lease impairment				(6,954)		(4,749)
	TOTAL		$	4,881	$	9,031

The Company will continue to evaluate its unevaluated properties; however, the timing of the ultimate evaluation and disposition of the properties has not been determined.

Costs Incurred in Oil and Gas Producing Activities (in $ thousands)

Costs incurred in oil and natural gas property acquisitions, exploration and development are summarized as follows, in $ thousands:

			Year Ended September 30,
			2011		2010
Property acquisitions
	Unproved properties	$	47	$	148
	Proved properties (includes wells, equipment and related facilities acquired with proved reserves)				1,954
Exploration			-		-
Production and development capital expenditures			-		-
	TOTAL	$	47	$	2,102

Standardized Measure of Discounted Future Net Cash Flow

The following Standardized Measure of Discounted Future Net Cash Flow information has been developed utilizing ASC 932, Extractive Activities – Oil and Gas (ASC 932) procedures and based on estimated oil reserve and production volumes.  It can be used for some comparisons, but should not be the only method used to evaluate the Company or the Company performance.  Further, the information in the following table may not represent realistic assessments of future cash flows, nor should the Standardized Measure of Discounted Future Net Cash Flows be viewed as representative of the Company’s current value. 

The Company believes that the following factors should be taken into account when reviewing the following information:

·future costs and selling prices will probably differ from those required to be used in these calculations;

·due to future market conditions and governmental regulations, actual rates of production in future years may vary significantly from the rate of production assumed in the calculations;

·a 10% discount rate may not be reasonable as a measure of the relative risk in realizing future net oil reserves; and

·future net revenues may be subject to different rates of income taxation.

The Standardized Measure of discounted future net cash flows relating to the Company's ownership interests in proved developed oil reserves for the years ended December 31, 2011 and 2010 are as follows:

			2011		2010
Future cash flows		$	3,079,000	$	5,125,800
Future oil and natural gas operation expenses			(830,000)		(1,276,000)
Future abandonment costs			(128,000)		(203,800)
Future severance tax			(154,000)		(366,600)
Future income tax expense			-		-
Future net cash flows			1,967,000		2,251,600
Less: 10% annual discount for estimating timing of cash flow			(512,000)		(711,400)
	Standardized measure of discounted future net cash flow	$	1,455,000	$	1,540,200

Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil Reserves

The following is a summary of the changes in Standardized Measure of discounted future net cash flows for the Company’s proved oil reserves during each of the years in the two year period ended September 30, 2011:

			2011		2010
Standardized measure of discounted future net cash flows at beginning of year		$	1,540,200	$	3,004,200
Net changes in prices and production costs			259,496		2,602,109
Sales of oil produced, net of production costs			(184,525)		(326,143)
Revisions of previous quantity estimates			85,509		(2,690,700)
Development costs incurred			(20,100)		(326,650)
Change in income taxes			-		-
Accretion of discount			15,493		14,084
	Standardized measure of discounted future net cash flows at year end	$	1,455,000	$	1,540,200

Results of Operations for Oil and Gas Producing Activities

The results of operations shown below exclude non-oil and gas producing activities, corporate overhead items, interest expense and other incomes expense, gains and losses.  Therefore, these results are on a different basis than results of operations reported upon in the consolidated statement of operations.

All operations were conducted in the United States.  The Company produces crude oil in North Dakota and natural gas in southeast Kansas.   The Company produces no natural gas in North Dakota and no oil in Kansas at this time.   Because of limited funding, exploration activities were not conducted in the years ended September 30, 2011 and 2010. 

			2011		2010
Operating revenue		$	363,122	$	684,707
Costs and expenses
	Exploration expenses		-		-
	Production expenses		177,161		312,579
	Depreciation, depletion and amortization		962.131		866,418
	Loss on abandonment of unproved properties		1,020,479		-
	Loss (gain) on write off and sales of leases and equipment		1,301,566		78,137
	Impairment of proved properties		280,963		811,339
	General and administrative expenses		6,681		32,784
Total costs and expenses			3,748,981		2,101,257
Loss from Operations			(3,385,859)		(1,416,549)
					-
	Other income (expense)		(15,493)		79,300
Net results for operations		$	(3,401,352)	$	(1,337,249)

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
REVENUE
Oil sales	$ 333,275	$ 612,607
Natural gas sales	29,847	72,101
TOTAL REVENUE	363,122	684,708
OPERATING EXPENSES
Production costs - oil	148,750	286,464
Production costs - natural gas	28,411	26,060
Depreciation, depletion and amortization	970,239	878,408
Loss on abandonment of unproved properties	1,020,479
Loss on write-off and sales of leases and equipment	1,301,566	78,137
Impairment of proved properties	280,963	811,339
General and administrative	826,273	1,292,359
TOTAL OPERATING EXPENSES	4,576,681	3,372,767
OPERATING LOSS	(4,213,559)	(2,688,059)
OTHER INCOME (EXPENSE)
Interest and financing costs	(256,006)	(250,399)
Loss on initial recording of derivatives	(342,186)	(4,914,580)
Gain (loss) on extinguishment and conversion of debt	(221,000)	(1,469,078)
Gain (loss) on change in fair value of conversion option derivative	831,008	2,249,400
Gain (loss) on change in fair value of warrant derivative	651,531	(1,133,600)
Amortization of discount on debentures	825,257	517,436
Accretion of asset retirement obligation	15,493	14,084
Other income (expense)	49,569	161,254
TOTAL OTHER INCOME (EXPENSE)	(127,834)	(5,888,523)
LOSS BEFORE INCOME TAX	(4,341,393)	(8,576,582)
NET LOSS	$ (4,341,393)	$ (8,576,582)
Basic and diluted loss per share	$ (0.08)	$ (0.18)
Basic and diluted weighted average number shares outstanding	53,412,704	47,512,481

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Compensation Related Costs, Share Based Payments

24 Months Ended

Sep. 30, 2012

Disclosure Text Block Supplement [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

NOTE 14 - STOCK BASED COMPENSATION

The Company’s board of directors approved a stock option plan on August 11, 2009.  The purpose of the Plan is to provide employees and consultants of the Corporation and its Subsidiaries with an increased incentive to make significant and extraordinary contributions to the long-term performance and growth of the Corporation and its Subsidiaries, to join the interests of employees and consultants with the interests of the shareholders of the Corporation, and to facilitate attracting and retaining employees and consultants of exceptional ability.  The total number of shares available for grant under the terms of the Plan is 4,000,000.  The stock option price is the market price of the share at the date of issuance, but may be changed by the Board of Directors or designee from time to time.  The stock options are non-transferable and expire not more than five (5) years from the date of the granting.

The Company recognizes compensation expense straight-line over the vesting term.  Historically, the Company has issued new shares to satisfy exercises of stock options and the Company expects to issue new shares to satisfy any future exercises of stock options. 

During the year ended September 30, 2010, the Company granted 2,790,000 stock options to employees, contractors, board members and consultants exercisable at a price of $0.20 per share which expire September 2015.

At September 30, 2011, the Company had 2,040,000 options granted and outstanding.

The following table reflects the summary of stock options outstanding at September 30, 2011, and changes during the year ended September 30, 2011:

		Number of shares under options		Weighted Average Exercise Price Per Share			Weighted Average Fair Value			Aggregate Intrinsic Value
Balance outstanding, September 30, 2009			-		-			-			-
	Forfeited		-		-			-			-
	Exercised		-		-			-			-
	Granted		2,790,000		$0.20	$		558,000			-
Balance outstanding, September 30, 2010			2,790,000		0.20			558,000	$		279,000
	Forfeited		(750,000)		0.20			(150,000)			-
	Exercised		-		-			-			-
	Granted		-		-			-			-
Balance outstanding, September 30, 2011			2,040,000		$0.20	$		408,000	$		-

The fair value of the stock options granted was estimated using the Black-Scholes option-pricing model and is amortized over the vesting period of the underlying options.  The underlying assumptions used to calculate the fair value are as follows:

Year Ended September 30, 2010
	Dividend yield	-
	Expected volatility	99.3%
	Risk free interest rate	1.43%
	Expected life	5 years

A summary of the status of the Company’s nonvested stock options outstanding at September 30, 2011 is presented as follows:

		Number of options			Weighted Average Grant Date Fair Value Per Share			Weighted Average Grant Date Fair Value
Nonvested, September 30, 2009			-	$		-	$		-
	Granted		2,790,000			0.16			438,873
	Vested		(1,275,000)			0.16			(200,560)
	Forfeited		-						-
Nonvested, September 30, 2010			1,515,000	$		0.16	$		$238,813
	Granted		-			-			-
	Vested		(605,000)			0.16			(213,144)
	Forfeited		(750,000)			-			-
Nonvested, September 30, 2011			160,000			$0.16			$25,669

As of September 30, 2011, there was $25,669 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan.  That cost is expected to be recognized over a weighted-average period of 1.1 years. 

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Document and Entity Information (USD $)	12 Months Ended
	Sep. 30, 2011	Aug. 31, 2012	Mar. 31, 2011
Document and Entity Information
Entity Registrant Name	JAYHAWK ENERGY, INC.
Document Type	10-K
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Entity Central Index Key	0001308710
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		48,980,326
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	No
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Entity Public Float			$ 8,871,001

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Income Taxes

24 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 18 - INCOME TAX

The Company did not recognize an income tax benefit or expense for the fiscal years ended September 30, 2011 and 2010. 

The deferred tax assets were calculated based on an expected future combined tax rate of 40% consisting of maximum statutory federal tax rate of 35% and state taxes calculated at the rate of 5%, which is net of the expected federal income tax benefit. 

The components of the Company’s net deferred tax assets are as follows:

			2011			2010
Deferred tax assets arising from:
	Non-deductible share based compensation	$		166,000	$		81,000
	Property, plant and equipment			876,000			473,000
	Net operating loss carryforward			3,033,000			1,783,000
				4,075,000			2,337,000
	Less valuation allowance			(4,075,000)			(2,337,000)
	Net deferred tax assets	$		-	$		-

As management of the Company cannot determine that it is more likely than not the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to 100% of the net deferred tax asset has been recorded at September 30, 2011 and 2010. 

The Company has approximately $7.5 million of federal and state net operating loss carryforwards that expire through 2025 and 2028 that may be used to offset future taxable income. 

Based on the net loss for the year ended September 30, 2011 and 2010, of $4,341,393 and $8,576,582, respectively, the income tax benefit shown in the financial statements for the years ended September 30, 2011 and 2010 differs from the statutory rate as follows:

			2011 Amount		Rate			2010  Amount		Rate
Provision (benefit) at federal statutory rate		$		(1,519,000)		35%	$		(3,002,000)	35.0%
Permanent differences-financing instruments				(2,000)		0.1%			2,068,000	(24.0%)
Effect of state taxes				(217,000)		5%			(429,000)	5.0%
Increase in valuation allowance				1,738,000		(40.1%)			1,363,000	(16.0%)
	Total	$		-		-	$		-	-

The Company has concluded that the guidance regarding accounting for uncertainty in income taxes had no significant impact on the results of operations or financial position as of September 30, 2011 or 2010.  Therefore, the Company does not have an accrual for uncertain tax positions as of September 30, 2011 or 2010.  As a result, tabular reconciliation of beginning and ending balances would not be meaningful.  If interest and penalties were to be assessed, the Company would charge interest expense and penalties to other operating expense.  It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.  Fiscal years 2008 through 2011 remain subject to examination by state and federal tax authorities.

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CONOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (USD $)	Total	Common Shares	Stock Par Value	Additional Paid-In Capital	Retained Earnings (Deficit)	Stock Issuance Obligation
Cashless exercise of warrants (in shares) at Sep. 30, 2008
Private placement offering	$ 321,000		$ 2,675	$ 318,325
Private placement offering (in shares)		2,675,000
Balance at Sep. 30, 2009	7,505,386		44,509	12,821,792	(5,496,915)	136,000
Balance (in shares) at Sep. 30, 2009		44,509,496
Cashless exercise of warrants	3,950,000		2,111	3,947,889
Conversion of promissory note	2,329,521		2,154	2,463,367		(136,000)
Issuance of common shares in lieu of interest	50,083		134	49,949
Issuance of common shares in lieu of interest (in shares)		134,443
Issuance of common shares for services	24,971		72	24,899
Issuance of common shares for services (in shares)		71,000
Stock options	200,560			200,560
Loss for the year ended	(8,576,582)				(8,576,582)
Balance at Sep. 30, 2010	5,483,939		48,980	19,508,456	(14,073,497)
Cashless exercise of warrants (in shares) at Sep. 30, 2010		2,111,387
Balance (in shares) at Sep. 30, 2010		48,980,326
Conversion of promissory note (in shares) at Sep. 30, 2010		2,154,000
Issuance of common shares in lieu of interest	160,870		1,239	159,631
Issuance of common shares in lieu of interest (in shares)		1,238,751
Issuance of common shares for services	55,250		443	54,807
Issuance of common shares for services (in shares)		443,554
Issuance of common shares for conversion of debentures	718,000		4,899	713,101
Issuance of common shares for conversion of debentures (in shares)		4,898,614
Private placement offering	321,000		2,675	318,325
Private placement offering (in shares)		2,675,000
Stock options	213,144			213,144
Loss for the year ended	(4,341,393)				(4,341,393)
Balance at Sep. 30, 2011	$ 2,610,810		$ 58,236	$ 20,967,464	$ (18,414,890)
Balance (in shares) at Sep. 30, 2011		58,236,245

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Asset Retirement Obligations

24 Months Ended

Sep. 30, 2012

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligation Disclosure [Text Block]

NOTE 10 - ASSET RETIREMENT OBLIGATIONS

The Company has identified asset retirement obligations at the Girard, Kansas and Crosby, North Dakota operating sites.  These retirement obligations are determined based on the estimated cost to comply with abandonment regulations established by the Kansas Corporation Commission and the State of North Dakota.  The Company's engineers have estimated the cost, in today's dollars, to comply with these regulations.  These estimates have been projected out to the anticipated retirement date 12 to 18 years in the future, at an assumed inflation rate of 1.5 percent.  The anticipated future cost of remediation efforts in North Dakota, and Kansas, are $204,685, and $281,547, respectively.  These amounts were discounted back at an assumed interest rate of 10 percent, to arrive at a net present value of the obligation. The amount of the annual increase in the obligation is charged to "accretion expense" and for the years ended September 30, 2011 and 2010, was computed to be $15,493 and $14,084, respectively.

The following table summarizes the change in the asset retirement obligation since the beginning of the fiscal year ending September 30, 2010:

			September 30,
			2011		2010
Beginning balance		$	154,928	$	140,844
Liabilities incurred			-		-
Liabilities settled			-		-
Accretion expense			15,493		14,084
	TOTAL	$	170,421	$	154,928

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Deferred Costs, Capitalized, Prepaid, and Other Assets

24 Months Ended

Sep. 30, 2012

Disclosure Text Block Supplement [Abstract]

Other Assets Disclosure [Text Block]

NOTE 7 – OTHER LONG-TERM ASSETS

Other assets consists of various deposits and reclamation bonds.  Detail is disclosed in the following table:

			September 30,
			2011		2010
Rental Security Deposit		$	1,500	$	1,500
Bond Deposits			100,000		55,400
	TOTAL	$	101,500	$	56,900

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Subsequent Events

24 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 20 - SUBSEQUENT EVENTS

On October 4, 2011, the Company issued 472,604 shares of common stock in lieu of paying interest with cash, to holders of 10% convertible debentures described in Note 12.  The interest totaled $33,362 and was issued at the 5-day variable weighted-average price (VWAP) of $0.0706 per share.

On December 1, 2011, the Company entered into a four year lease with Marlin Property Management for $2,500 for office space at an alternate location in Coeur d'Alene, Idaho, at market rate on terms acceptable to the Company.

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Earnings Per Share

24 Months Ended

Sep. 30, 2012

Earnings Per Share

Earnings Per Share [Text Block]

Note 13 - COMMON STOCK

Fiscal Year End September 30, 2011

October 1, 2010 - The Company issued 124,999 shares of common stock in lieu of paying interest with cash, to holders of 10% convertible debentures described in Note 12.  The interest totaled $37,500 and was converted to shares at a price of $0.30 per common share.

April 13, 2011 - The Company closed on a private placement offering in the amount of $321,000 (the “Offering”).  Under the terms of this Offering, the Company issued 2,675,000 shares of its common stock at $0.12 per share.  No warrants are associated with this Offering.  The Company's Chief Executive Officer, purchased $144,000 or 44.9% of the Offering.

April 13, 2011 - The Company issued 649,564 shares of common stock in lieu of paying interest with cash, to holders of 10% convertible debentures described in Note 12.  The interest totaled $77,948 and was converted to shares at a price of $0.12 per common share.

May 6, 2011 - The Company issued 120,422 shares of common stock were issued to a member of the Board of Directors in lieu of cash payment for services provided.  The shares were valued at $0.1246 per share; with the fair value of the aggregate issuance approximating the value of the services rendered of $15,000.

June 30, 2011 - The Company issued 323,132 shares of common stock to the Board of Directors in lieu of cash payment for services provided.  These shares were valued at $.1246; with the fair value of the aggregate issuance approximating the value of the services provided of $49,710.

July 8, 2011 - The Company issued 404,637 shares of common stock in lieu of paying interest with cash, to holders of 10% convertible debentures described in Note 12.  The interest totaled $38,251 and was converted to shares at a price of $0.0945 per common share.

Per the terms of the debentures, holders have the option to receive shares issues in lieu of cash for accrued interest through the date of conversion.  The table below details common shares issued for conversion of debentures and accrued interest during the year ended September 30, 2011:

	Date		Debt Converted			Accrued Interest		Conversion price per share		Shares Issued
October 20, 2010		$		20,000	$		-		$0.18		111,111
October 21, 2010				36,000			-		$0.18		200,000
October 25, 2010				202,500			-		$0.18		1,125,000
October 27, 2010				27,000			-		$0.18		150,000
November 8, 2010				10,000			-		$0.18		55,556
November 24, 2010				10,000			-		$0.18		55,556
November 30, 2010				10,000			-		$0.18		55,556
December 7, 2010				50,000			1,068		$0.18		283,709
January 10, 2011				25,000			2,722		$0.18		154,012
May 3, 2011				20,000			-		$0.12		166,667
May 12, 2011				50,000			-		$0.12		416,667
May 25, 2011				50,000			764		$0.12		423,033
May 31, 2011				20,000			-		$0.12		166,667
August 5, 2011				60,000			-		$0.12		500,000
August 22, 2011				67,500			1,233		$0.12		572,777
September 22, 2011				60,000			1,383		$0.12		521,854
TOTAL		$		718,000	$		7,170				(1)  4,958,165

(1) Includes 59,551 shares of common stock issued as accrued interest on date of conversion at a 5-day variable weight average per share.  4,898,614 common shares issued strictly for conversion of debentures at stated price per share.

Fiscal Year End September 30, 2010

October2, 2009 - The Company issued 30,000 shares of common stock to one vendor for services rendered.  These shares were valued at $0.38 per share or $11,400.  The fair value of the aggregate issuance approximated the value of the services rendered.

October 30, 2009 - The Company issued 30,000 shares of common stock to one vendor for services rendered.  These shares were valued at $0.28 per share or $8,400.  The fair value of the aggregate issuance approximated the value of the services rendered

November 16, 2009 - As discussed in Note 9, the Company issued 544,000 shares of common stock to fulfill the stock issuance obligation recognized on July 30, 2009.  This obligation was recognized as the result of amending the original $800,000 short-term convertible promissory note, signed in July 2008.  The original note had a one-year maturity, maturing July 30, 2009, and provided for interest to be paid upon maturity, computed at a rate of 12 percent per annum.  The amendment extended the maturity date to July 30, 2010.  Accrued interest to the date of the amendment was $96,000.  This along with a 5 percent extension fee of $40,000 was converted to shares of the Company’s restricted common stock, at the rate of $0.25 per share.  The total amount of $136,000 was reflected as a stock issuance obligation as at September 30, 2009. 

January 6 and 27, 2010 - Holders of the debentures and the common stock purchase warrants, more fully described in Note 12, exercised their rights under those warrants to acquire 2,111,387 shares of the Company’s common stock in two separate cashless exercises.  As a result, the Company issued 1,398,065 shares, and 713,322 shares, in each of the respective transactions.

February 25, 2010 - As discussed in Note 9, the Company issued 1,600,000 shares of common stock for the conversion of the $800,000 convertible note payable reflected at September 30, 2009, and the accrued interest through February 25, 2010 of $55,143 at $0.53 per share.

April 01, 2010 - The Company issued 21,666 shares of common stock in lieu of paying interest, to one investor in the 10% convertible debentures, with cash.  The interest totaled $16,250 and was converted to shares at a price of $0.75 per common share.

May 04, 2010 - The Company issued 11,000 shares of common stock in lieu of paying cash for the rental of field equipment.   The value of the services was determined to be equivalent to the value of the shares issued at the closing stock price of that day, $0.47 per share, or $5,170.

June 28, 2010 - The Company issued 10,000 shares of common stock in conversion of $3,000 of principal to one of the holders of the 10% convertible debentures, in agreement with the terms thereof referenced above in Note 12,

July 20, 2010 - The Company issued the holders of the debentures 112,777 shares of the Company’s common stock in lieu of interest due and payable, totaling $33,833 as of July 01, 2010.  These were valued at $0.30 per share.

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Other Liabilities

24 Months Ended

Sep. 30, 2012

Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract]

Other Liabilities Disclosure [Text Block]

NOTE 8 - DERIVATIVE LIABILITIES

As discussed in Note 12, the Company entered into three separate issuances of convertible debentures, dated December 14, 2009, April 23, 2010 and October 20, 2010, which contained provisions allowing holders of the debentures to convert outstanding debt to shares of the Company's common stock. The debentures contain ‘down-round’ provisions which call for the debt conversion and warrant exercise prices to be reduced based on future issues of debt or equity with more favorable provisions.  Management has determined that these provisions cause the conversion options and warrants to require derivative liability accounting.  As such, management has valued them at fair value at the date of issuance and bifurcated from the host instruments. 

The debentures are convertible at any time after the original issue date into a number of shares of the Company’s common stock, determined by dividing the amount to be converted by a conversion price at September 30, 2011, of $0.12 per share or an aggregate of 10,658,333 shares.  Additionally common share purchase warrants were issued, expiring 42 months from the original issue date and permit the holders two exercisable options.  The warrants were exercisable by purchase of the Company’s common stock for cash, or alternatively, in a cashless exercise, the number of shares being determined in accordance with a predetermined formula based on the Company’s then current stock price.

Conversion option derivative

For the years ended September 30, 2011 and 2010, the fair value of conversion options was estimated at the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions and the associated  revaluation range of assumptions on designated event dates over the past two years:

	December 14, 2009	April 23, 2010	October 20, 2010	Revaluation Ranges
Risk-free interest rate	0.87%	1.10%	0.40%	0.04% to 1.60%
Expected dividend      yield	-	-	-	-
Expected term	2 years	1.64 years	2 years	.21 years to 3 years
Expected volatility	169.0%	196.6%	173.8%	120.1% to 184%
Per unit fair value of conversion option derivative liability	$0.60	$0.65	$0.14	$0.02 to $0.90
Number of conversion units valued	3,000,000	2,000,000	2,777,778	--
Valuation of conversion option derivative on date of issue	$1,800,000	$1,300,000	$388,889	--

Below is detail of the conversion option liability balance at September 30, 2011 and September 30, 2010.

		2011	2010
			(Restated Note 19)
Beginning balance		$                    848,300	$                               -
	Initial fair value of conversion option liability	388,889	3,100,000
	Revaluation of conversion option liability resulting from conversion of debentures	(119,683)	(2,300)
	Net change in fair value of conversion option liability	(831,008)	(2,249,400)
Ending balance		$                    286,498	$                   848,300
Conversion options outstanding at year-end		10,658,333	4,900,000
	Year end weighted average fair value per unit	$                          0.03	$                         0.17
Ending balance		$                    286,498	$                   848,300

Warrant derivative

For 2011 and 2010, the fair value of warrants was estimated at the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions and the associated  revaluation range of assumptions on designated event dates over the past two years:

	December 14, 2009	April 23, 2010	October 20, 2010	Revaluation Ranges
Risk-free interest rate	1.70%	1.68%	0.59%	0.25% to 1.70%
Expected dividend      yield	-	--	--
Expected term	3.5 years	3 years	3 years	3 to 3.5 years
Expected volatility	165.4%	166.2%	159.6%	136.6% to 172.8%
Per unit fair value of warrant derivative	$0.63	$0.66	$0.16	$0.06 to $1.44
Number of warrants valued	3,166,000	2,000,000	2,833,113	166,000 to 3,166,000
Valuation of warrant derivative	$2,564,460	$1,320,000	$453,298	--

Below is detail of the warrant derivative balance at September 30, 2011 and September 30, 2010.

		2011	2010
			(Restated Note 19)
Beginning balance		$                     498,180	$                               -
	Initial fair value of warrant derivative	453,298	3,314,580
	Revaluation of warrant derivative resulting from exercise of warrant	-	(3,950,000)
	Net change in fair value of warrant derivative	(651,531)	1,133,600
Ending balance		$                     299,947	$                   498,180
Warrants outstanding at year end		4,999,113	2,166,000
Year end weighted average fair value per unit		$0.06	$0.23
Ending balance		$                     299,947	$                   498,180

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Commitment and Contingencies

24 Months Ended

Sep. 30, 2012

COMMITMENTS AND CONTINGENCIES

Commitments and Contingencies Disclosure [Text Block]

NOTE 11 – INVESTMENT BY JOINT VENTURE PARTNER

During 2008, the Company completed a signed letter agreement with DK True Energy Development Limited ("DKTED”) which allowed DKTED to earn up to an 85% working interest in the Company's Girard project in southeast Kansas.  The agreement permitted DKTED to earn an initial participation and working interest of 42.5 percent after paying the Company $250,000 and spending $300,000 on workovers of existing wells during the first year.  DKTED subsequently assigned its interest in the Girard project to WHL Energy Midcon, LLC. ("WHL"), in December 2009.  At that time, the Company recognized receipt of $250,000 as a long-term liability called "Investment by Joint Venture Partner".

In 2010, after WHL had paid the $250,000 cash payment obligation and spent the $300,000 on workovers, the Company issued WHL an option to earn an additional 42.5 percent (total 85 percent) participation and working interest upon remitting to the Company an additional $250,000 within nine months of the granting of the option.  During the current year, the option period expired unexercised and, per the terms of the agreement, WHL's total working interest earned was set at 35 percent.  In accordance with ASC 932-360, the sale of the 35 percent partial interest in an unproved property for the initial payment amount of $250,000 has been treated as a recovery of cost of the property.

NOTE 21 – COMMITMENTS AND CONTINGENCIES 

There is no pending litigation or proceeding involving any director or officer of the Company for which indemnification is being sought.

On July 1, 2008, the Company leased office space for a period of three years for a fixed monthly rental of $1,500.  On December 1, 2011, the Company leased office space for a period of four years for fixed monthly rental of $2,500.  Accordingly, the Company's commitment to make these lease payments for each successive year is $30,000.

The Company is obligated to pay royalties to holders of oil and natural gas interests in both North Dakota and Kansas operations.  The Company also is obligated to pay working interest holders a pro-rata portion of revenue in oil operations net of shared operating expenses.  The amounts are based on monthly oil and natural gas sales and are charged monthly net of to oil and gas revenue and recognized as "Due to royalty and working interest holders" on the Company's balance sheet.

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Debt

24 Months Ended

Sep. 30, 2012

Debt Disclosure [Abstract]

Short-term Debt [Text Block]

NOTE 9 - NOTES PAYABLE DUE IN LESS THAN ONE YEAR

On July 30, 2008 JayHawk signed a convertible promissory note in the amount of $800,000 for cash received of an equal amount.  The original note provided for interest to be paid at the maturity date of July 30, 2009, computed at a rate of 12 percent per annum.  The note and accrued interest was convertible into share of common stock at $1.75 per share.  On July 30, 2009, the note was amended to extend the maturity date to July 30, 2010.  Under the amended agreement, interest continued to be accrued and the holder continued the right to convert the outstanding principal balance and unpaid accrued interest to shares of the Company's common stock, at the conversion price of $1.75.

On February 25, 2010 the $800,000 principal of the note payable and currently accrued interest was converted to 1.6 million shares of the Company’s common stock.  An expense is recognized when convertible debt is converted to equity securities of the debtor to the extent that the fair value of the securities and other consideration transferred exceeds the fair value of securities issuable pursuant to the original conversion terms.  Management made an assessment of the modified terms of conversion and determined that the fair value of the 1.6 million shares on the date of issuance was $2,112,000 and exceeded the value of shares issuable pursuant to the amended agreement of $645,022, by $1,469,078.  This amount was charged to debt conversion expense and is included in Gain (loss) on extinguishment and conversion of debt on the Consolidated Statement of Operations.  As of September 30, 2011 and 2010, the Company has satisfied all financial obligations on this note. 

On September 1, 2010 the Company entered into a short-term promissory note with a vendor for its balance of accounts payable.  The initial principal balance of $272,373 was due and payable in six (6) equal payments of $46,729 including interest at a rate of 12% per annum.  The balance as of September 30, 2010 was  $227,914.  As of September 30, 2011, the Company has satisfied all financial obligations on this note. 

On March 10, 2011 the Company entered into a short-term promissory note with a vendor for its balance of accounts payable.  The principal balance of $146,905 was due and payable in five (5) equal payments of $29,768 beginning on March 15, 2011 including interest at a rate of 5.25% per annum.  As of September 30, 2011, the Company has satisfied all financial obligations on this note.  

On April 28, 2011 the Company entered into a short-term promissory note with a vendor for its balance of accounts payable.  The principal balance of $107,230 was due and payable in four (4) equal payments of $21,446 beginning on April 28, 2011 including interest at a rate of 5.25% per annum.  As of September 30, 2011, the Company has satisfied all financial obligations on this note.  

Disclosure Text Block Supplement [Abstract]

Debt and Capital Leases Disclosures [Text Block]

NOTE 12 - CONVERTIBLE DEBENTURES

During the year ended September 30, 2010, the Company issued, pursuant to a securities purchase agreement, 10% convertible debentures with a face value of $1,500,000.  The first tranche of the total financing, with a face value of $900,000, was issued during the first quarter ended December 31, 2009.  In April 2010, additional debentures with a face value of $600,000 were issued.  All of the debentures have a two year maturity and were issued with attached common stock purchase warrants.  The effective interest rate on the debentures is 10% per annum.  The debentures are secured by all assets of the Company except those specifically excluded in the agreement which include all Kansas properties and related assets.

The debentures are convertible at any time after the original issue date into a number of shares of the Company’s common stock, determined by dividing the amount to be converted by an initial conversion price of $0.30 per share.  Additionally, attached common share purchase warrants expire 42 months from the original issue date and permit the holders two exercise options.  The warrants were exercisable by purchase of the Company’s common stock for cash at an initial exercise price of $0.45, or alternatively, with respect to the warrants issued in conjunction with the initial $900,000 tranche, in a cashless exercise, the number of shares being determined in accordance with a predetermined formula based on the Company’s then current stock price.   Subsequent to the initial issue date, the initial conversion price of $0.30 per share was amended to $0.18 per share and then $0.12 based on of provisions in the agreements related to equity issuances and issuance of additional convertible debentures described hereafter during the year ended September 30, 2011.  All of the warrants containing cashless exercise provision were fully exercised during the year ended September 30, 2010.

During the year ended September 30, 2010, the holders of the debentures and the common stock purchase warrants associated with the first $900,000 issuance, exercised all 3,000,000 warrants to acquire 2,111,388 shares of the Company’s common stock in two separate cashless exercises on January 6 and January 27, 2010.  Warrants attached to the debentures issued in April 2010 total 2,000,000, do not contain a cashless exercise provision, and remain to be exercised at the election of the debenture holders.

During the year ended September 30, 2011, the Company entered into a Securities Purchase Agreement with certain institutional investors to purchase $500,000 of Secured Convertible Debentures.  The debentures provide for interest to be paid quarterly, at the rate of 10% per annum, and are due two years from the issuance date.  The debentures are secured by all assets of the Company except those specifically excluded in the agreement which include all Kansas properties and related assets.

The debentures are convertible at any time after the original issue date into a number of shares of the registrant’s common stock, determined by dividing the amount to be converted by an initial conversion price of $0.18 per share.  In addition to the debentures the purchasers were issued an aggregate of 2,833,113 common share purchase warrants, each having a term of 42 months, expiring April of 2014, and giving the purchasers the right to purchase the Company’s common shares at an initial exercise price of $0.18 per share. Subsequent to the initial issue date, the initial conversion price of $0.18 per share was amended to $0.12 per share based on provisions in the agreements related to equity issuances and issuance of additional convertible debentures described hereafter during the year ended September 30, 2011

Based upon the fair values as of the original agreement dates of the December 2009 and April 2010 debentures, $1,500,000 was allocated to the common stock purchase warrants and the conversion features resulting in a discount on the debt.  Giving effect to the amortization of the discount, and the conversion of $658,000 and $3,000 in principal conversion for the years ended September 30, 2011 and 2010, $118,625 and $982,564 of the discount remains to be amortized at September 30, 2011 and 2010, respectively.  The discount will continue to be amortized over the remaining life of the underlying convertible debentures.

Based upon the fair values as of the original agreement dates of the October 2010 debentures, $500,000 was allocated to the common stock purchase warrants and the conversion features resulting in a discount on the debt.  Giving effect to the amortization of the discount and the conversion of $60,000 in principal conversion, $198,000 of the discount remains to be amortized as of September 30, 2011.  The discount will continue to be amortized over the remaining life of the underlying convertible debentures.

The 10% interest payable quarterly as per provisions in the debentures may be paid in shares of common stock at the Company's option according to a predetermined formula.  For the years ended September 30, 2011 and 2010, 1,238,751 and 134,443 common shares were issued, respectively, for interest payable under the debentures.  Interest expense of $192,036 and $50,083 has been included in ‘Interest and financing costs’ in the consolidated statements of operations for the years ended September 30, 2011 and 2010, respectively. Interest accrued is included on the Consolidated Balance Sheets in "Other payables, interest and taxes accrued" of $33,362 and $37,500 at September 30, 2011 and 2010, respectively.

The debentures all contain ‘down-round’ provisions which call for the debt conversion and warrant exercise prices to be reduced based on future issues of debt or equity with more favorable provisions.  Management has determined that these provisions cause the conversion options and warrants to require derivative liability accounting.  As such, management has valued at fair value at the date of issuance and bifurcated from the host instruments.  See Note 8.

In all three of these debt issuances, the fair value of the derivative liabilities at the date of issuance exceeded the amount of the debt.  The excess of the fair value of the derivative liabilities issued over the debt amount has been recorded to the statement of operations during the years ended September 30, 2011 and 2010, as follows:

		Excess fair value of derivative liabilities over face amount of debt at issuance
Issue Date	Debt Amount	2011	2010
December 14, 2009	$900,000	-	$2,894,580
April 23, 2010	600,000	-	2,020,000
October 20, 2010	500,000	$342,186	-
		$342,186	$4,914,580

In all three cases, the entire face amount of the debt issued has been allocated to discount, and is being amortized over the respective term of the debt.

During the fiscal years ended September 30, 2011 and 2010, holders of the debt elected to convert $718,000 and $3,000 face amount of the debt into 4,898,614 and 10,000 shares of common stock, respectively, according to the terms of the agreements. See Note 13.

Giving effect to monthly amortization of the debt discounts and the conversion of debt into shares of common stock, during the years ended September 30, 2011 and 2010, $825,257 and $517,436, respectively, of debt discount amortization has been posted to the statement of operations.  The remaining discounts will continue to be amortized to the statement of operations over the remaining life of the underlying convertible debentures.

As of September 30, 2011, the Company is in default of the terms of the convertible debentures as a result of certain provisions of the agreement.  The December 2009 and April 2010 debentures maturity date of December 14, 2011 has lapsed, causing the default provisions on all debentures including the October 2010 debentures for a  total balance of $1,279,000 as of September 30, 2011.    Management has reclassified the outstanding balance of all debentures, including the October 2010 debentures to current liabilities as of September 30, 2011. 

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Equity

24 Months Ended

Sep. 30, 2012

Disclosure Text Block Supplement [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

NOTE 14 - STOCK BASED COMPENSATION

The Company’s board of directors approved a stock option plan on August 11, 2009.  The purpose of the Plan is to provide employees and consultants of the Corporation and its Subsidiaries with an increased incentive to make significant and extraordinary contributions to the long-term performance and growth of the Corporation and its Subsidiaries, to join the interests of employees and consultants with the interests of the shareholders of the Corporation, and to facilitate attracting and retaining employees and consultants of exceptional ability.  The total number of shares available for grant under the terms of the Plan is 4,000,000.  The stock option price is the market price of the share at the date of issuance, but may be changed by the Board of Directors or designee from time to time.  The stock options are non-transferable and expire not more than five (5) years from the date of the granting.

The Company recognizes compensation expense straight-line over the vesting term.  Historically, the Company has issued new shares to satisfy exercises of stock options and the Company expects to issue new shares to satisfy any future exercises of stock options. 

During the year ended September 30, 2010, the Company granted 2,790,000 stock options to employees, contractors, board members and consultants exercisable at a price of $0.20 per share which expire September 2015.

At September 30, 2011, the Company had 2,040,000 options granted and outstanding.

The following table reflects the summary of stock options outstanding at September 30, 2011, and changes during the year ended September 30, 2011:

		Number of shares under options		Weighted Average Exercise Price Per Share			Weighted Average Fair Value			Aggregate Intrinsic Value
Balance outstanding, September 30, 2009			-		-			-			-
	Forfeited		-		-			-			-
	Exercised		-		-			-			-
	Granted		2,790,000		$0.20	$		558,000			-
Balance outstanding, September 30, 2010			2,790,000		0.20			558,000	$		279,000
	Forfeited		(750,000)		0.20			(150,000)			-
	Exercised		-		-			-			-
	Granted		-		-			-			-
Balance outstanding, September 30, 2011			2,040,000		$0.20	$		408,000	$		-

The fair value of the stock options granted was estimated using the Black-Scholes option-pricing model and is amortized over the vesting period of the underlying options.  The underlying assumptions used to calculate the fair value are as follows:

Year Ended September 30, 2010
	Dividend yield	-
	Expected volatility	99.3%
	Risk free interest rate	1.43%
	Expected life	5 years

A summary of the status of the Company’s nonvested stock options outstanding at September 30, 2011 is presented as follows:

		Number of options			Weighted Average Grant Date Fair Value Per Share			Weighted Average Grant Date Fair Value
Nonvested, September 30, 2009			-	$		-	$		-
	Granted		2,790,000			0.16			438,873
	Vested		(1,275,000)			0.16			(200,560)
	Forfeited		-						-
Nonvested, September 30, 2010			1,515,000	$		0.16	$		$238,813
	Granted		-			-			-
	Vested		(605,000)			0.16			(213,144)
	Forfeited		(750,000)			-			-
Nonvested, September 30, 2011			160,000			$0.16			$25,669

As of September 30, 2011, there was $25,669 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan.  That cost is expected to be recognized over a weighted-average period of 1.1 years. 

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Fair Value Measures and Disclosures

24 Months Ended

Sep. 30, 2012

Disclosure Text Block [Abstract]

Derivatives and Fair Value [Text Block]

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents, trade accounts receivables, accounts payable and accrued liabilities approximate fair value due to their limited time to maturity or ability to immediately convert them to cash in the normal course.  The carrying values of convertible debentures is net of a discount and does not reflect fair value of similar instruments.  The approximate fair value of the convertible debentures based upon the number of shares into which the debentures are convertible is $850,000 using the current market price per share of stock at September 30, 2011. 

The table below sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2011 and September 30, 2010, respectively, and the fair value calculation input hierarchy that the Company has determined has applied to each asset and liability category.

			2011		2010	Input Hierarchy Level
Assets:
	Cash equivalents	$	52,912	$	56,280	Level 1
Liabilities:
	Conversion option derivative		286,498		848,300	Level 2
	Warrant derivative		299,947		498,180	Level 2

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (4,341,393)	$ (8,576,582)
Depreciation, depletion and amortization	970,239	878,408
Accretion of asset retirement obligation	15,493	14,084
Amortization of discount on debentures	825,257	517,436
Loss on extinguishment of debt		1,469,078
Loss on initial recording of derivative	342,186	4,914,580
Loss (gain) on conversion of debt	221,000
Loss (Gain) on change in fair value of conversion option derivative	(831,008)	(2,249,400)
Loss (Gain) on change in fair value of warrant derivative	(651,531)	1,133,600
Common stock issued in consideration of services	55,250	24,970
Common stock issued in lieu of interest	160,870	89,226
Loss on write-off and sales of leases and equipment	1,301,566	78,137
Impairment of proved properties	280,963	811,339
Loss on abandonment of unproved properties	1,020,479
Stock based compensation	213,144	200,560
Trade accounts receivable	146,560	68,092
Other current assets and other long term assets	(50,418)	(3,598)
Accounts payable	(206,180)	817,494
Due to royalty and working interest holders	45,983	27,479
Other payables, interest and taxes accrued	(46,300)	178,358
Net cash provided (used) by operating activities	(527,840)	214,903
Purchase of property and equipment	(22,770)
Sale of joint interests in Kansas property		125,000
Proceeds from sales of equipment	220,000
Proved oil and gas additions		(1,652,831)
Unproved oil and gas property additions	(48,445)	(32,012)
Refund (deposit) on proved property development	36,736	(72,999)
Net cash provided (used) by investing activities	185,521	(1,632,842)
Proceeds from convertible debentures	500,000	1,500,000
Proceeds from private placement of common stock	321,000
Principal payments on notes payable	(482,049)	(31,439)
Net cash provided by financing activities	338,951	1,468,561
Net increase (decrease) in cash and cash equivalents	(3,368)	50,622
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	56,280	5,658
CASH AND CASH EQUIVALENTS AT END OF YEAR	$ 52,912	$ 56,280

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Receivables, Loans, Notes Receivable, and Others

24 Months Ended

Sep. 30, 2012

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 4 - TRADE ACCOUNTS RECEIVABLE

At September 30, 2011, trade accounts receivable represents those amounts the Company is owed for its oil and gas production delivered during the month of September 2011 and amounts due from other working interests for their respective percentages of joint operating costs and drilling costs. Management has determined the allowance for doubtful accounts by evaluating individual customer receivables and considering a customer's financial condition, credit history and current economic conditions.  As of September 30, 2011 and 2010 there is no allowance recognized for bad debt. 

Proceeds for the September 2011 deliveries, valued at $70,664, were subsequently received in October 2011.  Amounts receivable for September natural gas deliveries, $571 were also received in October 2011. 

Proceeds for the August and September 2010 deliveries, valued at $193,297, were subsequently received in October 2010.  Amounts receivable for September natural gas deliveries, $6,533 were also received in October 2010. Specifically, trade accounts receivable are detailed as follows:

			2011		2010
Due for crude oil		$	70,664	$	193,297
Due for natural gas			571		6,533
Other receivables			7,620		25,585
	TOTAL	$	78,855	$	225,415

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Derivative Instruments and Hedging Activities

24 Months Ended

Sep. 30, 2012

Disclosure Text Block [Abstract]

Derivatives and Fair Value [Text Block]

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents, trade accounts receivables, accounts payable and accrued liabilities approximate fair value due to their limited time to maturity or ability to immediately convert them to cash in the normal course.  The carrying values of convertible debentures is net of a discount and does not reflect fair value of similar instruments.  The approximate fair value of the convertible debentures based upon the number of shares into which the debentures are convertible is $850,000 using the current market price per share of stock at September 30, 2011. 

The table below sets forth the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2011 and September 30, 2010, respectively, and the fair value calculation input hierarchy that the Company has determined has applied to each asset and liability category.

			2011		2010	Input Hierarchy Level
Assets:
	Cash equivalents	$	52,912	$	56,280	Level 1
Liabilities:
	Conversion option derivative		286,498		848,300	Level 2
	Warrant derivative		299,947		498,180	Level 2