SEC FILE NUMBER 333-212536

As Filed with the Securities and Exchange Commission on August 8, 2016 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM S-1/A-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933


SAUER ENERGY, INC. Nevada

(Exact Name of Issuer as specified in its charter) (State or Other Jurisdiction of Incorporation

or Organization)

3511 26-3261559

(Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification No.)


1620 Emerson Avenue, Oxnard, CA, 93033 888-829-8748 (Address and telephone number of principal executive offices)


1620 Emerson Avenue, Oxnard, CA, 93033

(Address of principal place of business or intended principal place of business)

Frank J. Hariton, Esq., 1065 Dobbs Ferry Road, White Plains, New York 10607, (914) 674- 4373

(Name, address and telephone number of agent for service)


Approximate Date of Proposed Sale to the Public: From time to time after the date this registration statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [x]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 424, check the following box. [ ]

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


Large accelerated filer

[ ]

Accelerated filer

[ ]

Non-accelerated filer

[ ]

Smaller reporting company

[x]

(Do not check if a smaller reporting company)

CALCULATION OF REGISTRATION FEE


Title of each class of securities to be registered

Amount to be registered (1)

Proposed maximum offering price per share (2)

Proposed maximum aggregate offering price (1)

Amount of registration fee (3)

Common Stock, $.0001 par value per share

55,700,000

$0.038

$2,116,600

$213.14*


  1. In accordance with Rule 416(a), the registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions.


  2. Estimated in accordance with Rule 457(c) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee based on the closing market price of the Registrant’s common stock on July 1, 2016.


  3. Calculated under Section 6(b) of the Securities Act of 1933.

* Previously paid

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.


SUBJECT TO COMPLETION, DATED August 8, 2016 PRELIMINARY PROSPECTUS

SAUER ENERGY, INC.

55,700,000 Shares of Common Stock

This prospectus relates to the offer and resale of up to 55,700,000 shares of our common stock, par value $0.0001 per share, by the selling stockholder, Beaufort Capital Partners, LLC ("Beaufort"), and represent shares that Beaufort has agreed to purchase if put to it by us pursuant to the terms of the Equity Purchase Agreement (the “EPA”) we entered into with Beaufort on July 1, 2016. Subject to the terms and conditions of the EPA, we have the right to "put," or sell, up to $3,000,000 worth of shares of our common stock to Beaufort. This arrangement is sometimes referred to as an "EPA." For more information on the selling stockholder, please see the section of this prospectus entitled "Selling Security Holder" beginning on page 43. We will not receive any proceeds from the resale of these shares of common stock offered by Beaufort.

We will, however, receive proceeds from the sale of shares directly to Beaufort pursuant to the EPA. When we put an amount of shares to Beaufort, the per share purchase price that Beaufort will pay to us in respect of such put will be determined in accordance with a formula set forth in the Equity Purchase Agreement. There will be no underwriter's discounts or commissions so we will receive all of the proceeds of our sale to Beaufort. The purchase price to be paid by Beaufort will be equal to 72% multiplied by the lowest closing price of our common stock for the ten trading days prior to the notice from us (the “Market Price”). We will be entitled to put to Beaufort on each put 250% of the average of the dollar volume on the principal trading exchange for our common stock for the 10 trading days preceding the put date; provided that the number of shares to be purchased by Beaufort shall not exceed the number of such shares that, when added to the number of shares of our common stock then beneficially owned by Beaufort, would exceed 4.99% of the number of shares of our common stock outstanding. Beaufort may sell any shares offered under this prospectus at prevailing market prices or privately negotiated prices.

Beaufort is an "underwriter" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in connection with the resale of our common stock under the EPA. For more information, please see the section of this prospectus titled "Plan of Distribution" beginning on page 44. Our common stock became eligible for trading on the OTC Bulletin Board on August 13, 2009. Our common stock is quoted on the OTCQB under the symbol "SENY". The closing price of our stock on July 1, 2016, was $0.0375. You should understand the risks associated with investing in our common stock. Before making an investment, read the "Risk Factors," which begin on page 5 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


The date of this prospectus is August 8, 2016.


Page

PROSPECTUS SUMMARY

3

RISK FACTORS

5

SHARES ELIGIBLE FOR FUTURE SALE

14

USE OF PROCEEDS

16

DETERMINATION OF OFFERING PRICE

16

BUSINESS

32

MARKET PRICE OF COMMON STOCK AND OTHER STOCKHOLDER MATTERS

33

TRADING MARKET

33

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


35

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

38

EXECUTIVE COMPENSATION

39

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


42

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

43

SELLING SECURITY HOLDER

43

RELATIONSHIP BETWEEN THE ISSUER AND THE SELLING SECURITY HOLDER

44

PLAN OF DISTRIBUTION

44

DESCRIPTION OF SECURITIES

45

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

46

EXPERTS

46

LEGAL MATTERS

47

WHERE YOU CAN FIND MORE INFORMATION

47

AUDITED FINANCIAL STATEMENTS FOR THE YEARS ENDED AUGUST 31, 2015

49

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION INDEMNIFICATION OF DIRECTORS AND OFFICERS RECENT SALES OF UNREGISTERED SECURITIES EXHIBITS

UNDERTAKINGS SIGNATURES

II-1 92

92

92

93

94

95

97


You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that which is contained in this prospectus. This prospectus may be used only where it is legal to sell these securities. The information in this prospectus may only be accurate on the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of securities.


PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms, the "Company," "Sauer Energy," "we," "us," "our," and "our company" refer to Sauer Energy, Inc., a Nevada corporation.


Company Overview The Offering

Common stock 55,700,000 shares that may be offered by the selling stockholder.


Shares Outstanding:


Common stock 273,433,664 shares outstanding as of the date of this prospectus.


Total proceeds


We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by the selling shareholder. We will receive proceeds from our sale of shares to Beaufort. Beaufort has committed to purchase up to $3,000,000 worth of shares of our common stock over a period of time terminating on the earlier of: (i) 36 months from the effective date of the Equity Purchase Agreement (the “EPA”); or (ii) the date on which Beaufort has purchased shares of our common stock pursuant to the EPA for an aggregate maximum purchase price of

$3,000,000. The purchase price to be paid by Beaufort will be equal to 72% of the Market Price of the common stock as determined under the EPA. We will be entitled to put to Beaufort on each put date such number of shares of common stock as equals 250% of the average of

the dollar volume on the principal trading exchange for our common stock for the 10 trading days preceding the put date; provided that the number of shares to be purchased by Beaufort shall not exceed the number of such shares that, when added to the number of shares of our common stock then beneficially owned by Beaufort, would exceed 4.99% of the number of shares of our common stock outstanding.


Risk Factors


There are significant risks involved in investing in our company. For a discussion of risk factors you should consider before buying our common stock, see "Risk Factors" beginning on page 5.


Company Overview


We (“the Company”) were incorporated on August 19, 2008, in the State of Nevada, under the name BCO Hydrocarbon, Ltd., for the purpose of acquiring, exploring, and if warranted and

feasible, developing natural resource assets. The Company began its business operations by executing a Farm-in Agreement providing the Company with the right to a 50.0% working interest in two Petroleum and Natural Gas Crown leases in Alberta, Canada. On July 25, 2010 the Company acquired all of the shares of Sauer Energy, Inc., a California corporation, and has since changed its business to that of Sauer Energy, Inc. On September 17, 2010 our majority shareholder and sole director approved a name change which was officially effected on October 15, 2010, when we became Sauer Energy, Inc.(“SEI”) a Nevada corporation. Our California subsidiary has since been dissolved.


Our Business


Our business, described more fully under “Business”, is the design, research and development of vertical axis wind turbine (VAWT) electrical generation systems for residential and commercial use. We have not commenced production or realized revenues, but anticipate doing so with the receipt of the funds under the Equity Purchase Agreement. We have not generated any revenue and have incurred losses of $846,100 in the fiscal year ended August 31, 2015; losses of $2,218,630 in the fiscal year ended August 31, 2014, and losses of $8,662,500 since our inception on August 7, 2008. We have continued to incur operating losses.


The opinion of our independent auditors for the fiscal years ended August 31, 2015, is qualified subject to substantial doubt as to our ability to continue as a going concern. If we are in fact unable to continue as a going concern, you may lose your entire investment.


Our principal executive offices are located at 1620 Emerson Avenue, Oxnard, CA, 93033, and our telephone number is 888-829-8748.


RISK FACTORS


Investing in our common stock involves a high degree of risk, and you should be able to bear the complete loss of your investment. You should carefully consider the risks described below and the other information in this prospectus when evaluating our company and our business. If any of the following risks actually occur, our business could be harmed. In such case, the trading price of our common stock could decline and investors could lose all or a part of the money paid to buy our common stock.


RISKS RELATED TO OUR BUSINESS


We have a history of losses.


We are in a pre-expansion stage, have never realized any revenue and have a history of losses. We have not generated any revenue and have incurred losses of $846,000 in the fiscal year ended August 31, 2015; losses of $2,218,630 in the fiscal year ended August 31, 2014; and losses of $9,603,727 through May 31, 2016 since our inception on August 7, 2008. If we continue incurring losses and fail to achieve profitability, we may have to cease our

operations. Unless we bring our products to market and realize revenues from their sale, shareholders are likely to lose their entire investment.


We do not have sufficient cash on hand.


As at May 31, 2016, we had $61,223 cash on hand. These cash resources are not sufficient for us to execute our business plan. If we do not generate sufficient cash from our intended financing activities and sales, we will be unable to continue our operations. We estimate that within the next 12 months we will need $8,000,000 in cash from either investors or

operations. While we intend to engage in several equity or debt financings, there is no assurance that these will actually occur. Nor can we assure our shareholders that we will not be required to obtain additional financing on terms that are dilutive of their interests. You should recognize that if we are unable to generate sufficient revenues or obtain debt or equity financing, we will not be able to earn profits and may not be able to continue operations.


We may not be able to continue our business as a going concern.


The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated a deficit of $9,603,727 as of May, 31, 2016, and has had no revenues.


In view of these matters, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. If these adjustments were required to be made, the value of our assets and your shares would be reduced. Management plans to raise additional capital through the sale of stock to pursue business development activities.


If we are not able to raise enough funds through the EPA or other sources, we may not be able to successfully develop and market our products and our business may fail.


The Company's cash on hand at May 31, 2016, was $61,223. We have generated no revenue from operations. We do not have any commitments for financing other than the EPA, and we will need additional financing to meet our obligations and to continue our business. Although we plan to raise funds through the EPA, due to the conditions of the EPA we cannot guarantee that we will be able to raise money through the use of the EPA or that we will be able to utilize the full EPA.


As we raise additional capital, shareholders' percentage ownership interest will likely be reduced.


The raising of additional financing would, in all likelihood, result in dilution or reduction in the value of our securities. If we issue additional stock in accordance with the EPA (up to 55,700,000 shares), common shareholders' ownership interest will be reduced. We have recently

raised money from the sale of convertible notes that contain a conversion feature with a discount to market. Such a discount will have a dilutive effect on our current shareholders as well.

If we are unable to continue to retain the services of Dieter Sauer, Jr. or if we are unable to successfully recruit qualified managerial and company personnel having experience in the small wind turbine industry, we may not be able to continue operations.


Our success depends to a significant extent upon the continued services of Dieter Sauer, Jr. our CEO and President. The loss of the services of Mr. Sauer could have a material adverse effect on our growth, revenues, and prospective business. Mr. Sauer will enter into an employment agreement with us requiring him to devote substantially all of his time to us but, to date, has not done so. We do not have a “key person” life insurance policy on Mr. Sauer. Additionally, there are a limited number of qualified technical personnel with significant experience in the design, development, manufacture, and sale of our wind turbines, and we may face challenges hiring and retaining these types of employees.


In order to successfully implement and manage our business plan, we will be dependent upon, among other things, successfully recruiting qualified managerial and company personnel having experience in the small wind turbine business. Competition for qualified individuals is intense. There can be no assurance that we will be able to find, attract and retain existing employees or that we will be able to find, attract and retain qualified personnel on acceptable terms.


We have no independent audit committee nor do we have an audit committee financial expert at this time.


Our full board of directors functions as our audit committee. This may hinder our board of directors' effectiveness in fulfilling the functions of the audit committee. Currently, we have no independent audit committee nor do we have an audit committee financial expert at this time. Our full board of directors functions as our audit committee and is comprised of four directors, two of whom are not considered to be "independent" in accordance with the requirements of Rule 10A-3 under the Exchange Act. An independent audit committee plays a crucial role in the corporate governance process, assessing our company's processes relating to our risks and control environment, overseeing financial reporting, and evaluating internal and independent audit processes. The lack of an independent audit committee may prevent the board of directors from being independent from management in its judgments and decisions and its ability to pursue the committee's responsibilities without undue influence. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified, independent directors, the management of our business could be compromised. In addition, the director on our board of directors is not considered to be a "financial expert" in that he does not have the education or experience of being a chief financial officer.


If we are unable to successfully achieve broad market acceptance of our systems, we may not be able to generate enough revenues in the future to achieve or sustain profitability.


We are dependent on the successful commercialization of our systems. The market for small wind turbines is at an early stage of development. The market for our systems is unproven. The

technology may not gain adequate commercial acceptance or success for our business plan to succeed.

If we cannot establish and maintain relationships with distributors, we may not be able to increase revenues.


In order to increase our revenues and successfully commercialize our systems, we must establish and maintain relationships with various third party distributors. We currently do not have any signed distribution agreements.


If we cannot assemble a large number of our systems, we may not meet anticipated market demand or we may not meet our product commercialization schedule.


To be successful, we will have to assemble our systems in large quantities at acceptable costs while preserving high product quality and reliability. If we cannot maintain high product quality on a large scale, our business will be adversely affected. We may encounter difficulties in scaling up production of our systems, including problems with the supply of key components.

Even if we are successful in developing our assembly capability, we do not know whether we will do so in time to meet our product commercialization schedule or satisfy the requirements of our customers. In addition, product enhancements need to be implemented to various components of the platform to provide better overall quality and uptime in high wind

regimes. The implementation of the enhancements to our system may also delay significant production by requiring additional manufacturing changes and technical support to facilitate the manufacturing process.


If we experience quality control problems or supplier shortages from component suppliers, our revenues and profit margins may suffer.


We do not plan to manufacture our wind turbine systems ourselves, but plan to outsource this part of our business. Our dependence on third-party suppliers for components of our turbine systems involves several risks, including limited control over pricing, availability of materials, quality and delivery schedules. Any quality control problems or interruptions in supply with respect to one or more components or increases in component costs could materially adversely affect our customer relationships, revenues and profit margins.


Technological advances could render our VAWT products uncompetitive.


While management believes that our current and proposed designs are sufficiently advanced to be commercially successful, we cannot assure you that any competitor will not design a superior product with which we cannot compete or that other energy production sources may not in the future prove superior to wind power generation. Those events could substantially harm our operations.


Any future international expansion will subject us to risks associated with international operations that could increase our costs and decrease our profit margins.


International operations are subject to several inherent risks that could increase our costs and decrease our profit margins including:




If we determine to seek sales or contract for manufacturing outside the United States, we will be subject to these risks. However, we plan to be in a strong financial position before we would attempt to do so.


If we cannot effectively manage our internal growth, our business prospects, revenues and profit margins may suffer.


If we fail to effectively manage our internal growth in a manner that minimizes strains on our resources, we could experience disruptions in our operations and ultimately be unable to generate revenues or profits. We expect that we will need to significantly expand our operations to successfully implement our business strategy. As we add marketing, sales and build our infrastructure, we expect that our operating expenses and capital requirements will increase. To effectively manage our growth, we must continue to expend funds to improve our operational, financial and management controls, and our reporting systems and procedures. In addition, we must effectively expand, train and manage our employee base. If we fail in our efforts to manage our internal growth, our prospects, revenue and profit margins may suffer.


Our technology competes against other small wind turbine technologies. Competition in our market may result in pricing pressures, reduced margins or the inability of our systems to achieve market acceptance.


We compete against several companies seeking to address the small wind turbine market. We may be unable to compete successfully against our current and potential competitors, which may result in price reductions, reduced margins and the inability to achieve market acceptance. The current level of market penetration for small wind turbines is relatively low and as the market increases, we expect competition to grow significantly. Our competition may have significantly more capital than we do and as a result, they may be able to devote greater resources to take advantage of acquisition or other opportunities more readily.

Our inability to protect our patents and proprietary rights in the United States and foreign countries could materially adversely affect our business prospects and competitive position.


Our vertical axis wind turbine designs are protected by multiple patents. However, the grant of a patent does not ensure against the possibility that our patent will not be found to infringe upon patents or other intellectual property rights held by others, nor does the grant of a patent ensure that the patent will provide meaningful protection against potential or actual infringement by others.


If we encounter unforeseen problems with our current technology offering, it may inhibit our sales and early adoption of our products.

We are in the process of setting a certification standard through extensive computer fluid dynamic testing and actual field testing to curb anomalies related to manufacturing before we finalize our process. We do not anticipate negative results based on our preliminary results. We are at a stage in development that we can perfect our design prior to going into production.


We are a technology development company and are in an early production phase where we may encounter difficulties that we did not anticipate. Unforeseen problems relating to manufacture of the units or their operating effectively in the field could have a negative impact on adoption, future shipments and our operating results.


We are to establish and maintain required disclosure controls and procedures and internal controls over financial reporting and to meet the public reporting and the financial requirements for our business.


Our management has a legal and fiduciary duty to establish and maintain disclosure controls and control procedures in compliance with the securities laws, including the requirements mandated by the Sarbanes-Oxley Act of 2002. The standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. Because we have limited resources, we may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting, and disclosure controls and procedures. If we cannot assess our internal control over financial reporting as effective or provide adequate disclosure controls or implement sufficient control procedures, may cause investor confidence and share value may be negatively impacted. We currently do not have a sufficient number of management employees to establish adequate controls and procedures.


Our officers have limited experience in managing a public company.


Our present officers have no experience in managing a public company prior to our acquiring our present operations in 2010 and we do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identify other deficiencies that we may not be able to remediate in time to meet the deadline

imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.


Control by Management

As of August 8, 2016, we are effectively controlled by management, specifically Dieter Sauer, Jr., our CEO and director, who owns 49,812,500 shares or 23% of our 273,433,664 issued and outstanding shares of common stock. As of August 8, 2016, he is able to exercise effective control by management, since his interest is substantial and unchallenged by any other shareholders with substantial interests or directorships of the company. All of our officers and directors as a group control 62,852,500 shares or 23.5%. Accordingly, they will be able to elect our board of directors and control our corporate affairs for the foreseeable future.


Risks Related to Common Stock


The large number of shares eligible for immediate and future sales may depress the price of our stock.


As of the date of this prospectus we have 273,433,664 shares of common stock

outstanding. 185,193,752 shares are “free trading” and may serve to overhang the market and depress the price of our common stock.


There is currently a limited public market for our common stock. Failure to develop or maintain a trading market could negatively affect its value and make it difficult or impossible for you to sell your shares.


Our common stock trades on the OTCQB under the Symbol SENY. There has been a limited public market for our common stock and an active public market for our common stock may not develop. Failure to develop or maintain an active trading market could make it difficult for you to sell your shares or recover any part of your investment in us. Even if a market for our common stock does develop, the market price of our common stock may be highly volatile. In addition to the uncertainties relating to future operating performance and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on the market price of our common stock.


Penny Stock” rules may make buying or selling our common stock difficult. Limitations upon Broker-Dealers Effecting Transactions in "Penny Stocks"

Trading in our common stock is subject to material limitations as a consequence of regulations which limit the activities of broker-dealers effecting transactions in "penny stocks." Pursuant to Rule 3a51-1 under the Exchange Act, our common stock is a "penny stock" because it (i) is not listed on any national securities exchange or The NASDAQ Stock Market™, (ii) has a market price of less than $5.00 per share, and (iii) its issuer (the Company) has net tangible assets less than $2,000,000 (if the issuer has been in business for at least three (3) years) or $5,000,000 (if the issuer has been in business for less than three (3) years).


Rule 15g-9 promulgated under the Exchange Act imposes limitations upon trading activities on "penny stocks", which makes selling our common stock more difficult compared to selling securities which are not "penny stocks. "Rule 15a-9 restricts the solicitation of sales of "penny stocks" by broker-dealers unless the broker first (i) obtains from the purchaser information concerning his financial situation, investment experience and investment objectives, (ii) reasonably determines that the purchaser has sufficient knowledge and experience in financial matters that the person is capable of evaluating the risks of investing in "penny stocks", and (iii) delivers and receives back from the purchaser a manually signed written statement acknowledging the purchaser's investment experience and financial sophistication.


Rules 15g-2 through 15g-6 promulgated under the Exchange Act require broker-dealers who engage in transactions in "penny stocks" first to provide their customers with a series of disclosures and documents, including (i) a standardized risk disclosure document identifying the risks inherent in investing in "penny stocks", (ii) all compensation received by the broker-dealer in connection with the transaction, (iii) current quotation prices and other relevant market data, and (iv) monthly account statements reflecting the fair market value of the securities.


There can be no assurance that any broker-dealer which initiates quotations for the Common Stock will continue to do so, and the loss of any such broker-dealer likely would have a material adverse effect on the market price of our common stock.


FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.


In addition to the "penny stock" rules described below, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.


Because our common stock is deemed a low-priced "penny stock," it will be cumbersome for brokers and dealers to trade in our common stock, making the market for our common stock less liquid and negatively affect the price of our stock.

We will be subject to certain provisions of the Securities Exchange Act of 1934 (the "Exchange Act"), commonly referred to as the "penny stock" rules as defined in Rule 3a51-1. A penny stock is generally defined to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Since our stock is deemed to be a penny stock, trading is subject to additional sales practice requirements of broker-dealers. These require a broker-dealer to:



In some circumstances, approve the purchaser's account under certain standards and deliver written statements to the customer with information specified in the rules.


Consequently, penny stock rules and FINRA rules may restrict the ability or willingness of broker-dealers to trade and/or maintain a market in our common stock. Also, prospective investors may not want to get involved with the additional administrative requirements, which may have a material adverse effect on the trading of our shares.


SHARES ELIGIBLE FOR FUTURE SALE


The sale of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock. In addition, any such sale or perception could make it more difficult for us to sell equity, or equity related, securities in the future at a time and price that we deem appropriate. If and when this registration statement becomes effective and we become subject to the reporting requirements of the Exchange Act, we might elect to adopt a stock option plan and file a registration statement under the Securities Act registering the shares of common stock reserved for issuance there under. Following the effectiveness of any such registration statement, the shares of common stock issued under such plan, other than shares held by affiliates, if any, would be immediately eligible for resale in the public market without restriction.


The sale of shares of our common stock which is not registered under the Securities Act, known as “restricted” shares, typically is affected under Rule 144. As of the date of this prospectus we have outstanding an aggregate of 273,433,664 shares of common stock of which 88,239,892 are restricted stock. All of our restricted shares of common stock might be sold under Rule 144 if held for more than six months by non-affiliates. In addition, each of our officers, directors or affiliates, who own an aggregate of 62,852,500 shares, may sell 1% of our outstanding shares (approximately 2,734,000, shares) every three months under Rule 144. No prediction can be made as to the effect, if any, that future sales of “restricted” shares of our

common stock, or the availability of such shares for future sale, will have on the market price of our common stock or our ability to raise capital through an offering of our equity securities.


The sale of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock. In addition, any such sale or perception could make it more difficult for us to sell equity, or equity related, securities in the future at a time and price that we deem appropriate. If and when this registration statement becomes effective and we become subject to the reporting requirements of the Exchange Act, we might elect to adopt a stock option plan and file a registration statement under the Securities Act registering the shares of common stock reserved for issuance thereunder. Following the effectiveness of any such registration statement, the shares of common stock issued under such plan, other than shares held by affiliates, if any, would be immediately eligible for resale in the public market without restriction.


No Dividends


We never have paid any dividends on our common stock and we do not intend to pay any dividends in the foreseeable future.


Future issuances of common shares may be adversely affected by the EPA.


The market price of our common stock could decline as a result of issuances and sales by us, including pursuant to the Equity Purchase Agreement, or sales by our existing shareholders, of common stock, or the perception that these issuances and sales could occur. Sales by our shareholders might also make it more difficult for us to issue and sell common stock at a time and price that we deem appropriate. It is likely that the sale of shares by Beaufort will depress the market price of our common stock.


Draw-downs under the EPA may cause dilution to existing shareholders.


Beaufort has committed to purchase up to $3,000,000 worth of shares of our common stock. From time to time during the term of the EPA, and at our sole discretion, we may present Beaufort with a put notice requiring Beaufort to purchase shares of our common stock. The purchase price to be paid by Beaufort will be 72% of the Market Price of our common stock. We will be entitled to put to Beaufort on each put date such number of shares of common stock as equals 250% of the average of the dollar volume on the principal trading exchange for our common stock for the 10 trading days preceding the put date; provided that the number of shares to be purchased by Beaufort shall not exceed the number of such shares that, when added to the number of shares of our common stock then beneficially owned by Beaufort, would exceed 4.99% of the number of shares of our common stock outstanding. As a result, our existing shareholders will experience immediate dilution upon the purchase of any of the shares by Beaufort. The issue and sale of the shares under the Equity Purchase Agreement may also have an adverse effect on the market price of the common shares. Beaufort may resell some, if not all, of the shares that we issue to it under the EPA and such sales could cause the market price of the common stock to decline significantly. To the extent of any such decline, any subsequent puts would require us to issue and sell a greater number of shares to Beaufort in exchange for each

dollar of the put amount. Under these circumstances, the existing shareholders of our company will experience greater dilution. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by Beaufort, and because our existing stockholders may disagree with a decision to sell shares to Beaufort at a time when our stock price is low, and may in response decide to sell additional shares, further decreasing our stock price. If we draw down amounts under the EPA when our share price is decreasing, we will need to issue more shares to raise the same amount of funding. There is no guarantee that we will satisfy the conditions to the EPA. Although the Equity Purchase Agreement provides that we can require Beaufort to purchase, at our discretion, up to $3,000,000 worth of shares of our common stock in the aggregate, there can be no assurances that we will be able to satisfy the closing conditions applicable for each put. If we fail to satisfy the applicable closing conditions, we will not be able to sell the put shares to Beaufort. There is no guarantee that we will be able to fully utilize the EPA. In 2013 we registered shares under an EPA with another financing source and for various reasons we were only able to utilize approximately

$355,199 of the $1,500,000 potentially available under that Equity Purchase Agreement. In March of 2015, we entered into a similar EPA with Beaufort for the purchase of up to

$3,000,000 worth of our common stock. However, we were only able to realize $688,520 under that EPA before all of the shares registered thereunder were sold. In December of 2015, we entered into a similar EPA with Beaufort for the purchase of up to $3,000,000 worth of our common stock. We were only able to avail ourselves of $393,610 under that EPA before all the shares thereunder were sold at July 6, 2016.


USE OF PROCEEDS


We will not receive any proceeds from the sale of the common stock by the selling security holder pursuant to this prospectus. All proceeds from the sale of the shares will be for the account of the selling security holder.


We have agreed to bear the certain expenses relating to the registration of the shares for the selling security holder. We anticipate receiving proceeds from any "puts" tendered to Beaufort under the EPA. Such proceeds from the EPA are intended to be used approximately as follows: to fund our manufacturing expansion, research and development, marketing, advertising, distribution efforts, technology development, product line expansion and enhancement and working capital needs.


DETERMINATION OF OFFERING PRICE


The offering price for the shares sold to Beaufort under the put will equal 72% of the Market Price of our common stock on the date the purchase price is calculated. To the extent that the disparity between the offering price and market price of the common stock is material, such disparity was determined by us to be fair in consideration of Beaufort establishing a line of credit to facilitate our ongoing operations.


Equity Purchase Agreement

We entered into the Equity Purchase Agreement (“EPA”) with Beaufort on July 1, 2016. Pursuant to the EPA, Beaufort committed to purchase up to $3,000,000 worth of our common stock, over a period of time terminating on the earlier of: (i) 36 months from the date of the agreement; (ii) the date on which Beaufort has purchase shares of our common stock pursuant to the EPA for an aggregate maximum purchase price of $3,000,000; or (iii) if there is no effective registration statement for a period of 45 days after the registration statement of which this prospectus forms a part is ordered effective. We may draw on this facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the EPA. The purchase price to be paid by Beaufort will be 72% of the Market Price of our common stock. We will be entitled to put to Beaufort on each put date such number of shares of common stock as equals 250% of the average of the dollar volume on the principal trading exchange for our common stock for the 10 trading days preceding the put date; provided that the number of shares to be purchased by Beaufort shall not exceed the number of such shares that, when added to the number of shares of our common stock then beneficially owned by Beaufort, would exceed 4.99% of the number of shares of our common stock outstanding. The EPA provides for payment to us of the price for the shares delivered to Beaufort within one business day of electronic delivery of the shares. There are put restrictions applied on days between the put notice date and the closing date with respect to that particular put. During such time, we are not entitled to deliver another put notice. There are circumstances under which we will not be entitled to put shares to Beaufort, including the following:



The selling security holder may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. Broker-dealers engaged by the selling security holder may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling security holder (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling security holder does not expect these commissions and discounts relating to its sales of shares to exceed what is customary in the types of transactions involved. The selling security holder and any broker-dealers or agents that are involved in selling the shares of common stock are deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them is deemed to be underwriting commissions or discounts under the Securities Act. Because selling security holder is deemed to be an underwriter within the meaning of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of common stock will be paid by the selling security holder and/or the purchasers. There is no underwriter or coordinating broker acting in connection with the

proposed sale of the resale shares by the selling security holder. We are required to pay certain fees and expenses incurred by us incident to the registration of the shares. We have agreed to indemnify the selling security holder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. Upon our company being notified in writing by the selling security holder that any material arrangement has been entered into with a broker-dealer for the sale of common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing: (i) the name of each such selling security holder and of the participating broker-dealer(s); (ii) the number of shares involved; (iii) the price at which such the shares of common stock were sold; (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable; (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus; and (vi) other facts material to the transaction.


Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to our common stock for a period of two business days prior to the commencement of the distribution. In addition, the selling security holders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our common stock by the selling security holders or any other person. We will make copies of this prospectus available to the selling security holders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.


DESCRIPTION OF SECURITIES


The Company’s Certificate of Incorporation authorizes us to issue an aggregate of 650,000,000 shares of Common Stock. As of the date of this prospectus 273,433,664 shares of our Common Stock were issued and outstanding. All outstanding shares of Common Stock are of the same class and have equal rights and attributes. The holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of stockholders of the Company. All stockholders are entitled to share in dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefore. In the event of liquidation, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of all liabilities. Holders of Common Stock do not have cumulative or preemptive rights.


Warrants or Convertible Securities


Under the private placements, the Company issued 600,000 units of securities for total cash proceeds of $150,000. One private placement of 200,000 units of securities consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.50 and expired March 31, 2014. The other private placement of 400,000 units of securities consisted of one (1) share of common stock, par value $0.0001 per share and two (2) common stock purchase warrants with an exercise price of $0.40 and expired July 31, 2015.


During the fiscal year ended August 31, 2014, the Company entered into four private placement agreements for total cash proceeds of $250,000. The private placements of 5,000,000 units consist of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.30 and expiring January 31, 2016. The Company also issued 1,000,000 warrants to an investor in consideration of a loan for

$50,000. These warrants had an exercise price of $0.18 that expired on March 20, 2015. There are no warrants outstanding at this time.


We also had a convertible note with a principal amount of $275,000 remaining as of August 31, 2015. Six additional conversions occurred: One for $25,000 on September 10, 2015, October 23, 2015, one for $26,000 on November 6, 2015, one for $24,000 on November 20, 2015, one for

$25,000 on December 8, 2015, and one for $25,000 on December 23, 2015. At May 31, 2016, the note balance was $-0-.


Transfer Agent


The transfer agent for our common stock is Action Stock Transfer Corporation, 2469 East Fort Union Bl., Suite 214, Salt Lake City, UT 84121.


DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES


Under Nevada Law and our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.


Regarding indemnification for liabilities arising under the Securities Act which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Securities Act and is, therefore, unenforceable.


EXPERTS


The financial statements for the year ended August 31, 2015, included in this prospectus have been audited by Fruci & Associates II, PLLC, 218 North Bernard, 2nd Floor, Spokane, WA, 99201, to the extent and for the periods indicated in their report thereon. Such financial statements have been included in this prospectus and Registration Statement in reliance upon the

report of Fruci & Associates II, PLLC, and upon the authority of such firm as experts in auditing and accounting.


LEGAL MATTERS


The validity of our common stock offered hereby will be passed upon for us by Frank J. Hariton, Esq., White Plains, New York. Mr. Hariton owns 2,635,000 shares of our common stock.


WHERE YOU CAN FIND MORE INFORMATION


We are subject to the informational requirements of the Exchange Act, and file annual and current reports, proxy statements and other information with the Commission. These reports, proxy statements and other information filed by Sauer Energy, Inc. can be read and copied at the Commission's Public Reference Room at 100 F Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. We will provide to the record holders of our securities a copy of our annual reports containing audited financial statements and such periodic and quarterly reports free of charge upon request. The Commission also maintains a website that contains reports, proxy statements, information statements and other information located at http://www.sec.gov. This prospectus does not contain all the information required to be in the registration statement (including the exhibits), which we have filed with the Commission under the Securities Act and to which reference is made in this prospectus.


To the Board of Directors and Shareholders of Sauer Energy, Inc.


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We have audited the accompanying balance sheets of Sauer Energy, Inc. as of August 31, 2015 and 2014 and the related statements of operations, changes in stockholders’ equity (deficit) and cash flows for the year ended August 31, 2015. Sauer Energy, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sauer Energy, Inc. as of August 31, 2015, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a history of operating losses, has limited cash resources, and its viability is dependent upon its ability to meet future financing requirements. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


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MartinelliMick PLLC Spokane, Washington November 30, 2015


SAUER ENERGY, INC.

Balance Sheets

August 31,

August 31,

2015

2014

ASSETS

Current Assets

Cash

$ 4,968

$ 459,363

Petty Cash

1,500

1,500

Prepaid Expenses

13,507

593

19,975

461,456

Property and Equipment, net

113,201

146,704

Other Assets

Intangible Assets

1,292,984

1,410,973

Security Deposit

14,507

14,000

1,307,491

1,424,973

Total Assets

$ 1,440,667

$ 2,033,133

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Accounts Payable and accrued liabilities

$ 14,566

$ 21,516

Convertible Loan and Interest Payable

275,000

600,000

Derivative Liability on Convertible Loans

446,785

1,025,000

Total Current Liabilities

736,351

1,646,516



Commitments & Contingencies

-

-

Stockholders' Equity

Common Stock, $0.0001 par value; authorized

650,000,000 shares issued and outstanding

115,150,246 shares outstanding on August 31, 2014

148,173,100 shares outstanding on August 31, 2015

14,817

11,515

Additional Paid-In Capital

9,351,999

8,191,503

Accumulated deficit

(8,662,500)

(7,816,401)

Total Stockholders' Equity

704,316

386,617

Total Liabilities and Stockholders' Equity

$ 1,440,667

$ 2,033,133


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


SAUER ENERGY, INC.

Statement of Operations

For the Year Ended

August 31,

August 31,

2015

2014

Revenue

$ -

$ -

General and

Administrative Expenses:

Professional Fees

110,932

115,469

Consulting

266,606

140,364

Research & development expense


393,307


128,387

Other general and administrative expenses


498,380


384,058

1,269,225

768,278

Loss from operations

(1,269,225)

(768,278)

Other Income (expense)

Settlement expense

-

(1,101,685)

Interest and finance

(155,090)

325,989

Changes in derivative liability

578,215

(674,656)

423,125

(1,450,352)

(Loss) before taxes

(846,100)

(2,218,630)

Provision (credit) for taxes

-

-


Net (Loss)

$ (846,100)

$ (2,218,630)

Basic earnings (loss) per common share,

basic and diluted:

$ (0.01)

$ (0.02)

Weighted average number of common

shares outstanding, basic

123,653,300

102,456,356


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



SAUER ENERGY, INC.

Statement of Stockholders' Equity

For the period from inception (August 7, 2008) to August 31, 2015

Total

Common Stoc

k

Additional

Shareholders'

Number of

Paid-In

Accumulated

Equity

Shares

Amount

Capital

Deficit

(Deficit)

Balances August 31, 2013

93,742,564

$ 9,374

$ 6,329,521

$ (5,597,771)

$ 741,124

Shares issued from note and interest conversion


3,415,933


342


253,314


253,656

Shares issued for cash per LOC

6,191,749

618

554,274

554,892

Outstanding warrant expense

18,094

18,094

Shares returned to Treasury pursuant to settlement with Eclipse Advisors, LLC


(700,000)


(70)


(196,805)


(196,875)

Shares issued for cash per settlement


2,000,000


200


299,800


300,000

Shares issued per mediation settlement with St. George Investments


5,000,000


500


649,500


650,000

Shares issued for services

500,000

50

24,950

25,000

Share subscriptions

5,000,000

500

249,500

250,000

Outstanding warrant expense

-

-

9,355

9,355

Miscellaneous adjustment

-

1

-

1

net (loss)

-

-

-

(2,218,630)

(2,218,630)

Balances August 31, 2014

115,150,246

$ 11,515

$ 8,191,503

$ (7,816,401)

$ 386,617

Shares issued for cash per LOC

-

Shares issued for cash per LOC

16,231,584

1,623

552,573

554,196


Shares issued for services

4,900,000

490

284,112

284,602

Shares issued for note conversions


11,891,270


1,189


323,811


325,000

-

net (loss)

(846,100)

(846,100)

Balances August 31, 2015

148,173,100

$ 14,817

$ 9,351,999

$ (8,662,500)

$ 704,316


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


SAUER ENERGY, INC.

Statement of Cash Flows

For the Year Ended

August 31,

August 31,

2015

2014

Cash flows from operating activities:

Net (loss)

$ (846,100)

$ (2,218,630)

Adjustments to reconcile net loss to

net cash provided (used) by operating activities:

Amortization

117,989

73,962

Depreciation

62,622

30,169

Change in derivative liability

(578,215)

674,650

Issuance of stock for services or claims

284,600

25,000

Adjustment of Warrants

-

27,449

Terms of Mediation Settlement

-

778,125

Changes in operating assets and liabilities:

Other Assets

(13,421)

(593)

Accounts payable and accrued expenses

(6,947)

16,249


Net cash flows used by operating activities

(979,472)

(593,619)

Cash flows from investing activities:

Purchase of furniture and equipment

(29,119)

(114,091)

Purchase of intangible assets

-

(59,704)

Net cash used by investing

activities

(29,119)

(173,795)

Cash flows from financing activities:

Proceeds from loans

-

204,200

Repayment on loans

-

-

Proceeds from shareholders' loan

-

-

Payment on shareholders' loan

-

-

Proceeds from issuance of common stock, net of costs


554,196


754,899

Subscriptions received

-

250,000

Net cash provided

by financing activities

554,196

1,209,099

Net increase (decrease) in cash

(454,395)

441,685

Cash, beginning of the period

459,363

17,678

Cash, end of the period

$ 4,968

$ 459,363

Supplemental cash flow disclosure:

Interest paid

$ -

$ 27,667

Taxes paid

$ -

$ -


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

SAUER ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS

AUGUST 31, 2015


NOTE 1

ORGANIZATION AND NATURE OF OPERATIONS

Organization

Sauer Energy, Inc. was incorporated in California on August 7, 2008. The Company was incorporated to develop and market wind power electric generators.

Current Business of the Company

On July 25, 2010, the Company executed a plan of reorganization with BCO Hydrocarbon Ltd., a Nevada exploration stage enterprise, in which Sauer Energy Inc. became a subsidiary of BCO. BCO changed its name to Sauer Energy, Inc.

The Company leases warehouse/office facilities in Camarillo, California, in which the Company develops

wind power technology. A production prototype of a vertical axis wind turbine (VAWT) has been developed. Its compact size is aimed at the small business and home market. The company is focused on plans to manufacture and distribute the product. In May, 2012, the acquisition of the entire assets of a wind turbine company added two more wind turbine models to the Company, together with patents and a distribution network. During 2014 and 2015, the Company continued to develop its technology.


NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


These financial statements have been prepared using the basis of accounting generally accepted in the United States of America. Under this basis of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred. The Company has adopted August 31 as the fiscal year- end.

Cash and Cash Equivalents

The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10

(SFAS No. 157), Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820- 10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:


Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current

period presentation. These reclassifications had no effect on reported losses, total assets, or stockholdersequity as previously reported.


Note 3 Going Concern

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated a deficit of $8,662,500 as of August 31, 2015, has had no revenues, which raises substantial doubt as to the Company’s ability to continue as a going concern.


In view of these matters, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Companys ability to raise additional capital, obtain financing and to succeed in its

future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management plans to raise additional capital through the sale of stock to pursue business development activities.

Note 4 Property and Equipment

Property and Equipment consisted of the following at August 31, 2015 and August 31, 2014:


2015

2014

Computers and equipment

$97,365

$243,880


Truck & Trailers

$9,400

9,400

Less accumulated depreciation

$(169,199)

$(106,576)

Property and equipment, net

$113,201

$ 146,704


The Company depreciates its property and equipment using accelerated methods over lives of five or seven years.

Note 5 Asset Purchase


On May 11, 2012, the Company entered into an Asset Purchase Agreement with St. George Investments LLC, an Illinois limited liability company, to acquire certain assets in foreclosure for 6,000,000 common shares. The assets were formerly owned by Helix Wind, Inc., a Nevada corporation in the same business as the Company. The assets and agreed prices were:



Tangible Assets

Equipment

$ 23,000

Supplies

$ 1,000

Inventory

$ 1,000

$ 25,000

Intangible Assets

Goodwill

$ 5,000

Intellectual Property (10 patents, 2 trademarks, network

systems, wind turbine monitoring system, URL)

$1,467,500

Restrictive Covenant

$ 2,500

$1,475,000


Note 6 Intangible Property

The Company has acquired intangible property in patents, patents pending and goodwill. The patents are being amortized over their expected lives of not more than seventeen years. The restrictive covenants were fully amortized as of August 31, 2013. Those patent costs allocated to pending patents do not begin amortizing until the underlying patent is issued. If for some reason a patent is not issued the costs associated with the acquisition and the continuation of the application are fully amortized in the year of the denial.



August 31,

2015

2014

Patents

$ 109,092

$ 109,092

Purchased Patents

1,467,500

1,467,500

Goodwill

5,000

5,000

Less Amortization

(288,608)

(170,619)

$ 1,292,984

$ 1,410,973


Note 7 Convertible Loans and Interest Payable


The Company entered into note agreements and subsequent modifications and settlements on convertible

notes. These notes are convertible into the Companys common stock and are due usually within one year. The notes were issued with original issuance discounts of twelve percent which was immediately convertible into common stock and if the note was not repaid in ninety days the zero percent interest rate was replaced with an immediate prepaid interest charge at ten percent with was subject to

conversion. The Conversion terms were both fixed and variable if the trading prices did not meet the fix conversion price. See the derivative discussion in Note 8 concerning these loans.


August 31,


2015

2014

Convertible Loans and Accrued Interest:

St. George Investments

$ 275,000

$ 600,000


Note 8 Derivative Liabilities

The Company entered into certain convertible loan agreements during 2012 and 2013. These agreements contained terms that allowed for the conversion of the debt into common stock. The basic agreement was originally with $0.25 conversion prices unless the stock sold at less than $0.25. If the trades were at less than original term, the debt holders could elect to convert their debt at sixty percent of the lowest trading price in the 25 trading days prior to the conversion notice. Because of these terms, the debt conversion clause requires that the Company account for these note balances as derivatives valued at the fair market

value of the Companys common stock on the day of any financial reporting period. At August 31, 2015 and 2014, the fully convertible shares would be 18,044,619 and 12,500,000 common shares, respectively.



Derivative Liabilities on Convertible Loans:

August 31,

2015 2014


St. George Investments

$ 446,785

$1,025,000


Note 9 Commitments and Contingencies

Rental Agreement:

On August 17, 2012, the Company leased a 10,410 square foot industrial condominiumin Camarillo, California, for three years for monthly lease payments of $7,000 per month. There are no common area costs. All company operations were concentrated at the site and this lease ended on August 31, 2015.


On August 7, 2015, the Company entered into a Commercial Single-Tenant Lease for a 26,550 square foot building in Oxnard, California, with monthly payments of $13,507 for sixty months, plus common area costs of $507.38 per month. All company operations will be concentrated at the site.

Lease Commitments following five fiscal years: Fiscal year ended

image

August 31,



Year


Lease

2016

168,173


2017


168,173


2018

168,173

2019

168,173

2020

168,173


Note 10 - Federal income tax


No provision was made for federal income tax, since the Company has had significant net operating losses. Net operating loss carryforwards may be used to reduce taxable income through the year 2034. The availability of the Companys net operating loss carryforwards are subject to limitation if there is a

50% or more positive change in the ownership of the Companys stock, unless the same or similar business is carried on. The net operating loss carryforward for federal and state income tax purposes was approximately $8,660,000, which will expire in 2029 through 2034 if not utilized. The Company uses 35% for a composite tax rate to estimate the value of net operating losses for deferred taxes.


The Company as of August 31, 2015 and 2014 recognized net operating losses of approximately

$846,000 and $2,200,000, respectively. The total estimated deferred taxes as of August 31, 2015 are

$3,031,000. The net increases for the years ended August 31, 2014 and 2013 are approximately $296,000 and $770,000. The Company recorded a 100% valuation allowance for the deferred tax asset since it is more likely than not that some part or all of the deferred tax asset will not be realized.


Although Management believes that its estimates are reasonable, no assurance can be given that the final 1tax outcome of these matters will not be different than that which is reflected in our tax provisions.

Ultimately, the actual tax benefits to be realized will be based upon future taxable earnings levels, which are very difficult to predict.


No provision was made for federal income tax, since the Company had an overall net operating loss and has accumulated net operating loss carryforwards.


For the year ended August 31, 2015, and 2014, no income tax expense has been realized as a result of operations and no income tax penalties and/or interest have been accrued related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and in the State of California. These filings are subject to a three year statute of limitations. The Company’s evaluation of income tax positions included the years ended August 31, 2015, and 2014, could be subject to agency examinations. No filings are currently under examination. No adjustments have been made to reduce the estimated income tax benefit at fiscal year-end or at the quarterly reporting dates. Any valuations relating to these income tax provisions will comply with U.S. generally accepted accounting principles.


Note 11 Capital Stock

The Company went public on 7/25/ 2010. Its Common Stock is traded on the open market under the symbol OTCQB: SENY.


On December 1, 2011, the Company issued 24,000 units of securities to an investor at $0.25 per unit for

$6,000 cash pursuant to a private placement agreement. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of

$0.60 each, expiring July 31, 2014.


On July 31, 3012, the Company issued 808,000 units of securities at $0.25 per unit for $202,000 cash pursuant to a private placement agreement. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.50 each, expiring July 31, 2014.


On September 18, 2012, the Company issued 200,000 units of securities at $0.25 per unit for $50,000 cash pursuant to a private placement agreement. Each unit consisted on one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.50 each, expiring March 31, 2014.


On October 10, 2012, the Company entered into a private placement agreement that involved issuing 200,000 units of securities at $0.25 per unit for a total amount of $50,000. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant expiring March 31, 2014, with an exercise price of $0.50 each.


On June 4, 2013, the Company entered into a private placement agreement that involved issuing 400,000 units of securities at $0.25 per unit for $100,000 cash pursuant to a private placement agreement. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and two (2) common stock purchase warrants for a total of 800,000 warrants with an exercise price of $0.40 each, these expired July 31, 2015.


On September 16, 2013, the Company issued 110,375 shares of common stock for $10,000 at $0.0906 per share pursuant to a convertible note.


On October 1, 2013, the Company issued 200,000 shares of common stock for $13,600 at $0.06800 per share pursuant to a convertible note.


On October 9, 2013, the Company issued 500,000 shares of common stock for $28,000 at $0.0560 per share pursuant to a convertible note.


On October 16, 2013, the Company issued 555,720 shares of common stock for $74,915 at $0.16870 per share pursuant to an Equity Purchase Agreement to repay loan, interest and fees.


On November 6, 2013, the Company issued 250,000 shares of common stock for $26,355 at $0.1056 per share pursuant to an Equity Purchase Agreement.


On November 11, 2013, the Company issued 300,000 shares of common stock for $30,819 at $0.10288 per share pursuant to an Equity Purchase Agreement.


On November 14, 2013, the Company issued 300,000 shares of common stock for $20,160 at $0.0672 per share pursuant to a convertible note.


On November 18, 2013, the Company issued 300,000 shares of common stock for $32,091 at $0.1071 per share pursuant to an Equity Purchase Agreement.


On December 2, 2013, the Company issued 290,000 shares of common stock for $19,314 at $0.06660 per share pursuant to a convertible note.


On December 2, 2013, the Company issued 300,000 shares of common stock for $29,619 at $0.09888 per share pursuant to an Equity Purchase Agreement.


On December 9, 2013, the Company issued 300,000 shares of common stock for $28,707 at $0.09584 per share pursuant to an Equity Purchase Agreement.

On January 6, 2014, the Company issued 300,000 shares of common stock for $18,180 at $0.06060 per share pursuant to a convertible note.


On January 9, 2014, the Company issued 332,742 shares of common stock for $29,955 at $0.0902 per share pursuant to an Equity Purchase Agreement.

On January 21, 2014, the Company issued 349,097 shares of common stock for $29,955 at $0.0857 per share pursuant to an Equity Purchase Agreement.


On January 29, 2014, the Company issued 310,000 shares of common stock for $15,066 at $0.0486 per share pursuant to a convertible note.


On February 14, 2014, the Company issued 500,741 shares of common stock for $24,336 at $0.0486 per share pursuant to a convertible note.


On March 3, 2014, the Company issued 330,235 shares of common stock for $26,980 at $0.08176 per share pursuant to an Equity Purchase Agreement.


On March 28, 2014, the Company issued 577,741 shares of common stock for $49,980 at $0.0900 per share pursuant to an Equity Purchase Agreement.


On April 1, 2014, the Company issued 371,645 shares of common stock for $34,980 at $0.0942 per share pursuant to an Equity Purchase Agreement.


On April 9, 2014, the Company issued 400,000 shares of common stock for $37,996 at $0.0950 per share pursuant to an Equity Purchase Agreement.


On April 15, 2014, the Company issued 352,936 shares of common stock for $34,954 at $0.0992 per share pursuant to an Equity Purchase Agreement.


On April 24, 2014, the Company issued 320,000 shares of common stock for $32,277 at $0.1010 per share pursuant to an Equity Purchase Agreement.


On May 7, 2014, the Company issued 310,000 shares of common stock for $27,280 at $0.0880 per share pursuant to an Equity Purchase Agreement.


On May 23, 2014, the Company issued 310,000 shares of common stock for $25,567 at $0.0826 per share pursuant to an Equity Purchase Agreement.

On June 9, 2014, the Company issued 300,000 shares of common stock for $20,229 at $0.06758 per share pursuant to an Equity Purchase Agreement.


On June 23, 2014, the Company issued 323,950 shares of common stock for $19,956 at $0.06174 per share pursuant to an Equity Purchase Agreement.


On May 30, 2014, the Company issued 500,000 shares of common stock for $0.05 per share for consulting services of $25,000.


On July 7, 2014, the Company entered into a private placement agreement that involved issuing 5,000,000 units of securities at $0.05 per unit for a total amount of cash of $250,000. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrants for a total of 5,000,000 warrants with an exercise price of $0.30 each expiring January 31, 2016.


On January 7, 2015, the Company issued 698,324 shares of common stock for $30,000 at $0.04296 per share pursuant to a convertible note.


On January 29, 2015, the Company issued 476,190 shares of common stock for $20,000 at $0.042 per share pursuant to a convertible note.


On February 11, 2015, the Company issued 714,286 shares of common stock for $30,000 at $0.042 per share pursuant to a convertible note.


On February 24, 2015, the Company issued 476,190 shares of common stock for $20,000 at $0.042 per share pursuant to a convertible note.


On March 5, 2015, the Company authorized 636,132 shares of common stock at $0.0393 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On March 19, 2015, the Company authorized 694,444 shares of common stock at $0.036 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On April 13, 2015, the Company authorized 816,993 shares of common stock at $0.0306 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.

On April 28, 2015, the Company authorized 989,861 shares of common stock to be issued for $35,635 at

$0.03600 per share pursuant to an Equity Purchase Agreement.


On May 1, 2015, the Company authorized 4.4 million shares of common stock at $0.059 per share to be issued for services rendered.


On May 4, 2015, the Company authorized 868,056 shares of common stock at $0.228 to be issued in exchange for cancellation of $25,000 of the convertible loan.


On May 5, 2015, the Company authorized 1,704,282 shares of common stock to be issued for $58,900 at

$0.03456 per share pursuant to an Equity Purchase Agreement.


On May 18, 2015, the Company authorized 1,828,704 shares of common stock to be issued for $59,250 at

$0.03240 per share pursuant to an Equity Purchase Agreement.


On May 20, 2015, the Company authorized 905,797 shares of common stock at $0.0276 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On May 26, 2015, the Company entered into a consulting agreement wherein 500,000 shares were due and payable.


On June 5, 2015, the Company authorized 1,798,611 shares of common stock to be issued for $54,390 at

$0.03456 per share pursuant to an Equity Purchase Agreement.


On June 9, 2015, the Company authorized 500,000 shares of common stock at $0.05 per share to be issued pursuant to the consulting agreement of May 26, 2015.


On June 10, 2015, the Company authorized 922,063 shares of common stock at $0.0252 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On June 23, 2015, the Company authorized 2,009,646 shares of common stock to be issued for $58,900 at

$0.022392 per share pursuant to an Equity Purchase Agreement.

On July 1, 2015, the Company authorized 1,402,918 shares of common stock at $0.01782 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On July 6, 2015, the Company authorized 2,020,202 shares of common stock to be issued for $40,000 at

$0.01980 per share pursuant to an Equity Purchase Agreement.


On July 20, 2015, the Company authorized 3,102,500 shares of common stock to be issued for $55,845 at

$0.01800 per share pursuant to an Equity Purchase Agreement.


On July 23, 2015, the Company authorized 1,543,210 shares of common stock at $0.0270 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On July 28, 2015, the Company authorized 12,777,778 shares of common stock to be issued for $50,000 at $0.01800 per share pursuant to an Equity Purchase Agreement.


On July 28, 2015, the Company authorized 12,777,778 shares of common stock to be issued for $50,000 at $0.01800 per share pursuant to an Equity Purchase Agreement.


On August 7, 2015, the Company authorized 1,640,420 shares of common stock at $0.01524 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On August 7, 2015, the Company authorized 1,666,667 shares of common stock at $0.015 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


For the year ended August 31, 2014, the Company recognized two equity transactions in warrants which had a total Black-Scholes values of $27,449.


The Company has not recognized any equity transactions in warrants for the year ended August 31, 2015.


Note 12 Warrants


Under the private placements, the Company issued 600,000 units of securities for total cash proceeds of

$150,000. One private placement of 200,000 units of securities consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of

$0.50 and expired March 31, 2014. The other private placement of 400,000 units of securities consisted of one (1) share of common stock, par value $0.0001 per share and two (2) common stock purchase warrants with an exercise price of $0.40 and expired July 31, 2015.


During the fiscal year ended August 31, 2014, the Company entered into four private placement agreements for total cash proceeds of $250,000. The private placements of 5,000,000 units consist of one

(1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.30 and expiring January 31, 2016. The Company also issued 1,000,000 warrants to an investor in consideration of a loan for $50,000. These warrants had an exercise price of $0.18 that expired on March 20, 2015.


The following table is a summary of information about the warrants outstanding at August 31, 2015:



Shares Underlying Warrants Outstanding


Range of Exercise Price


Shares Underlying \Warrants Outstanding


Weighted Average Remaining Contractual Life


Weighted Average

Exercise Price


$0.40

$0.18 - $0.30

800,000 Shares \ 800,000

Warrants

6,000,000 Shares \ 6,000,000

Warrants


0 .73 years

1.27 years


$0.32

$0.28



image


The following table is a summary of activity of outstanding stock warrants for the years ended August 31, 2015:


Number of Warrants

Weighted Average Exercise Price

Balance, August 31, 2014

6,800,000

0.29

Warrants expired

(1,800,000)

0.59

Warrants cancelled

-

-


Warrants Granted

-

-

Warrants exercised

-

-

Balance, August 31,2015

5,000,000

0.30


NOTE 13 - Contingencies, Litigation

There were no loss contingencies or legal proceedings against the Company with respect to matters arising in the ordinary course of business.


On October 23, 2013, the Company filed a complaint against St George Investments, LLC (St. George") in Superior Court, Ventura County California seeking declaratory relief as to contracts relating to the

Companys May, 2012, purchase of the assets of Helix Wind from St. George for treasury stock then

valued in excess of $1.8 Million and a subsequent February, 2013, promissory note for $275,000 executed under the terms of an amendment to the May, 2012, asset purchase agreement. The Company alleged that the Helix Wind asset purchase price had been substantially paid and, in fact, may have been overpaid in

light of St. Georges failure to deliver all of the intellectual property of Helix Wind. St. George interpreted

the contracts and promissory note as entitling it to a windfall recovery above and beyond the asset purchase price and promissory note amount. On November 21, 2013, St George exercised its right as a non-California based entity to remove the action from the Ventura state court to the federal court sitting in Los Angeles, the United States District Court for the Central District of California. On November 26, 2013, St. George filed its answer and counterclaim seeking to enforce its interpretation of the contracts and to thereby collect approximately $440,000 above and beyond what is otherwise due, plus costs and attorney fees. On February 3, 2014, the parties participated in a mediation session at the Federal Court

and executed an agreement reflecting a settlement in principal (the Settlement) which becomes binding

only if the parties are unable to come to terms on more formal settlement agreements. The parties have since executed more formal settlement agreements which are included as an exhibit hereto. The basic terms of the Settlement required the issuance of an additional 5,000,000 shares of our common stock to St George under the Helix APA; required St. George to purchase additional shares of our common stock for

$300,000 ($0.15 per share) which is a price above the market price at the time of the Settlement; fixed the amount due on the note issued to St George in connection with the Helix APA at $600,000 and granted the Company certain prepayment rights. The Settlement provides for limitations on the amounts of our common stock that St. George may sell into the market.


NOTE 14 Subsequent Events

Management has reviewed and evaluated subsequent events and transactions occurring after the balance sheet date, August 31st, 2015, through the filing of this Annual Report on Form 10-K on November 30, 2015, and determined that the following additional subsequent events have occurred:


On September 1, 2015, the Company authorized 651,042 shares of common stock to be issued for

$15,000 at $0.02304 per share pursuant to an Equity Purchase Agreement.


On September 10, 2015, the Company authorized 1,640,420 shares of common stock at $0.01524 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On September 11, 2015, the Company authorized 902,778 shares of common stock to be issued for

$19,500 at $0.021 per share pursuant to an Equity Purchase Agreement.


On September 18, 2015, the Company authorized 1,072,125 shares of common stock to be issued for

$22,000 at $0.020 per share pursuant to an Equity Purchase Agreement.


On October 6, 2015, the Company authorized 868,056 shares of common stock to be issued for $15,000 at $0.017 per share pursuant to an Equity Purchase Agreement.


On October 12, 2015, the Company authorized 1,012,731 shares of common stock to be issued for

$17,500 at $0.01728 per share pursuant to an Equity Purchase Agreement.


On October 20, 2015, the Company authorized 1,851,852 shares of common stock to be issued for

$28,000 at $0.015120 per share pursuant to an Equity Purchase Agreement.


On October 23, 2015, the Company authorized 1,984,127 shares of common stock at $0.01260 per share to be issued in exchange for cancellation of $25,000 of the convertible loan.


On October 27, 2015, the Company authorized 6,613,757 shares of common stock to be issued for

$100,000 at $0.015120 per share pursuant to an Equity Purchase Agreement.


On November 6, 2015, the Company authorized 2,063,492 shares of common stock at $0.01260 per share to be issued in exchange for cancellation of $26,000 of the convertible loan.


On November 20, 2015, the Company authorized 2,000,000 shares of common stock at $0.01200 per share to be issued in exchange for cancellation of $24,000 of the convertible loan.


SAUER ENERGY, INC.

Condensed Balance Sheet

(unaudited)

May 31, 2016

8/31/2015

ASSETS

Current Assets

Cash

$ 61,223

$ 4,968

Petty Cash

1,500

1,500

Prepaid Expenses

-

13,507

62,723

19,975

Property and Equipment, net

61,718

113,201

Other Assets

Intangible Assets

1,237,531

1,292,984

Security Deposit

16,502

14,507

1,254,033

1,307,491

Total Assets

$ 1,378,474

$ 1,440,667

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Accounts Payable and accrued liabilities

$ 19,840

$ 14,566

Note payable

-

-

Convertible Loan and Interest Payable

-

275,000

Derivative Liability on Convertible Loans

-

446,785

Total Current Liabilities

19,840

736,351

Commitments and Contingencies

-

-

Stockholders' Equity

Common Stock, $0.0001 par value; authorized

650,000,000 shares, issued and outstanding were

268,819,942 shares outstanding on May 31, 2016 and

148,173,100 shares outstanding on August 31, 2015

26,881

14,817

Additional Paid-In Capital

10,935,480

9,351,999

Accumulated deficit

(9,603,727)

(8,662,500)

Total Stockholders' Equity

1,358,634

704,316

Total Liabilities and Stockholders' Equity

$ 1,378,474

$ 1,440,667


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



SAUER ENERGY, INC.

image

Statement of Operations (unaudited)

For the Three Months Ended For the Nine Months Ended


May 31, May 31,

image

2016 2015 2016 2015

image

Revenue $ - $ - $ - $ -


General and

Administrative Expenses:

Professional Fees

39,148

46,060

73,456

94,832

Consulting

495,770

155,920

557,080

229,734

Research & development

expense

57,337

161,579

154,313

295,274

Other general and

administrative expenses

123,616

106,198

364,870

321,038

715,871

469,757

1,149,719

940,878

Loss from operations

(715,871)

(469,757)

(1,149,719)

(940,878)

Other Income (expense)

Interest and finance

(113,176)

(59,805)

(238,294)

(59,805)

Changes in derivative liability

61,363

(72,917)

446,785

618,750

(51,813)

(132,722)

208,491

558,945

(Loss) before taxes

(767,684)

(602,479)

(941,228)

(381,933)

Provision (credit) for taxes

-

-

-

-

Net (Loss)

$ (767,684)

$ (602,479)

$ (941,228)

$ (381,933)

Basic and diluted earnings (loss) per common share,


$ (0.00)


$ (0.00)


$ (0.00)


$ (0.00)

image

Weighted average number

of common shares outstanding,

basic and diluted 230,506,741 122,118,859 191,280,841 117,780,618

image


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


SAUER ENERGY, INC.

Statement of Cash Flows

(unaudited)

For the Nine Months Ended

May 31,

2016

2015

Cash flows from operating activities:

Net (loss)

$ (941,228)

$ (381,933)

Adjustments to reconcile net loss to

net cash provided (used) by operating activities:

Amortization

54,936

55,472

Depreciation

51,500

45,227

Change in derivative liability

(446,785)

(618,750)

Issuance of stock for services or claims

499,470

284,600

Financing costs paid in shares

237,576

59,805

Changes in operating assets and liabilities:

Other Assets

10,512

593

Accounts payable and accrued expenses

5,274

(16,584)

Net cash flows (used by) operating activities

(528,745)

(571,570)

Cash flows from investing activities:

Purchase of furniture and equipment

-

(16,010)

Net cash (used by) investing activities

-

(16,010)

Cash flows from financing activities:

Proceeds from issuance of note payable

50,000

-

Payments on note payable

(50,000)

(225,000)

Proceeds from issuance of common stock, net of costs

585,000

378,785

Net cash (used by) provided by financing activities

585,000

153,785

Net increase (decrease) in cash

56,255

(433,795)

Cash, beginning of the period

4,968

460,863

Cash, end of the period

$ 61,223

$ 27,068

Supplemental cash flow disclosure:

Interest paid

$ 719

$ -

Taxes paid

$ -

$ -


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


Sauer Energy, Inc.

Notes to the Financial Statements May 31, 2016

(unaudited)


Note 1 - Organization and summary of significant accounting policies:


These unaudited interim financial statements as of and for the three and nine months ended May 31, 2016 reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.


These unaudited interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end August 31, 2015, report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the nine-month period ended May 31, 2016, are not necessarily indicative of results for the entire year ending August 31, 2016.


Following is a summary of our organization and significant accounting policies:


Organization and nature of business – Sauer Energy, Inc. (formerly: BCO Hydrocarbon Ltd.) (identified in these footnotes as “we” or the “Company”) was incorporated in the State of Nevada, United States of America on August 19, 2008. It was a natural resource exploration stage company and anticipated acquiring, exploring, and if warranted and feasible, developing natural resource assets. BCO had the right to acquire a 50% working interest in an oil and gas lease in Alberta, Canada.


Sauer Energy, Inc. (the “Old Sauer”) was incorporated in California on August 7, 2008. The Company is engaged in the design and manufacture of vertical axis wind turbine (VAWT) systems.


On July 25, 2010, the Company, the president and sole director Malcolm Albery (“MA”)

and Dieter Sauer, Jr. (“DS”) completed a closing (the “Closing”) under an Agreement and Plan of Reorganization, dated as of June 23, 2010 (the “Agreement”). The Agreement provided: (a) for the purchase by DS of all of the 39,812,500 shares of the Company owned by MA for

$55,200; (b) the contribution by DS of all of the shares of Old Sauer, a California corporation (“SEI”) to the Company; (c) the assignment of certain patent rights related to wind turbine technology held by DS to the Company; and (d) the election of DS to the Company’s board of directors. In connection with the Closing, Mr. Sauer was elected President and CEO of the Company and two former shareholders of the Company agreed to (i) indemnify the Company

against any claims resulting from breaches of representations and warranties by the Company in the Agreement; (ii) to acquire and cause to be returned for cancellation an aggregate of 67,437,500 shares of the Company’s common Stock, including all of the shares owned by former officer and director Daniel Brooks and; (3) assume all of the Company’s obligations in connection with certain oil and gas leases in Canada.


The agreement was executed on July 25, 2010. Sauer Energy, Inc. became a wholly-owned subsidiary of the Company. On August 29, Malcolm Albery resigned as President and was replaced by Dieter Sauer. In the following month, the Company changed its name from BCO Hydrocarbon Ltd. to Sauer Energy, Inc.


The Company’s fiscal year-end is August 31.


Basis of presentation – Our accounting and reporting policies conform to U.S. generally accepted accounting principles applicable to developing enterprises.


Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.


Cash and cash equivalents - For purposes of the statement of cash flows, we consider all cash in banks, money market funds, and certificates of deposit with a maturity of less than six months to be cash equivalents.


Fixed assets - Property, plant and equipment is valued at cost less accumulated depreciation and impairment losses. If the costs of certain components of an item of property, plant and equipment are significant in relation to the total cost of the item, they are accounted for and depreciated separately. Depreciation expense is recognized using the straight-line method for the vehicle and the double declining method for all remaining assets and is amortized over the estimated useful life of the related asset. The following useful lives are assumed:


Vehicle & Equipment 5 years


Furniture & Fixtures 7 Years


Fair Value of Financial Instruments - The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10, “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820- 10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available.

The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:



Share based payments and awards


The company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation, or Topic 718), which supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and its related implementation guidance and eliminates the alternative to use Opinion 25’s intrinsic value method of accounting that was provided in Statement 123 as originally issued. This Statement requires an entity to measure the cost of employee services received in exchange for an award of an equity instruments, which includes grants of stock options and stock warrants, based on the fair value of the award, measured at the grant date, (with limited exceptions). Under this standard, the fair value of each award is estimated on the grant date, using an option-pricing model that meets certain requirements. We use the Black- Scholes option-pricing model to estimate the fair value of our equity awards, including stock options and warrants. The Black-Scholes model meets the requirements of Topic 718; however, the fair values generated may not reflect their actual fair values, as it does not consider certain factors, such as vesting requirements, employee attrition and transferability limitations. The Black-Scholes model valuation is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We estimate the expected volatility and estimated life of our stock options at grant date based on historical volatility; however, due to the thinly traded nature of our stock, we have chosen to use an average of the annual volatility of like companies in our industry. For the “risk-free interest rate”, we use the Constant Maturity Treasury rate on 90 day government securities. The term is equal to the time until the option expires. The dividend yield is not applicable, as the company has not paid any dividends, nor do we anticipate paying them in the foreseeable future. The fair value of our restricted stock is based on the market value of our free trading common stock, on the grant date calculated using a 20 trading day average. At the time of grant, the share based-compensation expense is recognized in our financial statements based on awards that are ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. For the nine months ended May 31, 2016, and May 31, 2015, we recognized $0 in share based expense due to the issuance of common stock warrants.


Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses, total assets, or stockholders’ equity as previously reported.


Note 2 – Going Concern


The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated a deficit of $9,603,727 of May 31, 2016, and has no revenues.


In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. No assurance can be given that additional financing will be available when needed or that such financing will be available on terms acceptable to the Company. This would have a material adverse effect on the Company and raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management plans to raise additional capital through the sale of stock to pursue business development activities.


Note 3 – Property and Equipment


Property and Equipment consisted of the following at

May 31, 2016

August 31, 2015

Computer and equipment & truck

$ 282,416

$ 282,399

Less: Accumulated depreciation/amortization

(220,698)

(169,198)

Property and equipment, net

$ 61,718

$ 113,201


Note 4 – Asset Purchase


On May 11, 2012, the Company entered into an Asset Purchase Agreement with St. George Investments LLC, an Illinois limited liability company, to acquire certain assets in foreclosure for 6,000,000 common shares. The assets were formerly owned by Helix Wind, Inc., a Nevada corporation in the same business as the Company. The assets and agreed prices were:


Asset Purchase

May 11, 2012

Tangible Assets

Equipment

$ 23,000

Supplies

1,000

Inventory

1,000

Total Tangible Assets

$ 25,000

Intangible Assets


Goodwill

$ 5,000

Intellectual Property (10 patents, 2 trademarks, network system, wind turbine monitoring system, URL


1,467,500

Restrictive Covenant

$ 2,500

Total intangible assets acquired

$ 1,475,000

Total Assets acquired

$ 1,500,000

Note 5 – Intangible Property

The Company has acquired intangible property in patents, patents pending and goodwill. The patents are being amortized over their expected lives of not more than seventeen years. The restrictive covenants were fully amortized as of August 31, 2013. Those patent costs allocated to pending patents do not begin amortizing until the underlying patent is issued. If for some reason a patent is not issued the costs associated with the acquisition and the continuation of the application are fully amortized in the year of the denial. The balances as of May 31, 2016, and August 31, 2015, are as follows:


May 31, 2016

August 31,2015

Patents

$ 109,092

$ 109,092

Purchased Patents

1,467,500

1,467,500

Goodwill

5,000

5,000

Less Amortization

(344,060)

(288,608)

$ 1,237,532

$ 1,292,984


Note 6 – Notes and Convertible Loans and Interest Payable


The Company entered into note agreements and subsequent modifications and settlements on convertible notes. These notes are convertible into the Company’s common stock and are due usually within one year. The notes were issued with original issuance discounts of twelve percent which were immediately convertible into common stock and if the note was not repaid in ninety days the zero percent interest rate was replaced with an immediate prepaid interest charge at ten percent with was subject to conversion. The Conversion terms were both fixed and variable if the trading prices did not meet the fix conversion price. See the derivative discussion in Note 7 concerning these loans.


On January 26, 2016, the Company executed a $50,000 note with a third party bearing interest at 10% due April 26, 2016. The Note requires the Company to make prepayments equal to 25% of its equity line puts. As at May 31, 2016, there were no notes outstanding.


May 31, 2016

August 31,2015

Convertible Loans and Accrued Interest:

St. George Investments

$ -0-

$ 275,000


Note 7 – Related Party Share Issuances


During the quarter ending May 31, 2016, 10M shares of common stock were issued to Dieter Sauer and 13M shares of common stock were issued to Ana Sauer.


Note 8 – Derivative Liabilities


The Company entered into certain convertible loan agreements during 2012 and 2013. These agreements contained terms that allowed for the conversion of the debt into common stock. The

basic agreement was originally with $0.25 conversion prices unless the stock sold at less than

$0.25. If the trades were at less than original term, the debt holders could elect to convert their debt at sixty percent of the lowest trading price in the 25 trading days prior to the conversion notice. Because of these terms, the debt conversion clause requires that the Company account for these note balances as derivatives valued at the fair market value of the Company’s common stock on the day of any financial reporting period. At May 31, 2016, and May 31, 2015, the fully convertible shares would be $-0- and 15,625,000 common shares, respectively.


May 31, 2016

August 31,2015

Derivative Liabilities on Convertible Loans:

St. George Investments

$ -0-

$ 446,785


Note 9 Commitments and Contingencies


Rental Agreement:


On August 17, 2012, the Company leased a 10,410 square foot industrial condominiumin Camarillo, California, for three years for monthly lease payments of $7,000 per month. There are no common area costs. All company operations were concentrated at the site and this lease ended on August 31, 2015.


On August 7, 2015, the Company entered into a Commercial Single-Tenant Lease for a 26,550 square foot building in Oxnard, California, with monthly payments of $13,507 for sixty months, plus common area costs of $507.38 per month. All company operations will be concentrated at the site.


Year

Lease

2016

$ 42,043

2017

168,173

2018

168,173

2019

168,173

Lease Commitments – as of May 31, 2016: August 31,


Note 10 – Federal Income Taxes


No provision was made for federal income tax, since the Company has had significant net operating losses. Net operating loss carryforwards may be used to reduce taxable income through the year 2034. The availability of the Companys net operating loss carryforwards are subject to

limitation if there is a 50% or more positive change in the ownership of the Companys

stock, unless the same or similar business is carried on. The net operating loss carryforward for federal and state income tax purposes was approximately $8.7M, which will expire in 2029

through 2034 if not utilized. The Company uses 35% for a composite tax rate to estimate the value of net operating losses for deferred taxes.


The total estimated deferred taxes as of August 31, 2015 is $3,035,289. The Company recorded a 100% valuation allowance for the deferred tax asset since it is more likely than not that some part or all of the deferred tax asset will not be realized.


Although Management believes that its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in our tax provisions. Ultimately, the actual tax benefits to be realized will be based upon future taxable earnings levels, which are very difficult to predict.


No provision was made for federal income tax, since the Company had an overall net operating loss and has accumulated net operating loss carryforwards.


For the nine months ended May 31, 2016, no income tax expense has been realized as a result of operations and no income tax penalties and/or interest have been accrued related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and in the State of California. These filings are subject to a three-year statute of limitations. The Company’s evaluation of income tax positions included the years ended August 31, 2015, through 2013, and could be subject to agency examinations. No filings are currently under examination. No adjustments have been made to reduce the estimated income tax benefit at fiscal year-end or at the quarterly reporting dates. Any valuations relating to these income tax provisions will comply with U.S. generally accepted accounting principles.


Note 11 – Capital Stock


The Company went public on 7/25/ 2010. Its Common Stock is traded on the open market under the symbol OTCQB: SENY.


On June 4, 2013, the Company entered into a private placement agreement that involved issuing 400,000 units of securities at $0.25 per unit for $100,000 cash pursuant to a private placement agreement. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and two (2) common stock purchase warrants for a total of 800,000 warrants with an exercise price of $0.40 each, these expired July 31, 2015.


On July 7, 2014, the Company entered into a private placement agreement that involved issuing 5,000,000 units of securities at $0.05 per unit for a total amount of cash of $250,000. Each unit consisted of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrants for a total of 5,000,000 warrants with an exercise price of $0.30 each expiring January 31, 2016.


During the quarter ending February 28, 2015, the Company issued 2,364,990 shares of common stock for $100,000 pursuant to a convertible note.

During the quarter ending May 31, 2015, the Company issued 3,921,422 shares of common stock for $125,000 pursuant to a convertible note.


During the quarter ending May 31, 2015, the Company authorized 4.4 million shares of common stock to be issued for services rendered.


During the quarter ending May 31, 2015, the Company issued 4,522,847 shares of common stock for $153,785 pursuant to an Equity Purchase Agreement


During the quarter ending August 31, 2015, the Company issued 7,175,278 shares of common stock for $125,000 pursuant to a convertible note.


During the quarter ending August 31, 2015, the Company authorized 500,000 shares of common stock at $0.05 per share to be issued pursuant to the consulting agreement of May 26, 2015.


During the quarter ending August 31, 2015, the Company issued 11,708,737 shares of common stock for $245,235 pursuant to an Equity Purchase Agreement.


During the quarter ending November 30, 2015, the Company issued 7,688,039 shares of common stock for $100,000 pursuant to a convertible note.


During the quarter ending November 30, 2015, the Company issued 15,576,508 shares of common stock for $254,000 pursuant to an Equity Purchase Agreement.


During the quarter ending February 29, 2016, the Company issued 11,077,216 shares of common stock for $100,000 pursuant to a convertible note.


During the quarter ending February 29, 2016, the Company issued 4,269,242 shares of common stock for $55,000 pursuant to an Equity Purchase Agreement.


During the quarter ending May 31, 2016, the Company issued 40,950,000 shares of common stock was issued for services rendered.


During the quarter ending May 31, 2016, 75,000 shares were cancelled and returned to treasury.


During the quarter ending May 31, 2016, the Company issued 9,498,761 shares of common stock for $125,000 pursuant to a convertible note.


During the quarter ending May 31, 2016, the Company issued 31,682,076 shares of common stock for $275,500 pursuant to an Equity Purchase Agreement.


Note 12 – Warrants


Under the private placements, the Company issued 600,000 units of securities for total cash proceeds of $150,000. One private placement of 200,000 units of securities consisted of one (1)

share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.50 and expired March 31, 2014. The other private placement of 400,000 units of securities consisted of one (1) share of common stock, par value $0.0001 per share and two (2) common stock purchase warrants with an exercise price of $0.40 and expired July 31, 2015.


During the fiscal year ended August 31, 2014, the Company entered into four private placement agreements for total cash proceeds of $250,000. The private placements of 5,000,000 units consist of one (1) share of common stock, par value $0.0001 per share and one (1) common stock purchase warrant with an exercise price of $0.30 that expired January 31, 2016.


The following table is a summary of information about the warrants outstanding at May 31, 2016:


Number of Warrants

Weighted Average Exercise Price

Balance, August 31, 2015

5,000,000

0.30

Warrants expired

5,000,000

-

Warrants cancelled

-

-

Warrants Granted

-

-

Warrants exercised

-

-

Balance, May 31, 2016

-0-

-0-


NOTE 13 - Litigation


There were no loss contingencies or legal proceedings against the Company with respect to matters arising in the ordinary course of business.


St. George Investment Settlement:


On October 23, 2013, the Company filed a complaint against St George Investments, LLC (“St. George") in Superior Court, Ventura County California seeking declaratory relief as to contracts relating to the Company’s May, 2012 purchase of the assets of Helix Wind from St. George for treasury stock then valued in excess of $1.8 Million and a subsequent February 2013 promissory note for $275,000 executed under the terms of an amendment to the May, 2012 asset purchase agreement. The Company alleged that the Helix Wind asset purchase price had been substantially paid and, in fact, may have been overpaid in light of St. George’s failure to deliver all of the intellectual property of Helix Wind.


On February 3, 2014, the parties participated in a mediation session at the Federal Court and executed an agreement reflecting a settlement in principal (the “Settlement”) which becomes binding only if the parties are unable to come to terms on more formal settlement agreements. The parties have since executed more formal settlement agreements which are included as an exhibit hereto. The basic terms of the Settlement required the issuance of an

additional 5,000,000 shares of our common stock to St George under the Helix APA; required St.

George to purchase additional shares of our common stock for $300,000 ($0.15 per share) which is a price above the market price at the time of the Settlement; fixed the amount due on the note issued to St George in connection with the Helix APA at $600,000 and granted the Company certain prepayment rights. The Settlement provides for limitations on the amounts of our common stock that St. George may sell into the market.


As of May 31, 2016, the note has been paid in full.


NOTE 14 – Subsequent Events


Management has reviewed and evaluated subsequent events and transactions occurring after the balance sheet date, May 31, 2016, through the filing of this Quarterly Report on Form 10-Q on June 27, 2016, and determined that only the following additional subsequent event has occurred:


Equity Purchase Agreement


From June 1, 2016, to present, the Company authorized 2,386,407 shares of common stock to be issued for $50,000 pursuant to an Equity Purchase Agreement.


PART II - INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

We estimate that expenses in connection with the distribution described in this registration statement (other than brokerage commissions, discounts or other expenses relating to the sale of the shares by the selling security holders) will be as set forth below. We will pay all of the expenses with respect to the distribution, and such amounts, with the exception of the Securities and Exchange Commission registration fee, are estimates.


SEC registration fee

$213.00


Accounting fees and expenses

$5,000.00


Legal fees and expenses

$0.00 *


Printing and related expenses

$1,000.00


Transfer agent fees and expenses

$1,000.00


Miscellaneous

$887.00


Total

$8,100.00


* Mr. Hariton’s fees of $5,000 have been paid by the selling shareholder.


ITEM 14.INDEMNIFICATION OF DIRECTORS AND OFFICERS


The Certificate of Incorporation and the Bylaws of our Company provide that our Company will indemnify, to the fullest extent permitted by the Nevada Revised Statutes, each person who is or was a director, officer, employee or agent of our Company, or who serves or served any other enterprise or organization at the request of our Company. Pursuant to Nevada law, this includes elimination of liability for monetary damages for breach of the directors’ fiduciary duty of care to our Company and its stockholders. These provisions do not eliminate the directors’ duty of care and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Nevada law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to our Company, for acts or omissions not in good faith or involving intentional misconduct, for

knowing violations of law, for any transaction from which the director derived an improper personal benefit, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Nevada law. The provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws or state or federal environmental laws.


We have not entered into any agreements with our directors and executive officers that require us to indemnify these persons against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred (including expenses of a derivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason of the fact that the person is or was a director or officer of our Company or any of our affiliated enterprises.


We do not maintain any policy of directors’ and officers’ liability insurance that insures its directors and officers against the cost of defense, settlement or payment of a judgment under any circumstances.


ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES


There have been no private offerings in fiscal years 2015 and 2016. For Fiscal Year ended 2015, a total of 33,022,854 shares were issued.

For Fiscal Year ended 2015, conversions were made in the amount of $325,000 on a note that resulted in 11,891,270 shares being issued and 4,900,000 shares were issued for services.


From September 1, 2015, to August 8, 2016, conversions were made in the amount of

$275,000 on same note that resulted in 9,498,761 shares being issued. The foregoing issuances were exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof as transactions by an issuer not involving any public offering. The note has been satisfied in full.

ITEM 16. EXHIBITS


Exhibit No. Description


    1. Articles of Incorporation. Incorporated by reference to the Exhibits attached to the Company's Form S-1filed with the SEC on October 30, 2008


    2. Bylaws. Incorporated by reference to the Exhibits attached to the Company's Form S-1 filed with the SEC on October 30, 2008


    3. Articles of Amendment to the Articles of Incorporation filed with the Secretary of State of Nevada on October 15, 2010 Incorporated by reference to the like numbered exhibit to the Company’s Annual Report on Form 10-K for the year ended August 31, 2010.


4.1 Specimen Stock Certificate. Filed with S-1 dated March 17, 2015


5.1 Opinion of Frank J. Hariton. Previously filed


    1. Farm-In Agreement dated August 29, 2008, between Unitech Energy Resources Inc. and BCOHydrocarbon Ltd. Incorporated by reference to the Exhibits attached to the Company's Form S-1 filed with the SEC on October 30, 2008


    2. Agreement and Plan of Reorganization, dated June 23, 2010, by and among the Registrant, Dieter R. Sauer, Jr., and Malcolm Albery. Incorporated by reference to Exhibit 10.1 to Current Report on Form 8- K filed June 25, 2010.


    3. Lease, dated August 20, 2012, between Erik J. Eppink and Sauer Energy, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on September 12, 2012)


    4. Equity Purchase Agreement, dated as of February 27, 2015, by and between Beaufort Capital Partners, LLC and Sauer Energy, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on March 16, 2015).


    5. Registration Rights Agreement, dated as of February 27, 2015, by and between Beaufort Capital Partners, LLC and Sauer Energy, Inc. (Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed with the SEC on March 16, 2015).


    6. Lease, dated August 7, 2015, between Emmet J. Hawkes and Sally Hawkes and Sauer Energy Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on September 24, 2015)


    7. Equity Purchase Agreement, dated as of December 21, 2015, by and between Beaufort Capital Partners, LLC and Sauer Energy, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on December 23, 2015).


    8. Registration Rights Agreement, dated as of December 21, 2015, by and between Beaufort Capital Partners, LLC and Sauer Energy, Inc. (Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed with the SEC on December 23, 2015).

    9. Equity Purchase Agreement, dated as of July 1, 2016, by and between Beaufort Capital Partners, LLC and Sauer Energy, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on July 1, 2016).


    10. Registration Rights Agreement, dated as of July 1, 2016, by and between Beaufort Capital Partners, LLC and Sauer Energy, Inc. (Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed with the SEC on July 1, 2016).


22.1 Subsidiaries of the Registrant. None


    1. Consent of Fruci & Associates II, PLLC Filed herewith


    2. Consent of Frank J. Hariton (included in exhibit 5.1)


      ITEM 17. UNDERTAKINGS


      1. Rule 415 Offering The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed on the registration statement or any material change to such information in the registration statement;


(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post- effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:


The undersigned registrant undertakes that in a primary offering of the securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a

seller and will be considered to offer or sell such securities to such purchaser: (i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (230.424 of this chapter); (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. B. Request for Acceleration of Effective Date Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.


SIGNATURES


Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oxnard, State of California on August 8, 2016.


Sauer Energy, Inc.

By: /s/ Dieter R. Sauer, Jr. Dieter R. Sauer, Jr., President and CEO

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


Signature

Title

Date

/s/ Dieter R. Sauer, Jr.

CEO and President

8/8/2016

Dieter R. Sauer, Jr.

(Principal Executive Financial and Accounting Officer)

/s/ Jeff Massey

Director


8/8/2016

Jeff Massey

/s/ Zohreh Hashemi

Director

8/8/2016

Zohreh Hashemi