10-Q 1 mainbody.htm MAINBODY

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

[X]	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


	For the quarterly period ended June 30, 2015


[ ]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934


	For the transition period from __________ to __________


	Commission File Number: 000-53498

Stratean Inc.

(Exact name of Registrant as specified in its charter)

Nevada	87-044945
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

2391 South 1560 West

Woods Cross, Utah 84087

(Address of principal executive offices)

(801) 244-4405

(Registrant’s telephone number)

_______________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

[ ] Large accelerated filer	[ ] Accelerated filer
[ ] Non-accelerated filer	[X] Smaller reporting company

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

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 20,378,415 common shares as of July 1, 2015

Table of Contents

	TABLE OF CONTENTS	Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	8
Item 4:	Controls and Procedures	9
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	10
Item 1A:	Risk Factors	10
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3:	Defaults Upon Senior Securities	10
Item 4:	Mine Safety Disclosure	10
Item 5:	Other Information	10
Item 6:	Exhibits	10

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our financial statements included in this Form 10-Q are as follows:

F-1	Balance Sheets as of June 30, 2015 and September 30, 2014 (unaudited);

F-2	Statements of Operations for the three and nine months ended June 30, 2015 and 2014 (unaudited);

F-3	Statements of Cash Flow for the nine months ended June 30, 2015 and 2014 (unaudited);

F-4	Notes to Financial Statements.

The accompanying condensed financial statements of Stratean Inc. ( the “Company”) are unaudited, but in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) necessary to fairly state the Company’s financial position, results of operations, and cash flows as of and for the dates and periods presented. The condensed financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.

These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the twelve months ended September 30, 2014, filed with the Securities and Exchange Commission (the “Commission”).

The results of operations for the three and nine months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the entire year ending September 30, 2015 or for any future period.

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STRATEAN INC.
BALANCE SHEETS
(UNAUDITED)

ASSETS	June 30, 2015			September 30, 2014
Current assets
Cash	$	125,936		$	116,741
Prepaid expense		38,179			21,143
Total current assets		164,115			137,884
Deposits		2,358			—
Fixed Assets		607,090			580,973
Intangible assets		45,118			44,397
Total assets		818,681			763,254
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	5,277		$	8,658
Due to related parties		1,473			1,473
Total current liabilities		6,750			10,131
Notes payable		—			44,857
Total liabilities		6,750			54,988
Stockholders' equity (deficit)
Common stock; $0.001 par value; 100,000,000 shares authorized; 20,378,415 and 17,409,915 shares issued and outstanding as of June 30, 2015 and September 30, 2014, respectively		20,378			17,410
Preferred stock; $0.001 par value; 10,000,000 shares authorized; 400,000 and 0 shares issued and outstanding as of June 30, 2015 and September 30, 2014, respectively		400			—
Additional paid-in capital		4,635,459			1,100,131
Accumulated earnings (deficit)		(3,844,306	)		(409,275	)
Total stockholders' equity (deficit)		811,931			708,266
Total liabilities and stockholders' equity (deficit)	$	818,681		$	763,254

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

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STRATEAN INC.
STATEMENT OF OPERATIONS
(UNAUDITED)

	For the Three Months Ended						For the Nine Months Ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Revenues	$	—		$	2,555		$	—		$	2,555
Cost of revenues		—			700			—			700
Gross profit		—			1,855			—			1,855
Operating expenses
Professional fees		45,713			2,300			3,336,369			14,606
Research and development		74			—			52,288			—
General and administrative expenses		8,258			9,457			39,170			12,961
Depreciation and amortization		731			—			2,060			—
Total operating expenses		54,776			11,757			3,429,887			27,567
Loss from operations		(54,776	)		(9,902	)		(3,429,887	)		(25,712	)
Other income (expense)
Interest expense		—			(997	)		(5,144	)		(45,962	)
Total other income (expense)		—			(997	)		(5,144	)		(45,962	)
Net income (loss)	$	(54,776	)	$	(10,899	)	$	(3,435,031	)	$	(71,674	)
Basic income (loss) per common share	$	(0.00	)	$	(0.00	)	$	(0.18	)	$	(0.00	)
Basic weighted average common shares outstanding		20,378,415			8,636,736			18,841,734			16,723,047

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

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STRATEAN INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)

	Nine Months Ended
	June 30, 2015			June 30, 2014
Cash Flows from Operating Activities
Net loss	$	(3,435,031	)	$	(71,674	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Imputed interest on related party debt		5,143			5,383
Amortization of debt discount		—			40,000
Stock based consulting		3,228,517			3,796
Depreciation and amortization		2,060			792
Shares issued for interest expense		—			578
Changes in assets and liabilities
(Increase) decrease in prepaid expense		1,143			(3,000	)
Increase in deferred revenue		—			—
(Increase) decrease in deposits		(2,358	)		—
Increase (decrease) in accounts payable		(3,381	)		(10,060	)
Net cash from operating activities		(203,907	)		(34,185	)
Cash Flows from investing
Purchase of intangible assets		(2,594	)		(2,250	)
Purchase of fixed assets		(26,304	)		—
Net cash used in investing activities		(28,898	)		(2,250	)
Cash Flows from Financing Activities
Proceeds from issuance of common stock		242,000			75,000
Proceeds from related party debt		—			5,881
Payments on related party debt		—			(5,881	)
Proceeds from convertible notes payable		—			59,190
Payments on convertible notes payable		—			(35,690	)
Net cash from financing activities		242,000			98,500
Net increase (decrease) in Cash		9,195			62,065
Beginning cash balance		116,741			270
Ending cash balance	$	125,936		$	62,335
Supplemental disclosure of cash flow information
Cash paid for interest	$	—		$	—
Cash paid for tax	$	—		$	—
Non-Cash investing and financing transactions
Common stock issued for debt	$	50,000		$	40,000
Shares issued for services	$	690,000		$	—
Options and warrants issued for services	$	2,556,296		$	—
Shares issued to acquire intangible assets	$	—		$	42,385
Shares issued to acquire fixed assets, net of liabilities assumed	$	—		$	424,073

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

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STRATEAN INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1. BASIS OF PRESENTATION AND GOING CONCERN

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

Going concern – The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $(3,844,306) since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

2. SUMMARY OF SIGNIFICANT POLICIES

This summary of significant accounting policies of Stratean Inc. is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.

Use of estimates – The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.

Cash and cash equivalents – For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. There was $125,936 and $116,741 in cash and cash equivalents as of June 30, 2015 and September 30, 2014, respectively.

Fair Value of Financial Instruments – The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

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The three levels of the fair value hierarchy are described below:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Revenue recognition – The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements” and No. 104, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonably assured. For the periods ended June 30, 2015 and 2014 the Company reported revenues of $0 and $2,555, respectively.

Long-lived Assets – In accordance with the Financial Accounting Standards Board ("FASB") Accounts Standard Codification (ASC) ASC 360-10, "Property, Plant and Equipment," the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

Stock-based compensation – The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock Compensation”, which provides investors and other users of financial statements with more complete and neutral financial information, by requiring that the compensation cost relating to share-based payment transactions be recognized in the financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. ASC 718-10 covers a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As of June 30, 2015, the Company has not implemented an employee stock based compensation plan.

Non-Employee Stock Based Compensation – The Company accounts for stock based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASC 505-50. The Company may issues compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting services.

Earnings (loss) per share – The Company reports earnings (loss) per share in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 260-10 “Earnings Per Share”, which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.

Recently Issued Accounting Pronouncements – On June 10, 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-10, Development Stage Entities (Topic 915) – Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the concept of a development stage entity ("DSE") in its entirety from current accounting guidance. The Company has elected early adoption of this standard, which eliminates the designation of DSEs and the requirement to disclose results of operations and cash flows since inception.

The Company has evaluated the all other recent accounting pronouncements through ASU 2015-12, and believes that none of them will have a material effect on the Company's financial position, results of operations or cash flows.

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3. FIXED ASSETS

Fixed assets consist of the following as of June 30, 2015 and September 30, 2014

	June 30, 2015			September 30, 2014
Machinery and equipment	$	604,269		$	580,973
Tenant improvements		1,533			—
Furniture and fixtures		1,475			—
Total		607,277			580,973
Less: accumulated depreciation		(187	)		—
Fixed assets, net of accumulated depreciation	$	607,090		$	580,973

Depreciation expense for the nine months ended June 30, 2015 and 2014 was $187 and $0, respectively.

4. INTANGIBLE AND OTHER ASSETS

Intangible assets consist of the following as of June 30, 2015 and September 30, 2014

	June 30, 2015			September 30, 2014
Patents	$	51,596		$	49,002
Less: accumulated amortization		(6,478	)		(4,605	)
Fixed assets, net of accumulated amortization	$	45,118		$	44,397

Amortization expense for the nine months ended June 30, 2015 and 2014 was $1,873 and $0, respectively.

5. RELATED PARTY TRANSACTIONS

On December 31, 2014, Stratean Inc. (the "Company") and two Promissory Note holders, Burkeley J. Priest ("Priest") and The Munson Family Limited Partnership ("Munson") entered into Debt Settlement Agreements ("Agreements"), to settle two Promissory Notes ("Notes") with a face value of $33,341 and $16,659, respectively. Priest and Munson agreed that, upon execution of their agreements and receipt of the stock, all claims of Priest and Munson against Stratean Inc., were deemed released.

On December 31, 2014 the Company executed a settlement agreement and issued Priest 115,026 shares of Stratean Inc. $0.001 par value common stock which had a fair value on December 31, 2014 of approximately $0.33 per share, or $38,342. On the date of the transaction Priest owned approximately 6.2% of the Company's outstanding common stock and is considered a related party, therefore in accordance with ASC 470-50 approximately $5,001 was recorded as a charge against additional paid in capital as a result of the Agreement.

On December 31, 2014 the Company executed a settlement agreement and issued Munson 57,474 shares of Stratean Inc. $0.001 par value common stock which had a fair value on December 31, 2014 of approximately $0.33 per share, or $19,158. On the date of the transaction Munson owned approximately 7.5% of the Company's outstanding common stock and is considered a related party, therefore in accordance with ASC 470-50 approximately $2,499 was recorded as a charge against additional paid in capital as a result of the Agreement.

Pursuant to the Agreements Priest has been granted a 10 year royalty ("Royalty") of one-half of one percent (.5%) of "Gross Revenues" derived from the "Sale of Stratean Downdraft Gasifer units".

Pursuant to the Agreements Munson has been granted a 10 year royalty ("Royalty") of one-quarter of one percent (.25%) of "Gross Revenues" derived from the "Sale of Stratean Downdraft Gasifer units".

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The Agreements define 'Gross Revenues' as; monies actually received by Stratean arising from the sale of its units. The Agreement further defines the 'Sale of Stratean Gasifier Units' as revenues received by Stratean as a direct result and occurrence of a sale of physical gasifier units to third parties. All other revenues generated by Stratean whether related to the Company's Gasifier or otherwise are explicitly excluded. Under this agreement Stratean is required to render statements and make payments to Priest and Munson within 60 days after the last day of each fiscal quarter.

Stratean remains free to exercise all the rights of ownership of its property and intellectual property including the right to sell its intellectual property and make licensing and sub-license agreements without consulting Priest or Munson and upon whatever terms it deems wise.

6. PREPAID EXPENSES

The Board of Directors created a Board of Advisors to provide the Officers and Directors with advice and insight and appointed Brad Patee to serve as a member of the board of advisors for a period of one year.

As compensation for his appointment, Mr. Patee was granted 180,000 non-statutory options under the following terms: non-transferable, fully vest on March 31, 2015, expire five years from the date of grant, strike price of $0.25 and become immediately exercisable upon the occurrence of a significant liquidating, restructuring or change of control event.

The 180,000 stock options were valued at $54,411 using the Black-Scholes option pricing model based upon the following assumptions: term of 5 years, risk free interest rate of 2.11%, a dividend yield of 0% and volatility rates of 110%. The amount was capitalized as a prepaid expense and will be amortized over twelve months, during the nine months ended June 30, 2015 the Company recorded an expense of $16,502.

7. STOCKHOLDERS’ EQUITY (DEFICIT)

On April 15, 2015, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (the “Certificate of Amendment”) with the Nevada Secretary of State. The Certificate of Amendment authorized ten million (10,000,000) shares of preferred stock. The Company’s Board of Directors and a majority of its shareholders approved the Certificate of Amendment.

On April 15, 2015, pursuant to Article IV of our Articles of Incorporation, the Company’s Board of Directors voted to designate a class of preferred stock entitled Series A Preferred Stock, consisting of up to one million (1,000,000) shares, par value $0.001. Under the Certificate of Designation, holders of Series A Preferred Stock will be entitled to quarterly dividends on 2% of our earnings before interest, taxes and amortization. The dividends are payable in cash or common stock. The holders will also have a liquidation preference on the state value of $0.02 per share plus any accumulated but unpaid dividends. The holders are further entitled to have the Company redeem their Series A Preferred Stock for three shares of common stock in the event of a change of control and they are entitled to vote together with the holders of the Company’s common stock on all matters submitted to shareholders at a rate of forty-five (45) votes for each share held.

On April 16, 2015, the Company issued a total of four hundred thousand (400,000) shares of its newly designated Series A Preferred Stock to members of the board of directors.

On April 28, 2015, our board of directors approved a forward split of 1 to 3 in which each shareholder will be issued 3 common shares in exchange for 1 common share of their currently issued common stock. A record date of May 8, 2015 was established and FINRA was provided ten days’ notice prior to the effective date pursuant to Rule 10b-17 of the Securities and Exchange Act of 1934, as amended. New stock certificates will be issued upon surrender of the shareholders’ old certificates. I accordance with ASC 505-20 all stock-related information presented in these financial statements and accompanying footnotes has been retroactively adjusted to reflect the number of shares resulting from this action.

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8. DEFINITIVE AGREEMENTS

On December 5, 2014, Stratean Inc. (the "Company") and Combustion Resources, Inc. ("Combustion Resources") executed a Service Agreement ("Agreement") to independently test the Company’s Gasifier to further establish its capability of producing large volumes of clean, renewable energy from any carbon compound (Municipal Solid Waste (MSW), Coal, Sewage Sludge) into clean Synthesis Gas.

The testing will be comprised of seven stages, as of the date of this filing Combustion Resources had completed stages one through three, it is anticipate the remaining stages will be completed prior to September 30, 2015. Each of the seven stages are briefly outlined below.

Characterize Feedstock: The feedstock selected for use in the Gasifier will be fully characterized to assist in understanding how the Gasifier performs for that feedstock.

Review Design Data: A full understanding of the installation and operation of the Gasifier will be outlined, including configuration, construction, thermochemical calculations and theoretical operating conditions and performance.

Prepare Gasifier for Test Runs: The Gasifer will be installed for testing at Utah State University’s Carbon Energy Innovation Center.

Preliminary Test Runs of Gasifier: Baseline testing will be completed to ensure all systems and support equipment are operating properly.

Perform Baseline Run of Gasifier: Baseline test will be performed during which samples of gas, liquid, and solid effluent streams will be collected and analyzed. During the testing process conditions will be monitored and upon completion the data will be inspected and analyzed to determine how the Gasifier operated during the baseline testing. After completion of the test run Petersen Inc. will inspect and verify mechanical operations and integrity of the gasifier.

Perform Extended Run of Gasifier: An extended run of the Gasifier will be performed following a successful baseline test run. The test run will be used to demonstrate extended operation of the Gasifier, and if there are any effects of extended operation of the Gasifier or associated support equipment. During the extended test run samples of gas, liquid, and solid effluent streams will be collected and analyzed. During the testing process conditions will be monitored and upon completion the data will be inspected and analyzed to determine how the Gasifier operated during the extended testing. After completion of the test run Petersen Inc. will inspect and verify mechanical operations and integrity of the Gasifier.

Project Report: A report will be prepared at the conclusion of the study describing the results of the evaluation of the Gasifier. The report will provide a detailed discussion of the results of the tests, and will make recommendations of possible process revisions and additional work that can provide insights and direction for optimizing the Gasifier performance. The report will also provide recommendations for addition testing and items to be considered regarding feasibility of commercial operation of the Gasifier.

Pursuant to the Agreement, the Company will make payments totaling $147,144. On December, 9, 2014, the Company made an initial payment of $50,000 to begin the project. Another $50,000 will be due upon completion of task five and the balance of $47,144 is due upon delivery of the Final Project report. The Company anticipates the final project report will be completed prior to the end of our fiscal year.

9. COMMITMENTS AND CONTINGENCIES

Lease obligations – The Company has operating leases for its offices. Future minimum lease payments under the operating leases for the facilities as of June 30, 2015, are as follows:

2015 $14,850

10. SUBSEQUENT EVENTS

The Company has evaluated events subsequent to the balance sheet through the issuance date of these financial statements in accordance with FASB ASC 855 and has determined that there are no such events that would require adjustment to, or disclosure in, the financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Company Overview

Stratean Inc. is in the business of acquiring, licensing and marketing patents and technology to create renewable energy from solid waste. The Company plans to turn today’s landfill dilemma into tomorrow’s energy solution.

Stratean Inc.'s technology converts any organic material into SynGas. SynGas can be used as clean, renewable, environmentally friendly, warming fuel for power plants, motor vehicles, and as feedstock for the generation of DME (Di-Methyl Ether). DME is the premier energy carrier and offers a range of important benefits:

Ÿ Simple and low cost of production

Ÿ An environmentally-benign propellant and coolant

Ÿ Clean-burning and high energy efficiency

Ÿ Lower transportation and distribution costs

Ÿ Easily converted into other fuels and chemicals

The Stratean Gasifier converts the following materials into clean, reusable, renewable, and affordable energy:

Ÿ Municipal Solid Waste (MSW)

Ÿ Municipal sewage sludge

Ÿ Food and cooking waste

Ÿ Petroleum sludge and oily wastes

Ÿ Animal manures

Ÿ Cellulosic and non-cellulosic biomass

Ÿ Energy crops

Ÿ Scrap tires

Ÿ Coal

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The process involves the grinding, drying, separating, mixing, and then pelletizing of solid waste. These pellets constitute the feedstock for the Gasifier. Gasifying the pellets produces SynGas. SynGas can be converted into multiple forms of energy including motor vehicle and jet fuels. The SynGas produced is so clean that it generally does not require hot-gas cleanup. SynGas is mostly hydrogen and carbon monoxide. Hydrogen and carbon monoxide are primary building blocks for fuels and chemicals. SynGas is a clean burning fuel suitable for use in duel-fuel diesel engines, gas turbines, and steam boilers.

The Company believes that the Stratean process will turn the world’s waste problem into an abundant, renewable resource of energy. The Stratean production can be adapted to the specific energy requirements of a given area. Communities are expected to benefit from the countless options created including inexpensive green electric power for homes, clean-burning fuel for garbage trucks, street maintenance equipment, or for resale to other municipalities. Because of the modular nature of the components intrinsic to the process, the plant could provide one energy source, then be converted to provide a different energy product. A Stratean facility could produce additional electric power during the peak demand part of the day and produce fuels during the rest of the day.

The Company’s market segmentation is vast as the Company expects to apply its technology to anything that is carbon based. The markets for which the Company has focused its efforts include: the electric utility market, municipal waste, processing plants, the refining sector, stranded natural gas fields, and Canadian oil sands.

The Company has begun pursuing opportunities to utilize the assets and intellectual properties purchased. The Company aims to further develop these technologies in order to pursue licensing, manufacturing and direct sales agreements for its Gasifier technology.

The technologies and prototype will begin undergoing clinical lab testing to further establish its capability of producing large volumes of clean, renewable energy from any carbon compound (Municipal Solid Waste (MSW), Coal, Sewage Sludge) into clean Synthesis Gas. The Company’s Gasifier is still under development and a commercially viable Gasifier is not expected to be sellable until the second quarter of 2015. In December of 2014 the Company executed an agreement with Combustion Resources, LLC to independently test the Company’s production model prototype. Combustion was engaged to independently test the Gasifer's performance and certify the results of its performance. The Company believes the results of these independent tests will provide the results needed to prove its commercial viability, at which time the Company would begin to actively market its Gasifer units.

The Company has not engaged in any significant negotiations to sell its Gasifier products to any major customers. Once completed, the Company intends to distribute its products through advertisements and sales calls on potential customers with demonstrations of how the products work. The failure to acquire customers to generate revenues will negatively affect the Company’s financial performance.

Results of operations for the three months ended June 30, 2015 and 2014

Revenues

We did not earned any revenues during the three months ending June 30, 2015 as compared to $2,555 during the three months ending June 30, 2014, respectively. We do not anticipate earning significant revenues until such time that we have fully developed our technology and are able to market our products.

Operating Expenses

The Company had operating expenses of $54,776 for the three months ended June 30, 2015, as compared with $11,757 for the three months ended June 30, 2014.

Professional fees increased to $45,713 for the three months ended June 30, 2015 from $2,300 for the same period ended June 30, 2014. Our professional fees expenses for the three months ended June 30, 2015 consisted mainly of stock based consulting fees and consulting fees paid to an officer of the Company.

Research and development fees increased to $74 for the three months ended June 30, 2015 from $0 for the same period ended June 30, 2014. Our research and development expenses for the three months ended June 30, 2015 consisted mainly of expenses to prepare our Gasifier for independent testing.

General and administrative fees decreased to $8,258 for the three months ended June 30, 2015 from $9,457 for the same period ended June 30, 2014. Our general and administrative expenses for the three months ended June 30, 2015 and 2014 consisted mainly of office and rent expenses and general expenses incurred as a result of fundraising efforts.

Depreciation and amortization expense increased to $731 for the three months ended June 30, 2015 from $0 for the same period ended June 30, 2014.

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Other Expenses

We had other expenses of $0 for the three months ended June 30, 2015, compared with other expenses of $997 for the three months ended June 30, 2014. Our other expenses for the three months ended June 30, 2014 consisted of amortization of imputed interest on officer loans and amortization of debt discount.

Net Loss

We recorded a net loss of $54,776 for the three months ended June 30, 2015, as compared with a net loss of $10,899 for the three months ended June 30, 2014.

Results of operations for the nine months ended June 30, 2015 and 2014

Revenues

We did not earned any revenues during the nine months ending June 01, 2015 as compared to $2,555 during the nine months ending June 30, 2014, respectively. We do not anticipate earning significant revenues until such time that we have fully developed our technology and are able to market our products.

Operating Expenses

The Company had operating expenses of $3,429,887 for the nine months ended June 30, 2015, as compared with $27,567 for the nine months ended June 30, 2014.

Professional fees increased to $3,336,369 for the nine months ended June 30, 2015 from $14,606 for the same period ended June 30, 2014. Our professional fees expenses for the nine months ended June 30, 2015 consisted mainly of stock based consulting and legal fees.

Research and development fees increased to $52,288 for the nine months ended June 30, 2015 from $0 for the same period ended June 30, 2014. Our research and development expenses for the nine months ended June 30, 2015 consisted mainly of fees to independently test our Gasifier.

General and administrative fees increased to $39,170 for the nine months ended June 30, 2015 from $12,961 for the same period ended June 30, 2014. Our general and administrative expenses for the nine months ended June 30, 2015 consisted mainly of office and rent expenses and expenses incurred as a result of fundraising efforts. In comparison, our general and administrative expenses for the nine months ended June 30, 2014 consisted mainly of expenses related to SEC compliance.

Depreciation and amortization expense increased to $2,060 for the nine months ended June 30, 2015 from $0 for the same period ended June 30, 2014.

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Other Expenses

We had other expenses of $5,144 for the nine months ended June 30, 2015, compared with other expenses of $45,962 for the nine months ended June 30, 2014. Our other expenses for the nine months ended June 30, 2015 consisted mainly of amortization of imputed interest on officer loans as compared to the same period ending June 30, 2014 which consisted mainly of amortization of debt discount.

Net Loss

We recorded a net loss of $3,435,031 for the nine months ended June 30, 2015, as compared with a net loss of $71,674 for the nine months ended June 30, 2014.

Liquidity and Capital Resources

As of June 30, 2015, we had total current assets of $164,115, consisting of cash and prepaid expenses, and total assets in the amount of $818,681. Our total current liabilities as of June 30, 2015 were $6,750. We had working capital of $157,365 as of June 30, 2015.

Operating activities used $203,907 in cash for the nine months ended June 30, 2015. Our net loss of $3,435,031 was the main component of our negative operating cash flow, offset mainly by stock based consulting of $3,228,517 and imputed interest of $5,143.

Cash flows used by investing activities during the nine months ended June 30, 2015 was $28,898 as a result of the purchase of fixed and intangible assets.

Cash flows provided by financing activities during the nine months ended June 30, 2015 amounted to $242,000 and consisted of $242,000 in proceeds from our private offering of common stock and warrants.

In addition to $242,000 we were able to raise in the sale of our common stock, we were able to settle two promissory notes with a face values of $33,341 and $16,659. Pursuant to the Debt Settlement Agreements, we issued 38,342 and 19,158 shares of common stock, respectively, along with royalties, as provided in the Agreements, to settle the notes.

Despite the efforts we have made to raise money and to settle debt, based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Off Balance Sheet Arrangements

As of June 30, 2015, there were no off balance sheet arrangements.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Going concern – The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $3,844,306 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

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The three levels of the fair value hierarchy are described below:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2015. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2015, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of June 30, 2015, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting

Our company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending September 30, 2015: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2015 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A: Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The information set forth below relates to our issuances of securities without registration under the Securities Act of 1933 during the reporting period which were not previously included in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.

On April 16, 2015, the Company issued a total of four hundred thousand (400,000) shares of its newly designated Series A Preferred Stock to members of the board of directors.

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

Exhibit Number	Description of Exhibit
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 formatted in Extensible Business Reporting Language (XBRL).
**Provided herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Stratean, Inc.

Date:	August 13, 2015

	By: /s/ S. Matthew Schultz S. Matthew Schultz Title: Chief Executive Officer

Date:	August 13, 2015

	By: /s/Zachary K. Bradford Zachary K Bradford Title: Chief Financial Officer