8-K/A

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
____________________

FORM 8-K/A

Amendment No. 1

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): June 30, 2016

Stratean Inc.
(Exact name of registrant as specified in its charter)

Nevada	000-53498	87-044945
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

70 North Main Street, Ste. 105 Bountiful, Utah	84010
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 801-244-4405

___________________________________________________

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)
[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

On July 7, 2016, we filed a Current Report on Form 8-K to disclose entering into an Asset Purchase Agreement with CleanSpark Holdings LLC, CleanSpark LLC, CleanSpark Technologies LLC and Specialized Energy Solutions, Inc., described in Item 1.01 to that Current Report. This Amendment No. 1 is filed to provide the required financial statements of the businesses acquired and pro forma financial information.

No other changes have been made to the Current Report on Form 8-K. This Amendment No. 1 speaks as of the original filing date of the Form 8-K, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 8-K.

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CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS

This Current Report on Form 8-K includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements provide Stratean Inc.’s (the “Company”) current expectations and forecasts about future events. Forward-looking statements may be identified by the use of words such as “expect,” “believe,” “will,” “would,” “should” or comparable terminology or the negative of these words, or by discussions of strategy. While the Company believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause actual results to differ include, without limitation, failure to consummate or delays in consummating the transactions described herein, transaction costs associated with the transactions described herein, unexpected losses of economies of scope or scale as a result of the transactions described herein, a decrease or adjustment in the purchase price or other amendment to the definitive agreements for the transactions described herein, failure to obtain necessary governmental approvals for the transactions described herein, and other risks and uncertainties included in reports the Company files with or furnishes to the Securities and Exchange Commission. The Company cautions you that no forward-looking statement is a guarantee of future performance, and you should not place undue reliance on these forward-looking statements which reflect the Company’s view only as of the date of this report. Stratean, Inc. undertakes no obligation to update any forward-looking information.

SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS

ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Asset Purchase

On June 30, 2016, Stratean, Inc. and Cleanspark II, LLC, a wholly-owned subsidiary of Stratean, Inc. (together, the “Company”), entered into an Asset Purchase Agreement (the “Purchase Agreement”) with CleanSpark Holdings LLC, CleanSpark LLC, CleanSpark Technologies LLC and Specialized Energy Solutions, Inc. (together, the “Seller”). The closing of the transactions contemplated by the Purchase Agreement occurred on June 30, 2016 (the “Closing Date”).

On the Closing Date, pursuant to the Purchase Agreement, the Company acquired all the assets (the “Assets”) and assume certain liabilities (the “Assumed Liabilities”) related to Seller and its line of business. The Assets the Company purchased from Seller include:

• Equipment and other tangible assets;

• Domain names, websites and intellectual property;

• All rights to causes of action, lawsuits, judgments, claims and demands of any nature available to or being pursued by the Seller;

• Contracts to which Seller is bound;

• Current and future customer accounts, including accounts receivable;

• All investments, including the holdings that CleanSpark Holdings LLC has in CleanSpark LLC, CleanSpark Technologies LLC and Specialized Energy Solutions, Inc., and any investments those subsidiaries have as well; and

• Any other assets of any nature whatsoever that are related to or used in connection with the business of Seller and its goodwill.

In exchange for the Assets, the Company assumed the Assumed Liabilities, consisting of certain accounts payable amounting to approximately $200,000 arising out of the Assets. The Company also issued to Seller six million (6,000,000) shares of common stock and two-year warrants to purchase four million five hundred thousand (4,500,000) shares of common stock at an exercise price of $1.50 per share.

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Simultaneously with the Purchase Agreement, the Company entered into certain ancillary agreements (the “Ancillary Agreements”) with Seller, consisting of a bill of sale, intellectual property assignment and lock-up/leak-out agreement. The lock-up/leak-out agreement prevents Seller from selling the Company’s securities in the public market for a year  .

The Purchase Agreement contains customary representations, warranties and covenants. In addition, the Company and Seller agreed to certain post-closing covenants, including the following:

• The board of directors of the Company shall have approval and oversight over a management developed budget to exploit the Assets and will work with the management of CleanSpark II, LLC, to which the Assets have been transferred. For a period of nine months from the Closing Date, the Company agrees to fund on a monthly basis all pre-approved budgetary needs for CleanSpark II, LLC to achieve its business objectives.

• The strategic management of Cleanspark II, LLC shall be determined by the board of directors of the Company. Management shall be appointed for Cleanspark II, LLC and they shall control the day-to-day operations of Cleanspark II, LLC, subject to the oversight of the Company and its board of directors. Employment agreements for appointed management of Cleanspark II, LLC will be negotiated prior to close but will hold an effective date post-closing. The parties shall jointly agree to a business plan for Cleanspark II, LLC within sixty (60) days of closing.

• Within thirty (30) days of the Closing Date, the Company agrees to appoint one (1) candidate chosen by Seller to the board of directors of the Company. The Company’s board of directors still maintains exclusive rights to accept the suggested appointment and in the case the suggested appointment is rejected by the board, Seller will have the right to present a new candidate until such time as the candidate is approved by the Company’s board of directors. The term of the appointment of Seller’s member of the board shall be in accordance with the Company’s bylaws.

• The Company will appoint an accounting firm of its choosing to maintain Seller’s financial records to ensure compliance with US GAAP. Within 71 days of closing, Seller shall provide the Company with an audit for the two latest fiscal year periods and reviewed financials for an interim period ending June 30, 2016 prepared by Seller’s independent   auditor, satisfactory to the Company.

The foregoing description of the Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference.    

The Purchase Agreement has been included solely to provide investors and security holders with information regarding its terms. It is not intended to be a source of financial, business or operational information, or to provide any other factual information, about the Assets, the Company or Seller. The representations, warranties and covenants contained in the Purchase Agreement are made only for purposes of the Purchase Agreement and are made as of specific dates; are solely for the benefit of the parties (except as specifically set forth therein); may be subject to qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Purchase Agreement, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the parties, instead of establishing matters as facts; and may be subject to standards of materiality and knowledge applicable to the contracting parties that differ from those applicable to investors or security holders. Investors and security holders should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of the Assets, the Company or Seller. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Purchase Agreement, as applicable, which subsequent information may or may not be fully reflected in public disclosures.

CleanSpark Business

Overview

As a result of the Purchase Agreement and the acquisition of the Assets, the Company intends to take over the CleanSpark business as another opportunity in the energy sector, along with its existing Gasifier business. The Company believes that that synergies created from these businesses will strengthen its overall capacity to obtain

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financing, increase its customer base, open new distribution channels and increase its competitive strength in the energy market, all to the ultimate benefit of the Company’s shareholders.

Integral to CleanSpark’s business is the Flex Power System (the “System”), which the Company acquired in the acquisition of the Assets. The System provides secure, sustainable energy with significant cost savings for its energy customers. The System allows customers to efficiently manage renewable energy generation, storage and consumption. By having control over the facets of energy usage and storage, customers are able to reduce their dependency on utilities, thereby keeping energy costs relatively constant over time. The overall aim is to transform energy consumers into energy producers by supplying power that anticipates their routine instead of interrupting it.

Around the world, the aging grid is becoming unstable and unreliable due to increases in loads and lack of new large-scale generation facilities. This inherent instability is compounded by the push to integrate a growing number and variety of renewable but intermittent energy generators and advanced technologies into outdated electrical systems. Simultaneously, defense installations, industrial complexes, communities, and campuses across the world are turning to virtual power plants and microgrids as a means to decrease their reliance from the grid, utilize cleaner power, and enhance energy security and surety.

The convergence of these factors has created a “perfect storm” in the power supply optimization and energy management arena. Efficiently building and operating the macro- and microgrids of tomorrow, while maximizing the use of sustainable energy to produce affordable, stable, predictable, and reliable power on a large scale, is a significant opportunity that first-movers can leverage to capture a large share of this emerging global industry.

The System works with software that uses generation, consumption, and utility data to decide whether to use or store energy based on prioritized end-user benefits, including cost savings and critical loads. The flexible modular design gives users a turn-key solution that is capable of managing energy based on the needs of its user.

Energy Security Microgrids

Microgrids

A microgrid is comprised of any number of generation, energy storage, and smart distribution assets that serve a single or multiple loads, either connected to the grid or “islanded.” In the past, microgrids have consisted of off-grid generators organized with controls to provide power where utility lines cannot run. Today, modern microgrids integrate renewable energy generation systems, or REGS with advanced energy storage devices and interoperate with the local utility grid. Advanced autonomous cyber-secure microgrid controls relay information between intelligent hardware and localized servers to make decisions in real-time that deliver optimum power where it is needed, when it is needed.

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Flex Power System

CleanSpark’s System is an integrated microgrid control platform that seamlessly integrates all forms of energy generation with energy storage devices and controls facility loads to provide energy security in real time free of cyber threats. Able to interoperate with the local utility grid, the System brings users the ability to choose when to buy or sell power to and from the grid, enabling what the Company believes is the most cost effective power solution on the market. CleanSpark’s innovative FractalGrid topology enables multiple microgrids to work together or disassociate based on the system and the customers’ best interest.

Some of the features of the System include the following:

• Load Shifting – store excess energy generation and use it to meet peak demand during high-cost periods.
• Power Quality – enable real-time support and control of reactive power, frequency and harmonics to ensure the integrity of sensitive electronics and control equipment.
• Peak Shaving – supply virtually instantaneous energy to cover sudden usage spikes and reduce energy costs.
• Power Smoothing – use stored energy to cover sudden drops or spikes in solar or wind that occur from cloud cover or wind gusts.
• Frequency Regulation – counteract grid frequency deviations due to sudden load or generation changes through dispatch-able energy generation or storage.
• Load Leveling – use active microgrids to optimize the utility grid, allowing central power plants to be run at a constant speed, maximizing fuel efficiency.
• Demand Management and Response – curtail non-critical energy demand in response to current or predicted conditions of the microgrid or utility grid. This ensures future energy supply to the user and system integrity for the utility.
• Protect Existing Energy Assets – CleanSpark’s microgrids are technology-agnostic and integrates legacy assets such as backup generation, combined heat and power, and power distribution systems.
• Critical Load Security – energy independence and uninterruptible power to critical loads and facilities.
• Predictive Capacity and Machine-Learning (Under Development) – integrate predictive resource analysis such as cloud coverage into microgrid load management. The System identifies patterns (e.g., a facility’s energy use, local weather conditions affecting energy generation) and improves its decision-making as historical data accumulates.

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The Company believes that the System is ideal for commercial, industrial, healthcare, mining, defense, campus, and community users and ranges in size from 4 KW to 100 MW and beyond and can deliver power at or below the current cost of utility power in many geographies based on local rate structures and regional energy production factors..

CleanSpark’s Microgrid-as-a-Service (MaaS)

CleanSpark works with customers on the design, engineering, integration, installation and operations of the System.

FractalGrid Architecture

Fractals are structures that are self-similar at different scales. The CleanSpark FractalGrid architecture allows any number of microgrids to aggregate into a self-governing, dynamically optimizing network that functions as an individual microgrid. CleanSpark’s technology can integrate with any new or existing generation and storage assets to control loads and meet the customer’s energy goals. All hardware components are commercial-off-the-shelf (COTS) from Tier 1, ISO 9000 vendors. This allows the FractalGrid to continue developing its “plug-and-play” library with additional supported vendors and technologies as an evolving energy operating platform. It is made to scale and evolve as a customer’s business changes over time.

User Interface

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The user-centric interface promotes building occupant awareness through real-time display of energy performance and sustainable building information. By way of kiosks, video displays, desktops, tablets, and mobile devices a facility’s comprehensive energy use is displayed in a user-friendly manner, whether energy is obtained from the utility, solar, wind, gas, waste, storage, or any other proven technology.

A customer can access both individual and portfolio views through CleanSpark’s web portal and/or a local Microgrid Operations Center (MOC), displaying specific real-time performance details. Additional data is available, including past and future performance figures, on site conditions, and engineering data, such as voltages and operations and maintenance information. A display can be deployed at any site to bring efficiency awareness to personnel.

Employees

No employees are transferred by way of this transaction and any retention of key staff will be addressed in separate agreements.

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Competition

The amount of advanced energy management service providers for microgrids with comparable technologies and track record are few, but growing at a rapid pace. Because of the breadth of capability and the mission of CleanSpark, the company competes with numerous firms in the software and controls space with greater financial resources and name recognition. The majority of the competition is occupied by established companies, which may be defined as “Traditional” microgrid vendors. There are also a number of early stage companies that focus on either software or controls or energy storage that are defined as “Emerging” vendors that have started to gain traction in the marketplace.

Some of the Traditional vendors include: Schneider Electric, General Electric, ABB and ZBB. Some of the Emerging vendors include: SolarCity/Gridlogic, Stem, Power Analytics, Spirae, Green Energy Corp. and Geli. The Company intends to compete with these more established companies and believes its competitive advantages are as follows:

• Software – The mPULSE software is faster and able to integrate devices and components in a more seamless fashion than known competition. The speed of decision-making fully unlocks the potential of distributed renewables by providing control of storage devices to a near instantaneous degree. The event driven service oriented architecture built upon a robust enterprise service buss enables near real-time monitoring and control which offer a high degree of scalability.
• FractalGrid Architecture - The FractalGrid architecture enables machine-to-machine or microgrid-to-microgrid communications that offers a high degree of scalability. This patent pending approach is believed to be the most efficient and effective method to construct large campus microgrid systems. This topology is believed to be the most rapid, robust and reliable way to transform the centralized model to a distributed nodal system.
• Open Source platform – Traditional micro grid software and control systems are developed for project specific purposes with proprietary technology. Traditional systems are designed to work well with only the developer’s own equipment and software. This can result in expensive and complicated integration. CleanSpark has designed its software and controls using open standards to ensure compatibility with future devices, components and software applications.
• Cyber-Security – The fPS has been developed using the defense-in-depth approach that is taken to ensure strong security is maintained at all levels and compliant with the strictest national security standards.
• Strong intellectual property – CleanSpark’s FractalGrid patent (non-provisional granted) may be the most efficient microgrid architecture for reliability, security and scalability. The Company has also filed several other patents related to its software and microgrid architecture and continues to develop patentable software and hardware products as well as advanced trade secrets.
• Turnkey microgrid / energy security solution – In many geographies, CleanSpark and its storage solutions provide the most affordable, integrated microgrid solution. Navigant Research estimates microgrid costs at $5,000-$7,000/kw compared to CleanSpark’s at ~$3,500/kw, depending on the configuration.

Government Regulation

The Company is subject to federal, state and local laws and regulations governing environmental quality and pollution control. It is anticipated that, absent the occurrence of an extraordinary event, compliance with existing federal, state and local laws, rules and regulations concerning the protection of the environment and human health will not have a material effect upon the Company, its capital expenditures, or earnings. The Company cannot predict what effect additional regulation or legislation, enforcement policies thereunder and claims for damages for injuries to property, employees, other persons and the environment resulting from its operations. The Company’s operations related the CleanSpark business and System are subject to environmental regulation by state and federal authorities including the Environmental Protection Agency ("EPA"). This regulation has not increased the cost of planning, designing and operating to date. Although the Company believes that compliance with environmental regulations will not have a material adverse effect on its operations or results of these operations, there can be no assurance that significant costs and liabilities, including criminal penalties, will not be incurred. Moreover, it is possible that other developments, including stricter environmental laws and regulations, and claims for damages for injuries to property or persons resulting from our activities could result in substantial costs and liabilities.

In addition, companies operating in the energy space are subject to various local, utility, state, and federal policy requirements regarding the generation and sale of electricity. Given increasing renewable energy and grid resili  ency initiatives at all policy levels, it is believed that future developments may be beneficial to CleanSpark’s operations.

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In the conduct of the Company’s activities its operations will be subject to the requirements of the federal Occupational Safety and Health Act ("OSHA") and comparable state statutes. The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and similar state statutes require the Company to organize information about hazardous materials used, released or produced in its operations. Certain of this information must be provided to employees, state and local governmental authorities and local citizens. The Company is also subject to the requirements and reporting set forth in OSHA workplace standards.

Risk Factors   Associated with CleanSpark Business

The Company expects to experience increased working capital requirements in connection with the acquisition of CleanSpark’s Assets, which could adversely affect the Company’s ability to meet its financing obligations both to its existing business and the CleanSpark business line.

If the Company does not obtain additional financing, the Company’s business plans will be delayed and the Company may not achieve profitable operations.

At March 31, 2016, the Company had cash on hand of $151,689 and accumulated a deficit of $4,156,644. The Company has raised approximately $460,000 for the year ended September 30, 2015 and through the interim period ending March 31, 2016. The Company will need a minimum of $1,500,000 in capital will be needed for general administrative expenses, development of the Company’s existing Gasifier and newly acquired CleanSpark Assets, and marketing costs.

The Company’s operations could require the Company to utilize large sums of working capital, sometimes on short notice and sometimes without the ability to completely recover the expenditures on a timely basis or at all. If the Company encounters significant working capital requirements or cash outflows as a result of these or other factors, the Company may not have sufficient liquidity or the credit capacity to meet all of the Company’s cash needs.

The Company does not currently have any arrangements for financing and obtaining additional financing will be subject to a number of factors, including general market conditions, investor acceptance of the Company’s plan of operations and initial results from the Company’s business operations. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to the Company. Failure to raise additional financing may cause the Company to go out of business. If this happens, you could lose all or part of your investment.

The Company has a limited operating history and, accordingly, you will not have a significant basis on which to evaluate the Company’s ability to achieve the Company’s business objectives.

The Company has had limited operating results to date. The Company has a very limited operating history with comparatively limited assets and cash resources. Because of the Company’s limited operating history, you will have a small basis upon which to evaluate the Company’s ability to achieve the Company’s business objectives.

The Company may be forced to litigate to enforce or defend its intellectual property rights, which could negatively impact the Company’s business.

The Company may be forced to litigate to enforce or defend its intellectual property rights against infringement and unauthorized use by competitors, and to protect its trade secrets. In so doing, the Company may place its intellectual property at risk of being invalidated, held unenforceable, narrowed in scope or otherwise limited. Further, an adverse result in any litigation or defense proceedings may increase the risk of non-issuance of pending applications. Any such litigation could be very costly and could distract management from focusing on operating the Company’s business. The existence and/or outcome of any such litigation could harm the Company’s business, results of operations and financial condition.

Recently, CleanSpark has completed a preliminary investigation in relation to past employee(s) whom may have had acc  ess and ability to remove confidential information from its possession that could be used to compete in similar applications. At this time it is unclear if any confidential information was retained by former employees but the

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Company intends to further its investigation in the coming months and will take all measures to protect its intangible assets.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of the Company’s confidential and proprietary information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our stock.

The Company may not be able to protect its proprietary technology in the marketplace or the cost of doing so may be prohibitive or excessive.

The Company’s success will depend, in part, on its ability to obtain patents, protect its trade secrets and operate without infringing on the proprietary rights of others. The Company plans to rely upon a combination of patents, trade secret protection (i.e., know-how), and confidentiality agreements to protect the intellectual property of its System. The scope and validity of patents in the energy field involve complex legal and scientific questions and can be uncertain. Where appropriate, the Company seeks patent protection for its System. Filing, prosecuting and defending patents throughout the world would be prohibitively expensive, so the Company’s policy is to patent technology in jurisdictions with significant commercial opportunities. However, patent protection may not be available for some of the System.

The Company has filed a patent application 14/885,627 titled, “Establishing Communication and Power Sharing Links Between Components of a Distributed Energy System.” To maintain the status of the application, the Company must respond to the U.S. Patent and Trademark Office. This will involve Company time and resources, which may not be available.  

If the Company must spend significant time and money obtaining patent protection or protecting or enforcing its patents, if obtained, its business results of operations and financial condition may be harmed. The Company may not develop additional proprietary products that are patentable.

Many companies have encountered significant problems in protecting and enforcing intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property rights, particularly those relating to energy, which could make it difficult for the Company to stop the infringement of its patents or marketing of competing products in violation of its proprietary rights generally. Proceedings to enforce the Company’s patent rights in foreign jurisdictions could result in substantial cost and divert efforts and attention from other aspects of the Company’s business.

In addition, patents have a limited lifespan. In most countries, including the United States, the standard expiration of a patent is 20 years from the effective filing date. Various extensions of patent term may be available in particular countries, however in all circumstances the life of a patent, and the protection it affords, has a limited term.

Any loss of, or failure to obtain, patent protection could have a material adverse impact on the Company’s business. As such, the Company may be unable to prevent competitors from entering the market with products that are similar to or the same as the System.

Further given that our technology relates to energy, political pressure or ethical decisions may result in a change to the scope of patent claims for which the Company may be eligible. Different patent offices throughout the world may adopt different procedures and guidelines in relation to what is and is not patentable and as a result different protection could be obtained in different areas of the world which may impact the Company’s ability to maximize commercialization of its technology.

The Company may also incur increased expenses and cost in relation to the filing and prosecution of patent applications where third parties choose to challenge the scope or oppose the grant of any patent application or, following grant, seek to limit or invalidate any patent.  

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Any increased prosecution or defense required in relation to such patents and patent applications, whether relating to third party observation or any other third party challenge or opposition, entails increased cost and resource commitment to the business and may result in patents and patent applications being abandoned, invalidated or narrowed in scope.

The Company may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

The Company relies on trade secrets to protect its proprietary know-how and technological advances, especially where it does not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. The Company relies, in part, on confidentiality agreements     with its employees, consultants, outside collaborators and other advisors to protect its trade secrets and other proprietary information. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover the Company’s trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of the Company’s proprietary rights. Failure to obtain or maintain trade secret protection, or failure to adequately protect the Company’s intellectual property, could enable competitors to develop generic products or use the Company’s proprietary information to develop other products that compete with the Company’s System or have additional, material adverse effects upon the Company’s business, results of operations and financial condition.

In addition, the Company may provide trial periods to third parties under material transfer agreements, including to government entities or other organizations that the Company cannot control. There is a risk that such third parties could disclose details of the Company’s technology to others that could facilitate or assist such parties in the development of competing products.

Because CleanSpark is dependent on a small concentration of customers, any loss of a customer or failure to obtain additional customers will result in negative operating results and could put the Company out of business.

CleanSpark’s and its wholly owned subsidiares’ revenues are concentrated in 3 customers: City of Colton; a private golf club and Camp Pendleton FractalGrid Demonstration. The loss of one or more of these customers or the failure to acquire more customers could have a significant negative impact on the Company’s operating results and could put the Company out of business.

Because CleanSpark is a small company in a large industry of well-established and well-known companies, it may encounter difficulties procuring customers and projects.

The majority of the Company’s competition is occupied by established companies, which may be defined as “Traditional” microgrid vendors. There are also a number of early stage companies that focus on either software or controls or energy storage that are defined as “Emerging” vendors that have started to gain traction in the marketplace.

The Company is a small Emerging vendor in a very large energy industry. Many of the Company’s competitors have greater financial resources and brand recognition. While the Company believes that its technology has strong competitive strengths, it may have difficulty locating customers and establishing projects. Sales in this industry are oftentimes project-based and are usually obtained through a subcontract with a large general contractor. The Company may not win projects due to its size and perceived value and experience. In addition, large general contractors may see the Company as a competitor and choose not do business with it. In addition, larger competitors may have the resources to under bid projects, which the Company could not afford to take.

There are also risks associated with the Company’s inability to support customers that require support staff that the Company does not have or customers that are not in proximity with the Company over long distances. The Company may have geographic limitations on projects it is able to bid on due to limited resources and limited size of personnel. Currently all projects are in California as the operations are headquartered in San Diego, California. The Company plans to expand into the west coast and then into the mid-west, but that will take time and resources that the Company does not currently have available.

If the Company is unable to locate customers and expand its base of operations, it may never successfully compete in the industry and could go out of business.

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Because of the nature and location of a FractalGrid asset on Camp Pendleton, the U.S. Marine Corps may assert its right to take possession of the system with cause.

The California Energy Commission awarded $1.7 million to Harper Construction Company, Inc. in July 2013 to support a microgrid technology demonstration project. CleanSpark was subcontracted to provided design, development, integration, and installation services for the FractalGrid at the School of Infantry in the 52 Area of Marine Corps Base Camp Pendleton.

The project included integration of CleanSpark’s proprietary software and controls platform with a variety of energy storage technologies to include various energy storage devices. Together, the energy storage devices stores solar energy generated by existing fixed-tilt solar photovoltaic panels and fifteen dual axis tracking concentrated photovoltaic units. CleanSpark’s distributed controls combine the generation and storage technologies to create four separate microgrids that self align together to create a larger microgrid that ties directly into the larger utility grid at the 12kV level.

The project has demonstrated that in the event of an outage or other energy surety threat, the software has the ability to autonomously separate the microgrids from the utility and the controls operate them independently in “island” mode, and in most cases without interrupting service to critical circuits. Once energy from the grid is stabilized, CleanSpark’s platform has demonstrated its ability to reconnect the microgrid to the utility.

CleanSpark’s agreement on the project provides that Camp Pendleton may assert a right to take possession of the system for cause, defined as what may be necessary in the interest of the United States Marine Corps for defense purposes.

CleanSpark may become a party to lawsuits/disputes from time to time with uncertain consequences, the outcome of potential judgments may negatively affect the Company’s financial condition and results of operations.  

CleanSpark was notified of Trademark infringement regarding its “Synapse” line of microgrid controllers. Another vendor has been using a similar naming convention and asserted CleanSpark’s naming convention created ambiguity in the marketplace. CleanSpark has agreed to rename its product to resolve the issue. CleanSpark is in the process of revising marketing and public materials accordingly.

As the Company continues to grow, it can expect to have to deal with lawsuits that affect its business. Lawsuits are uncertain and involve a substantial degree of risk. If the Company is unable to successfully prosecute or defend these actions, its financial condition and results of operations could suffer.

The Company’s products may contain defects, which could adversely affect the Company’s reputation and cause it to incur significant costs, which it may not be able to afford.

Defects may be found in the Company’s products. Any such defects could cause the Company to incur significant return and exchange costs, re-engineering costs, divert the attention of the Company’s engineering personnel from product development efforts, and cause significant customer relations and business reputation problems. Any such defects could force the Company to undertake a product recall program, which could cause the Company to incur significant expenses and could harm its reputation and that of its products. If the Company delivers products with defects, the Company’s credibility and the market acceptance and sales of its products could be harmed.

If the Company is the subject of future product defect or liability suits, its business will likely fail.

In the course of the Company’s planned operations, it may become subject to legal actions based on a claim that its products are defective in workmanship or have caused personal or other injuries. The Company, through one of the subsidiaries acquired, has liability insurance ,   but it may not be adequate to cover all potential claims. Moreover, even with sufficient insurance coverage, any successful claim could significantly harm its business, financial condition and results of operations.

Because the Company does not have exclusive agreements with the third party vendors that will supply the Company’s hardware components, the Company may be unable to effectively supply and distribute hardware

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components to customers, which would adversely affect the Company’s reputation and materially reduce its revenues. 

The Company does not own or operate any manufacturing facilities. However, there are a number of vendors that are capable of providing the hardware the Company uses for its FractalGrid Architecture. The Company has no written agreements with its vendors. The Company’s arrangement with its vendors to acquire components is strictly through purchase orders.

If the Company loses the services of its third party vendors, it may be unable to secure the services of replacement vendors in a manner that would not harm or disrupt the Company’s business. In addition, because the Company does not have written agreements with its vendors, they could refuse to supply some or all of the needed components, reduce the number of components that they supply or change the terms and prices under which they normally supply components. The occurrence of any such conditions will have a materially negative effect upon the Company’s reputation and its ability to deploy the System, which will cause a material reduction in the Company’s revenues.

If the Company fails to adequately manage the size of its business, it could have a severe negative effect on financial results or stock price.

The Company’s management believes that in order to be successful it must appropriately manage the size of its business. This may mean reducing costs and overhead in certain economic periods, and selectively growing in periods of economic expansion. In addition, the Company will be required to implement operational, financial and management information procedures and controls that are efficient and appropriate for the size and scope of operations. The management skills and systems currently in place may not be adequate and the Company may not be able to manage any significant cost reductions or effectively provide for its growth.

The loss of executive officers or key employees could have a material adverse effect on the Company’s business.

The Company depends greatly on the efforts of the Company’s executive officers and other key employees to manage the Company’s operations, including new employees needed to run the CleanSpark side of the business.

The Company has not yet retained any designers and engineers needed to run the CleanSpark business. Staffing key personnel is expected to be addressed in separate agreements with qualified consultants within the coming weeks. The Company will need engineers with specific knowledge in designing and developing its products and services and there are limited resources available that have this specific experience. The Company will also need to hire professionals who understand the process, procedure and regulations associated with the energy sector. We will also need to identify sales and marketing professionals with specific experience in selling into energy sector channels.

The market for skilled employees is highly competitive, especially for employees in technical fields. There can be no assurance that we will be able to retain the services of all our key employees or a sufficient number to execute our plans, nor can there be any assurance we will be able to continue to attract new employees as required.

Personnel may voluntarily terminate their relationship with the Company at any time, and competition for qualified personnel, especially engineers, is intense. The process of locating additional personnel with the combination of skills and attributes required to carry out the Company’s strategy could be lengthy, costly and disruptive.

If the Company is unable to hire key personnel to run its business, lose the services of key personnel, or fail to replace the services of key personnel who depart, the Company could experience a severe negative effect on our financial results and stock price. In addition, there is intense competition for highly qualified engineering and marketing personnel in the locations where the Company principally operates. The failure to acquire the services of any key engineering, marketing or other personnel or the Company’s failure to attract, integrate, motivate and retain additional key employees could have a material adverse effect on the Company’s business, operating and financial results and stock price.   

The Company’s growth is dependent on obtaining new contracts and the failure to secure those contracts will result in poor operating results and could ultimately cause the Company to go out of business.

14

The Company’s strategy is to grow by selling and licensing Gasification and CleanSpark systems and other energy technologies. Successful implementation of this strategy is conditional on numerous conditions, such as the ability to identify and close sales and there can be no assurance that the Company’s expansion strategy can be successfully executed. If the Company is unable to obtain contracts to generate revenues, the Company will go out of business.

The Company’s failure to meet government regulations or any unfavorable changes in government regulation could harm the Company’s business.

The Company’s products and services are subject to various international, federal, state and local laws, regulations and administrative practices affecting the Company’s business. Projects using the Company’s systems could be delayed or prevented by difficulties in obtaining or maintaining the required approvals, permits or licenses. The Company cannot predict the nature of future laws, regulations, interpretations or applications, or determine what effect either additional government regulations or administrative orders, when and if promulgated, or disparate federal, state and local regulatory issues would have on the Company’s business in the future.

Government regulation, environmental risks and taxes could adversely affect the Company’s operating results.

The Company's energy operations will be subject to regulation by federal and state governments, including environmental laws. To date, the Company has not had to expend significant resources in order to satisfy environmental laws and regulations presently in effect. However, compliance costs under any new laws and regulations that might be enacted could adversely affect the Company's business and increase the costs of planning, designing, and producing the Company’s products.

SECTION 2 – FINANCIAL INFORMATION

Item 2.01 Completion of Acquisition or Disposition of Assets

The information set forth in Item 1.01 of this Current Report on Form 8-K that relates to the completion of acquisition of assets is incorporated by reference into this Item 2.01.

SECTION 3 – SECURITIES AND TRADING MARKETS

Item 3.02 Unregistered Sales of Equity Securities

The information set forth in Item 1.01 of this Current Report on Form 8-K that relates to the unregistered sales of equity securities is incorporated by reference into this Item 3.02.

On June 30, 2016, the Company issued a total of 600,000 shares of its Series A Preferred Stock to the four members of the Company’s board of directors for services rendered.

The issuance of the shares is exempt from registration in reliance upon Section 4(2) and/or Regulation D of the Securities Act of 1933, as amended.

SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT

Item 5.01 Changes in Control of Registrant

The information set forth in Item 1.01 of this Current Report on Form 8-K that relates to the change of control of the registrant is incorporated by reference into this Item 3.02.

As a result of the issuance to Seller (namely Cleanspark Holdings, LLC) amounting to roughly 22% of the Company’s issued and outstanding shares of common stock, there has been a change in control of the Company.

In connection with the change in control of our company, Seller has the right to appoint one person to the Company’s board of directors, as discussed more fully in Item 1.01 above.

15

There are no arrangements known to the Company, the operation of which may, at a subsequent date, result in a change in control of the Company.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The information set forth in Item 3.02 of this Current Report on Form 8-K that relates to the compensatory arrangements of directors is incorporated by reference into this Item 5.02.

SECTION 8 – OTHER EVENTS

Item 8.01 Other Events

On July 7, 2016, we issued a press release concerning the acquisition of assets of CleanSpark. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in Item 8.01 of this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

SECTION 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of businesses acquired

To the extent the financial statements and additional information required pursuant to Item 9.01(a) of Form 8-K are determined to be required to be filed, they will be filed by amendment to this Current Report on Form 8-K within 71 calendar days after the date on which this Current Report on Form 8-K must be filed.

(b) Pro forma financial information.

To the extent the pro forma financial information required pursuant to Item 9.01(b) of Form 8-K is determined to be required to be filed, it will be filed by amendment to this Current Report on Form 8-K within 71 calendar days after the date on which this Current Report on Form 8-K must be filed.

(d) Exhibits

Exhibit No.	Description
2.1	Asset Purchase Agreement, dated June 30, 2016*
99.1	Press Release, dated July 7, 2016*
99.2	Audited Financial Information for CleanSpark Holdings, LLC
99.3	Unaudited Financial Information for CleanSpark Holdings, LLC
99.4	Unaudited Pro Forma Financial Information

* Previously filed

16

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 hereunto duly authorized.

Stratean, Inc.

/s/ Zachary Bradford

Zachary Bradford
Chief Financial Officer

Date: September 16, 2016

17

EX-99.2

CLEANSPARK, LLC

BALANCE SHEETS

(AUDITED)

	September 30, 2015				September 30, 2014
ASSETS
Current assets
Cash		$	950,922		$	365,303
Accounts receivable			580,619			—
Prepaid expense			38,698			—
Deposits			82,742			—
Total current assets			1,652,981			365,303
Commercial microgrid			90,642			75,825
Fixed Assets			117,540			57,014
Tenant improvements			285,635			299,529
Intangible assets			67,891			5,855
Total assets			2,214,689			803,526
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities		$	464,405		$	94,202
Billings in excess of earnings			647,400			—
Accrued interest payable			138,723			28,387
Convertible Notes related party			602,200			—
Convertible Notes			777,000			—
Total current liabilities			2,629,728			122,589
Convertible Notes related party			—			602,200
Convertible Notes			—			777,000
Total liabilities			2,629,728			1,501,789
Members' deficit
Members deficit			(415,039	)		(698,263
Total members deficit			(415,039	)		(698,263
Total liabilities and stockholders' deficit		$	2,214,689		$	803,526

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

CLEANSPARK, LLC

STATEMENT OF OPERATIONS

(AUDITED)

	For the Year Ended
	September 30, 2015			September 30, 2014
Revenues	$	547,211		$	—
Cost of revenues		534,063			—
Gross profit		13,148			—
Operating expenses
Payroll expense		2,375,182			964,869
Rent expense		126,687			77,230
Professional fees		343,336			156,810
Research and development		37,632			34,651
General and administrative expenses		348,326			174,734
Depreciation and amortization		63,328			12,411
Total operating expenses		3,294,491			1,420,705
Loss from operations		(3,281,343	)		(1,420,705	)
Other income (expense)
Interest expense		(110,400	)		(28,387	)
Reimbursement income		75,000			—
Interest income		154			194
Total other income (expense)		(35,246	)		(28,193	)
Net income (loss)	$	(3,316,589	)	$	(1,448,898	)

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

2

CLEANSPARK, LLC

STATEMENT OF CASH FLOWS

(AUDITED)

	For the Year Ended
	September 30, 2015			September 30, 2014
Cash Flows from Operating Activities
Net loss	$	(3,316,589	)	$	(1,448,898	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		63,328			12,411
Changes in assets and liabilities
(Increase) decrease in prepaid expense		(38,698	)		—
Increase in deferred revenue		647,400			—
(Increase) decrease in deposits		(82,742	)		—
(Increase) decrease in accounts receivable		(580,619	)		—
Increase (decrease) in accounts payable		370,203			94,202
Increase (decrease) in accrued interest		110,336			28,387
Net cash from operating activities		(2,827,381	)		(1,313,898	)
Cash Flows from investing
Investments in intangible assets		(72,319	)		(6,165	)
Investments in commercial microgrid		(24,659	)		(77,790	)
Investments in fixed assets		(82,972	)		(59,267	)
Investments in tenant improvements		(6,863	)		(307,412	)
Net cash used in investing activities		(186,813	)		(450,634	)
Cash Flows from Financing Activities
Proceeds from related party convertible notes		—			602,200
Proceeds from convertible notes		—			777,000
Proceeds from members contributions		3,599,813			750,000
Net cash from financing activities		3,599,813			2,129,200
Net increase (decrease) in Cash		585,619			364,668
Beginning cash balance		365,303			635
Ending cash balance	$	950,922		$	365,303
Supplemental disclosure of cash flow information
Cash paid for interest	$	—		$	—
Cash paid for tax	$	—		$	—

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

3

CLEANSPARK, LLC

STATEMENT OF MEMBERS’ DEFICIT

(AUDITED)

	Members		Accumulated			Total Members'
	Contributions		Deficit			Deficit
Balance, September 30, 2013		1,000		(365	)		635
Members contribution of cash		750,000					750,000
Net loss				(1,448,898	)		(1,448,898	)
Balance, September 30, 2014		751,000		(1,449,263	)		(698,263	)
Members contribution of cash		3,599,813					3,599,813
Net loss				(3,316,589	)		(3,316,589	)
Balance, September 30, 2015		4,350,813		(4,765,852	)		(415,039	)

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

4

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(AUDITED)

1.   ORGANIZATION AND DESCRIPTION OF BUSINESS

Description History and Organization of Business

Cleanspark, LLC ("Cleanspark") was incorporated in November 2013 as an California limited liability company.  The Company is a clean technology company which provides advanced energy system optimization and engineering services, and distributed energy resource integration. In addition, CleanSpark developed a microgrid energy enterprise platform, the flex Power System, which is capable of managing complex renewable and legacy based power systems.

The flex Power System (“fPS”) is an integrated microgrid software and control platform that integrates all forms of energy generation with energy storage devices and controls facility loads to provide optimized energy usage and security. The fPS software uses real-time generation, consumption, and grid data to decide whether to use or store energy based on prioritized end-user benefits such as enhancing cost savings or preserving critical loads.

CleanSpark’s services allow for a cost effective renewable based power systems that promote renewables integration, lower energy consumption, and provide energy surety.

Shortly after forming the Company in 2013, CleanSpark and the Marines were awarded a grant by the California Energy Commission (“CEC”) to demonstrate these innovative approaches to community scale renewable energy integration and microgrids based on the Company’s FractalGrid architecture.

CleanSpark validated its technology platforms through its pilot microgrid installations. CleanSpark successfully installed its first microgrid at its office in Poway, CA in 2014. This pilot project, named DaVinci, incorporated solar photovoltaic, wind, diesel generation, advanced kinetic energy storage, electrical vehicles and granular building automation. As a follow on, CleanSpark partnered with the United States Marine Corps, Navy and California Energy Commission to demonstrate a unique 1.1MW microgrid called a FractalGrid. This installation includes concentrating photovoltaics, high efficiency solar photovoltaic, diesel generation, geothermal heat pumps, electric vehicles, all forms of advanced energy storage and highly automated intelligent building systems and controls across four separate facilities all working together in a ‘microgrid of microgrids’ configuration.

CleanSpark is between the validation, scaling and development phases of its business life-cycle and is working to achieve profitability, rapid market penetration and scalability. CleanSpark continues building strategic industry, business development and financial partnerships to continue development and deployment of its distributed energy resource and power management services.

2. BASIS OF PRESENTATION AND GOING CONCERN

The accompanying audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and 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 period presented have been reflected herein.

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 $(4,765,852) 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.

5

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(AUDITED)

2. SUMMARY OF SIGNIFICANT POLICIES

This summary of significant accounting policies of Cleanspark, LLC 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 $365,303 and $950,922 in cash and cash equivalents as of September 30, 2014 and September 30, 2015, 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.

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.

Revenues from fixed price construction contracts are recognized on the percentage of completion method, measured on the basis of incurred costs to estimated total costs for each contract. This cost to cost method is used because management considers it to be the best available measure of progress on these contracts. Revenues from cost-plus fee contracts are recognized on the basis of costs incurred during the period plus the fee earned, measured by the cost to cost method.

6

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(AUDITED)

The financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to costs to complete long-term contracts. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. Selling, general, and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Profit incentives are included in revenues when their realization is reasonably assured. An amount equal to contract costs attributable to claims is included in revenues when realization is probable and the amount can be reliably estimated.

The asset, "costs and estimated earnings in excess of billings on uncompleted contracts," represents revenues recognized in excess of amounts billed. The liability, "billings in excess of costs and estimated earnings on uncompleted contracts," represents billings in excess of revenues recognized.

For the periods ended September 30, 2015 and 2014 the Company reported revenues of $547,211 and $nil, 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.

Concentration of Credit Risk – Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash (the amounts of which may, at times, exceed Federal Deposit Insurance Corporation limits on insurable amounts) and trade accounts receivable.  Cash is managed within established guidelines, and the Company mitigates its risk by investing through major financial institutions.

Concentration of credit risk with respect to trade accounts receivable is limited by performing on-going credit evaluations of the Company's customers and adjusting credit limits based upon payment history and the customer's current credit worthiness. Collections and payments from customers are continuously monitored. 

The Company maintains an allowance for doubtful accounts which is based upon historical experience and specific customer collection issues that have been identified. While bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past.

Income Taxes – The Company is a limited liability company and treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the members. As such, no recognition of federal or state income taxes for the Company as limited liability companies have been provided for in the accompanying consolidated financial statements. Any uncertain tax position taken by the member is not an uncertain position of the Company.

7

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(AUDITED)

Recently Issued Accounting Pronouncements –The Company has evaluated the all recent accounting pronouncements through ASU 2016-14, and believes that none of them will have a material effect on the Company's financial position, results of operations or cash flows. 

3. PREPAID EXPENSES AND DEPOSITS

The Company prepaid certain vendor expenses totaling of $38,698 for services. The prepayments were expensed upon completion of the services subsequent to the period ending September 30, 2015.

The Company paid certain vendors a total of $82,742 for materials and supplies related to the Ram’s Hill commercial micro grid construction project. The deposit was expensed upon delivery of the materials subsequent to the period ending September 30, 2015.

4. COMMERCIAL MICROGRID

The California Energy Commission awarded a grant of $1.7 million to Harper Construction Company, Inc. in July 2013 to support a microgrid technology demonstration project. CleanSpark was subcontracted to provided design, development, integration, and installation services for the FractalGrid at the School of Infantry in the 52 Area of Marine Corps Base Camp Pendleton.  The project included integration of CleanSpark’s proprietary software and controls platform with a variety of energy storage technologies to include two low speed flywheels. Together, the advanced storage devices stock 300kWh of solar energy generated by existing fixed-tilt solar photovoltaic panels and fifteen dual axis tracking concentrated photovoltaic units. CleanSpark’s distributed controls combine the generation and storage technologies to create four separate microgrids that self align together to create a larger microgrid that ties directly into the larger utility grid at the 12kV level, allowing the base to consume energy from the most reliable, affordable source at any given time. The system provides a 100% renewable and sustainable solution to energy security.

Clean Spark purchased the microgrid from Harper Construction for one dollar and an agreement to indemnify Harper from any claims related to the operation of the Microgrid and assumption of the agreement to operate and maintain at the associated assets of the Camp Pendleton FractiaGrid for a period of 10 years. This includes maintaining the equipment in working condition and providing system upkeep on a monthly, quarterly and yearly basis an/or as needs arise. In the case of equipment failure CleanSpark has agreed to remove faulty equipment and/or abandon and leave in place. CleanSpark is required to carry appropriate liability insurances to cover damages attributed to ‘catastrophic’ failure of it’s owned and operated equipment.  CleanSpark continues to work with WACO and the Department of Defense to define additional rights and responsibilities and to expand the assets at the FractalGrid and future military microgrids within Camp Pendlton and other military installations.

These assets are recorded at their historical cost basis and consist of the following as of September 30, 2015 and September 30, 2014

	September 30, 2015			September 30, 2014
Commercial microgrid	$	102,449		$	77,790
Less: accumulated amortization		(11,807	)		(1,965	)
Commercial microgrid, net	$	90,642		$	75,825

8

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(AUDITED)

5. FIXED ASSETS

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

	September 30, 2015			September 30, 2014
Machinery and equipment	$	33,682		$	18,406
Furniture and fixtures		15,398			2,085
Computers and servers		93,159			38,776
Total		142,239			59,267
Less: accumulated depreciation		(24,699	)		(2,253	)
Fixed assets, net	$	117,540		$	57,014

Depreciation expense for the years ended September 30, 2015 and 2014 was $22,446 and $2,253, respectively.

6. TENANT IMPROVEMENTS

Tenant improvements consist of the following as of September 30, 2015 and September 30, 2014

	September 30, 2015			September 30, 2014
Tenant improvements	$	314,275		$	307,412
Less: accumulated amortization		(28,640	)		(7,883	)
Tenant improvements, net	$	285,635		$	299,529

Depreciation expense for the years ended September 30, 2015 and 2014 was $20,767 and $7,883, respectively

7. INTANGIBLE AND OTHER ASSETS

Intangible assets consist of the following as of June 30, 2016 and September 30, 2015

	September 30, 2015			September 30, 2014
Patents and trademarks	$	78,484		$	6,165
Less: accumulated amortization		(10,593	)		(310	)
Intangible assets, net	$	67,891		$	5,855

Amortization expense for the years ended September 30, 2015 and 2014 was $10,283 and $310, respectively

The Company has filed patents which to protect its FractalGrid Clean Energy Architecture, its fPS Microgrid Software, and the fPS Microgrid Controller. All patents are currently pending and have not yet been granted.

8. RELATED PARTY TRANSACTIONS

During the year ended September 30, 2014 the Company issued ten unsecured convertible promissory notes with a total principal amount of $602,200 to employees and family members of employees of the Company. The notes bear an 8% annual interest rate and mature two years from issuance.

The Note also carried a convertible provision that in the following situations the notes would automatically convert into ownership units of the Company’s sole member in the event of a qualified financing or corporate transaction. A corporate transaction is defined as the sale of substantially all the assets of the Company or a qualified financing

9

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(AUDITED)

exceeding $30 million dollars. On July 1, 2016 a qualified corporate transaction occurred and all notes were converted into member units of our sole member.

9. CONVERTIBLE NOTES

During the year ended September 30, 2014 the Company issued nine unsecured convertible promissory notes with a total principal amount of $777,000 to investors. The notes bear an 8% annual interest rate and mature two years from issuance.

The Note also carried a convertible provision that in the following situations the notes would automatically convert into ownership units of the Company’s sole member in the event of a qualified financing or corporate transaction. A corporate transaction is defined as the sale of substantially all the assets of the Company or a qualified financing exceeding $30 million dollars. On July 1, 2016 a qualified corporate transaction occurred and all notes were converted into member units of our sole member.

10. MEMBERS’ DEFICIT

Overview –The membership interest of each member in the Company is in the form of units. Each unit represent common ownership and the holder of the units may receive dividends if declared.

During the years ending September 30, 2015 and 2014, the Company received $3,599,813 and $750,000 in cash contributions from its sole member.

11. DEFINITIVE AGREEMENTS

CleanSpark is responsible for Operations & Maintenance of the Photovotaic Solar array and Power Distribution System for 10 years at Rams Hill Golf course. This involves cleaning of Photovotaic solar panels, inspection of electrical components and distribution gear, tightening of electrical connection points and other general maintenance of components that are warranted under manufacturers warranties.  The Company will be paid annually fee of $15,000 per year at the conclusion of each year. The Contact also allows for a 2% escalation of fees each year. 

12.    SUBSEQUENT EVENTS

On April 15, 2016 the Company recorded an impairment on its tenant improvements associated with the office and microgrid improvements located at 13000 Gregg Strett, Poway Califonia 92064. The company had been subleasing on informal terms with the master lessor. The maser lessor defaulted on the terms of their lease which led to the eviction of Cleanspark from the premises. The Comapny is attempting to obtain rights to the property and that was installed onsite which includes components of the Davinci office micro grid. Due to the uncertainty of realizing future value from these assets the Company has written these assets off and as a result an impairment expense of $274,293 was recorded.

On July 1, 2016, Stratean, Inc. and Cleanspark II, LLC, a wholly-owned subsidiary of Stratean, Inc. (together, the “Buyer”), entered into an Asset Purchase Agreement, as amended (the “Purchase Agreement”) with CleanSpark LLC, (the “Seller”). The closing of the transactions contemplated by the Purchase Agreement, as amended occurred on July 1, 2016 (the “Closing Date”).

On the Closing Date, pursuant to the Purchase Agreement, the Company acquired all the assets (the “Assets”) and assume certain liabilities (the “Assumed Liabilities”) related to Seller and its line of business. The Assets the Buyer purchased from Seller include:

10

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(AUDITED)

• Equipment and other tangible assets;

• Domain names, websites and intellectual property;

• All rights to causes of action, lawsuits, judgments, claims and demands of any nature available to or being pursued by the Seller;

• Contracts to which Seller is bound;

• Current and future customer accounts, including accounts receivable;

• All member units in CleanSpark LLC, and any investments it may have; and

• Any other assets of any nature whatsoever that are related to or used in connection with the business of Seller and its goodwill.

In exchange for the Assets, the Company assumed the Assumed Liabilities, consisting of certain accounts payable amounting to approximately $200,000 arising out of the Assets. The Company also issued to Sole member of Cleanspark, LLC six million (6,000,000) shares of common stock and five-year warrants to purchase four million five hundred thousand (4,500,000) shares of common stock at an exercise price of $1.50 per share.

Simultaneously with the Purchase Agreement, the Buyer entered into certain ancillary agreements (the “Ancillary Agreements”) with Seller, consisting of a bill of sale, intellectual property assignment and lock-up/leak-out agreement. The lock-up/leak-out agreement prevents the Sole member of Cleanspark, LLC from selling the Company’s securities in the public market for a year.

The Purchase Agreement contains customary representations, warranties and covenants. In addition, the Buyer and Seller agreed to certain post-closing covenants, including the following:

• The board of directors of the Buyer shall have approval and oversight over a management developed budget to exploit the Assets and will work with the management of CleanSpark II, LLC, to which the Assets have been transferred. For a period of nine months from the Closing Date, the Buyer agrees to fund on a monthly basis all pre-approved budgetary needs for CleanSpark II, LLC to achieve its business objectives.

• The strategic management of Cleanspark II, LLC shall be determined by the board of directors of the Buyer. Management shall be appointed for Cleanspark II, LLC and they shall control the day-to-day operations of Cleanspark II, LLC, subject to the oversight of the Buyer and its board of directors. Employment agreements for appointed management of Cleanspark II, LLC may be negotiated prior to close but will hold an effective date post-closing. The parties shall jointly agree to a business plan for Cleanspark II, LLC within sixty (60) days of closing.

• Within thirty (30) days of the Closing Date, the Buyer agrees to appoint one (1) candidate chosen by Seller to the board of directors of the Company. The Buyers board of directors still maintains exclusive rights to accept the suggested appointment and in the case the suggested appointment is rejected by the board, Seller will have the right to present a new candidate until such time as the candidate is approved by the Buyer ’s board of directors. The term of the appointment of Seller’s member of the board shall be in accordance with the Company’s bylaws.

• The Buyer will appoint an accounting firm of its choosing to maintain Seller’s financial records to ensure compliance with US GAAP. Within 71 days of closing, Seller shall provide the Buyer with an audit for the two latest fiscal year periods and reviewed financials for an interim period ending June 30, 2016 prepared by Seller’s independent auditor, satisfactory to the Company.

11

EX-99.3

PCAOB Registered Auditors – www.sealebeers.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Cleanspark, LLC

We have audited the accompanying balance sheets of Cleanspark, LLC as of September 30, 2015 and September 30, 2014 and the related statements of operations, members equity (deficit), and cash flows for each of the years in the two-year period ended September 30, 2015 and September 30, 2014. Cleanspark, LLC’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 audit 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 Cleanspark, LLC as of September 30, 2015 and September 30, 2014, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has negative working capital at September 30, 2015, has incurred recurring losses and recurring negative cash flow from operating activities, and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Seale and Beers, CPAs

Seale and Beers, CPAs

Las Vegas, Nevada

September 16, 2016

1

CLEANSPARK, LLC

BALANCE SHEETS

(UNAUDITED)

	June 30, 2016				September 30, 2015
Current assets
Cash		$	4,421			$	950,922
Accounts receivable			7,500				580,619
Prepaid expense			—				38,698
Deposits			—				82,742
Total current assets			11,921				1,652,981
Commercial microgrid			82,973				90,642
Fixed Assets, net			190,047				117,540
Tenant improvements, net			—				285,635
Intangible assets			81,557				67,891
Total assets			366,498				2,214,689
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities		$	234,297			$	464,405
Billings in excess of earnings			—				647,400
Accrued interest payable			216,270				138,723
Convertible Notes related party			568,200				602,200
Convertible Notes			777,000				777,000
Total current liabilities			1,795,767				2,629,728
Convertible Notes related party			—				—
Convertible Notes			—				—
Total liabilities			1,795,767				2,629,728
Members' deficit
Members deficit			(1,429,269	)			(415,039	)
Total members deficit			(1,429,269	)			(415,039	)
Total liabilities and stockholders' deficit		$	366,498			$	2,214,689

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

2

CLEANSPARK, LLC

STATEMENT OF OPERATIONS

(UNAUDITED) 

	For the Three Months Ended						For the Nine Months Ended
	June 30, 2016			June 30, 2015			June 30, 2016			June 30, 2015
Revenues	$	3,750		$	4,000		$	1,892,625		$	4,000
Cost of revenues		—			2,600			1,829,697			2,600
Gross profit		3,750			1,400			62,928			1,400
Operating expenses
Payroll expense		90,396			530,225			1,608,862			1,777,097
Rent expense		9,313			61,874			86,048			87,726
Professional fees		128			112,879			446,108			230,738
Research and development		8,167			5,013			34,224			15,693
General and administrative expenses		85,127			151,627			363,019			241,458
Depreciation and amortization		21,396			15,820			70,898			36,401
Total operating expenses		214,527			877,438			2,609,159			2,389,113
Loss from operations		(210,777	)		(876,038	)		(2,546,231	)		(2,387,713	)
Other income (expense)
Interest expense		(26,830	)		—			(81,890	)		(82,525	)
Impairment expense		(274,293	)		—			(274,293	)		—
Gain on sale of assets		952			—			952			—
Interest income		—			—			39			54
Total other income (expense)		(300,171	)		—			(355,192	)		(82,471	)
Net income (loss)	$	(510,948	)	$	(876,038	)	$	(2,901,423	)	$	(2,470,184	)

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

3

CLEANSPARK, LLC

STATEMENT OF CASH FLOWS

(UNAUDITED)

	For the Nine Months Ended
	June 30, 2016			June 30, 2015
Cash Flows from Operating Activities
Net loss	$	(2,901,423	)	$	(2,470,184	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Impairment of tenant improvements		274,301			—
Depreciation and amortization		70,898			47,526
Changes in assets and liabilities
(Increase) decrease in prepaid expense		38,698			—
Increase in customer deposits		—			77,207
Increase in deferred revenue		(647,400	)		—
(Increase) decrease in deposits		82,742			(40,214	)
(Increase) decrease in accounts receivable		573,119			—
Increase (decrease) in accounts payable		(230,108	)		27,927
Increase (decrease) in accrued interest		77,547			82,528
Net cash from operating activities		(2,661,626	)		(2,275,210	)
Cash Flows from investing
Investments in intangible assets		—			(22,465	)
Investments in commercial microgrid		—			(24,659	)
Investments in fixed assets		(113,974	)		(12,074	)
Investments in tenant improvements		(24,094	)		(55,402	)
Net cash used in investing activities		(138,068	)		(114,600	)
Cash Flows from Financing Activities
Payments on related party convertible notes		(34,000	)		—
Proceeds from members contributions		1,887,193			3,086,202
Net cash from financing activities		1,853,193			3,086,202
Net increase (decrease) in Cash
		(946,501	)		696,392
Beginning cash balance
		950,922			365,303
Ending cash balance
	$	4,421		$	1,061,695
Supplemental disclosure of cash flow information
Cash paid for interest	$	—		$	—
Cash paid for tax	$	—		$	—

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

4

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

1.   ORGANIZATION AND DESCRIPTION OF BUSINESS

Description History and Organization of Business

Cleanspark, LLC ("Cleanspark") was incorporated in November 2013 as a California limited liability company.  The Company is a clean technology company which provides advanced energy system optimization and engineering services, and distributed energy resource integration. In addition, CleanSpark developed a microgrid energy enterprise platform, the flex Power System, which is capable of managing complex renewable and legacy based power systems.

The flex Power System (“fPS”) is an integrated microgrid software and control platform that integrates all forms of energy generation with energy storage devices and controls facility loads to provide optimized energy usage and security. The fPS software uses real-time generation, consumption, and grid data to decide whether to use or store energy based on prioritized end-user benefits such as enhancing cost savings or preserving critical loads.

CleanSpark’s services allow for a cost effective renewable based power systems that promote renewables integration, lower energy consumption, and provide energy surety.

Shortly after forming the Company in 2013, CleanSpark and the Marines were awarded a grant by the California Energy Commission (“CEC”) to demonstrate these innovative approaches to community scale renewable energy integration and microgrids based on the Company’s FractalGrid architecture.

CleanSpark validated its technology platforms through its pilot microgrid installations. CleanSpark successfully installed its first microgrid at its office in Poway, CA in 2014. This pilot project, named DaVinci, incorporated solar photovoltaic, wind, diesel generation, advanced kinetic energy storage, electrical vehicles and granular building automation. As a follow on, CleanSpark partnered with the United States Marine Corps, Navy and California Energy Commission to demonstrate a unique 1.1MW microgrid called a FractalGrid. This installation includes concentrating photovoltaics, high efficiency solar photovoltaic, diesel generation, geothermal heat pumps, electric vehicles, all forms of advanced energy storage and highly automated intelligent building systems and controls across four separate facilities all working together in a ‘microgrid of microgrids’ configuration.

CleanSpark is between the validation, scaling and development phases of its business life-cycle and is working to achieve profitability, rapid market penetration and scalability. CleanSpark continues building strategic industry, business development and financial partnerships to continue development and deployment of its distributed energy resource and power management services.

2. 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 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 period presented have been reflected herein.

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 $(7,667,275) 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.

5

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

3. SUMMARY OF SIGNIFICANT POLICIES

This summary of significant accounting policies of Cleanspark, LLC 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 $950,922 and $4,421 in cash and cash equivalents as of September 30, 2015 and June 30, 2016, 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.

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.

Revenues from fixed price construction contracts are recognized on the percentage of completion method, measured on the basis of incurred costs to estimated total costs for each contract. This cost to cost method is used because management considers it to be the best available measure of progress on these contracts. Revenues from cost-plus fee contracts are recognized on the basis of costs incurred during the period plus the fee earned, measured by the cost to cost method.

The financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to costs to complete long-term contracts. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. Selling, general, and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Profit incentives are included in revenues when their realization is reasonably assured. An amount equal to contract costs attributable to claims is included in revenues when realization is probable and the amount can be reliably estimated.

6

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

The asset, "costs and estimated earnings in excess of billings on uncompleted contracts," represents revenues recognized in excess of amounts billed. The liability, "billings in excess of costs and estimated earnings on uncompleted contracts," represents billings in excess of revenues recognized.

For the nine months ended June 30, 2016 and 2015 the Company reported revenues of $1,892,625 and $4,000, 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.

Concentration of Credit Risk – Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash (the amounts of which may, at times, exceed Federal Deposit Insurance Corporation limits on insurable amounts) and trade accounts receivable.  Cash is managed within established guidelines, and the Company mitigates its risk by investing through major financial institutions.

Concentration of credit risk with respect to trade accounts receivable is limited by performing on-going credit evaluations of the Company's customers and adjusting credit limits based upon payment history and the customer's current credit worthiness. Collections and payments from customers are continuously monitored. 

The Company maintains an allowance for doubtful accounts which is based upon historical experience and specific customer collection issues that have been identified. While bad debt expenses have historically been within expectations and allowances established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past.

Income Taxes – The Company is a limited liability company and treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the members. As such, no recognition of federal or state income taxes for the Company as limited liability companies have been provided for in the accompanying consolidated financial statements. Any uncertain tax position taken by the member is not an uncertain position of the Company.

Recently Issued Accounting Pronouncements –The Company has evaluated the all recent accounting pronouncements through ASU 2016-14, and believes that none of them will have a material effect on the Company's financial position, results of operations or cash flows. 

4. COMMERCIAL MICROGRID

The California Energy Commission awarded a grant of $1.7 million to Harper Construction Company, Inc. in July 2013 to support a microgrid technology demonstration project. CleanSpark was subcontracted to provided design, development, integration, and installation services for the FractalGrid at the School of Infantry in the 52 Area of Marine Corps Base Camp Pendleton.  The project included integration of CleanSpark’s proprietary software and controls platform with a variety of energy storage technologies to include two low speed flywheels. Together, the advanced storage devices stock 300kWh of solar energy generated by existing fixed-tilt solar photovoltaic panels and fifteen dual axis tracking concentrated photovoltaic units. CleanSpark’s distributed controls combine the generation and storage technologies to create four separate microgrids that self align together to create a larger microgrid that ties directly into the larger utility grid at the 12kV level, allowing the base to consume energy from the most reliable, affordable source at any given time. The system provides a 100% renewable and sustainable solution to energy security.

7

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

Clean Spark purchased the microgrid from Harper Construction for one dollar and an agreement to indemnify Harper from any claims related to the operation of the Microgrid and assumption of the agreement to operate and maintain at the associated assets of the Camp Pendleton FractiaGrid for a period of 10 years. This includes maintaining the equipment in working condition and providing system upkeep on a monthly, quarterly and yearly basis an/or as needs arise. In the case of equipment failure CleanSpark has agreed to remove faulty equipment and/or abandon and leave in place. CleanSpark is required to carry appropriate liability insurances to cover damages attributed to ‘catastrophic’ failure of it’s owned and operated equipment.  CleanSpark continues to work with WACO and the Department of Defense to define additional rights and responsibilities and to expand the assets at the FractalGrid and future military microgrids within Camp Pendlton and other military installations.

These assets are recorded at their historical cost basis and consist of the following as of June 30, 2016 and September 30, 2015

	June 30, 2016			September 30, 2015
Commercial microgrid	$	102,449		$	102,449
Less: accumulated amortization		(19,476	)		(11,807	)
Commercial microgrid, net	$	82,973		$	90,642

5. FIXED ASSETS

Fixed assets consist of the following as of June 30, 2016 and September 30, 2015

	June 30, 2016			September 30, 2015
Machinery and equipment	$	137,543		$	33,682
Furniture and fixtures		15,398			15,398
Computers and servers		106,891			93,159
Total		259,832			142,239
Less: accumulated depreciation		(69,785	)		(24,699	)
Fixed assets, net	$	190,047		$	117,540

Depreciation expense for the nine month ended June 30, 2016 and 2015 was $41,471 and $14,344, respectively.

6. TENANT IMPROVEMENTS

Tenant improvements consist of the following as of June 30, 2016 and September 30, 2015

	June 30, 2016		September 30, 2015
Tenant improvements	$	-	$	314,275
Less: accumulated amortization		-		(28,640	)
Tenant improvements, net	$	-	$	285,635

Depreciation expense for the nine month ended June 30, 2016 and 2015 was $11,334 and $15,491, respectively.

On April 15, 2016 the Company recorded an impairment on its tenant improvements associated with the office and microgrid improvements located at 13000 Gregg Strett, Poway California 92064. The company had been subleasing on informal terms with the master lessor. The maser lessor defaulted on the terms of their lease which led to the eviction of Cleanspark from the premises. The Company is attempting to obtain rights to the property and that was installed onsite which includes components of the Davinci office micro grid. Due to the uncertainty of realizing future value from these assets the Company has written these assets off and as a result an impairment expense of $274,293 was recorded.

8

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

7.  INTANGIBLE AND OTHER ASSETS

Intangible assets consist of the following as of June 30, 2016 and September 30, 2015

	June 30, 2016			September 30, 2015
Patents and trademarks	$	102,574		$	78,484
Less: accumulated amortization		(21,017	)		(10,593	)
Intangible assets, net	$	81,557		$	67,891

Amortization expense for the nine month ended June 30, 2016 and 2015 was $10,424 and $7,093, respectively.

The Company has filed patents which to protect its FractalGrid Clean Energy Architecture, its fPS Microgrid Software, and the fPS Microgrid Controller. All patents are currently pending and have not yet been granted.

8. RELATED PARTY TRANSACTIONS

During the year ended September 30, 2014 the Company issued ten unsecured convertible promissory notes with a total principal amount of $602,200 to employees and family members of employees of the Company. The notes bear an 8% annual interest rate and mature two years from issuance.

The Note also carried a convertible provision that in the following situations the notes would automatically convert into ownership units of the Company’s sole member in the event of a qualified financing or corporate transaction. A corporate transaction is defined as the sale of substantially all the assets of the Company or a qualified financing exceeding $30 million dollars. On July 1, 2016 a qualified corporate transaction occurred and all notes were converted into member units of our sole member.

9. CONVERTIBLE NOTES

During the year ended September 30, 2014 the Company issued nine unsecured convertible promissory notes with a total principal amount of $777,000 to investors. The notes bear an 8% annual interest rate and mature two years from issuance.

The Note also carried a convertible provision that in the following situations the notes would automatically convert into ownership units of the Company’s sole member in the event of a qualified financing or corporate transaction. A corporate transaction is defined as the sale of substantially all the assets of the Company or a qualified financing exceeding $30 million dollars. On July 1, 2016 a qualified corporate transaction occurred and all notes were converted into member units of our sole member.

10. MEMBERS’ DEFICIT

Overview –The membership interest of each member in the Company is in the form of units. Each unit represent common ownership and the holder of the units may receive dividends if declared.

During the nine month ending June 30, 2016, the Company received $,1887,193 in cash contributions from its sole member.

9

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

11. DEFINITIVE AGREEMENTS

CleanSpark is responsible for Operations & Maintenance of the Photovotaic Solar array and Power Distribution System for 10 years at Rams Hill Golf course. This involves cleaning of Photovotaic solar panels, inspection of electrical components and distribution gear, tightening of electrical connection points and other general maintenance of components that are warranted under manufacturers warranties.  The Company will be paid annually fee of $15,000 per year at the conclusion of each year. The Contract also allows for a 2% escalation of fees each year. 

12.    SUBSEQUENT EVENTS

On July 1, 2016, Stratean, Inc. and Cleanspark II, LLC, a wholly-owned subsidiary of Stratean, Inc. (together, the “Buyer”), entered into an Asset Purchase Agreement, as amended (the “Purchase Agreement”) with CleanSpark Holdings LLC, CleanSpark LLC, CleanSpark Technologies LLC and Specialized Energy Solutions, Inc. (together, the “Seller”). The closing of the transactions contemplated by the Purchase Agreement, as amended occurred on July 1, 2016 (the “Closing Date”).

On the Closing Date, pursuant to the Purchase Agreement, the Company acquired all the assets (the “Assets”) and assume certain liabilities (the “Assumed Liabilities”) related to Seller and its line of business. The Assets the Buyer purchased from Seller include:

• Equipment and other tangible assets;

• Domain names, websites and intellectual property;

• All rights to causes of action, lawsuits, judgments, claims and demands of any nature available to or being pursued by the Seller;

• Contracts to which Seller is bound;

• Current and future customer accounts, including accounts receivable;

• All member units in CleanSpark LLC, and any investments it may have; and

• Any other assets of any nature whatsoever that are related to or used in connection with the business of Seller and its goodwill.

Pursuant to an amendment of the Purchase Agreement, Cleanspark II, LLC was granted a 3-year exclusive option to purchase Specialized Energy Solutions, Inc. for 1,000 shares of Stratean Common Stock; and Cleanspark II, LLC was granted a 3-year exclusive option to purchase Clean Spark Technologies, LLC for 1,000 shares of Stratean Common Stock.

In exchange for the Assets, the Company assumed the Assumed Liabilities, consisting of certain accounts payable amounting to approximately $200,000 arising out of the Assets. The Company also issued to sole member of Cleanspark, LLC six million (6,000,000) shares of common stock and five-year warrants to purchase four million five hundred thousand (4,500,000) shares of common stock at an exercise price of $1.50 per share.

Simultaneously with the Purchase Agreement, the Buyer entered into certain ancillary agreements (the “Ancillary Agreements”) with Seller, consisting of a bill of sale, intellectual property assignment and lock-up/leak-out agreement. The lock-up/leak-out agreement prevents the Sole member of Cleanspark, LLC from selling the Company’s securities in the public market for a year.

The Purchase Agreement contains customary representations, warranties and covenants. In addition, the Buyer and Seller agreed to certain post-closing covenants, including the following:

• The board of directors of the Buyer shall have approval and oversight over a management developed budget to exploit the Assets and will work with the management of CleanSpark II, LLC, to which the Assets have been transferred. For a period of nine months from the Closing Date, the Buyer agrees to fund on a monthly basis all pre-approved budgetary needs for CleanSpark II, LLC to achieve its business objectives.

10

CLEANSPARK, LLC

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

• The strategic management of Cleanspark II, LLC shall be determined by the board of directors of the Buyer. Management shall be appointed for Cleanspark II, LLC and they shall control the day-to-day operations of Cleanspark II, LLC, subject to the oversight of the Buyer and its board of directors. Employment agreements for appointed management of Cleanspark II, LLC may be negotiated prior to close but will hold an effective date post-closing. The parties shall jointly agree to a business plan for Cleanspark II, LLC within sixty (60) days of closing.

• Within thirty (30) days of the Closing Date, the Buyer agrees to appoint one (1) candidate chosen by Seller to the board of directors of the Company. The Buyers board of directors still maintains exclusive rights to accept the suggested appointment and in the case the suggested appointment is rejected by the board, Seller will have the right to present a new candidate until such time as the candidate is approved by the Buyer ’s board of directors. The term of the appointment of Seller’s member of the board shall be in accordance with the Company’s bylaws.

• The Buyer will appoint an accounting firm of its choosing to maintain Seller’s financial records to ensure compliance with US GAAP. Within 71 days of closing, Seller shall provide the Buyer with an audit for the two latest fiscal year periods and reviewed financials for an interim period ending June 30, 2016 prepared by Seller’s independent auditor, satisfactory to the Company.

11

EX-99.4

STRATEAN INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

As of June 30, 2016

		Historical								Pro-forma Adjustments			Pro-forma Combined
		June 30, 2016				June 30, 2016
	Stratean Inc.				CleanSpark, LLC
ASSETS
Current assets
Cash		$	81,854			$	4,421						$	86,275
Accounts receivable			—				7,500							7,500
Prepaid expense			11,912				—							11,912
Deposits			589				—							589
Total current assets			94,355				11,921				—			106,276
Commercial microgrid			—				82,973							82,973
Fixed Assets			635,495				190,047							825,542
Cleanspark software			—				—		(a)		35,629,245			35,629,245
Tenant improvements			—				—							—
Intangible assets			51,175				81,557							132,732
														—
Total assets			781,025				366,498				35,629,245			36,776,768
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities		$	60,189			$	234,297			$	—		$	294,486
Accounts payable related parties			1,473				—				—			1,473
Billings in excess of earnings			—				—				—			—
Accrued interest payable			—				216,270				—			216,270
Convertible Notes related party			—				568,200		(b)		(568,200	)		—
Convertible Notes			—				777,000		(b)		(777,000	)		—
Total current liabilities			61,662				1,795,767				(1,345,200	)		512,229
Total liabilities			61,662				1,795,767				(1,345,200	)		512,229
Stockholders' equity (deficit)
Common stock; $0.001 par value;			21,086				—				6,000			27,086
Preferred stock;  $0.001 par value;			1,000				—				—			1,000
Additional paid-in capital			4,987,424				6,238,006		(a)(b)		36,968,445			48,193,875
Accumulated earnings (deficit)			(4,290,147	)			(7,667,275	)						(11,957,422	)
Total stockholders' equity (deficit)			719,363				(1,429,269	)			36,974,445			36,264,539
Total liabilities and stockholders' equity (deficit)		$	781,025			$	366,498			$	35,629,245		$	36,776,768

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

1

STRATEAN INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2016

		Historical					Pro-forma Adjustments	Pro-forma Combined
		June 30, 2016			June 30, 2016
		Stratean Inc.			CleanSpark, LLC
Revenues	$	—		$	3,750			$3,750
Cost of revenues		—			—			-
Gross profit		—			3,750			3,750
Operating expenses								-
Payroll expense		—			90,396			90,396
Rent expense		—			9,313			9,313
Professional fees		54,403			128			54,531
Research and development		50,000			8,167			58,167
General and administrative expenses		15,674			85,127			100,801
Depreciation and amortization		13,426			21,396			34,822
Total operating expenses		133,503			214,527			348,030
Loss from operations		(133,503	)		(210,777	)		(344,280)
Other income (expense)
Interest expense		—			(26,830	)		(26,830)
Impairment expense		—			(274,293	)		(274,293)
Gain on sale of assets		—			952			952
Total other income (expense)		—			(300,171	)		(300,171)
Net income (loss)	$	(133,503	)	$	(510,948	)		$(644,451)

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

2

STRATEAN INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Nine Months Ended June 30, 2016

		Historical					Pro -forma Adjustments		Pro-forma Combined
		June 30, 2016			June 30, 2016
		Stratean Inc.			CleanSpark, LLC
Revenues	$	—		$	1,892,625			$	1,892,625
Cost of revenues		—			1,829,697				1,829,697
Gross profit		—			62,928				62,928
Operating expenses									—
Payroll expense		—			1,608,862				1,608,862
Rent expense		—			86,048				86,048
Professional fees		268,560			446,108				714,668
Research and development		51,826			34,224				86,050
General and administrative expenses		42,293			363,019				405,312
Depreciation and amortization		33,911			70,898				104,809
Total operating expenses		396,590			2,609,159				3,005,749
Loss from operations		(396,590	)		(2,546,231	)			(2,942,821	)
Other income (expense)
Interest expense		—			(81,890	)			(81,890	)
Impairment expense		—			(274,293	)			(274,293	)
Gain on sale of assets		721			952				1,673
Interest income					39				39
Total other income (expense)		721			(355,192	)	—		(354,471	)
Net income (loss)	$	(395,869	)	$	(2,901,423	)		$	(3,297,292	)

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

3

STRATEAN INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Year Ended September 30, 2015

		Historical					Pro-forma Adjustments	Pro-Forma Combined
	September 30, 2015
		Stratean Inc.			CleanSpark, LLC
Revenues	$	—		$	547,211			$547,211
Cost of revenues		—			534,063			534,063
Gross profit		—			13,148			13,148
Operating expenses								-
Payroll expense		—			2,375,182			2,375,182
Rent expense		—			126,687			126,687
Professional fees		3,377,956			343,336			3,721,292
Research and development		52,288			37,632			89,920
General and administrative expenses		46,815			348,326			395,141
Depreciation and amortization		2,800			63,328			66,128
Total operating expenses		3,479,859			3,294,491			6,774,350
Loss from operations		(3,479,859	)		(3,281,343	)		(6,761,202)
Other income (expense)
Interest expense		(5,144	)		(110,400	)		(115,544)
Impairment expense		—			75,000			75,000
Interest income		—			154			154
Total other income (expense)		(5,144	)		(35,246	)		(40,390)
Net income (loss)	$	(3,485,003	)	$	(3,316,589	)		$(6,801,592)

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

4

STRATEAN INC.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial statements give effect to the asset purchase transaction (the "Transaction"). On July 1, 2016, Stratean, Inc. and Cleanspark II, LLC, a wholly-owned subsidiary of Stratean, Inc. (together, the “Buyer”), entered into an Asset Purchase Agreement, as amended (the “Purchase Agreement”) with CleanSpark Holdings LLC, CleanSpark LLC, CleanSpark Technologies LLC and Specialized Energy Solutions, Inc. (together, the “Seller”). The closing of the transactions contemplated by the Purchase Agreement, as amended, occurred on July 1, 2016 (the “Closing Date”).

 On the Closing Date, pursuant to the Purchase Agreement, the Company acquired all the assets (the “Assets”) and assume certain liabilities (the “Assumed Liabilities”) related to Seller and its line of business. The Assets the Buyer purchased from Seller include:

 Equipment and other tangible assets;

• Domain names, websites and intellectual property;

• All rights to causes of action, lawsuits, judgments, claims and demands of any nature available to or being pursued by the Seller;

• Contracts to which Seller is bound;

• Current and future customer accounts, including accounts receivable;

• All member units in CleanSpark LLC, and any investments it may have; and

• Any other assets of any nature whatsoever that are related to or used in connection with the business of Seller and its goodwill.

Pursuant to an amendment of the Purchase Agreement, Cleanspark II, LLC was granted a 3-year exclusive option to purchase Specialized Energy Solutions, Inc. for 1,000 shares of Stratean Common Stock; and Cleanspark II, LLC was granted a 3-year exclusive option to purchase Clean Spark Technologies, LLC for 1,000 shares of Stratean Common Stock.

In exchange for the Assets, the Company assumed the Assumed Liabilities, consisting of certain accounts payable amounting to approximately $200,000 arising out of the Assets. The Company also issued to sole member of Cleanspark, LLC six million (6,000,000) shares of common stock and five-year warrants to purchase four million five hundred thousand (4,500,000) shares of common stock at an exercise price of $1.50 per share.

The unaudited pro forma condensed combined balance sheet as of June 30, 2016 is presented as if the acquisition of Cleanspark had occurred on June 30, 2016.

The unaudited pro forma condensed combined statements of operations for the three and nine months ended June 30, 2016 are presented as if the acquisition of Cleanspark had occurred on June 30, 2016 and were carried forward through each of the aforementioned periods presented.

The unaudited pro forma condensed combined statements of operations for the year ended September 30, 2015 are presented as if the acquisition of Cleanspark had occurred on September 30, 2015 and were carried forward through each of the aforementioned periods presented.

The unaudited pro forma financial statements include certain adjustments that are directly attributable to the Transaction, which are expected to have a continuing impact on Stratean, and are factually supportable, as summarized in the accompanying notes.

1.BASIS OF PRO FORMA PRESENTATION

On July 1, 2016, the Company completed the acquisition of Cleanspark pursuant to the terms of the asset purchase agreement. In connection with the closing, the Company acquired all the assets (the “Assets”) and assume certain liabilities (the “Assumed Liabilities”) related to Seller and its line of business. The Assets the Buyer purchased from Seller include:

• Equipment and other tangible assets;

• Domain names, websites and intellectual property;

• All rights to causes of action, lawsuits, judgments, claims and demands of any nature available to or being pursued by the Seller;

• Contracts to which Seller is bound;

• Current and future customer accounts, including accounts receivable;

• All member units in CleanSpark LLC, and any investments it may have; and

• Any other assets of any nature whatsoever that are related to or used in connection with the business of Seller and its goodwill.

5

STRATEAN INC.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Pursuant to an amendment of the Purchase Agreement, Cleanspark II, LLC was granted a 3-year exclusive option to purchase Specialized Energy Solutions, Inc. for 1,000 shares of Stratean Common Stock; and Cleanspark II, LLC was granted a 3-year exclusive option to purchase Clean Spark Technologies, LLC for 1,000 shares of Stratean Common Stock.

In exchange for the Assets, the Company assumed the Assumed Liabilities, consisting of certain accounts payable amounting to approximately $200,000 arising out of the Assets. The Company also issued to sole member of Cleanspark, LLC six million (6,000,000) shares of common stock and five-year warrants to purchase four million five hundred thousand (4,500,000) shares of common stock at an exercise price of $1.50 per share.

Following the closing of the Transaction and the completion of the issuance of Stratean common stock, as described above, there were 40,610,669 shares of the Company's common stock outstanding.

These pro forma financial statements are presented as a continuation of Stratean. The equity of Stratean is presented as the equity of the combined company and the capital stock account of Stratean is adjusted to reflect the par value of the issued and outstanding common stock of the Company, after giving effect to the number of shares issued in connection with the Transaction.

The unaudited pro forma condensed combined balance sheet as of June 30, 2016, and the unaudited pro forma condensed combined statements of operations for the three and nine months ended June 30, 2016, and for the year ended September 30, 2015, are based on the historical financial statements of the Company and Cleanspark after giving effect to the closing of the Transaction, and the assumptions, reclassifications and adjustments described herein.

These unaudited pro forma financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP") and are expressed in US dollars.  They have been compiled using the significant accounting policies as set out in the audited financial statements of Stratean Inc. for the year ended September 30, 2015. Based on the review of the accounting policies of Cleanspark and the Company, there are no material accounting differences between the accounting policies of Cleanspark and the Company.

It is management's opinion that these pro forma financial statements include all adjustments necessary for the fair presentation, in all material respects, of the proposed transaction described above in accordance with US GAAP applied on a basis consistent with the Company's accounting policies.

The unaudited pro forma condensed combined financial information is not intended to represent or be indicative of the Company's consolidated results of operations or financial position that would have been reported had the Cleanspark acquisition been completed as of the dates presented, and should not be taken as a representation of the Company's future consolidated results of operations or financial position. The unaudited pro forma combined financial information does not reflect any operating efficiencies and/or cost savings that the Company may achieve with respect to the combined companies.

The unaudited pro forma condensed combined financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with: (i) the Company's audited annual financial statements for the years ended September 30, 2015 and 2014, as contained in the Company's annual report on Form 10-K for the fiscal year ended September 30, 2015, and unaudited interim condensed financial statements for the three and nine months ended June 30, 2016 and 2015, as contained in the Company's quarterly report on Form 10-Q for the period ended June 30, 2015, and (ii) Cleanspark’s audited annual financial statements for the years ended September 30, 2015 and 2014, and unaudited interim condensed consolidated financial statements of Cleanspark for the three and nine months ended June 30, 2016 and 2015, as included elsewhere in this Form 8-K.

6

STRATEAN INC.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

2.   PRO FORMA ASSUMPTIONS AND ADJUSTMENTS

The unaudited pro forma condensed consolidated financial statements incorporate the following pro forma assumptions and adjustments:

a) Upon closing of the Transaction 6,000,000 shares of the Company’s common stock and 4,500,000 warrants were issued to the Cleanspark’s sole member in exchange for all assets of Cleanspark.

b)Upon closing all convertible notes were converted and the sole member of Cleanspark assumed these liabilities and settled the debts with its ownership interest.

3.PRO FORMA SHARE CAPITAL

Pro forma shares of the Company's common stock as at June 30, 2016 have been determined as follows:

	Number of Shares		Par Value
Issued and outstanding shares of common stock of the Company		21,056,415		21,086
Issuance of shares and to purchase common shares for acquisition		6,000,000		6,000
Pro-forma balance, June 30, 2016		27,056,415		27,086

4.PRO FORMA LOSS PER SHARE

Pro-forma basic and diluted loss per share for the year ended September 30, 2015 and the three and nine months ended June 30, 2016 have been calculated based on the weighted average number of shares of the Company's common stock outstanding plus the shares of the Company's common stock to be issued and cancelled in connection with the Transaction.

	Year Ended September 30, 2015
Basic pro forma loss per share computation
Numerator:
Pro forma net loss available to stockholders		(6,801,592	)
Denominator:
Weighted average issued and outstanding shares of common stock		19,229,062
Shares of common stock issued to Epic stockholders per share exchange agreement		6,000,000
Pro forma weighted average shares outstanding		25,229,062
Basic pro forma loss per share		(0.27	)

7

	Three Months Ended June 30, 2016
Basic pro forma loss per share computation
Numerator:
Pro forma net loss available to stockholders		(644,451	)
Denominator:
Weighted average issued and outstanding shares of common stock		21,058,415
Shares of common stock issued to Epic stockholders per share exchange agreement		6,000,000
Pro forma weighted average shares outstanding		27,058,415
Basic pro forma loss per share		(0.02	)

	Nine Months Ended June 30, 2016
Basic pro forma loss per share computation
Numerator:
Pro forma net loss available to stockholders		(3,297,292	)
Denominator:
Weighted average issued and outstanding shares of common stock		20,842,065
Shares of common stock issued to Epic stockholders per share exchange agreement		6,000,000
Pro forma weighted average shares outstanding		26,842,065
Basic pro forma loss per share		(0.12	)

8