EX-99.4 9 ex99_4.htm

 

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.

 

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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.

 

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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.

 

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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.

 

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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.

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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.

 

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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)

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   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)

 

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