UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended: March 31, 2015

o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 333-164856

STRATEX OIL & GAS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Colorado		94-3364776
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

175 South Main Street, Suite 900

Salt Lake City, Utah

84111

(Address of principal executive offices)

(Zip Code)

(801) 519-8500

(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

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

The issuer had 118,995,071 shares of common stock outstanding as of May 15, 2015.

TABLE OF CONTENTS

		Page

PART I. FINANCIAL INFORMATION		3

Item 1.	Consolidated Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets (Unaudited) March 31, 2015 and December 31, 2014	3
	Condensed Consolidated Statements of Operations (Unaudited) For the Three Months Ended March 31, 2015 and 2014	4
	Condensed Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 2015 and 2014	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION		27

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 6.	Exhibits	27

SIGNATURES		28

Item 1. Financial Statements.

Stratex Oil & Gas Holdings, Inc.

Condensed Consolidated Balance Sheets

	(Unaudited) March 31, 2015			December 31, 2014
Assets

Current Assets:
Cash	$	224,203		$	1,937,225
Accounts receivable		244,100			448,702
Prepaid expenses		3,673			39,593
Total Current Assets		471,976			2,425,520

Deposits		146,746			128,805
Debt issuance costs		1,520,698			1,887,378
Oil and gas property, plant and equipment:
Proven property - net		9,000,917			9,834,506
Unproven property		11,258,581			10,951,429
Support facilities and related well equipment - net		2,250,851			2,652,271
Vehicles, furniture and equipment - net		114,832			122,309
Total Assets	$	24,764,601		$	28,002,218

Liabilities and Stockholders' Equity

Current Liabilities:
Accounts payable and accrued liabilities	$	2,952,875		$	3,609,890
Demand notes payable		322,575			322,575
Current maturities of notes payable - net of debt discount		678,032			573,094
Current maturities of convertible notes payable - net of debt discount		138,182			138,182
Capital lease obligations		-			88,000
Derivative liability - warrants		25,584			128,829
Total Current Liabilities		4,117,248			4,860,570

Long-term Liabilities:
Asset retirement obligations		663,269			639,349
Notes payable - net of debt discount		1,199,599			1,256,477
Convertible notes payable, net of debt discount		19,184,644			18,663,203

Total Long-Term Liabilities		21,047,512			20,559,029

Total Liabilities		25,164,760			25,419,599

Commitments and Contingencies

Stockholders' Equity:
Series A, convertible preferred stock, $0.0001 par value; 400 shares authorized; 100 shares issued; 0 and 0 shares outstanding		-			-
Common stock, $0.01 par value; 750,000,000 shares authorized; and 120,737,337 and 116,904,004 shares issued and outstanding		1,207,372			1,169,038
Additional paid in capital		29,826,735			29,321,895
Accumulated deficit		(31,414,266	)		(27,888,314	)
Less: Treasury stock, 40 shares Series A, convertible preferred stock, at cost		(20,000	)		(20,000	)
Total Stockholders' Equity		(400,159	)		2,582,619

Total Liabilities and Stockholders' Equity	$	24,764,601		$	28,002,218

See accompanying notes to the condensed consolidated financial statements.

Stratex Oil & Gas Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	For The Three Months Ended
	March 31,			March 31,
	2015			2014

Revenue	$	309,728		$	98,357

Operating Expenses:
Production expenses		311,527			40,939
Depletion, depreciation and amortization		178,652			17,519
General and administrative		679,428			778,608
Impairment of oil and gas assets		705,330			-
Loss on abandonment of oil and gas assets		331,405			-
Total Operating Expenses		2,206,342			837,066

Loss From Operations		(1,896,614	)		(738,709	)

Other Income and (Expense):
Interest expense		(1,640,506	)		(325,026	)
Change in fair value - derivative liabilities		103,245			(89,416	)
Warrant amendment expense		-			(14,755	)
Gain on sale of oil and gas interests		-			450,000
Loss on settlement of liabilities		(92,077	)		(1,000	)
Other income		-			39,175
Total Other Income and (Expense)		(1,629,338	)		58,978

Net Loss	$	(3,525,952	)	$	(679,731	)

Net Loss Per Common Share - Basic and Diluted	$	(0.03	)	$	(0.01	)

Weighted Average Number of Common Shares Outstanding - Basic and Diluted		116,946,597			47,287,376

See accompanying notes to the condensed consolidated financial statements.

Stratex Oil & Gas Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For The Three Months Ended
	March 31,			March 31
	2015			2014

Cash Flows From Operating Activities:
Net loss	$	(3,525,952	)	$	(679,731	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depletion, depreciation and amortization		178,652			17,519
Stock based compensation		126,341			57,041
Warrant amendment expense		-			14,755
Amortization of debt issue costs		366,680			34,268
Accretion of debt discount		572,045			167,360
Impairment of oil and gas assets		705,330			-
Loss on abandonment of oil and gas assets		331,405
Loss on settlement of liabilities		92,077			1,000
Income from forgiveness of debt		-			-
Gain on sale of oil and gas interests		-			(450,000	)
Change in fair value of derivative liabilities		(103,245	)		89,416
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable		204,602			(11,016	)
Prepaid expenses		35,920			(54,593	)
Deposits		(17,941	)		(25,000	)
Increase (decrease) in:
Accounts payable and accrued liabilities		(585,217	)		947,342
Net Cash Used In Operating Activities		(1,619,303	)		108,361

Cash Flows From Investing Activities:
Purchase of oil and gas properties		(84,465	)		(2,246,894	)
Proceeds from sale of oil and gas interests		-			45,000
Proceeds from sale of oil and gas properties		-			(21,000	)
Purchase of furniture and equipment		(3,200	)		(5,700	)
Net Cash Provided By (Used In) Investing Activities		(87,665	)		(2,228,594	)

Cash Flows From Financing Activities:
Proceeds from notes payable		-			400,000
Repayments on notes payable		(2,544	)		(96,373	)
Proceeds from convertible notes payable		-			8,622,650
Repayments on capital leases		(3,510	)		-
Debt issuance costs paid in cash		-			(366,918	)
Net Cash Provided By (Used In) Financing Activities		(6,054	)		8,559,359

Net change in cash		(1,713,022	)		6,439,126

Cash at beginning of period		1,937,225			609,061

Cash at end of period	$	224,203		$	7,048,187

Supplemental disclosures of cash flow information:
Cash paid for interest	$	527,108		$	68,568
Cash paid for taxes	$	-		$	-

Supplemental disclosure of non-cash investing and financing activities:

Issuance of common stock to settle liabilities	$	283,500		$	9,000
Original issue discount on notes payable	$	-		$	160,000
Original issue discount on convertible notes payable	$	-		$	2,432,078
Debt issuance costs paid in the form of warrants	$	-		$	372,962
Debt issuance costs accrued	$	-		$	345,016
Increase in asset retirement obligation	$	35,463		$	95,000
Vehicles purchased through issuance of notes payable	$	-		$	28,510
Capitalized oil and gas properties included in accounts payable	$	187,223			-

See accompanying notes to the condensed consolidated financial statements.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 Nature of Operations and Basis of Presentation:

Nature of Operations

Stratex Oil & Gas Holdings, Inc. (“we or the “Company”) was incorporated on August 15, 2003 as Poway Muffler and Brake Inc. in California to enter the muffler and brake business. On December 15, 2008, a merger was effected with Ross Investments Inc., a Colorado shell corporation. Ross Investments was the acquirer and the surviving corporation. Ross Investments Inc. then changed its name to Poway Muffler and Brake, Inc. On May 25, 2012, we filed an Amendment to our Certificate of Incorporation by which we changed our name from Poway Muffler and Brake, Inc., a Colorado corporation, to Stratex Oil & Gas Holdings, Inc., with the Secretary of the State of Colorado.

On July 6, 2012, Stratex Acquisition Corp., a wholly-owned subsidiary of Stratex Oil & Gas Holdings, Inc. merged with and into Stratex Oil & Gas, Inc., a Delaware corporation (“Stratex”) (“SOG”). Stratex was the surviving corporation of that Merger. As a result of the merger, we acquired the business of Stratex, and continued the business operations of Stratex as a wholly-owned subsidiary.

On December 1, 2014, pursuant to the terms and condition of the Agreement and Plan of Merger dated May 6, 2014 by and among Stratex Oil & Gas Holdings, Inc. (the “Company”), Richfield Acquisition Corp. (“Merger Sub”), and Richfield Oil & Gas Company (“Richfield”), as amended by Amendment No. 1 to Agreement and Plan and Merger dated July 17, 2014 (the Agreement and Plan of Merger, as so amended, the “Merger Agreement”), Merger Sub merged with and into Richfield, with Richfield continuing as the surviving corporation and as a wholly owned subsidiary of Stratex (the “Richfield Merger”).

The Company is engaged in the sale of oil and gas and the exploration for and development of oil and gas reserves in Texas, Kansas, North Dakota, Montana, Colorado and Utah.

Basis of Presentation- Unaudited Interim Financial Information

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to fairly present the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended December 31, 2014 and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on April 17, 2015.

Note 2 Summary of Significant Accounting Policies:

Principles of Consolidation and Presentation

The accompanying condensed consolidated financial statements been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: allowance for bad debt, inventory obsolescence, the fair value of share-based payments, fair value of derivative liabilities, estimates of the probability and potential magnitude of contingent liabilities and the valuation allowance for deferred tax assets due to continuing operating losses.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition. The Company's operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.

The Company’s future success depends largely on its ability to find and develop or acquire additional oil and gas reserves that are economically recoverable. Unless the Company replaces the reserves produced through successful development, exploration or acquisition activities, proved reserves will decline over time. Recovery of any additional reserves will require significant capital expenditures and successful drilling operations. The Company may not be able to successfully find and produce reserves economically in the future. In addition, the Company may not be able to acquire proved reserves at acceptable costs.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents at March 31, 2015 and December 31, 2014.

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable consist primarily of oil and gas receivables, net of a valuation allowance for doubtful accounts. As of March 31, 2015 and December 31, 2014, the allowance for doubtful accounts was $0.

Oil and Gas Properties, Successful Efforts Method

The Company accounts for oil and gas properties by the successful efforts method. Under this method of accounting, costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells that find proved reserves, and to drill and equip development wells are capitalized. Costs to drill exploratory wells that do not find proved reserves, geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed as incurred. The Company evaluates its proved oil and gas properties for impairment on a field-by-field basis whenever events or changes in circumstances indicate that an asset’s carrying value may not be recoverable. The Company follows FASB ASC 360 - Property, Plant, and Equipment, for these evaluations. Unamortized capital costs are reduced to fair value if the undiscounted future net cash flows from our interest in the property’s estimated proved reserves are less than the asset’s net book value. During the three months ended March 31, 2015, the Company recorded impairments on oil and gas assets of $705,330 and a loss on abandonment of oil and gas assets of $331,405. There were no impairments or loss on abandonments for the three months ended March 31, 2014.

The costs of development wells are capitalized whether productive or non-productive. Leasehold acquisition costs are capitalized when incurred. If proved reserves are found on an unproved property, leasehold cost is transferred to proved properties. Exploration dry holes are charged to expense when it is determined that no commercial reserves exist. Other exploration costs, including personnel costs, geological and geophysical expenses and delay rentals for oil and gas leases, are charged to expense when incurred. The costs of acquiring or constructing support equipment and facilities used in oil and natural gas producing activities are capitalized. Production costs are charged to expense as incurred and are those costs incurred to operate and maintain the Company’s wells and related equipment and facilities.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Depletion of producing oil and gas properties is recorded based on units of production. Acquisition costs of proved properties are depleted on the basis of all proved reserves, developed and undeveloped, and capitalized development costs (wells and related equipment and facilities) are depleted on the basis of proved developed reserves. As more fully described below, proved reserves are estimated by the Company’s independent petroleum engineer and are subject to future revisions based on availability of additional information. Asset retirement costs are recognized when the asset is placed in service, and are depleted over proved reserves using the units of production method.

Oil and gas properties are reviewed for impairment when facts and circumstances indicate that their carrying value may not be recoverable. The Company compares net capitalized costs of proved oil and gas properties to estimated undiscounted future net cash flows using management’s expectations of future oil and natural gas prices. These future price scenarios reflect the Company’s estimation of future price volatility. If net capitalized costs exceed estimated undiscounted future net cash flows, the measurement of impairment is based on estimated fair value, using estimated discounted future net cash flows based on management’s expectations of future oil and natural gas prices.

Unproven properties that are individually significant are assessed for impairment and if considered impaired are charged to expense when such impairment is deemed to have occurred. We perform periodic assessment of individually significant unproved crude oil and gas properties for impairment on a quarterly basis and we would recognize a loss at the time if there was an impairment by providing an impairment allowance. In determining whether a significant unproved property is impaired we consider numerous factors including, but not limited to, current exploration plans, favorable or unfavorable exploratory activity on adjacent leaseholds, our management and geologists’ evaluation of the lease, and the remaining months in the lease term. As of March 31, 2015 the company recorded and $66,177 expense for leases that had expired. There were no additional impairment allowances for expiring leases required as of March 31, 2015.

The sale of a partial interest in a proved oil and gas property is accounted for as normal retirement and no gain or loss is recognized as long as this treatment does not significantly affect the units-of-production depletion rate. If the units-of-production rate is significantly affected, then the sale shall be accounted for as the sale of an asset, and a gain or loss shall be recognized. The unamortized cost of the property or group of properties shall be apportioned to the interest sold and the interest retained on the basis of the fair values of those interests. A gain or loss is recognized for all other sales of producing properties and is included in the results of operations. The sale of a partial interest in an unproved property is accounted for as a recovery of cost when substantial uncertainty exists as to recovery of the cost applicable to the interest retained. A gain on the sale is recognized to the extent the sales price exceeds the carrying amount of the unproved property. A gain or loss is recognized for all other sales of nonproducing properties and is included in the results of operations.

Support Facilities and Equipment

Support facilities and equipment include property and equipment that are not oil and gas properties and are recorded at cost and depreciated using the straight-line method over their estimated useful lives of five to ten years. Expenditures for replacements, renewals, and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Long-lived assets, other than oil and gas properties, are evaluated for impairment to determine if current circumstances and market conditions indicate the carrying amount may not be recoverable. Our support facilities and equipment are generally located in proximity to certain of our principal fields.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Asset Retirement Obligations

The Company follows the provisions of the FASB ASC 410 - Asset Retirement and Environmental Obligations. The fair value of an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. As of March 31, 2015 and December 31, 2014, the Company’s obligations were $663,269 and $639,349, respectively. The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset. The Company’s asset retirement obligations relate to the abandonment of oil and gas producing facilities. The amounts recognized are based upon numerous estimates and assumptions, including future retirement costs, future recoverable quantities of oil and gas, future inflation rates and the credit-adjusted risk-free interest rate. Accretion of asset retirement costs for the three months ended March 31, 2015 and 2014 were $14,925 and $0, respectively.

Debt Issue Costs and Debt Discount

The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

Original Issue Discount

For certain debt issued, the Company provided the debt holder with an original issue discount. The original issue discount was equal to simple interest at 10% - 20% of the proceeds raised. The original issue discount was recorded to debt discount reducing the face amount of the note and is being amortized to interest expense over the maturity period of the debt. For certain debt the original issue discount exceeded face value bringing the carrying value to $0 and the remainder charged to interest expense.

Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.

When the Company records a BCF the relative fair value of the BCF would be recorded as a debt discount against the face amount of the respective debt instrument. The debt discount attributable to the BCF is amortized over the period from issuance to the date that the debt becomes convertible. If the debt is immediately convertible, the discount is amortized to interest expense in full immediately.

Derivative Financial Instruments

Fair value accounting requires bifurcation of embedded derivative instruments such as ratchet provisions or conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company utilized an option pricing model. In assessing the Company’s convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once determined, the derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the option pricing model.

Revenue Recognition

Revenues from the sale of oil and natural gas are recognized when the product is delivered at a fixed or determinable price, title has transferred, and collectability is reasonably assured and evidenced by a contract. The Company follows the “sales method” of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers, regardless of whether the sales are proportionate to its ownership in the property. A receivable or liability is recognized only to the extent that the Company has an imbalance on a specific property greater than its share of the expected remaining proved reserves.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Share-Based Payments

Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights are measured at their fair value utilizing an option pricing model on the awards’ grant date, based on the estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expenses resulting from share-based payments are recorded in cost of goods sold or general and administrative expense in the statement of operations, depending on the nature of the services provided.

Income Taxes

The Company is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Interest and penalties associated with income taxes are included in selling, general and administrative expense.

The Company follows ASC 740 “Accounting for Uncertainty in Income Taxes” which prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its consolidated financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. ASC 740 states that a tax benefit from an uncertain position may be recognized if it is "more likely than not" that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. After review of the Company’s tax positions, no liabilities were recorded for unrecognized tax benefits as of December 31, 2014.

Earnings Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss), adjusted for changes in income or loss that resulted from the assumed conversion of convertible shares, by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

The Company had the following potential common stock equivalents at March 31, 2015:

Convertible debt – face amount of $21,607,939, conversion price of $0.25 - $2.50			73,645,128
Common stock options, exercise price of $0.08 - $0.50			14,350,000
Common stock warrants, exercise price of $0.15 - $0.85			32,426,917
Total common stock equivalents			120,422,045

The Company had the following potential common stock equivalents at March 31, 2014:

Convertible debt – face amount of $120,000, conversion price of $0.70			171,429
Convertible debt – face amount of $8,622,650, conversion price of $0.30			28,742,167
Common stock options, exercise price of $0.08 - $0.50			9,100,000
Common stock warrants, exercise price of $0.15 - $0.85			16,330,532
Common stock to be issued			2,770,000
Total common stock equivalents			57,114,128

Since the Company reflected a net loss during the three months ended March 31, 2015 and 2014, the effect of considering any common stock equivalents, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk inherent in the inputs to the valuation technique. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are as follows:

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3		Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, inventory, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate their fair values because of the short maturity of these instruments.

The Company’s Level 3 financial liabilities consist of the derivative warrants issued with the 2011 notes payables for which there is no current market for this security such that the determination of fair value requires significant judgment or estimation. The Company valued the reset adjustments in the warrant on subsequent potential equity offerings using an option pricing model, for which management understands the methodologies. These models incorporate transaction details such as the Company’s stock price, contractual terms, maturity, risk-free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative warrant liability and derivative feature of convertible notes at every reporting period and recognizes gains or losses in the statements of operations attributable to the change in the fair value of the derivatives.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Financial instruments measured at fair value on a recurring basis are summarized below and disclosed on the balance sheets as follows:

March 31, 2015	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total
Derivative warrant liabilities	$	-	$	-	$	25,584	$	25,584

December 31, 2014	Fair Value Measurement Using
		Level 1		Level 2		Level 3		Total
Derivative warrant liabilities	$	-	$	-	$	128,829	$	128,829

The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period January 1, 2015 to March 31, 2015:

	Fair Value Measurement Using Level 3 Inputs
		Derivative Liabilities			Total

Balance, January 1, 2015	$	128,829		$	128,829

Purchases, issuances and settlements

Total gains or losses (realized/unrealized) included in net loss		(103,245	)		(103,245	)

Transfers in and/or out of Level 3

Balance, March 31, 2015	$	25,584		$	25,584

Fair Value of Financial Assets and Liabilities Measured on a Non-Recurring Basis

For periods in which impairment charges have been incurred, the Company is required to write down the value of the impaired asset to its fair value. The impairment charges were recorded during the three months ended March 31, 2015 were $705,330. There were no impairment charges for the three months ended March 31, 2014.

Jumpstart Our Business Startups Act (“JOBS Act”), adopted January 3, 2012

We qualify as an “emerging growth company,” as defined in Section 2(a) of the Securities Act as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are permitted to rely on exemptions from various reporting requirements including, but not limited to, the requirement to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes–Oxley Act of 2002, and the requirement to submit certain executive compensation matters to shareholder advisory votes such as “say on pay” and “say on frequency.”

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an emerging growth company up to the fifth anniversary of our first registered sale of common equity securities, or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Recent Accounting Pronouncements

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

In May 2014, the Financial Accounting Standards Board issued accounting guidance on revenue recognition. The amended guidance will enhance the comparability of revenue recognition practices and will be applied to all contracts with customers. Improved disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. This guidance will be effective for fiscal 2017 and will be required to be applied retrospectively. We are currently assessing the impact that this guidance will have on our financial statements at this time.

In August 2014, the Financial Accounting Standards Board issued ASU No. 2014-15. This standard provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. This ASU is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2016, with early adoption permitted. The Company is evaluating the new guidance and plans to provide additional information about its expected impact at a future date.

In April 2015, the Financial Accounting Standards Board issued ASU No. 2015-03. This standard provides guidance on the balance sheet presentation for debt issuance costs and debt discounts and debt premiums. To simplify the presentation of debt issuance costs, this standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. This ASU is effective for fiscal years beginning after December 15, 2015. The Company is evaluating the new guidance and plans to provide additional information about its expected impact at a future date.

Note 3 Going Concern:

The Company’s condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. The Company has incurred substantial losses from operations causing negative working capital, in that current liabilities exceed current assets, and the Company has negative operating cash flows, which raise substantial doubt about the Company’s ability to continue as a going concern. As reflected in the accompanying condensed consolidated financial statements, the Company has a net loss of $3,525,952 and net cash used in operations of $1,619,303 for the three months ended March 31, 2015 and has a working capital deficit of $3,645,272 at March 31, 2015.

The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all. These uncertainties create substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 Oil and Gas Assets:

The following table summarizes the Company’s oil and gas assets, net:

Balance – January 1, 2014	$	2,276,552
Additions		23,377,139
Depletion		(163,095	)
Asset retirement obligations		36,238
Impairment		(3,697,924	)
Abandonments		(1,042,975	)
Dispositions		-
Balance – December 31, 2014	$	20,785,935
Additions		307,679
Depletion		(71,904	)
Asset retirement obligations		18,741
Impairment		(705,330	)
Dispositions		(75,623	)
Balance – March 31, 2015	$	20,259,498

The Company owns support facilities and equipment which serve its oil and gas production activities. The following table summarizes the properties and equipment, net:

Balance – January 1, 2014	$	138,081
Additions		2,578,822
Depreciation		(64,193	)
Dispositions		(439	)
Balance – December 31, 2014	$	2,652,271
Additions		3,200
Depreciation		(84,868	)
Impairment		-
Dispositions		(319,752	)
Balance – March 31, 2015	$	2,250,851

On March 31, 2015 we entered into a Settlement Agreement whereby we agreed to transfer oil & gas leases totaling 2,629 acres located in Zavala county, Texas. The Company also transferred interest in well equipment located on the leases. The Company recognized a loss on the abandonment in the amount of $265,228.

As of March 31, 2015 and 2014, the Company had $71,904 and $17,519, respectively to depletion expense.

Note 5 Acquisition of Richfield Oil & Gas Company:

On December 1, 2014, the Company acquired Richfield Oil & Gas Company (Richfield) by merging a wholly owned subsidiary of the Company with and into Richfield, with Richfield continuing as the surviving corporation and wholly owned subsidiary of the Company. Richfield is involved in the exploration and production of crude oil and natural gas. Richfield’s asset base, technical capabilities and operating expertise, together with the Company’s project management, operational skills and financial capacity, should enable effective development of oil and gas reserves. At December 1, 2014, each share of Richfield common stock was exchanged for one share of common stock of the Company and each outstanding warrant to purchase Richfield common stock was exchanged for one warrant to purchase a share of the Company’s common stock.

The components of the consideration transferred follow:

Consideration attributable to stock issued (1)	$	8,183,220
Consideration attributable to exchanged warrants (2)		422,067
Consideration attributable to settlement of accounts and notes receivable (3)		4,645,463
Total consideration transferred	$	13,250,750

(1)	The fair value of the Company’s common stock on the acquisition date was $0.135 per share based on the closing value on the NASDAQ OTC. The Company issued 60,616,448 shares of stock for the acquisition of Richfield.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(2)	The fair value of warrants issued by the Company on the acquisition to former warrant holders of Richfield.

(3)	The fair value of a note receivable and accounts receivables to the Company from Richfield that was settled upon the acquisition.

The following table summarizes the assets acquired and liabilities assumed as of the acquisition date. The Company is in the process of obtaining additional valuation evidence, including appraisals and other market transactions, as it relates to certain oil and gas properties and other long-lived assets. Therefore, the provisional measurements for these amounts are subject to change.

Cash and cash equivalents	$	6,011
Accounts receivable		188,887
Other current assets		140,439
Proven oil and gas properties (1)		8,145,486
Unproven oil and gas properties (2)		9,930,578
Well equipment		2,072,166
Furniture and equipment		38,205
Goodwill (3)		32,787
Total assets acquired		20,554,559

Accounts payable and accrued liabilities		2,500,473
Notes and loans payable (4)		4,114,183
Asset retirement obligations		601,153
Capital lease obligations		88,000
Total liabilities assumed		7,303,809

Net assets acquired	$	13,250,750

(1)

Proven oil and gas properties were measured primarily using an income approach. The fair value measurements of the oil and gas assets were based, in part, on significant inputs not observable in the market and thus represent a Level 3 measurement. The significant inputs included Richfield resources, assumed future production profiles, commodity prices (mainly based on observable market inputs), discount rate of 15.0 percent, risk adjustments of classes of reserves between 10.0% and 100.0% and assumptions on the timing and amount of future development and operating costs.

(2)

Unproven oil and gas properties were measured primarily using a market approach with internal management inputs based, in part, on significant inputs not observable in the market and thus represent a Level 3 measurement. The significant inputs include estimated price per acre, potential future production and assumptions on the timing and amount of future development and operating costs.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(3)

Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill is not amortized and is not deductible for tax purposes.

(4)	Notes and loans payable and capital lease obligations were recognized mainly at market rates at closing (Level 1).

Note 6 Vehicles, Furniture and Equipment:

The following table summarizes furniture and equipment:

Balance – January 1, 2014	$	2,380
Additions		133,792
Depreciation		(13,863	)
Impairment		-
Balance – December 31, 2014	$	122,309
Additions		-
Depreciation		(6,954	)
Dispositions		(532	)
Balance – March 31, 2015	$	114,832

During three months ended March 31, 2015 and 2014, the Company recorded $6,954 and $2,034, respectively to depreciation expense.

Note 7 Demand Notes Payable:

As of March 31, 2105, three (3) convertible notes for an aggregate principal amount of $322,575 had become due and were in default. These notes were reclassified and are recorded as due on demand. The notes bear interest at rates between 10.0% to 12.0% and are convertible into shares of common stock at conversion rates between $0.60 to $2.50 per share.

Note 8 Notes Payable:

Promissory Note

On May 20, 2013, the Company issued a promissory note with principal of $80,000 for proceeds of $80,000. The note bears interest at 12% per annum with interest only payments for the first 24 months. The note matures on May 19, 2015. In addition, the Company issued the note holder a five (5) year common stock purchase warrant exercisable for up to 100,000 shares of common stock at $0.85 per share. The issuance of the warrants was recorded as a debt discount up to the face amount of the note. The amount in excess of the face amount of the note was recorded to interest expense on the date of issuance. The note is secured by certain oil and gas assets of the Company.

Promissory Note

On May 20, 2013, the Company issued a promissory note with principal of $25,000 for proceeds of $25,000. The note bears interest at 12% per annum with interest only payments for the first 24 months. The note matures on May 19, 2015. In addition, the Company issued the note holder a five (5) year common stock purchase warrant exercisable for up to 31,250 shares of common stock at $0.85 per share. The issuance of the warrants was recorded as a debt discount up to the face amount of the note. The amount in excess of the face amount of the note was recorded to interest expense on the date of issuance. The note is secured by certain oil and gas assets of the Company.

Promissory Note

On October 1, 2013, the Company issued a promissory note with principal of $500,000 for proceeds of $500,000. The note bears interest at 12% per annum with interest only payments for the first 36 months. The note matures on September 30, 2016. In addition, the Company issued the purchaser 1,000,000 shares of common stock of the Company. The issuance of the shares was recorded as a debt discount equal to the market value of shares issued at issuance date.

Promissory Note

On December 5, 2013, the Company issued a promissory note with principal of $500,000 for proceeds of $500,000. The note bears interest at 12% per annum with interest only payments for the first 36 months. The note matures on December 4, 2016. In addition, the Company issued the purchaser 1,000,000 shares of common stock of the Company. The issuance of the shares was recorded as a debt discount equal to the market value of shares issued at issuance date.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Promissory Note

On December 12, 2013, the Company issued a promissory note with principal of $25,000 for proceeds of $25,000. The note bears interest at 12% per annum and with interest only payments for the first 36 months. The note matures on December 11, 2016. In addition, the Company issued the purchaser 50,000 shares of common stock of the Company. The issuance of the shares was recorded as a debt discount equal to the market value of shares issued at issuance date.

Promissory Note

On January 27, 2014, the Company issued a promissory note with principal of $400,000 for proceeds of $400,000. The note bears interest at 12% per annum and with interest only payments for the first 36 months. The note matures on January 27, 2017. In addition, the Company issued the purchaser 800,000 shares of common stock of the Company. The issuance of the shares was recorded as a debt discount equal to the market value of shares issued at issuance date.

Promissory Note

On February 14, 2014 and September 25, 2014, the Company issued promissory notes in the principal amount of $28,510 and $24,855, respectively, for the purchase of two vehicles. Monthly principal and interest payments are $599 and $450, respectively. The notes bear interest at 9.49% and 9.13% per annum and mature on February 13, 2019 and September 7, 2020, respectively. The notes are each secured by a vehicle.

Promissory Note

On December 1, 2014 as part of the merger with Richfield, the Company assumed a promissory note in the amount of $578,454. The note bears interest at 10% per annum with monthly principal and interest payments in the amount of $15,000. The note matures on June 30, 2015.

Notes payable as of March 31, 2015 is as follows:

	March 31, 2015

Notes payable	$	2,141,416
Discount on notes		(263,785	)
Notes payable, net of debt discount		1,877,631
Less: Current maturities		(678,032	)

Notes payable, net of debt discount and current maturities	$	1,199,599

Future minimum debt repayments under these obligations at March 31, 2015 are as follows:

2015 (remainder of year)	$	675,814
2016		1,034,506
2017		410,116
2018		11,102
2019 and thereafter		9,878
	$	2,141,416

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 9 Convertible Notes Payable:

(A)	Series A Senior Secured Convertible Promissory Notes

From February 11, 2014 through April 10, 2014, the Company raised gross proceeds of $9,987,650 through the sale of units (the “Series A Units”) in a private offering (the “Series A Offering”). The purchase price for each Series A Unit was $50,000 and each Series A Unit consisted of (i) a 12% Series A Senior Secured Convertible Promissory Note in the principal amount of $50,000 (the “Series A Notes”) convertible into shares of common stock of the Company at a conversion price of $0.30 per share and (ii) a Series A warrant to purchase 33,333 shares of common stock of the Company at an exercise price of $0.30 per share (the “Series A Warrant”). All outstanding principal and interest of each Series A Note is due on February 11, 2016. The Series A Notes may be redeemed by the Company at any time following six (6) months after their respective issuance. If however, the Company elects to redeem the Series A Notes prior to the one (1) year anniversary date of the issuance of such Series A Note, the Company shall pay the holder all unpaid interest on the portion of the principal redeemed that would have been earned through such one (1) year anniversary date. Each Series A Note bears interest at 12% per annum and is due and payable quarterly, in arrears. The holder of each Series A Note may elect to convert the principal balance of the Series A Note into shares of common stock at any time following six (6) months after the issuance of such note. The Series A Notes are secured by a first lien on substantially all of the assets of the Company, including all present and future wells and working interests, on a pro-rata basis. As of March 31, 2015 the Company had not redeemed any Series A Notes and there were no conversions of the principal balance by note holders.

Beneficial Conversion Feature

The intrinsic value of certain convertible notes, when issued, gave rise to a beneficial conversion feature which was recorded as a discount to the notes of $1,613,642 to be amortized over the period from issuance to the date that the debt matures.

Warrants

Each investor participating in the Series A Offering received a Series A Warrant, exercisable for up to 33,333 shares of common stock for every $50,000 invested. The Series A Warrants are exercisable at $0.30 per share. The Series A Warrants expire five (5) years from the date of issuance. During the year ended December 31, 2014, we issued Series A Warrants exercisable for up to 6,658,374 shares of our common stock to investors participating in the Series A Offering. The issuance of the Series A Warrants was recorded as a debt discount of $1,424,236 and is being amortized over the life of the Series A Note.

(B)

Series B Senior Secured Convertible Promissory Notes

From June 6, 2014 through August 20, 2014, the Company raised gross proceeds of $8,014,560 through the sale of units (the “Series B Units”) in a private offering (the “Series B Offering”). The purchase price for each Series B Unit was $50,000 and each Series B Unit consisted of (i) a 12% Series B Senior Secured Convertible Promissory Note in the principal amount of $50,000 (the “Series B Notes”) convertible into shares of common stock of the Company at a conversion price of $0.30 per share and (ii) a Series B warrant to purchase 33,333 shares of common stock of the Company at an exercise price of $0.30 per share (the “Series B Warrant”). All outstanding principal and interest of each Series B Note is due on June 6, 2016. The Series B Notes may be redeemed by the Company at any time following six (6) months after their respective issuance. If however, the Company elects to redeem the Series B Notes prior to the one (1) year anniversary date of the issuance of such Series B Note, the Company shall pay the holder all unpaid interest on the portion of the principal redeemed that would have been earned through such one (1) year anniversary date. Each Series B Note bears interest at 12% per annum and is due and payable quarterly, in arrears. The holder of each Series B Note may elect to convert the principal balance of the Series B Note into shares of common stock at any time following six (6) months after the issuance of such note. The Series B Notes are secured by a first lien on substantially all of the assets of the Company, including all present and future wells and working interests, on a pro-rata basis. The lien is pari-passu with the lien granted in favor of the holders of the Company’s outstanding Series A Notes. As of March 31, 2015 the Company had not redeemed any Series B Notes and there were no conversions of the principal balance by note holders.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Warrants

Each investor participating in the Series B Offering received a Series B Warrant, exercisable for up to 33,333 shares of common stock for every $50,000 invested. The Series B Warrants are exercisable at $0.30 per share. The Series B Warrants expire five (5) years from the date of issuance. During the year ended December 31, 2014, we issued Series B Warrants exercisable for up to 5,342,742 of our common stock to investors participating in the Series B Offering. The issuance of the Series B Warrants was recorded as a debt discount of $990,408 and is being amortized over the life of the Series B Note.

(C)

Other Convertible Promissory Notes

As part of the merger with Richfield, on December 1, 2014, the Company agreed to assume two (2) convertible notes in the aggregate principal amount of $138,182 and $3,194,972. Both notes bear interest at 12.0% per annum and are convertible into shares of common stock at a conversion rate of $0.25 per share. The notes mature on May 31, 2015 and June 30, 2016 respectively.

The following is a summary of Convertible Notes Payable:

	March 31, 2015

Convertible notes payable	$	21,335,365
Debt discount		(2,012,534	)
Convertible notes payable, net of debt discount		19,322,826
Less current maturities		(138,132	)
Balance – March 31, 2015	$	19,184,644

Future minimum debt repayments under these obligations at March 31, 2015 are as follows:

2015 (remainder of year)	$	138,182
2016		21,197,182
2017 and thereafter		-
	$	21,335,364

D)	Debt Issuance Costs

Debt issuance costs, net are as follows:

Balance - January 1, 2014	$	-
Debt issuance costs incurred in 2014		2,845,541
Amortization of debt issuance costs		(958,163	)
Balance – December 31, 2014	$	1,887,378
Amortization of debt issuance costs		(366,680	)
Balance - March 31, 2015	$	1,520,698

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 10 Stockholders’ Equity (Deficit):

(A)

Preferred Stock

During the three months ended March 31, 2015 the Company did not issue any shares of preferred stock.

(B)

Common Stock

During the three months ended March 31, 2015, the Company issued the following common stock:

Transaction Type	Quantity of Shares		Valuation		Range of Value per Share
Common stock issued for services		400,000	$	54,000	$	0.135
Common stock issued to settle liabilities		2,100,000		283,500	$	0.135
Common stock issued to settle lawsuit and abandon lease		1,333,333		133,333	$	0.10
Total		3,833,333	$	470,833	$	0.10-0.135

(C)

Warrants

The following is a summary of the Company’s warrant activity during the three months ended March 31, 2015:

	Warrants		Weighted Average Exercise Price

Outstanding – January 1, 2015		33,450,677	$	0.34
Exercisable – January 1, 2015		33,450,677	$	0.34
Granted		-	$	-
Exercised		-	$	-
Expired/Cancelled		1,023,760	$	-
Outstanding – March 31, 2015		32,426,917	$	0.34
Exercisable – March 31, 2015		32,426,917	$	0.34

Warrants Outstanding							Warrants Exercisable
Range of exercise price		Number Outstanding		Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.15 - $0.85		32,426,917	3.36 years	$	0.32		32,426,917	$	0.32

At March 31, 2015 and 2014 there was no intrinsic value of warrants outstanding and exercisable.

(D)

Options

The following is a summary of the Company’s option activity during the three months ended March 31, 2015:

	Options		Weighted Average Exercise Price

Outstanding – January 1, 2015		17,850,000	$	0.21
Exercisable – January 1, 2015		15,225,000	$	0.19
Granted		-	$	-
Exercised		-	$	-
Forfeited/Cancelled		(2,000,000)	$	0.30
Outstanding – March 31, 2015		15,850,000	$	0.20
Exercisable – March 31, 2015		14,350,000	$	0.19

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Options Outstanding							Options Exercisable
Range of exercise price		Number Outstanding		Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.08-$0.50		15,850,000	4.61 years	$	0.20		14,350,000	$	0.19

At March 31, 2015 and 2014 there was no intrinsic value of options outstanding and exercisable.

(E)

Treasury Stock

There were no treasury stock transactions during the three months ended March 31, 2015.

Note 11 Commitments and Contingencies:

Litigations, Claims and Assessments

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

On December 10, 2013, the Company entered into a Joint Development Agreement dated as of December 3, 2013 (the “Joint Agreement”) with Eagleford Energy, Inc., an Ontario, Canada Corporation (“Eagleford”) and its wholly-owned subsidiary, Eagleford Energy, Zavala Inc., a Nevada corporation (“Eagleford Zavala”). On January 24, 2014, the Company, Eagleford and Eagleford Zavala entered into an amendment to the Joint Agreement (the “First Amendment”), pursuant to which Eagleford Zavala, in exchange for certain commitments made by us therein, accelerated the grant to us of certain undivided interests in its oil and gas lease dated September 1, 2013 covering approximately 2,629 acres in Zavala County, Texas (the “Lease”). Effective March 31, 2015 the Company settled litigation against Eagleford Energy, Zavala Inc. The action was for foreclosure of the payment of obligations owed by Eagleford Energy, Zavala Inc. for lease obligations. Prior to foreclosure Eagleford paid the obligations which were owed. On March 31, 2015 this matter was settled by Stratex releasing its interest in the project for the development of the 2,926 acres in Zavala County, Texas, to its two partners Eagleford Energy, Zavala Inc. and Quadrant Energy, Inc. The parties entered into a mutual release of all obligations. Pursuant to the Mutual Settlement Agreement and the abandonment of the lease the Company agreed to pay $25,000 in cash and issue 1,333,333 shares of common stock to Eagleford Energy Corp.

Oil & Gas Prices

The prices of oil, natural gas, methane gas and other fuels have been, and are likely to continue to be, volatile and subject to wide fluctuations in response to numerous factors, including but not limited to the worldwide and domestic supplies of oil and gas, changes in the supply of and demand for such fuels, political conditions in fuel-producing and fuel-consuming regions, weather conditions, the development of other energy sources, and the effect of government regulation on the production, transportation and sale of fuels. These factors and the volatility of energy markets make it extremely difficult to predict future oil and gas price movements with any certainty. A decline in prices could adversely affect the Company’s financial position, financial results, cash flows, access to capital and ability to grow.

Environmental Liabilities

Oil and gas operations are subject to many risks, including well blowouts, cratering and explosions, pipe failure, fires, formations with abnormal pressures, uncontrollable flows of oil, natural gas, brine or other well fluids, and other environmental hazards and risks. Our drilling operations involve risks from high pressures and from mechanical difficulties such as stuck pipes, collapsed casings, and separated cables. If any of these circumstances occur, the Company could sustain substantial losses as a result of injury or loss of life, destruction of property and equipment, damage to natural resources, pollution or other environmental damages, clean-up responsibilities, regulatory investigations and penalties, suspension of operations, and compliance with environmental laws and regulations relating to air emissions, waste disposal and hydraulic fracturing, restrictions on drilling and completion operations and other laws and regulations. The Company’s potential liability for environmental hazards may include those created by the previous owners of properties purchased or leased prior to the date we purchase or lease the property. The Company maintains insurance against some, but not all, of the risks described above. Insurance coverage may not be adequate to cover casualty losses or liabilities.

Stratex Oil & Gas Holdings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Employment Contracts

On January 15, 2015, and effective as of January 1, 2015, the Company entered into Amended Employment Agreements with the following Executive Officers: Alan D. Gaines, Executive Chairman of the Board; Stephen P. Funk, Chief Executive Officer: Matthew S. Cohen, Executive Vice President and General Counsel; Michael J. Thurz, Chief Administrative Officer; and Michael A. Cederstrom, Vice President. The purpose of the Amended Employment Agreements was to assist with the Company’s cash flow during this period of reduced oil and gas commodity pricing. The amendments to the Employment Agreements removed the provision stating the amount of salary to be paid and replaced it with the following statement, “…salary at the rate to be determined by the Board of Directors. Executive’s base salary may be reviewed and further adjusted from time to time by the Board in its discretion”. Pursuant to this amendment the Board of Directors reduced the Executive Officers base salary by 75%.

On February 13, 2015 the Board of Directors accepted the resignation of Matthew S. Cohen as the Company’s General Counsel and Executive Vice President to allow him to pursue other business opportunities.

Agreements with Placement Agents and Finders

The Company entered into a Financial Advisory and Investment Banking Agreement with Radnor Research & Trading Company, LLC (“Radnor”) effective January 24, 2014 (the “Radnor Advisory Agreement”). Pursuant to the Radnor Advisory Agreement, Radnor acted as the Company’s exclusive financial advisor and placement agent to assist the Company in connection with the two private placements of the Series A and Series B Convertible Promissory Notes.

There were no payments to Radnor during the three months ended March 31, 2015. During the three months ended March 31, 2014 the Company paid to Radnor fees of $382,765 and issued to Radnor 1,275,900 warrants to purchase common stock that expire five (5) years from the date of issuance with an exercise price of $0.30 per share.

Joint Development Agreement

On March 13, 2015 the Company entered into a Joint Development Agreement with Itasca Energy LLC (“IE”) whereby IE will drill up to 6 wells in the Buda Limestone formation of the leasehold to earn a 77.5 % working interest in each of the 6 wells which are completed, the Company will retain a 21.3% working interest in each well. IE will pay all cost of development through the tanks on the six wells. If IE completes all six wells they will earn a 77.5 % working interest in 10,314 gross (7,994 net) working interest in the Matthews Lease and 50% working interest in 9,333 gross and (4,666 net) in the remaining portion of the Matthews Lease. The first well of this agreement was spudded on March 16, 2015 each of the 5 remaining wells must be spudded within 120 days of the prior well reaching total depth. If the wells are not spudded with the required time period then IE will earn its interest in the actual wells drilled only and will not earn an interest in the total lease.

Note 12 Subsequent Events:

On April 1, 2015, the Company issued a promissory note with principal of $300,000 for proceeds of $300,000. The note bears interest at 12% per annum and is due and payable in 60 days. On April 21, 2015, the Company paid $150,000 of the principal balance.

On April 28, 2015 the Board of Directors of the Company, accepted the resignation of Alan D. Gaines, our Executive Chairman of the Board and Board Member. Mr. Gaines resigned in order to pursue other business opportunities. The Company and Mr. Gaines signed a Separation Agreement whereby Mr. Gaines agreed to return 1,782,266 shares of the Company’s common stock and 6,300,000 warrants vested or unvested owned by Mr. Gaines were cancelled.

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

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements appearing in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties because they are based on current expectations and relate to future events and future financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth in our “Risk Factors.”

Overview

We are an independent energy company focused on the acquisition and subsequent exploitation and development of predominantly crude oil in Kansas and Texas as well as varied non-operated working interests in North Dakota, Montana, Colorado, Utah and Kansas. In Texas, we have interests in certain properties located in Zavala Counties. Our Zavala County acreage lies within the established oil rim of the very prolific Eagle Ford Shale play, one of the most actively drilled basins in the United States. The play is also known for multiple stacked pay zones and is also highly prospective for the San Miguel, Austin Chalk and Buda formations, which all produce within the general vicinity. Management views our Zavala County acreage as the cornerstone of its present development program. Our Kansas property is situated on acreage where we intend to drill low risk, wells in the Wilcox and Arbuckle formations located in central Kansas area. In Montana, we focus on stacked Williston Basin production primarily from the Bakken Shale, and Three Forks formations. Our Utah property is located in the Central Utah overthrust and the shale play. We are currently participating in the shale play with Whiting Petroleum as the operator.

Present corporate strategy is to internally identify those prospects, which may take the form of acquisition of bolt on acreage and/or production within existing core areas or other potentially opportunistic areas of interest. We intend to evaluate those prospects utilizing subsurface geology, geophysical data and existing well control. Currently, we utilize the services of geologists, petroleum engineers and geophysicists with local expertise on a contract basis, in order to maintain a low cost structure.

To date, the Company has only held small, passive, non-operated working interests in North Dakota, Montana and Kansas. By virtue of our recent Richfield Merger with Richfield the Company now intends to actively exploit Kansas and Utah properties together with the Zavala County Texas properties. The Company has assumed operator status. Upon assuming the role of operator, subject to the terms of the underlying leases, the Company will be able to have greater control over the timing of expenditures, drilling and completion costs, and operating budgets.

The Company currently owns, as of March 31, 2015, an interest in 86 wells, 55 of which account for the Company’s present net production and cash flow. Currently, we hold approximately 35,317 net leasehold acres in Sheridan, Montana, Williams, Billings, Divide, Mountrail, and Stark Counties, North Dakota, Weld County, Colorado, Central Kansas, Central Utah and Zavala County, Texas.

The Bakken formation is recognized internationally as a major source of oil reserves. The United States Geological Survey (USGS) estimates that the Bakken has some 4.3 billion barrels of recoverable oil. The Keystone pipeline, which runs along the US-Canada border, was halted by President Obama and we expect it to be approved and construction to be resumed in the near future. If approved, it will be a principal means of transporting the Bakken oil from the Canadian and US portions of the formation to the refineries. It is believed that the Bakken oil fields and the shale gas fields in other parts of the US will make the US energy independent this decade.

We expect to continue to acquire oil and gas properties and to build our asset base. As we continue to review business opportunities, we believe that we will need to raise additional capital through equity sales and debt financing to continue to acquire more properties, and business opportunities, such properties are expected to generate cash flow from participation in the development of the drilling programs that each property is designed to support.

Results of Operations for the three months ended March 31, 2015 as compared to the three months ended March 31, 2014:

Revenues:

We generated revenues of $309,728 for the three months ended March 31, 2015 compared to $98,357 for the three months ended March 31, 2014. The increase in revenue reflects an increase in sales volumes as a result of one of the merger of the Company with Richfield on December 1, 2014.

Operating Expenses:

●	Production expense was $311,527 for the three months ended March 31, 2015 compared to $40,939 for the three months ended March 31, 2014. The increase in expenses reflects an increase in the number of producing wells as a result of one of the merger of the Company with Richfield on December 1, 2014.

●	General and administrative expense was $679,428 for the three months ended March 31, 2015 compared to $778,608 for the three months ended March 31, 2014. The overall $99,180 decrease in operating expenses is primarily attributable to the following approximate net increases (decreases) in operating expenses:

	●	A decrease in legal and professional fees of $(404,400). In the prior year the Company incurred higher legal and consulting fees due to the Company negotiating and entering into multiple Joint Development Agreements, the commencement of the Company’s private offering and merger with Richfield.

	●	An increase in Insurance expenses of $26,100 as a result of the Company’s merger with Richfield.

	●	An increase in Rent expenses of $47,600 as a result of the Company’s merger with Richfield.

	●	An increase of payroll and payroll related expenses of $139,800 that was attributed to an increase in FTE as a result to merger of the Company with Richfield on December 1, 2014.

	●	An increase in Stock based compensation of $51,500 as a result of the Company’s additional amortization of employee option agreements and additional stock awards from the previous year.

	●	An increase in all other general and administrative expenses in the amount of $40,220.

●	Depletion, depreciation and amortization expense was $178,652 for the three months ended March 31, 2015 compared to $17,519 for the three months ended March 31, 2014. The increase in expense reflects an increase in total oil production as a result of the merger of the Company with Richfield on December 1, 2014 coupled with a increase in the per barrel depletion rates as a result of the Company reserve reports as compared to the three months ended March 31, 2014.

●	Impairment of oil and gas assets was $705,330 for the three months ended March 31, 2015, and $0 for the year ended March 31, 2014. This is due to leases expiring within the next twelve months that we do not anticipate being able to renew.

●

Loss on abandonment of oil and gas assets was $331,405 for the three months ended March 31, 2015, and $0 for the year ended March 31, 2014. This is due to the $265,228 loss incurred on the abandonment of the 2,629 acres in Zavala County, Texas as a result of our settlement agreement. In addition, the Company recorded a $66,177 loss for leases that expired in our undeveloped Utah properties. There was no loss on abandonment of oil and gas assets during the three months ended March 31, 2014.

Other Income and (Expense):

Other Income (Expense)-net: Other income (expenses) consists primarily of gains and losses on the change in fair value of derivative liabilities, gains and losses on sale of oil and gas properties/interests and interest expense all primarily related to the Company’s convertible promissory notes, traditional notes and warrant issuances.

Other income (expenses) - net decreased by $1,688,316 to $(1,629,338) for the three months ended March 31, 2015 as compared to other income (expenses) - net of $58,978 for the three months ended March 31, 2014. For the three months ended March 31, 2015 other income (expenses) consisted of ($1,640,506) in interest expense, a gain on change in fair value of derivative liabilities of $103,245, and a loss on settlement of liabilities of ($92,077). For the three months ended March 31, 2014 other income (expenses) consisted of ($325,026) in interest expense, a loss on change in fair value of derivative liabilities of ($89,416), warrant amendment expense of ($14,755), a gain on sale of oil and gas interests of $450,000, a loss on settlement of liabilities of ($1,000) and other income of $39,175.

Liquidity and Capital Resources:

We have incurred net operating losses and operating cash flow deficits since inception, continuing through the first quarter of 2015. We are in the early stages of acquisition and development of oil and gas leaseholds and properties, and we have been funded primarily by a combination of equity issuances and debt, and to a lesser extent by operating cash flows, to execute on our business plan of acquiring working interests in oil and gas properties and for working capital for production. At March 31, 2015, we had cash and cash equivalents totaling $224,203.

Our ability to obtain financing may be impaired by many factors outside of our control, including the capital markets (both generally and in the crude oil and natural gas industry in particular), our limited operating history, the location of our crude oil and natural gas properties and prices of crude oil and natural gas on the commodities markets (which will impact the amount of asset-based financing available to us) and other factors. Further, if crude oil or natural gas prices on the commodities markets decline, our revenues will likely decrease and such decreased revenues may increase our requirements for capital.

Any new debt or equity financing arrangements may not be available to us, or may be available only on unfavorable terms. Additionally, these alternatives could be highly dilutive to our existing stockholders, and may not provide us with sufficient funds to meet our long-term capital requirements. We have and may continue to incur substantial costs in the future in connection with raising capital to fund our business, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, which may adversely impact our financial condition. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs (even to the extent that we reduce our operations), we will be required to reduce operating costs, which could jeopardize our future strategic initiatives and business plans, and we may be required to sell some or all of our properties (which could be on unfavorable terms), seek joint ventures with one or more strategic partners, strategic acquisitions and other strategic alternatives, cease our operations, sell or merge our business, or file a petition for bankruptcy.

Our condensed consolidated financial statements for the three months ended March 31, 2015 were prepared assuming we would continue as a going concern, which contemplates that we will continue in operation for the foreseeable future and will be able to realize assets and settle liabilities and commitments in the normal course of business. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that could result should we be unable to continue as a going concern.

Cash Flows from Operating Activities

Cash used in operating activities was $1,619,303 for the three months ended March 31, 2015, as compared to cash provided by operating activities of $108,361 during the three months ended March 31, 2014. The decrease in cash provided by operating activities during the three months ended March 31, 2015 as compared to March 31, 2014 is primarily due to increases in legal and professional fees during the period partially offset by a decrease in salaries and payroll related expenses.

Cash Flows from Investing Activities

Cash used in investing activities for the three months ended March 31, 2015 was $87,665 as compared to $2,228,594 during the three months ended March 31, 2014. The net increase is primarily due to a significant increase in capital acquisition cost during the first three months of 2014 as compared to the comparable period ended 2015. The increase is slightly offset by the Company receiving $45,000 in proceeds from the sale of oil and gas interests during 2014.

Cash Flows from Financing Activities

Total net cash used in financing activities was $6,504 for the three months ended March 31, 2015, from payments on notes and capital leases. Total net cash provided by financing activities during the three months ended March 31, 2014 was $8,559,359 from various debt and equity offerings. For more details about these debt and equity financings, see Notes to the Condensed Consolidated Financial Statements for the three months ended March 31, 2015, incorporated by reference herein.

Planned Capital Expenditures

Depending on our ability to obtain sufficient financing, development plans for 2015 include identifying, acquiring and operating properties as well continued development of our existing leases. The Company plans to continue its Joint Development Programs in Texas and to review opportunistic acquisitions when available. We will also to continue to participating in the ongoing Authorization for Expense (AFE) process for the existing properties where these programs make economic sense for the Company.

The Company incurred approximately $354,428 in development costs related to the purchase and development of working interest in wells during the three months ended March 31, 2015. Unrelated to any potential acquisitions or advances to be made to Richfield under the Loan Agreement, the Company expects to incur maintenance and operating costs of approximately $45,000 to $60,000 per month for the next twelve months to maintain these assets.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we have elected not to provide the disclosures required by this item.

Item 4. Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Administrative Officer (“CAO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2015. The CEO and CAO have concluded that, as of March 31, 2015, our disclosure controls and procedures were not effective, in that they ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes made in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - Other Information

Item 1. Legal Proceedings

In or about September 2014 Stratex filed an action against Eagleford Energy, Zavala Inc. in the 293^rd District Court of Zavala County, Texas. Styled Stratex Oil & Gas Holdings, Inc. v Eagleford Energy, Zavala Inc. Case No 14-09-132090-ZCV, the action was for foreclosure of the payment of obligations owed by Eagleford Energy, Zavala Inc. for lease obligations. Prior to foreclosure Eagleford paid the obligations which were owed. On March 31, 2015 this matter was settled by Stratex releasing its interest in the project for the development of the 2,926 acres in Zavala County, Texas, to its two partners Eagleford Energy, Zavala Inc and Quadrant Energy, Inc. The parties entered into a mutual release of all obligations.

Litigation in the Ordinary Course

We have become involved in litigation from time to time relating to claims arising in the ordinary course of our business. We do not believe that the ultimate resolution of such claims would have a material effect on our business, results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material effect on our business, results of operations, financial condition and cash flows.

Item 1A. Risk Factors

As a smaller reporting company, we have elected not to provide the disclosures required by this item.

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

On March 31, 2015 the Company issued 2,500,000 shares of unregistered common stock to employees and consultants for work on the merger between the Company and Richfield. The shares were issued at $0.135 per share.

On March 31, 2015 the Company issued 1,333,333 shares of unregistered common stock to Eagleford Energy Corp in settlement of litigation between the Company and Eaglford Energy Corp. The shares were issued at $0.10 per share.

Item 6. Exhibits

Exhibit No.		Description
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. (Filed herewith)
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002. (Filed herewith)
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002. (Filed herewith)
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002. (Filed herewith)

SIGNATURES

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

	STRATEX OIL &GAS HOLDINGS, INC.

Date: May 15, 2015	By:	/s/ Stephen Funk
		Stephen Funk
		Chief Executive Officer and Director
		(Principal Executive Officer)

Date: May 15, 2015	By:	/s/ Michael J. Thurz
		Michael J. Thurz
		Chief Administrative Officer
		(Principal Financial Officer)

Stratex Oil & Gas Holdings, Inc. 10-Q