8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 8, 2005

STRATUS SERVICES GROUP, INC.

(Exact name of registrant as specified in its charter)

New Jersey (State or other jurisdiction of incorporation)	001-15789 (Commission File Number)	22-3499261 (IRS Employer Identification Number)
500 Craig Road, Suite 201 Manalapan, New Jersey 07726 (Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (732) 866-0300

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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

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Section 1 -	Registrant’s Business and Operations
Item 1.01	Entry into a Material Definitive Agreement

As reported in the Report on Form 10-Q of Stratus Services Group, Inc. (the “Company”) for the quarter ended June 30, 2005, as filed with the Securities and Exchange Commission on August 17, 2005, on August 11, 2005, the Company and Capital Temp Funds (the “Lender”) entered into an Amended and Restated Forbearance Agreement (the “Amended Forbearance Agreement”) whereby the Lender had again agreed to forbear from accelerating obligations and/or enforcing existing defaults until August 26, 2005.

Additionally, in connection with the Company and the Lender entering into the Amended Forbearance Agreement, the Company, the Lender and ALS, LLC (“ALS”) also entered into the ALS Forbearance, whereby ALS agreed to forbear, through August 25, 2005, from enforcing payment defaults under the Outsourcing Agreement between the Company and ALS, subject to certain conditions.

On August 25, 2005, the Company, the Lender and ALS all agreed by letter agreement to extend, for an additional one (1) week period both the Amended Forbearance Agreement, and the ALS Forbearance, subject to the terms and conditions set forth therein.

On September 1, 2005, the Company, the Lender and ALS all agreed by letter agreement to extend, for another additional one (1) week period, both the Amended Forbearance Agreement and the ALS Forbearance, subject to the terms and conditions set forth therein.

On September 8, 2005, the Company, the Lender and ALS all agreed by letter agreement to extend, for another additional one (1) week period, both the Amended Forbearance Agreement and the ALS Forbearance, subject to the terms and conditions set forth therein, except that the Amended Forbearance Agreement was further amended as follows: (a) the time frame in which the Company has to obtain $500,000 in capital or subordinated loans from a third party has been extended to September 16, 2005; (b) Capital will no longer rebate $50,000 of the $300,000 Forbearance Fee as originally contemplated by the Amended Forbearance Agreement if the Forbearance Fee is paid by October 10, 2005; and (c) the Forbearance Period was extended to September 16, 2005. In conjunction with such extension, the Lender also notified the Company that, unless the repayment of the Company’s obligations to the Lender have been fully resolved to its satisfaction by September 15, 2005, or ALS, LLC commits to extend the ALS Forbearance for a period of sixty (60) days from that date, the Company should not assume that any further extensions of the Amended Forbearance Agreement will be forthcoming.

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Exhibit No.   Description  

10.41	Letter Agreement between the Company, ALS, LLC and Capital Temp Funds regarding further extension of Forbearance dated September 8, 2005.
10.42	Letter Agreement between the Company and Capital Temp Funds regarding further extension of Forbearance dated September 8, 2005.

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SIGNATURES

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

	STRATUS SERVICES GROUP, INC. (Registrant)
Date: September 14, 2005	By:	/s/ Joseph J. Raymond
		President and Chief Executive Officer

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EX-10.41

EXHIBIT 10.41

WRITER'S DIRECT DIAL:

(813) 227-8473

WRITER'S E-MAIL:

mbrundage@hwhlaw.com

September 1, 2005

Michael A. Maltzman, CFO

Stratus Services Group, Inc.

500 Craig Road

Suite 201

Manalapan, New Jersey 07726

Re: Continued forbearance regarding default under outsourcing agreement dated August 13, 2004, by and between ALS, LLC and Stratus Services Group, Inc., as amended (the “Agreement”)

Dear Mr. Maltzman:

This law firm represents ALS, LLC (“Advantage”) in connection with the Agreement and Advantage’s business relationships with Stratus Services Group, Inc. (“Stratus”). Capital TempFunds (“CTF”) is Stratus’ secured lender under the terms and conditions of a loan and security agreement dated as of December 8, 2000 as amended and modified (the “Secured Loan”). As you know, by letters dated July 29, 2005, and August 5, 2005, Advantage has provided Stratus with written notices of its defaults and material breaches of payment obligations due under the Agreement. Stratus has failed to cure the material breaches of payment obligations within two business days of notice and therefore, pursuant to paragraph 3 of the Agreement, Advantage currently has the right to terminate the Agreement. Additionally, as a result of the defaults, Stratus owes to Advantage $1,000.00 per day of payment obligation breach or 24% annual interest on the outstanding amount, compounded daily, or a maximum allowed by law, whichever is higher. We understand that CTF has declared defaults under the Secured Loan, but has entered into a forbearance agreement with Stratus through at least September 16, 2005.

This letter sets forth the terms by which the parties agree to a forbearance of enforcement of existing defaults that have been declared by Advantage as to the Agreement and CTF as to the Secured Loan. Due to the time urgency in getting this letter agreement prepared and executed, the parties agree to enter a more formal agreement if reasonably necessary.

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Advantage will forbear from enforcing current defaults under the Agreement, unless a default occurs hereunder, on the following terms and conditions:

1.   On Stratus’ direction which is given hereby, CTF shall wire transfer to Advantage by 5:00 p.m. Eastern on September 8, 2005 the sum of $1.5 million presently owed by Stratus to Advantage pursuant to the terms of the Agreement (excluding the $600,000 subordinated receivable, which will remain due and owing)

2.   Conditioned upon timely receipt of the payment required in paragraph 1 above, Advantage will release and fund the current payroll associated with the Agreement.

3.   Provided that Stratus complies with all the terms of this forbearance agreement, Advantage will continue to perform under the Agreement and forbear from enforcing the existing defaults through September 15, 2005.

4.   Advantage shall invoice to Stratus as to the payroll paid under paragraph 2 above consistent with the Agreement except that such invoices shall have two components: (a) invoices totaling the amount of $1,100,000 shall be due and payable on or before September 15, 2005 (the “Deferred Amount”); and (b) the remaining amount due under invoices after deducting $1,100,000 shall be due and payable immediately (the “Immediately Payable Amount”).

5.   Stratus shall repay the Immediately Due Amount by directing CTF, on a daily basis starting Friday September 9, 2005, to advance and wire transfer to Advantage from available funds under the Secured Loan. Stratus shall provide Advantage with an exact copy of the loan status provided by CTF.

6.   Stratus shall be in default hereunder unless the Immediately Due Amount is paid in full by September 14, 2005. The Deferred Amount shall be due in full without further notice or demand at 12:00 p.m. Eastern on September 15, 2005.

7.   Any further default under the Agreement or the Secured Loan shall be a default hereunder, unless specifically stated other wise herein. A default hereunder or under the Agreement shall entitle Advantage to immediately terminate the Agreement and immediately seek all available remedies. For the term hereof, CTF agrees to give Advantage and Stratus immediate and simultaneous notice of any default by Stratus hereunder or under the Secured Loan. For the term hereof, Advantage agrees to give CTF and Stratus immediate and simultaneous notice of any default by Stratus hereunder or under the Agreement.

8.   CTF has agreed to extend the term of the forbearance agreement through September 16, 2005, pursuant to and subject to such forbearance agreement, an executed copy of which will be immediately provided to Advantage. Stratus shall provide Advantage with copies of the executed forbearance agreement with CTF. Advantage’s obligation to forbear hereunder shall cease if CTF ceases to forbear under its forbearance agreement and Advantage’s right to cease forbearing hereunder shall constitute Advantages sole remedy against CTF.

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HILL, WARD & HENDERSON, P.A.

s/

Michael P. Brundage

ALS, LLC By:s/ Jay Wolin Its:CFO	Stratus Service Group, Inc. By:s/ Joseph J. Raymond Its:CEO
Acknowledged and consented to by Capital TempFunds, Inc. By:s/ Gerard A. Gabriele Its:Senior Vice President

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EX-10.42

EXHIBIT 10.42

CAPITAL TEMPFUNDS

a division of CAPITAL FACTORS LLC,

One Brixam Green, 15800 John J. Delaney Drive, Suite 300,

Charlotte, North Carolina 28277

September 8, 2005

Michael A. Maltzman, CFO

Stratus Services Group, Inc.

500 Craig Road

Suite 201

Manalapan, New Jersey 07726

Re: AMENDED AND RESTATED FORBEARANCE AGREEMENT (the “Forbearance Agreement”), dated as of August 11, 2005, as amended as of August 25, 2005 and September 1, 2005, by and between CAPITAL TEMPFUNDS, a division of CAPITAL FACTORS LLC, (“Capital”), and STRATUS SERVICES GROUP, INC. (“Borrower”)

Dear Mr. Maltzman:

It is mutually agreed between the parties hereto that the Forbearance Agreement be further amended as follows:

a)   Clause (a) of the first sentence Section 3 of the Forbearance Agreement, is hereby further amended to replace “September 9, 2005” with “September 16, 2005”;

b)   The proviso relating to the rebate of $50,000 contained at the end of Section 4 of the Forbearance Agreement is deleted; and

c)   Clause (f) of Section 7 of the Forbearance Agreement is hereby amended to replace “August 31, 2005” with “September 16, 2005”.

The Borrower hereby represents and warrants to Capital that, after giving effect to this letter agreement, no Default or Event of Default other than the Designated Defaults has occurred and is continuing. Borrower hereby acknowledges and agrees that a breach of the representation and warranty set forth herein shall constitute a Forbearance Default under the Forbearance Agreement and an Event of Default under the Loan Agreement. This letter agreement shall not be deemed to be a waiver, amendment or modification of, or consent to or departure from, any provisions of the Loan Agreement,

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the Forbearance Agreement or any other Loan Document or to be a waiver of any Forbearance Default under the Forbearance Agreement or Default or Event of Default under the Loan Agreement or any other Loan Document whether arising before or after the date hereof (except for the specific amendment referenced above in this letter agreement), and this letter agreement shall not preclude the future exercise of any right, remedy, power or privilege available to Capital whether under the Forbearance Agreement, the Loan Agreement, the other Loan Documents or otherwise. All capitalized terms not otherwise defined herein shall have the meanings given to them in the Forbearance Agreement.

This letter agreement shall be deemed to be a Loan Document for all purposes. This letter agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same agreement. Any signature delivered by a party by facsimile transmission shall be deemed to be an original signature hereto.

If the above provisions are satisfactory to you, please execute this letter agreement as set forth below and return it to Capital.

Capital TempFunds, a division of Capital Factors, LLC

By:s/ Gerard A. Gabriele

Its:Senior Vice President

Acknowledged and Agreed:

Stratus Service Group, Inc.

By:s/ Joseph J. Raymond

Its:CEO

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