UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act
Date of Report (Date of Earliest event Reported): December 31, 2014
STRATEAN INC.
(Exact name of registrant as specified in its charter)
| Nevada | 000-53498 | 87-0449945 | ||
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
2391 South 1560 West
Woods Cross, Utah 84087
(Address of principal executive offices, including zip code)
(801) 244-4405
(Registrant’s telephone number, including area code)
(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):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Section 1 - Registrant's Business and Operations
Item 1.02 Termination of a Material Definitive Agreement
On December 31, 2014, Stratean Inc. (the "Company") and two Promissory Note holders, Burkeley J. Priest ("Priest") and The Munson Family Limited Partnership ("Munson") entered into Debt Settlement Agreements ("Agreements"), to settle two Promissory Notes ("Notes") with a face value of $33,341 and $16,659, respectively. Priest and Munson agreed that, upon execution of their agreements and receipt of the stock, all claims of Priest and Munson against Stratean Inc., were deemed released.
Pursuant to the Agreements the Company issued Priest 38,342 shares of Stratean Inc. $0.001 par value common stock which had a fair value on December 31, 2014 of approximately $1.00 per share, or $38,342. On the date of the transaction Burkeley J. Priest owned approximately 6.2% of the Company's outstanding common stock and is considered a related party, therefore in accordance with ASC 470-50 approximately $5,001 will be recorded as a charge against additional paid in capital as a result of the Agreement.
Pursuant to the Agreements the Company issued Munson 19,158 shares of Stratean Inc. $0.001 par value common stock which had a fair value on December 31, 2014 of approximately $1.00 per share, or $19,158. On the date of the transaction The Munson Family Limited Partnership owned approximately 7.5% of the Company's outstanding common stock and is considered a related party, therefore in accordance with ASC 470-50 approximately $2,499 will be recorded as a charge against additional paid in capital as a result of the Agreement.
Pursuant to the Agreements Priest has been granted a 10 year royalty ("Royalty") of one-half of one percent (.5%) of "Gross Revenues" derived from the "Sale of Stratean Downdraft Gasifer units".
Pursuant to the Agreements Munson has been granted a 10 year royalty ("Royalty") of one-quarter of one percent (.25%) of "Gross Revenues" derived from the "Sale of Stratean Downdraft Gasifer units".
The Agreements define 'Gross Revenues' as; monies actually received by Stratean arising from the sale of its units. The Agreement further defines the 'Sale of Stratean Gasifier Units' as revenues received by Stratean as a direct result and occurrence of a sale of physical gasifier units to third parties. All other revenues generated by Stratean whether related to the Company's Gasifier or otherwise are explicitly excluded. Under this agreement Stratean is required to render statements and make payments to Priest and Munson within 60 days after the last day of each fiscal quarter.
Stratean remains free to exercise all the rights of ownership of its property and intellectual property including the right to sell its intellectual property and make licensing and sub-license agreements without consulting Priest or Munson and upon whatever terms it deems wise.
The foregoing description of the terms of the Debt Settlement Agreements is qualified in its entirety by reference to the provisions of the agreements filed as Exhibit 10.1 and Exhibit 10.2 to this report, which is incorporated by reference herein.
Section 2 - Financial Information
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information contained in Item 1.02 of this Form 8-K is incorporated herein by reference.
Section 3 - Securities and Trading Markets
Item 3.02 Unregistered Sales of Equity Securities
In connection with the Debt Settlement Agreements, the Company will issue 57,500 shares of restricted $0.001 par value common stock. The shares were authorized for issuance pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
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Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
| Exhibit No. | Description | |
| Exhibit 10.1 | Debt Settlement Agreement dated December 31, 2014 | |
| Exhibit 10.2 | Debt Settlement Agreement dated December 31, 2014 |
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.
| Date: January 6, 2015 | Stratean Inc. | ||
| (Registrant) | |||
| By: | /s/ Zachary K. Bradford | ||
| Zachary K. Bradford, Chief Financial Officer | |||
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DEBT SETTLEMENT AGREEMENT
This Debt Settlement Agreement (the “Agreement”) is made and entered into as of December 31, 2014, by and between Stratean Inc., a Nevada corporation (“Stratean”), and Burkeley J. Priest, an Individual (“Priest”), with respect to the following.
RECITALS
A. Priest is the holder of a $33,341 Promissory Note (the “Debt”) dated February 24, 2014.
B. Stratean is the owner and holder of U.S. Patent No. 8,105,401 (“Parallel Path, Downdraft Gasifier Apparatus and Method”), and U.S. Patent No. 8,518,133 (“Parallel Path, Downdraft Gasifier Apparatus and Method”) (the “Patents”)
C. Stratean and Priest agree to settle and resolve the Debt in full upon the following terms and conditions.
TERMS AND CONDITIONS
1. Stock. Promptly after execution of this Agreement, Stratean shall cause to be issued to Priest 38,342 shares of Stratean Inc. $0.001 par value common stock (the “Stock”).
2. Royalty. Stratean shall pay to Priest or his designee a royalty("Royalty") of one-half of one percent(.5%) of "Gross Revenues" derived from the "Sale of Stratean Downdraft Gasifer units".
a) "Gross Revenues" are defined as the monies actually received by Stratean Inc. arising from the sale of its units.
b) "Sale of Stratean Downdraft Gasifer Units" is defined as revenues received by Stratean as a direct result of the occurrence of a sale of physical gasifier units to third parties.
c) The Royalty shall have a life of 10 years and will expire at 11:59 PM on December 31, 2024
d) Stratean shall render statements and make payments to Priest quarterly within sixty (60) days after the last day of each March, June, September and December.
e) All other revenues generated by Stratean Inc. whether related to the Downdraft Gasifier or otherwise is explicitly excluded.
f) Priest has the right upon written notice to assign its royalty rights to any designee until expiration.
g) Stratean shall be free to exercise all the rights of ownership of its property and intellectual property including the right to sale its intellectual property and make licensing and sub-license agreements without consulting Priest and upon whatever terms it deems wise.
3. Release and Satisfaction. Upon receipt of the Stock, Priest acknowledges and agrees that the Debt (including all interest, costs and attorney’s fees associated therewith) shall be deemed satisfied and paid in full. Priest agrees that, subject to receipt of the Stock, all claims of Priest against Stratean Inc. and its management, shall be deemed released.
4. Representations and Covenants of Stratean. Stratean represents and covenants to Priest as follows:
A. The issuance of the Stock has been duly authorized by all required corporate action and, when issued, will be fully paid and nonassessable.
B. If at any time Stratean decides, in its sole discretion, to register securities with the Securities and Exchange Commission (the “Commission”), Stratean agrees that it shall cause the Stock to be registered along with whatever other securities it chooses to register on Form S-1, at no further cost to Priest.
C. Stratean is the owner of the Patents.
5. Acknowledgments and Representations of Priest. Priest represents and acknowledges as follows:
A. That Priest is the sole holder of the Debt, and has full power and authority to enter into and perform the terms of this Agreement. Priest agrees and covenants not to institute or cause to be instituted any suit or other form of action or proceeding of any kind or nature against Stratean, or its predecessors, assigns, successors, officers, directors, agents, or affiliates to collect or attempt to collect the Debt.
B. Intentionally left Blank.
C. That:
(a) the Stock is “restricted securities” as that term is defined in Rule 144 promulgated by the Commission under the Securities Act of 1933, as amended (the “Securities Act”), the resale of the Stock is restricted by federal and state securities laws and, accordingly, the Stock must be held indefinitely unless its resale is subsequently registered under the Securities Act or an exemption from such registration is available for its resale;
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(b) Other than as contemplated herein, Priest acknowledges that Stratean has not undertaken, and will have no obligation, to register any shares of the Stock under the Securities Act;
(c) By completing the Questionnaire, attached hereto as Exhibit “A,” Priest is representing and warranting that it is an accredited investor as the term is defined in Rule 501 of Regulation D under the Securities Act;
(d) The decision to execute this Agreement and acquire the Stock agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of Stratean;
(e) Priest and Priest's advisor(s) have had a reasonable opportunity to ask questions of and receive answers from Stratean in connection with the issuance of the Stock hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about Stratean;
(f) The books and records of Stratean were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by Priest during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Stock hereunder have been made available for inspection by Priest, Priest's lawyer and/or advisor(s);
(g) Stratean is entitled to rely on the representations and warranties of Priest contained in this Agreement and the Questionnaire;
(h) Priest will indemnify and hold harmless Stratean and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of Priest contained in this Agreement, the Questionnaire or in any document furnished by Priest to Stratean in connection herewith being untrue in any material respect or any breach or failure by Priest to comply with any covenant or agreement made by Priest to Stratean in connection therewith;
(i) Priest has been advised to consult Priest's own legal, tax and other advisors with respect to the merits and risks of an investment in the Stock and with respect to applicable resale restrictions, and it is solely responsible (and Stratean is not in any way responsible) for compliance with: (i) any applicable laws of the jurisdiction in which Priest is resident in connection with the distribution of the Stock hereunder, and (ii) applicable resale restrictions;
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(j) Neither the Commission nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Stock;
(k) No documents in connection with the sale of the Stock hereunder have been reviewed by the Commission or any state securities administrators;
(l) Priest is aware that an investment in Stratean is speculative and involves certain risks, including the possible loss of the entire investment;
(m) Priest (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Stock for an indefinite period of time;
(n) Priest (i) is able to fend for itself; (ii) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Stock; and (iii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;
(o) Priest is not an underwriter of, or dealer in, the common shares of Stratean, nor is Priest participating, pursuant to a contractual agreement or otherwise, in the distribution of the Stock;
(p) Priest is not aware of any advertisement of any of the Stock and is not acquiring the Stock as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and
(q) Priest acknowledges and agrees that Stratean shall not consider the Priest's subscription for acceptance unless the undersigned provides to Stratean, along with an executed copy of this Agreement: (i) a fully completed and executed Questionnaire in the form attached hereto as Exhibit A, and (ii) such other supporting documentation that Stratean or its legal counsel may request to establish Priest's qualification as a qualified investor.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as on the day and year first written above.
Stratean Inc., a Nevada corporation
By/s/S. Matthew Schultz
S. Matthew Schultz, Its CEO
Burkeley J. Priest, an Individual
By_/s/ Burkeley J. Priest
__________________________
Its ________________________
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DEBT SETTLEMENT AGREEMENT
This Debt Settlement Agreement (the “Agreement”) is made and entered into as of December 31, 2014, by and between Stratean Inc., a Nevada corporation (“Stratean”), and The Munson Family Limited Partnership, an Nevada Limited Partnership (“Munson”), with respect to the following.
RECITALS
A. Munson is the holder of a $16,659 Promissory Note (the “Debt”) dated February 24, 2014.
B. Stratean is the owner and holder of U.S. Patent No. 8,105,401 (“Parallel Path, Downdraft Gasifier Apparatus and Method”), and U.S. Patent No. 8,518,133 (“Parallel Path, Downdraft Gasifier Apparatus and Method”) (the “Patents”)
C. Stratean and Munson agree to settle and resolve the Debt in full upon the following terms and conditions.
TERMS AND CONDITIONS
1. Stock. Promptly after execution of this Agreement, Stratean shall cause to be issued to Munson 19,158 shares of Stratean Inc. $0.001 par value common stock (the “Stock”).
2. Royalty. Stratean shall pay to Munson or his designee a royalty("Royalty") of one-quarter of one percent(.25%) of "Gross Revenues" derived from the "Sale of Stratean Downdraft Gasifer Units".
a) "Gross Revenues" are defined as the monies actually received by Stratean Inc. arising from the sale of its units.
b) "Sale of Stratean Downdraft Gasifer Units" is defined as revenues received by Stratean as a direct result of the occurrence of a sale of physical gasifier units to third parties.
c) The Royalty shall have a life of 10 years and will expire at 11:59 PM on December 31, 2024
d) Stratean shall render statements and make payments to Munson quarterly within sixty (60) days after the last day of each March, June, September and December.
e) All other revenues generated by Stratean Inc. whether related to the Downdraft Gasifier or otherwise is explicitly excluded.
f) Munson has the right upon written notice to assign its royalty rights to any designee until expiration.
g) Stratean shall be free to exercise all the rights of ownership of its property and intellectual property including the right to sale its intellectual property and make licensing and sub-license agreements without consulting Munson and upon whatever terms it deems wise.
3. Release and Satisfaction. Upon receipt of the Stock, Munson acknowledges and agrees that the Debt (including all interest, costs and attorney’s fees associated therewith) shall be deemed satisfied and paid in full. Munson agrees that, subject to receipt of the Stock, all claims of Munson against Stratean Inc. and its management, shall be deemed released.
4. Representations and Covenants of Stratean. Stratean represents and covenants to Munson as follows:
A. The issuance of the Stock has been duly authorized by all required corporate action and, when issued, will be fully paid and nonassessable.
B. If at any time Stratean decides, in its sole discretion, to register securities with the Securities and Exchange Commission (the “Commission”), Stratean agrees that it shall cause the Stock to be registered along with whatever other securities it chooses to register on Form S-1, at no further cost to Munson.
C. Stratean is the owner of the Patents.
5. Acknowledgments and Representations of Munson. Munson represents and acknowledges as follows:
A. That Munson is the sole holder of the Debt, and has full power and authority to enter into and perform the terms of this Agreement. Munson agrees and covenants not to institute or cause to be instituted any suit or other form of action or proceeding of any kind or nature against Stratean, or its predecessors, assigns, successors, officers, directors, agents, or affiliates to collect or attempt to collect the Debt.
B. Intentionally left Blank.
C. That:
(a) the Stock is “restricted securities” as that term is defined in Rule 144 promulgated by the Commission under the Securities Act of 1933, as amended (the “Securities Act”), the resale of the Stock is restricted by federal and state securities laws and, accordingly, the Stock must be held indefinitely unless its resale is subsequently registered under the Securities Act or an exemption from such registration is available for its resale;
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(b) Other than as contemplated herein, Munson acknowledges that Stratean has not undertaken, and will have no obligation, to register any shares of the Stock under the Securities Act;
(c) By completing the Questionnaire, attached hereto as Exhibit “A,” Munson is representing and warranting that it is an accredited investor as the term is defined in Rule 501 of Regulation D under the Securities Act;
(d) The decision to execute this Agreement and acquire the Stock agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of Stratean;
(e) Munson and Munson's advisor(s) have had a reasonable opportunity to ask questions of and receive answers from Stratean in connection with the issuance of the Stock hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about Stratean;
(f) The books and records of Stratean were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by Munson during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Stock hereunder have been made available for inspection by Munson, Munson's lawyer and/or advisor(s);
(g) Stratean is entitled to rely on the representations and warranties of Munson contained in this Agreement and the Questionnaire;
(h) Munson will indemnify and hold harmless Stratean and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of Munson contained in this Agreement, the Questionnaire or in any document furnished by Munson to Stratean in connection herewith being untrue in any material respect or any breach or failure by Munson to comply with any covenant or agreement made by Munson to Stratean in connection therewith;
(i) Munson has been advised to consult Munson's own legal, tax and other advisors with respect to the merits and risks of an investment in the Stock and with respect to applicable resale restrictions, and it is solely responsible (and Stratean is not in any way responsible) for compliance with: (i) any applicable laws of the jurisdiction in which Munson is resident in connection with the distribution of the Stock hereunder, and (ii) applicable resale restrictions;
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(j) Neither the Commission nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Stock;
(k) No documents in connection with the sale of the Stock hereunder have been reviewed by the Commission or any state securities administrators;
(l) Munson is aware that an investment in Stratean is speculative and involves certain risks, including the possible loss of the entire investment;
(m) Munson (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Stock for an indefinite period of time;
(n) Munson (i) is able to fend for itself; (ii) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Stock; and (iii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;
(o) Munson is not an underwriter of, or dealer in, the common shares of Stratean, nor is Munson participating, pursuant to a contractual agreement or otherwise, in the distribution of the Stock;
(p) Munson is not aware of any advertisement of any of the Stock and is not acquiring the Stock as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and
(q) Munson acknowledges and agrees that Stratean shall not consider the Munson's subscription for acceptance unless the undersigned provides to Stratean, along with an executed copy of this Agreement: (i) a fully completed and executed Questionnaire in the form attached hereto as Exhibit A, and (ii) such other supporting documentation that Stratean or its legal counsel may request to establish Munson's qualification as a qualified investor.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as on the day and year first written above.
Stratean Inc., a Nevada corporation
By/s/S. Matthew Schultz
S. Matthew Schultz, Its CEO
The Munson Family Limited Partnership, a Nevada Limited Partnership
By/s/Gerald Rice
Gerald Rice, Its Manager
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