UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities and Exchange Act of 1934
Date
of
Report (Date of earliest reported): February 12, 2007
(Exact
name of registrant as specified in charter)
Stronghold
Technologies, Inc.
(Former
name of registrant)
|
Nevada
|
333-54822
|
22-3762832
|
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
16801
Addison Road, Suite 310, Addison, Texas 75001
(Address
of principal executive offices) (Zip Code)
Registrant's
telephone number, including area code: (214) 866-0606
Copies
to:
Gregory
Sichenzia, Esq.
Stephen
M.
Fleming, Esq.
Sichenzia
Ross Friedman Ference LLP
1065
Avenue of the Americas
New
York,
New York 10018
Phone:
(212) 930-9700
Fax:
(212)
930-9725
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):
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry
into a Material Definitive Agreement
Item
2.03 Creation
of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet
Arrangement of a Registrant
Item
3.02 Unregistered
Sales of Equity Securities
To
obtain
funding for its ongoing operations, DealerAdvance, Inc. (f/k/a Stronghold
Technologies, Inc.) (the “Company”) entered into a Securities Purchase Agreement
(the “Agreement”) with New Millennium Capital Partners II, LLC, AJW Qualified
Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (collectively, the
“Investors”) on December 15, 2006 for the sale of (i) $900,000 in callable
secured convertible notes (the “Notes”) and (ii) stock purchase warrants (the
“Warrants”) to buy 5,000,000 shares of our common stock.
The
following closings have occurred under the Agreement:
| · |
On
December 15, 2006, the Investors purchased $250,000 in Notes and
received
Warrants to purchase 1,388,500 shares of the Company’s common stock.
|
| · |
On
January 11, 2007, the Investors purchased $150,000 in Notes and received
Warrants to purchase 850,000 shares of the Company’s common
stock.
|
| · |
On
February 12, 2007, the Investors purchased $150,000 in Notes and
received
Warrants to purchase 850,000 shares of the Company’s common
stock.
|
In
addition, provided that all of the conditions in the Securities Purchase
Agreement are satisfied, on the final business day of each month until the
full
amount under the Agreement has been purchased, the Company will issue to the
Investors and the Investors will purchase $125,000 in Notes and related
Warrants. The Company or a majority in interest of the Investors may terminate
the obligation to issue additional Notes and Warrants upon 30 days
notice.
The
Notes
bear interest at 8%, mature two years from the date of issuance, and are
convertible into our common stock, at the Investors' option, at a conversion
price, equal to the lower of (i) $0.05 or (ii) 25% of the average of the three
lowest intraday trading prices for our common stock during the 20 trading days
before, but not including, the conversion date. As of February 13, 2007, the
average of the three lowest intraday trading prices for our common stock during
the preceding 20 trading days as reported on the Over-The-Counter Bulletin
Board
was $.003 and, therefore, the conversion price for the secured convertible
notes
was $.00075. Based on this conversion price, the Notes in the amount of $150,000
issued on February 12, 2007 were convertible into 200,000,000 shares of our
common stock.
We
may
prepay the Notes in the event that no event of default exists, there are a
sufficient number of shares available for conversion of the callable secured
convertible notes and the market price is at or below $.08 per share. The full
principal amount of the Notes is due upon default under the terms of Notes.
In
addition, we have granted the Investors a security interest in substantially
all
of our assets and intellectual property as well as registration rights.
The
Warrants are exercisable until five years from the date of issuance at a
purchase price of $0.05 per share. In addition, the exercise price of the
Warrants is adjusted in the event we issue common stock at a price below market.
The
Investors have contractually agreed to restrict their ability to convert the
Notes and exercise the Warrants and receive shares of our common stock such
that
the number of shares of the Company common stock held by them and their
affiliates after such conversion or exercise does not exceed 4.99% of the
Company’s then issued and outstanding shares of common stock.
The
sale
of the Notes in the amount of $250,000 was completed on December 15, 2006,
in
the amount of $150,000 was completed on January 11, 2007 and in the amount
of
$150,000 was completed on February 12, 2007. As of the date hereof, the
Company is obligated on $550,000 in face amount of Notes issued to the Investors
in connection with this financing. The Notes are a debt obligation
arising other than in the ordinary course of business which constitute a direct
financial obligation of the Company. In addition, the Company is
also obligated on approximately $6,300,000 in face amount of callable secured
convertible notes issued to the Investors pursuant to other Securities Purchase
Agreements entered with the Investors.
The
Notes
and Warrants were offered and sold to the Investors in a private placement
transaction made in reliance upon exemptions from registration pursuant to
Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated
thereunder. Each of the Investors is an accredited investor as
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933.
Item
9.01 Financial
Statements and Exhibits
|
Exhibit
No.
|
Description
|
| |
|
|
4.1
|
Securities
Purchase Agreement dated December 15, 2006 by and among the Company
and
New Millennium Capital Partners II, LLC, AJW Qualified Partners,
LLC, AJW
Offshore, Ltd. and AJW Partners, LLC (1)
|
| |
|
|
4.2
|
Form
of Callable Secured Convertible Note (1)
|
| |
|
|
4.3
|
Form
of Stock Purchase Warrant (1)
|
| |
|
|
4.4
|
Registration
Rights Agreement dated December 15, 2006 by and among the Company
and New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
AJW
Offshore, Ltd. and AJW Partners, LLC (1)
|
| |
|
|
4.5
|
Security
Agreement dated December 15, 2006 by and among the Company and New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
AJW
Offshore, Ltd. and AJW Partners, LLC (1)
|
| |
|
|
4.7
|
Intellectual
Property Security Agreement dated December 15, 2006 by and among
the
Company and New Millennium Capital Partners II, LLC, AJW Qualified
Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
(1)
|
| |
|
|
4.7
|
Form
of Callable Secured Convertible Note issued in January
2007(2)
|
| |
|
|
4.8
|
Form
of Stock Purchase Warrant in January 2007(2)
|
| |
|
|
4.9
|
Form
of Callable Secured Convertible Note issued in February
2007
|
| |
|
|
4.10
|
Form
of Stock Purchase Warrant in February
2007
|
_________________________________________
(1)
Incorporated by reference to the Form 8K Current Report filed with the
Securities and Exchange Commission on December 21, 2006.
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.
DEALERADVANCE
INC.
Date:
February 15, 2007 By:
/s/Steven
Humphries
Name: Steven Humphries
Title: CEO