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): March 17, 2006
STRONGHOLD TECHNOLOGIES, INC.
(Exact name of registrant as specified in charter)
--------------------------------------------------------------------------------
Nevada 333-54822 22-3762832
--------------------------------------------------------------------------------
(State or Other Jurisdiction of (Commission File (IRS Employer
Incorporation or Organization) Number) Identification No.)
--------------------------------------------------------------------------------
106 Allen Road, Basking Ridge, NJ 07920
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 903-1195
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, 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 March 17, 2006 for the sale of (i) $1,450,000 in callable
secured convertible notes (the "Notes") and (ii) stock purchase warrants (the
"Warrants") to buy 2,900,000 shares of our common stock.
On March 17, 2006, the Investors purchased $250,000 in Notes and received
Warrants to purchase 250,000 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 commencing in April 2006 and
ending in January 2007, the Company will issue to the Investors and the
Investors will purchase $200,000 in Notes and related Warrants in April 2006 and
May 2006 and $100,000 in Notes and related Warrants thereafter. 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 March 21,
2006, 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 $.01 and, therefore, the conversion price for the secured
convertible notes was $.0025. Based on this conversion price, the Notes in the
amount of $250,000 issued on March 17, 2006 were convertible into 100,000,000
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 March 17,
2006. As of the date hereof, the Company is obligated on $250,000 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 $4,680,000 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 March 17, 2006 by and among
the Company and New Millennium Capital Partners II, LLC, AJW
Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
4.2 Form of Callable Secured Convertible dated March 17, 2006
4.3 Form of Stock Purchase Warrant dated March 17, 2006
4.4 Registration Rights Agreement dated March 17, 2006 by and among
the Company and New Millennium Capital Partners II, LLC, AJW
Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
4.5 Security Agreement dated March 17, 2006 by and among the Company
and New Millennium Capital Partners II, LLC, AJW Qualified
Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC
4.6 Intellectual Property Security Agreement dated March 17, 2006 by
and among the Company and New Millennium Capital Partners II,
LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW
Partners, LLC
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.
STRONGHOLD TECHNOLOGIES, INC.
Date: March 22, 2006 By:/s/Christopher Carey
--------------------
Name: Christopher Carey
Title: CEO