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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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) July 27, 2006
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MORTGAGE ASSISTANCE CENTER CORPORATION
(Exact Name of Registrant as Specified in Charter)
Florida 000-21627 06-1413994
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
2614 Main St., Dallas, TX 75226
(Address of Principal Executive Offices) (Zip Code)
(214) 670-0005
(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):
|_| 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))
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ITEM 8.01 OTHER EVENTS
On July 27, 2006, Mortgage Assistance Center Corporation (the
"Company") and FAX, LP, a private venture capital firm based in Dallas, Texas,
executed a memorandum with term sheet related to (i) a proposed bridge loan to
the Company in the amount of up to $200,000 and (ii) an equity investment in the
Company with the proposed issuance by the Company of shares of Series A
Preferred Stock having a total purchase price of $3,000,000.
The portion of the term sheet related to the bridge loan contemplates
the issuance by the Company of two senior subordinated notes of $100,000 each
with a combined principal balance of $200,000 and accompanying warrants to
purchase a total of 100,000 shares of the Company's common stock at a purchase
price of $0.39 per share. The senior subordinated notes and warrants would be
purchased by FAX, LP for an aggregate purchase price of $200,000. The senior
subordinated notes would bear interest at the rate of 12% per annum with
principal and interest payable six months after issuance and the senior
subordinated notes would be convertible into Series A Preferred Stock of the
Company, if and when the Company is authorized to issue shares of Series A
Preferred Stock. The issuance of the senior subordinated notes is subject to the
execution of mutually acceptable definitive documentation.
The portion of the term sheet related to the issuance of Series A
Preferred Stock contemplates the sale to FAX, LP, or one of its affiliates, of
up to $3,000,000 in Series A Preferred Stock.
The term sheet contemplates the issuance of up to $3,000,000 in Series
A Preferred Stock, with $1,500,000 in Series A Preferred Stock to be issued
initially at closing, and the remaining $1,500,000 to be issued in tranches of
$500,000 at the Company's option, assuming that the Company is able to meet
certain benchmarks to be agreed upon by the Company and the purchaser. The term
sheet indicates that in connection with the issuance of Series A Preferred
Stock, the Company will issue to the purchaser of Series A Preferred Stock
warrants to purchase common stock representing up to 37.5% of the fully diluted
common stock of the Company at a purchase price of $0.01 per share.
The term sheet indicates that the Series A Preferred Stock:
o Will pay dividends at the rate of 10% per annum on a
compounding quarterly basis (dividends may be deferred during
the first 12 months);
o May be redeemed without penalty by the Company at any time
prior to the seventh anniversary of the date of issuance, and
must be redeemed by the Company on the seventh anniversary of
the date of issuance, in either case, at the face amount plus
accrued but unpaid dividends; and
o Will have priority over common stock in the event of a
liquidation of the Company.
The term sheet indicates that the Purchaser shall be entitled to
designate two of five seats or three of seven seats, as the case may be, of the
board of directors of the Company. Further, the term sheet provides that Bill
Payne and Rod Jones, principals of FAX LP, will fill two board of directors
seats representing the purchasers' interests and Dale Hensel and Dan Barnett,,
major shareholders and officers of the Company, will fill two board of directors
seats representing their respective interests, all being pursuant to a voting
agreement to be mutually agreed upon between the parties. The term sheet
provides that the Company's Board of Directors must approve specified
significant corporate actions.
Preferred Stock currently is not authorized under the Company's
articles of incorporation.. Holders of more than a majority of the issued and
outstanding shares of the Company's common stock have indicated that they are
willing to approve an amendment to the Company's articles of incorporation to
authorize the issuance of blank check preferred stock. The Company will be
required to file with the Securities and Exchange Commission and circulate to
its shareholders an Information Statement meeting the requirements of Securities
Exchange Act Rule 14c-2 prior to the effectiveness of any such amendment.
The issuance of Series A Preferred Stock as contemplated by the term
sheet also is subject to :
o Negotiation and execution of a mutually acceptable definitive
purchase agreement;
o The restructure of the Company's existing indebtedness so that
all but $500,000 of such existing indebtedness has a maturity
of two years or more;
o Purchaser's completion of due diligence to its satisfaction;
and
o The Company's ability to meet benchmarks to be agreed upon by
the purchaser and the Company before the balance of the $1.5
million, at the Company's option, may be issued and funded in
increments of $500,000, as individually requested by the
Company,.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
99.1 Term sheet dated July 27, 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.
Dated: August 9, 2006
MORTGAGE ASSISTANCE CENTER CORPORATION
By: /s/ Dale Hensel
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Name: Dale Hensel
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Title: President, CEO, CFO
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