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): DECEMBER 21, 2007
CONVERGENCE ETHANOL, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 0-4846-3 82-0288840
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
5701 Lindero Canyon Rd., #2-100
Westlake Village, California 91362
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (818) 735-4750
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:
|_| 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 1.03. BANKRUPTCY OR RECEIVERSHIP.
On December 21, 2007, Convergence Ethanol, Inc. (the "Company"), a Nevada
corporation, filed a voluntary petition for relief under Chapter 7 of the United
States Bankruptcy Code (the "CETH Bankruptcy Petition"). The CETH Bankruptcy
Petition was filed in the United States Bankruptcy Court in the Southern
District of Texas, Case No. 07-38717. The date jurisdiction was assumed is
December 21, 2007. The bankruptcy trustee is Lowell T. Cage and the date of his
appointment is December 21, 2007.
On December 21, 2007, California MEMS USA, Inc., a California corporation and
wholly owned subsidiary of Convergence Ethanol, Inc. (the "Company"), filed a
voluntary petition for relief under Chapter 7 of the United States Bankruptcy
Code (the "CA MEMS USA Bankruptcy Petition"). The CA MEMS USA Bankruptcy
Petition was filed in the United States Bankruptcy Court in the Southern
District of Texas, Case No. 07-38718. The date jurisdiction was assumed is
December 21, 2007. The bankruptcy trustee is Lowell T. Cage and the date of his
appointment is December 21, 2007.
On December 18, 2007, GCA Strategic Investment Fund Limited and other creditors
of Gulfgate Equipment, Inc., a Texas corporation and wholly owned subsidiary of
Convergence Ethanol, Inc. (the "Company"), filed an involuntary petition for
relief under Chapter 7 of the United States Bankruptcy Code (the "Gulfgate
Equipment Bankruptcy Petition"). The Gulfgate Equipment Bankruptcy Petition was
filed in the United States Bankruptcy Court in the Southern District of Texas,
Case No. 07-38657. The date jurisdiction was assumed is December 18, 2007. The
bankruptcy trustee is Lowell T. Cage and the date of his appointment is December
18, 2007.
In connection with the Gulfgate Equipment, Inc. filing, the court bankruptcy
trustee will be responsible for the wind-up of the business.
On November 6, 2007, Bott Equipment Company, Inc., a Texas corporation and
wholly owned subsidiary of Convergence Ethanol, Inc. (the "Company"), filed a
voluntary petition for relief under Chapter 7 of the United States Bankruptcy
Code (the "Bott Equipment Bankruptcy Petition"). The Bott Equipment Bankruptcy
Petition was filed in the United States Bankruptcy Court in the Southern
District of Texas, Case No. 07-37767. The date jurisdiction was assumed is
November 6, 2007. The bankruptcy trustee is Lowell T. Cage and the date of his
appointment is November 6, 2007. (Please reference the Company's Form 8-K filed
on November 15, 2007.)
In connection with the filings, Convergence Ethanol, Inc. and all of its
subsidiaries have ceased all business activity and operations. The Company
believes that its assets will be insufficient to satisfy the claims of all
creditors and it is unlikely that the Company's shareholders will be eligible to
participate in any distributions of the Company's assets as a result of the
Bankruptcy.
Upon liquidation, the Company will cease operations and wind up its business. On
that basis, and on the basis of the public announcement of the Company's
liquidation in a Chapter 7 Bankruptcy, in accordance with previous no-action
letters issued by the Securities and Exchange Commission (the "SEC") (see,
Paiute Oil and Mining Corp.,1987 SEC No-Act. LEXIS 2459) the Company expects
that it will cease to file reports under the Securities Exchange Act of 1934.
The court bankruptcy trustee will be responsible for the wind-up of the
business.
ITEM 2.04 TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL
OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT.
On October 27, 2006, Convergence Ethanol, Inc. (the "Company") entered
into a Securities Purchase Agreement (the "Purchase Agreement") with GCA
Strategic Investment Fund Limited ("GCA") and executed a Convertible Note dated
October 27, 2006, in favor of GCA in the amount of $3,530,000.00 (the "Note"),
as reported in the Company's Current Report on Form 8-K filed on November 17,
2006. Pursuant to the Purchase Agreement, the Company was required to file a
registration statement covering the resale of the securities (the "Registrable
Securities") issuable in connection with the Purchase Agreement no later than
December 26, 2006, and to obtain effectiveness of the registration statement no
later than January 25, 2007.
As of March 13, 2007, in spite of the Company's best efforts the
Company was unable to file or obtain a registration statement covering the
Registrable Securities. As a result, on March 13, 2007, GCA delivered a notice
(the "Notice") to the Company stating that the Company (i) had breached the
registration covenants contained in the Purchase Agreement, (ii) had accrued
liquidated damages of no less than $145,906.61, and (iii) was accruing
additional liquidated damages of $2,353.33 per day after March 13, 2007, as
reported in the Company's Current Report on Form 8-K filed on March 19, 2007.
The Notice demanded payment of liquidated damages of $145,906.61 and stated that
if the Company failed to pay the liquidated damages in accordance with the terms
of the Purchase Agreement and the Notice, GCA would issue to the Company a
notice of default.
On June 1, the Company received a default and demand notice (the "June
Notice") from GCA. The June Notice demands payment of (i) the outstanding
principal amount owed under the Note of $3,530,000.00, (ii) accrued and unpaid
liquidated damages of $334,173.01, (iii) additional liquidated damages of
$2,353.33 per day after June 1, 2007, (iv) accrued and unpaid default interest
of $225,920.00 pursuant to the Note, and (v) additional default interest of
$1,765.00 per day after June 1, 2007. The June Notice also states that legal
proceedings will be instituted against the Company without further notice
seeking a judgment against the Company for all outstanding indebtedness and all
court costs and that GCA intends to hold the Company liable for reasonable
attorneys' fees, as provided in the Purchase Agreement, unless the Company pays
the total amount demanded within ten (10) days of the Company's receipt of the
June Notice.
On October 15, the Company received a default and demand notice (the
"October Notice") from GCA. The October Notice informed the Company that CGA had
posted the Gulfgate Property for foreclosure sale on November 6, 2007, between
the hours of 10:00 a.m. and 1:00 p.m. In spite of the Company's best efforts the
Company was unable to pay all amounts due under the Note prior to the scheduled
sale. As a result, CGA foreclosed on the Gulfgate Property on November 6, 2007.
On December 18, 2007, GCA Strategic Investment Fund Limited and other
creditors of Gulfgate Equipment, Inc., filed an involuntary petition for relief
under Chapter 7 of the United States Bankruptcy Code in the United States
Bankruptcy Court in the Southern District of Texas.
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
Effective December 14, 2007, James A. Latty, Ph.D, P.E., submitted his
resignation as President, Chief Executive Officer and Chairman of the Board of
Convergence Ethanol, Inc. to pursue other interests and opportunities.
Effective December 31, 2007, Steven S. Newsom, Attorney, submitted his
resignation as Director of Convergence Ethanol, Inc. to pursue other interests
and opportunities.
Effective December 31, 2007, Richard W. York, submitted his resignation
as Chief Financial Officer of Convergence Ethanol, Inc. to pursue other
interests and opportunities.
EXHIBITS
Exhibit 99.1 December 31, 2007 Press Release
[SIGNATURE PAGE FOLLOWS]
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: December 28, 2007 Convergence Ethanol, Inc.
By: /s/ Richard W. York
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Richard W. York
Chief Financial Officer