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): September 23, 2005
CONSOLIDATED ENERGY INC.
(Exact name of registrant as specified in its charter)
Wyoming 3630 86-0852222
(State or other jurisdiction of Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
12508 WEST ATLANTIC BLVD.
CORAL SPRINGS, FLORIDA 33071
(Address of principal executive offices) (zip code)
(954) 575-1471
(Registrant's telephone number, including area code)
Copies to:
Richard A. Friedman, 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.
On July 1, 2005, Consolidated Energy, Inc. (the "Company") failed to pay
interest as required pursuant the terms of certain 6% senior secured convertible
promissory notes (the "6% Notes") executed on February 24, 2005 for an aggregate
total face amount of $7,000,000, and thereby caused a default under the terms of
the 6% Notes. The holders of the 6% Notes are Gryphon Master Fund, L.P. and GSSF
Master Fund, LP, Lonestar Partners, L.P., WS Opportunity International Fund,
Ltd., WS Opportunity Fund (QP), L.P., WS Opportunity Fund, L.P., Renaissance US
Growth Investment Trust PLC, and BFS US Special Opportunities Trust PLC (all
collectively the "6% Note Holders").
Subsequently, and in order to secure additional financing for continuing
operations, on September 23, 2005, the Company executed a promissory note (the
"Bridge Note") payable to Cordillera Fund L.P. ("Cordillera") for an aggregate
principal amount of up to $1,500,000. On September 23, 2005, the Company
received $182,000 total gross proceeds ($170,000 total net proceeds) under the
Bridge Note. Further amounts may be advanced to the Company under the Bridge
Note until the maturity date, which is the earliest to occur of (a) December 16,
2005, (b) the first business day following the Company's receipt of $2,500,000
or more in proceeds from the issuance or sale of any promissory note, capital
stock or other security of any nature, or (c) the occurrence of an event of
default. Interest accrues on the outstanding principal amount of the Bridge Note
at a rate of 15% per annum, compounded annually, from September 23, 2005 and is
payable in cash or shares of common stock at the election of Cordillera. If
interest is paid in shares of common stock, then such interest will be
considered paid in full upon the Company's issuance and deliver of 882,353
shares of common stock, pro rated if less than the entire $1,500,000 principal
amount is advanced to the Company. The Company is required to file a
registration statement with the Securities and Exchange Commission registering
the resale of the shares of common stock issuable under the Bridge Note within
30 days after the holder demands such registration on terms materially the same
as the February 24, 2005 Registration Rights Agreement executed by, among other
parties, the Company and Cordillera.
In connection with the Bridge Note, the Company entered into a Consent and
Waiver with the 6% Note Holders, whereby the 6% Note Holders consented to the
Bridge Note transactions and waived, until resolution of the Bridge Note
transactions, the application of any of the provisions of the 6% Notes and
related transaction documents. The Company also entered into a Subordination
Agreement in connection with the Bridge Note, whereby Cordillera agreed to
subordinate the Bridge Note to the prior payment in full in cash of the 6%
Notes. In addition, the 6% Note Holders entered into a Bridge Forbearance with
the Company whereby the 6% Note Holders agreed to forebear from exercising any
of their rights or remedies under the 6% Note and the related securities
purchase agreement, security agreement and any other related transaction
documents for a period of ten business days.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
See Item 1.01 above.
Item 9.01 Financial Statements and Exhibits.
(a) Exhibits.
Exhibit
Number Description
- --------- ----------------------------------------------------------------------
10.1 Securities Purchase Agreement (Incorporated by reference to the
Company's Form 8-K filed with the Securities and Exchange Commission
on February 24, 2005)
10.2 Registration Rights Agreement (Incorporated by reference to the
Company's Form 8-K filed with the Securities and Exchange Commission
on February 24, 2005)
10.3 Form of 6% Note (Incorporated by reference to the Company's Form 8-K
filed with the Securities and Exchange Commission on February 24,
2005)
10.4 Security Agreement (Incorporated by reference to the Company's Form
8-K filed with the Securities and Exchange Commission on February 24,
2005)
10.5 Promissory Note dated September 23, 2005 issued to Cordillera Fund
L.P.
10.6 Consent and Waiver dated September 23, 2005
10.7 Bridge Forbearance dated September 23, 2005
10.8 Subordination Agreement entered into as of September 23, 2005
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSOLIDATED ENERGY, INC.
Dated: September 28, 2005 By: /s/ David Guthrie
--------------------------------
Name: David Guthrie
Title: Chief Executive Officer