Current Report Filing (8-k)
25 April 2017 - 3:12AM
Edgar (US Regulatory)
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): April 24, 2017 (April 18, 2017)
Reed’s
Inc.
(Exact
name of registrant as specified in its charter)
Delaware
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001-32501
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35-2177773
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(State
or other jurisdiction
of
incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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1300
South Spring Street, Los Angeles, California 90061
(Address
of principal executive offices and zip code)
Not
applicable
(Former
name or former address if changed since last report)
Registrant’s
telephone number, including area code: (310) 217-9400
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:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item
1.01 Entry into a Material Definitive Agreement
On
April 21, 2017 (“Closing Date”), pursuant to a Securities Purchase Agreement (“Purchase Agreement”), Reed’s
Inc., a Delaware corporation (“Reed’s” or the “Company”) sold and issued a secured convertible
subordinated non-redeemable note in the principal amount of $3,400,000 (“Note”) and a warrant to purchase
1,416,667 shares of common stock (“Warrant Shares”) to Raptor/Harbor Reeds SPV LLC (“Purchaser”). The
Note bears interest at a rate of 12% per annum, compounded monthly on a 360-day year/ 30-day month basis. The Note is secured
by a second priority security interest in the Company’s assets, which is subordinate to the first priority security interest
of PMC Financial Services Group, LLC (“PMC”). The Note matures on the two-year anniversary of the Closing date and
may not be prepaid. After 180 days, the Note may be converted, at any time and from time to time, into 1,133,333 shares of common
stock of the Company (“Conversion Shares”). The Warrant will expire on the fifth (5th) anniversary of the Closing
Date and have an exercise price equal to $4.00. The Warrant will not be exercisable until 180 days after the Closing date.
The Note and Warrant contain customary anti-dilution provisions and the Conversion Shares and Warrant Shares are subject to a
registration rights agreement. The investor was granted a right to participate in future financing transactions of the Company
for a term of two years.
The
Company intends to use the net proceeds from the offering of approximately $3,240,000 for working capital and general corporate
purposes. Wunderlich Securities, the Company’s placement agent, received a fee of $160,000 for placement agency services.
As
a condition to PMC’s approval of the transaction and Purchaser’s subordinated security interest, on April 21, 2017,
Reed’s and PMC entered into Amendment Number Fifteen to Amended and Restated Loan and Security Agreement changing the Revolving
Loan Maturity Date, Term Loan Maturity Date, Cap Ex Loan Maturity Date and Term Loan B Maturity Date from January 1, 2019, to
October 21, 2018.
On
April 19, 2016, three accredited investors that are party to that certain Securities Purchase Agreement dated May 26, 2016 and
hold participation rights in the Company’s financing transactions agreed to waive their participation rights with regard
to the April 24, 2017 financing. In consideration, these investors’ participation rights, expiring in May 2017, were extended
for a period of two years. In addition, the Company increased the terms of their outstanding warrants by one year and reduced
the exercise price from $4.25 to $3.00 and issued five-year warrants to purchase an aggregate of 210,111 shares of common stock
at the exercise price of $3.00 to these investors. The newly issued warrants contain customary anti-dilution provisions.
The Company issued a press release on April
24, 2017, announcing the financing transaction. A copy of the press release is attached to this Current Report on Form 8-K as
Exhibit 99.1.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The
information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
Item
3.01 Notice of Delisting or Failure to Satisfy a Continued Listed Rule or Standard; Transfer of Listing.
On March 31, 2017, Reed’s filed a Notification
of Late Filing on Form 12b-25 indicating that the filing of its Annual Report on Form 10-K for the fiscal year ended December
31, 2016 (the “Form 10-K”) would be delayed. The Company was not able to file the Form 10-K within the 15-day extension
period. As anticipated, on April 18, 2016, the Company received a letter (the “Deficiency Letter”) from the NYSE MKT
LLC (the “NYSE MKT”) indicating that the Company was not in compliance with the filing requirements for continued
listing under Sections 134 and 1101 of the NYSE MKT Company Guide as a result of the Company’s delay in filing the Form
10-K. The Company is filing the Form 10-K on April 24, 2017 and expecting to regain compliance on this specific matter.
Item
3.02 Unregistered Sales of Equity Securities
The
information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
These
securities issued in the financing transaction were not registered under the Securities Act of 1933, as amended (the “Securities
Act”), but qualified for exemption under Section 4(a)(2) of the Securities Act. The securities were exempt from registration
under Section 4(a)(2) of the Securities Act because the issuance of such securities did not involve a “public offering,”
as defined in Section 4(a)(2) of the Securities Act, due to the insubstantial number of persons involved in the transaction, size
of the offering, manner of the offering and number of securities offered. Based on an analysis of the above factors, we have met
the requirements to qualify for exemption under Section 4(a)(2) of the Securities Act. The securities issued to the May 26, 2016
financing participants are exempt from registration pursuant to the provisions Section 3(a)(9) of the Securities Act of 1933,
as amended.
Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers
On
April 19, 2017, Chris Reed resigned from his position as Chief Executive Officer of Reed’s, effective immediately. Concurrently,
Mr. Reed was appointed as Chief Innovation Officer. Mr. Reed will continue to serve as non-independent director of Reed’s
Board of Directors.
On
April 19, 2017, Stefan Freeman, one of the Company’s independent directors, was appointed as interim Chief Executive Officer
of Reed’s.
Mr.
Freeman is a strategic and performance focused executive with more than 25 years in sales operations, manufacturing and supply
chain operations in beverages and consumer products. Mr. Freeman has worked for the three largest soda companies in the world
and was promoted within each company. From 2011 through 2014, Mr. Freeman was the Regional Vice President of Manufacturing for
Coca-Cola Refreshments, managing eight manufacturing plants located throughout Southern California, Arizona and Hawaii. These
plants produced 231 million cases with revenues in excess of $500 million annually. In 2014 Mr. Freeman was promoted from within
Coca-Cola Refreshments to Vice President of Fleet Operations in Atlanta, Georgia where he managed one of the five largest fleet
operations in North America through April 2016. Prior to working for Coca-Cola, Mr. Freeman was Director of Supply Chain for Dean
Foods’ Pacific Coast Group, managing nine production facilities with responsibility for a $155 million annual operating
budget. Other prior positions include Director of Sales Operations for Dr. Pepper Snapple Group and Supply Chain Manager and Plant
Manager for Pepsi-Cola Bottling Group. Mr. Freeman holds a Bachelor’s of Science in mechanical engineering from Tuskegee
University and is an active member of the Cisco Systems Global Manufacturing Advisory Board.
FORWARD-LOOKING STATEMENTS
This Current Report
on Form 8-K ("Form 8-K") contains forward-looking statements. Such statements may be preceded by the words “may,”
“will,” “should,” “expects,” “plans,” “anticipates,” “could,”
“intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,”
“predicts,” “potential” or “continue” or the negative of these terms or other similar expressions.
Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual
results, performance or achievements to be materially different from any future results, performance or achievements expressed
or implied by the forward-looking statements. Forward-looking statements are only current predictions and are subject to known
and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements
to be materially different from those anticipated by such statements. These factors include, but are not limited to, the Company's
ability to manage growth; manage debt; meet development goals; and other important risks and uncertainties referenced and discussed
under the heading titled “Risk Factors” in the Company's filings with the Securities and Exchange Commission. Although
we believe that the expectations reflected in the forward-looking statements contained in this Form 8-K are reasonable, we cannot
guarantee future results, levels of activity, performance, or achievements. The statements in this Form 8-K are made as of the
date hereof, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligations
to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which
they were made.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
Exhibit
No.
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Description
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4.1
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Form
of Warrant 2017-1 Warrant
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4.2
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Form
of 2017-2 Warrant
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4.3
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Form
of Subordinated Convertible Non-Redeemable Secured Promissory Note dated
April 21, 2017
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10.1
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Securities
Purchase Agreement by and between Reed’s Inc. and Raptor/Harbor Reeds SPV LLC dated April 21,
2017
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10.2
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Second
Lien
Security Agreement
by and between Reed’s Inc. and Raptor/Harbor Reeds SPV LLC dated April 21,
2017
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10.3
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Form
of Registration Rights Agreement by and between Reed’s Inc. and Raptor/Harbor
Reeds SPV LLC dated April 21, 2017
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10.4
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Amendment
Number Fifteen to Amended and Restated Loan and Security Agreement between Reed’s Inc. and PMC Financial Services
Group, LLC dated April 21, 2017
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99.1
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Press
Release dated April 24, 2017
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SIGNATURE
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, thereunto duly authorized.
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REED’S,
INC.,
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a
Delaware corporation
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Dated:
April 24, 2017
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By:
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/s/
Daniel Miles
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Daniel
Miles,
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Chief
Financial Officer
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