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
July
16, 2008
Date
of
Report (Date of earliest event reported)
Reed’s,
Inc.
(Exact
name of Registrant as specified in its charter)
|
Delaware
|
001-32501
|
95-4348325
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(I.R.S.Employer
Identification No.)
|
13000
South Spring Street, Los Angeles, California 90061
(Address
of principal executive offices)
(Zip
Code)
(310)
217-9400
Registrant's
telephone number, including area code
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):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Reed’s,
Inc.
This
Current Report on Form 8-K and other reports filed by the Registrant from time
to time with the Securities and Exchange Commission (collectively the “Filings”)
contain forward looking statements and information that are based upon beliefs
of, and information currently available to, the Registrant’s management, as well
as estimates and assumptions made by the Registrant’s management. When used in
the Filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”,
“intend”, “plan” or the negative of these terms and similar expressions as they
relate to the Registrant or the Registrant’s management identify forward looking
statements. Such statements reflect the current view of the Registrant with
respect to future events and are subject to risks, uncertainties, assumptions
and other factors relating to the Registrant’s industry, operations and results
of operations and any businesses that may be acquired by the Registrant. Should
one or more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may differ significantly
from those anticipated, believed, estimated, expected, intended or
planned.
Item
1.01 Entry into Material Definitive Agreement
Reed’s
Inc. (the “Company”)
entered into a two-year $2,000,000 secured revolving line of credit agreement
(the “Agreement”)
dated
May 30, 2008 (“Agreement
Date”)
with
First Capital Western Region LLC (“Lender”).
The
facility will be primarily used to provide working capital, fund the Company’s
expansion within mainstream grocery store accounts and facilitate the Company’s
general growth plans.
The
following description is a summary of the material terms and conditions of
the
Agreement. The summary is not intended to be complete and it is qualified in
its
entirety by reference to the Agreement included as Exhibit 10.1 to this report
and incorporated herein by reference. Capitalized terms not defined herein
have
the meaning ascribed to them in the Agreement.
Loans
under the Agreement are secured by all of the Company’s right, title and
interest in and to all of Company’s property, whether real or personal, tangible
or intangible, now owned or existing or hereafter acquired or arising (the
“Collateral”).
Loans
under the Agreement shall bear interest or, at Lender’s option, Lender may
charge the Company’s loan account with, interest on the average daily net
principal amount of loans outstanding equal to 5.75%, plus the greater of (i)
2.0%, per annum and
(ii)
the LIBOR Rate. The “LIBOR
Rate”
is,
at
any time, the rate of interest noted in The
Wall Street Journal,
Money
Rates section, as the “30 day LIBOR Rate”.
On
each
anniversary of the Agreement Date, as an annual fee for providing of financial
accommodations pursuant to the terms of the Agreement, the Company shall pay
to
Lender a fee in the amount one-half percent (0.50%) of the then prevailing
Maximum Credit Limit.
As
of the
Closing Date, Eligible Inventory was not included in the Borrowing Base.
Following the Closing Date Lender may opt to include Eligible Inventory in
the
Borrowing Base. If Lender makes such an election, then effective upon the
issuance by Lender of a written notice to the Company of such election (an
“Election
Notice”)
and if
the conditions subsequent to the Agreement have been satisfied, the amount
shall
be determined by Lender, which amount may be calculated based on a
formula.
Lender
shall be entitled to charge a monthly minimum interest charge for each calendar
month during the term of the Agreement that the average outstanding principal
balance of the advances during such month is less than $1,000,000 (the
“Minimum
Average Monthly Loan Balance”)
subject to certain conditions.
On
the
first day of each month during the term of the Agreement following the issuance
of an Election Notice pursuant to this Agreement, an unused line fee in an
amount equal to 0.50%, per annum, times the result of (i) the Maximum Credit
Limit, less (ii) the average
daily net principal amount of loans outstanding hereunder
during
the immediately preceding month will be payable by the Company.
In
the
event that the Company terminates the Agreement for any reason after the date
that is six months following the Agreement Date and termination is effective
other than on a day which is the last day of the then current term of this
Agreement, the Company will pay to Lender on or prior to the effective date
of
such termination an early termination fee equal to: (i) if the date of
termination is prior to the first anniversary of the Agreement Date, three
percent (3%) of the Maximum Credit Limit, and (ii) if the date of termination
is
after the first anniversary of the Agreement Date, two percent (2%) of the
Maximum Credit Limit, provided,
however,
that if
(i) within 60 calendar days following the Agreement Date Lender has not issued
an Election Notice and committed to provide an sublimit for advances against
Eligible Inventory of not less than $300,000, or (ii) if Lender notifies
Borrower in writing that Lender will not include Eligible Inventory in the
Borrowing Base, then in either case so long as no Default has occurred and
is
continuing at the time Borrower terminates this Agreement, Borrower shall be
obligated to pay Lender an early termination fee in connection with such
termination equal to one-half percent (0.50%) of the Maximum Credit
Limit.
The
Agreement contains customary events of Default, including but not limited to,
non-payment by the Company when due of any amount payable under the Agreement
(ii) non-payment by the Company when due of the premium on any insurance policy
required to be maintained under the Agreement; (iii) inaccuracy of
representations, warranties and covenants made by the Company in the Agreement;
(iv) default by the Company under any other agreement for borrowed money; or
(v)
suspension of the operation of the Company’s present business. In the event of
Default, Lender may, among other remedies, (i) terminate Lender’s commitment to
make loans or to extend other financial accommodations to the Company; (ii)
declare the entire principal amount of all loans outstanding, all interest
thereon, any unpaid fees immediately due and payable in full; (iii) notify
Customers that the Accounts have been assigned to Lender and that Lender has
a
security interest therein, collect them directly, and charge the collection
costs and expenses to the Company’s loan account; (iv) ship, reclaim, recover,
store, finish, maintain, repair, prepare for sale, advertise for sale and sell
the Collateral; and/or (v) exercise any of the remedies available to Lender
as a
secured party under the Uniform Commercial Code. To the extent permitted by
law,
whenever there is a Default under the Agreement, the rate of interest on the
unpaid principal balance shall, at the option of Lender, be increased by adding
the default margin of 5.0% to the interest rate otherwise in effect.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The
disclosure in response to Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item
8.01 Other Events
On
July
14, 2008, the Company issued a press release (the “Press Release”) regarding the
Agreement described in Item 1.01 of this Current Report on Form 8-K. Further
information is set forth in the Press Release, a copy of which is filed as
Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference
herein.
Item
9.01 Financial Statements and Exhibits.
|
Exhibit
No.
|
Document
|
| |
|
|
10.1
|
Loan
and Security Agreement between Reed’s Inc. and First Capital Western
Region LLC dated May 30, 2008
|
| |
|
|
99.1
|
Press
Release dated July 14, 2008
|
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.
|
|
|
|
|
|
REED’S,
INC.
|
|
|
|
|
|
Dated:
July 16, 2008
|
By:
|
/s/ Christopher
J. Reed
|
|
|
Christopher
J. Reed
President
|
|
|
|