Business Context and Reporting Period
This Form 8-K is a current report filed by REED's, INC. on August 16, 2022. The filing addresses a critical corporate event regarding the company's listing status on The Nasdaq Stock Market.
Key Financial Metrics
The filing references financial data from the company's Form 10-Q for the period ended June 30, 2022, to establish grounds for delisting.
- Stockholders' Equity: Reported a deficit of $419,000 as of June 30, 2022.
- Minimum Equity Requirement: Nasdaq Capital Market requires a minimum of $2,500,000 in stockholders' equity.
- Stock Price: The bid price closed below $1.00 per share for 30 consecutive business days prior to August 16, 2021, and remained non-compliant through the extended compliance period ending August 15, 2022.
- Other Metrics: The filing text does not provide specific values for revenue, profit, cash flow, margins, or debt.
Material Changes and Delisting Determination
Nasdaq Regulation issued a determination letter on August 16, 2022, stating that REED's, Inc. has failed to regain compliance with two specific listing rules:
- Listing Rule 5550(a)(2) (Minimum Bid Price): The company failed to maintain a bid price of at least $1.00 per share over the required compliance periods.
- Listing Rule 5550(b)(1) (Stockholders' Equity): The company failed to meet the $2,500,000 minimum stockholders' equity requirement and did not qualify for alternatives based on market value of listed securities or net income from continuing operations.
Consequently, the company's common stock is scheduled to be delisted from the Nasdaq Capital Market, with trading suspended at the opening of business on August 25, 2022, unless an appeal is filed.
Outlook, Management Commentary, and Risks
Appeal Process: The company intends to appeal Nasdaq's determination to a hearings panel. Filing a hearing request will stay the suspension of trading and the filing of the Form 25-NSE pending the panel's decision. The deadline to request an appeal is 4:00 p.m. Eastern Time on August 23, 2022.
Management Commentary: Management states it is diligently working to satisfy Nasdaq's requirements but explicitly notes there can be no assurances that the company will be able to do so.
Risks and Contingencies: The filing includes standard forward-looking statements warning that actual results could differ materially from projections due to known and unknown risks. The primary contingency is the outcome of the Nasdaq hearings panel, which determines whether the stock will remain listed or be delisted.
Investor Verification Checklist
- Verify the status of the appeal request filed with Nasdaq by the August 23, 2022 deadline.
- Monitor the outcome of the Nasdaq hearings panel decision regarding the delisting determination.
- Review the most recent Form 10-Q (ended June 30, 2022) for details on the $419,000 stockholders' deficit and overall financial health.
- Check for any subsequent filings regarding the suspension of trading scheduled for August 25, 2022.
- Assess the company's plan to address the minimum bid price and equity deficiencies if the appeal is unsuccessful.