Business Context and Reporting Period
Company: REED's, INC.
Filing Type: Form 8-K (Current Report)
Date of Report: May 5, 2009
Reporting Period: Events occurring on April 28, 2009, and May 4, 2009.
This filing reports the designation of a new class of preferred stock and the filing of a registration statement for a rights offering. The company is a Delaware corporation headquartered in Los Angeles, California.
Key Financial Metrics
This Form 8-K does not contain financial performance data such as revenue, profit, cash flow, margins, or debt levels. The filing focuses exclusively on capital structure changes.
Capital Structure Details:
- Security Designated: Series B Convertible Preferred Stock.
- Authorized Shares: 150,000 shares.
- Stated Value: $10.00 per share.
- Dividend Rate: 8% annual, cumulative, non-compounding, accruing daily.
- Initial Conversion Price: $2.00 per share (subject to amendment based on market conditions).
- Mandatory Conversion Trigger: $3.00 per share (subject to amendment).
- Redemption Price: Greater of 110% of original purchase price plus accrued dividends, or the fair market value of the conversion shares.
Material Changes
April 28, 2009: Filed a Certificate of Designation with the Delaware Secretary of State to create the Series B Convertible Preferred Stock. The Board of Directors indicated an expectation to amend the conversion rate and mandatory conversion trigger price prior to the actual issuance of shares.
May 4, 2009: Filed a registration statement on Form S-3 for the Series B Preferred Stock, amending a previously filed Form S-1 from January 2009. The company announced a rights offering to distribute nontransferable subscription rights to existing common stockholders at no charge.
Guidance, Outlook, and Risks
Management Commentary: The company anticipates distributing subscription rights to existing common stockholders. The Board expects to revise the conversion price and mandatory conversion trigger based on prevailing market conditions at the time of sale.
Risks and Uncertainties: The filing includes a standard disclaimer regarding forward-looking statements. Identified risks include:
- Difficulty in marketing products and services.
- Maintaining brand recognition.
- Need for significant capital.
- Dependence on third-party distributors and brewers.
- Increasing costs of fuel and freight.
- Competition and intellectual property protection.
Unusual Items: The filing notes that the Series B Preferred ranks senior to common stock but junior to Series A Convertible Preferred Stock. Holders have no voting rights except as required by law.
Investor Verification Checklist
- Verify the final conversion price and mandatory conversion trigger price, as the filing states these are subject to amendment prior to issuance.
- Confirm the record date and terms of the rights offering for existing common stockholders.
- Review the attached Certificate of Designation (Exhibit 3.1) for the full legal text of the Series B Preferred rights.
- Check the most recent Form 10-K and Form 10-Q for current financial performance and liquidity status, as this 8-K does not provide operational metrics.
- Monitor the status of the Form S-3 registration statement to ensure the offering proceeds as planned.