Business Context and Reporting Period
This Form 8-K was filed by REED's, INC. on December 28, 2017, reporting events occurring on December 22, 2017. The filing addresses a completed rights offering and a resulting change in control of the Company.
Key Financial Metrics
The Company completed a rights offering selling 9,333,333 units (comprising common stock and warrants), generating net proceeds of approximately $13,018,000. On a pro-forma basis as of December 22, 2017, Stockholders' Equity improved to approximately $8,557,000, up from a deficit of $3,643,000 as of September 30, 2017. The filing does not provide specific revenue, profit, cash flow, or debt metrics for the period.
Material Changes
- Change in Control: Raptor/Harbor Reeds SPV LLC became the largest shareholder, increasing its beneficial ownership from 16.93% to 27.64%.
- Capital Structure: The Company issued 9,333,333 shares of common stock and warrants to purchase 4,666,666 shares at an exercise price of $2.025 per share.
- Board Composition: The Company agreed to appoint up to two directors designated by Raptor to the board of directors.
- Listing Compliance: The capital raise is expected to return the Company to compliance with NYSE American continued listing standards.
Outlook and Management Commentary
Management indicated that the transaction was necessary to address listing compliance issues. The Company is subject to review by the NYSE American to confirm compliance. Raptor exercised basic and over-subscription rights to purchase 2,666,667 units for $4,000,000 and received additional warrants to purchase 750,000 shares at $1.50 per share, exercisable after 180 days with a cashless exercise feature.
Investor Verification Checklist
- Confirm the final approval of the two new Raptor-designated directors by the NYSE American.
- Verify the official confirmation of compliance with NYSE American continued listing standards.
- Review the terms of the backstop commitment and the specific vesting or exercise conditions of the additional warrants issued to Raptor.
- Assess the impact of the increased share count (from ~15.3M to ~24.6M shares) on future earnings per share.