SEC Comment Letter for REED'S, INC. (REED) (CIK 0001140215) (REED) — Aug 28, 2007
REED'S, INC. (REED) (CIK 0001140215)
Date: Aug. 28, 2007 · CIK: 0001140215 · Accession: 0000000000-07-042009
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-32501
Referenced dates: June 29, 2007
Letter
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-0404 DIVISION OF CORPORATION FINANCE Mail Stop 3561 August 28, 2007 By Facsimile and U.S. Mail Ms. Judy Holloway Reed Chief Financial Officer Reed’s Inc. 13000 South Spring Street Los Angeles, California
Re: Reeds, Inc. Form 10-KSB for the fiscal year ended December 31, 2006 Filed April 16, 2007 File No. 001-32501
Dear Ms. Reed:
We have reviewed your response to our prior comments dated June 29, 2007, on the above referenced filing and have the fo llowing additional comments. We welcome any questions you may have about our comments or on any other aspe ct of our review. Feel free to call us at th e telephone numbers listed at the end of th is letter.
Form 10-KSB December 31, 2006
Item 7 – Financial Statements
Balance Sheet, page F-2
1. We note your response to prior comment 3 of our letter dated June 29, 2007. As indicated in your disclosure on page 21 “federal securities laws do not provide that a rescission offer will terminate a purch aser’s right to rescind a sale of stock that was not registered as required or was not otherwise exempt from such registration requirements. Accordingly, although the rescission offer may have been accepted or rejected by some of the offerees, we may continue to be liable under federal and state securitie s laws for up to an amount equal to the value of all shares of common stock issued in connection with the initial public offering, plus
Ms. Judy Holloway Reed Reeds, Inc. August 28, 2007 Page 2 any statutory interest we may be requir ed to pay.” Specifically EITF D-98 paragraph 4 states “rule 5-02.28 of Re gulation S-X requires securities with redemption features that are not solely within the control of the issuer to be classified outside of permanent equity. Events that could trigger redemption should be evaluated separately and the possi bility that any trig gering event that is not solely within the control of the issuer could occur—without regard to probability—would require the security to be classified outside of permanent equity.” If you continue believe the shar es are properly classified as permanent equity please explain using current Federal Securities Laws how you, as the offeror, are solely in control when th e offerees have rights that cannot be terminated. Further, demonstrate for us how you believe the defenses available to you would allow you to prevail against a shareholder’s claim for damages.
Statement of Cash Flows, page F-5
2. We note your response to prior comment 4 of our letter dated June 29, 2007. We do not believe combining gross borrowings and gross payments accurately portrays gross reporting. Further, please explain your repayment terms and how they qualify as having a maturity of thr ee months or less. See SFAS 95 paragraph 13.
Note 1 – Operations and Summary of Significant Accounting Policies
R – Recent Accounting Pronouncements, page F-11
3. We note your response to prior comment 5 of our letter dated June 29, 2007. Please clarify how SFAS 158 would be effec tive as of the Company’s year ending August 31, 2007 or revise your disclosure in futu re filings to indicate the fiscal year December 31, 2006. SFAS 158 is e ffective for Company’s with publicly traded securities as of the fis cal year ending after December 15, 2006.
As appropriate, please revise your filing and respond to these comments within 10 business days or tell us when you will provide us with a response. You may wish to provide us with marked copies of the amendm ents to expedite our review. Please furnish a cover letter with your amendments that keys your responses to our comments and provides any requested information. Detailed co ver letters greatly faci litate our review. Please understand that we may have additiona l comments after reviewing your responses to our comments. Please submit your re sponse letter on EDGAR as a correspondence file.
Ms. Judy Holloway Reed Reeds, Inc. August 28, 2007 Page 3 You may contact Scott Stringer, Staff Accountant at (202) 551-3272 or me at (202) 551-3841 if you have any questions regarding the comments on the financial statements and related matters.
Sincerely,
Michael Moran
Accounting Branch Chief
Show Raw Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404
DIVISION OF
CORPORATION FINANCE
Mail Stop 3561
August 28, 2007
By Facsimile and U.S. Mail
Ms. Judy Holloway Reed
Chief Financial Officer
Reed’s Inc.
13000 South Spring Street Los Angeles, California
Re: Reeds, Inc.
Form 10-KSB for the fiscal year ended December 31, 2006
Filed April 16, 2007
File No. 001-32501
Dear Ms. Reed:
We have reviewed your response to our prior comments dated June 29, 2007, on
the above referenced filing and have the fo llowing additional comments. We welcome
any questions you may have about our comments or on any other aspe ct of our review.
Feel free to call us at th e telephone numbers listed at the end of th is letter.
Form 10-KSB December 31, 2006
Item 7 – Financial Statements
Balance Sheet, page F-2
1. We note your response to prior comment 3 of our letter dated June 29, 2007. As
indicated in your disclosure on page 21 “federal securities laws do not provide
that a rescission offer will terminate a purch aser’s right to rescind a sale of stock
that was not registered as required or was not otherwise exempt from such registration requirements. Accordingly, although the rescission offer may have been accepted or rejected by some of the offerees, we may continue to be liable under federal and state securitie s laws for up to an amount equal to the value of all
shares of common stock issued in connection with the initial public offering, plus
Ms. Judy Holloway Reed
Reeds, Inc.
August 28, 2007 Page 2
any statutory interest we may be requir ed to pay.” Specifically EITF D-98
paragraph 4 states “rule 5-02.28 of Re gulation S-X requires securities with
redemption features that are not solely within the control of the issuer to be classified outside of permanent equity. Events that could trigger redemption should be evaluated separately and the possi bility that any trig gering event that is
not solely within the control of the issuer could occur—without regard to
probability—would require the security to be classified outside of permanent
equity.” If you continue believe the shar es are properly classified as permanent
equity please explain using current Federal Securities Laws how you, as the offeror, are solely in control when th e offerees have rights that cannot be
terminated. Further, demonstrate for us how you believe the defenses available to
you would allow you to prevail against a shareholder’s claim for damages.
Statement of Cash Flows, page F-5
2. We note your response to prior comment 4 of our letter dated June 29, 2007. We
do not believe combining gross borrowings and gross payments accurately portrays gross reporting. Further, please explain your repayment terms and how
they qualify as having a maturity of thr ee months or less. See SFAS 95 paragraph
13.
Note 1 – Operations and Summary of Significant Accounting Policies
R – Recent Accounting Pronouncements, page F-11
3. We note your response to prior comment 5 of our letter dated June 29, 2007.
Please clarify how SFAS 158 would be effec tive as of the Company’s year ending
August 31, 2007 or revise your disclosure in futu re filings to indicate the fiscal
year December 31, 2006. SFAS 158 is e ffective for Company’s with publicly
traded securities as of the fis cal year ending after December 15, 2006.
As appropriate, please revise your filing and respond to these comments within 10
business days or tell us when you will provide us with a response. You may wish to
provide us with marked copies of the amendm ents to expedite our review. Please furnish
a cover letter with your amendments that keys your responses to our comments and provides any requested information. Detailed co ver letters greatly faci litate our review.
Please understand that we may have additiona l comments after reviewing your responses
to our comments. Please submit your re sponse letter on EDGAR as a correspondence
file.
Ms. Judy Holloway Reed
Reeds, Inc.
August 28, 2007 Page 3
You may contact Scott Stringer, Staff Accountant at (202) 551-3272 or me at (202) 551-3841 if you have any questions regarding the comments on the financial
statements and related matters.
Sincerely,
Michael Moran
Accounting Branch Chief