KonaRed Enters $12 Million Purchase Agreement With Chicago-Based Investor
By Max Rothman
KonaRed might not have even finished shaking hands with VDF FutureCeuticals, its new licensing partner and former courtroom opponent, by the time the company announced Thursday morning that it has entered a $12 million purchase agreement with Lincoln Park Capital Fund, LLC, (LPC) a Chicago-based investment firm.
“This access to capital from LPC increase our flexibility to increase product awareness with consumers via marketing and retail expansion, build inventory, pursue additional product development and formula creation, and continue to build the KonaRed brand,” Shaun Roberts, president and CEO of KonaRed, said in a joint release.
The investment follows a busy few months for KonaRed, including the announcement on Tuesday of its partnership with VDF FutureCeuticals, Inc., a researcher, developer and manufacturer of fruit, vegetable and grain-based nutraceutical and functional food ingredients. The partnership settles a long-standing patent infringement lawsuit between Sandwich Isles Trading Company, the maker of KonaRed’s coffee fruit beverages, and VDF, which alleged that KonaRed had violated coffee fruit production methods and technologies marketed by VDF.
But that’s just some of the most recent information from a company that’s had no shortage of news. On Jan. 28, KonaRed announced that it had closed a private placement investment of $1 million from an institutional investor and another third party group. On Jan. 22, the company announced the updated designs for its 10.5 oz. bottles. On Jan. 14, the company announced that it has begun a five-year agreement with Greenwell Farms, a coffee fruit supplier. On Jan. 6, the company announced that it has partnered with Splash Beverage Group, run by beverages executives Kevin McClafferty and Robert Nistico, which will help sell and distribute the beverage. On Oct. 21, 2013, the company announced that it had been selected by Kroger for its “Taste of Tomorrow” program. On Oct. 17, 2013, the company announced that it has gone public, commenced trading as “KRED” and completed its merger with Sandwich Isles.
The most recent investment agreement gives KonaRed the option to sell up to $12 million of equity capital to LPC during a 30-month period, according to the release. KonaRed controls the timing and amount of any future investments between the two parties.
The release states that there are no limits to what LPC may pay for the KonaRed stock, which will be based on up-to-date market prices. LPC has also agreed not to engage in short selling or hedging of KonaRed’s stock.
The full release is below:
KALAHEO, Hawaii — KonaRed Corporation (OTCBB: KRED) (“KonaRed” or the “Company”), developers of the powerful coffee fruit wellness beverage which is sold in select Whole Foods, Safeway, Sprouts, 7-Eleven, and many other retail outlets throughout the U.S. and Canada, announced today that it has entered into a purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”), a Chicago-based institutional investor, whereby LPC committed to invest, at the Company’s sole option, up to $12 million of equity capital over the term of the Purchase Agreement.
“This access to capital from LPC increases our flexibility to increase product awareness with consumers via marketing and retail expansion, build inventory, pursue additional product development and formula creation, and continue to build the KonaRed brand,” stated Shaun Roberts, President and CEO of KonaRed.
During the 30-month term of the Purchase Agreement the Company, at its sole discretion, has the right to sell to LPC up to $12 million of its common stock, in amounts as described in the Purchase Agreement and subject to certain conditions, which include the effectiveness of a registration statement with the U.S. Securities and Exchange Commission (the “SEC”) registering the sale of the shares that may be issued to LPC. The Company controls the timing and amount of any future investment and LPC is obligated to make purchases, if and when the Company elects in accordance with the Purchase Agreement.
There are no upper limits to the price LPC may pay to purchase KonaRed common stock and the purchase price of the shares related to any future investments will be based on the prevailing market prices of the Company’s shares immediately preceding the notice of sale to LPC. LPC has agreed not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company’s shares of common stock. In consideration for entering into the Purchase Agreement, the Company has issued shares of common stock to LPC as a commitment fee. From the commencement date as set out in the Purchase Agreement, the Purchase Agreement may be terminated by the Company at any time, at its sole discretion, without any monetary cost. It is the Company’s intention that the proceeds from this investment will be used to increase brand awareness among consumers and retailers via a variety of marketing and sales strategies and for working capital requirements.
A more detailed description of the Purchase Agreement will be set forth in the Company’s Current Report on Form 8-K to be filed with the SEC which the Company encourages be reviewed carefully.
This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities in this offering, nor will there be any sale of these securities in any jurisdiction in which such offer solicitation or sale are unlawful prior to registration or qualification under securities laws of any such jurisdiction.
None of the securities issued in connection with the proposed investment have been registered under the United States Securities Act of 1933, as amended (the “Act”), or under the securities laws of any state in the United States, and were issued in reliance upon exemptions from registration under the Act. None of the securities may be offered or sold in the United States absent registration under the Act or pursuant to an available exemption from such registration requirements.
About KonaRed Corporation
KonaRed is in the business of bringing the health and wellness attributes of the coffee fruit to the masses. KonaRed has developed an innovative, state of the art, proprietary process that produces antioxidant-packed extracts and powders from the coffee fruit which are used in its antioxidant juices, organic green teas, and on-the-go packs, as well as ingredients which can be added to food, beverages, and nutritional products. The company is headquartered in Kalaheo, Hawaii, and its products are sold in select Whole Foods, Albertsons, Safeway, Sprouts, Walmart, 7-Eleven, and many other retail outlets throughout the US and Canada. For Investor Relations information about the company, contact IR@KonaRed.com. For Media Inquiries, contact PR@KonaRed.com.
About Lincoln Park Capital Fund, LLC
LPC is an institutional investor headquartered in Chicago, Illinois. LPC’s experienced professionals manage a portfolio of investments in public and private entities. These investments are in a wide range of companies and industries emphasizing life sciences, specialty financing, energy and technology. LPC’s investments range from multiyear financial commitments to fund growth to special situation financings to long-term strategic capital offering companies certainty, flexibility and consistency. For more information, visit www.lpcfunds.com.