UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Section 1 - Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement.
In a transaction that closed on September 29, 2023, Kona Gold Beverages, Inc. (the “Company,” “our,” “us,” and “our”) sold its Ooh La Lemin Lemonade brand to Sprecher Brewing Company. Since our acquisition of Ooh La Lemin in January of 2021, we grew the brand to 10 SKUs and built a solid foundation and following for Ooh La Lemin, both still and carbonated. Sprecher Brewing Company’s (“Sprecher”) purchase of Ooh La Lemin is part of that company’s growth strategy that has been in place since 2020. It will be creating a new All Natural Beverage Category with the acquisition of Ooh La Lemin.
We received $450,000 at the closing of the transaction, all of which was allocated to the repayment of certain of our debt obligations. The sale included our intellectual property rights to the brand, the assignment of related distributorship agreements, the transfer of our remaining inventory, the assignment of related social media sites, and the transfer of other assets related to the brand. None of our accounts receivable was transferred. Sprecher also issued to us its promissory note in the initial principal amount of $50,000 with a maturity date of January 15, 2024. The note bears interest at the annual rate of one percent. The transaction documents included standard mutual representations and warranties and post-closing undertakings.
With the sale of Ooh La Lemin, we will be shifting our focus to our Gold Leaf Distribution subsidiary. Gold Leaf Distribution had positive trends in profitability late last year and early this year and has a proven track record. We believe that the significant reduction in overhead in our beverage subsidiary with the sale of the brand and our restructuring to grow our Gold Leaf Distribution operations will provide us with the best chance to become profitable in our 2024 fiscal year.
The foregoing summary description of the transaction documents is not complete and is qualified in its entirety by reference to the full text of each of the transaction documents, a copy of each of which is filed herewith as an exhibit to this Current Report on Form 8-K and is incorporated by reference herein. Please see Exhibit 10.58 for the form of Asset Purchase Agreement between Sprecher and us; Exhibit 10.59 for the form of our Bill of Sale to Sprecher; and Exhibit 10.60 for the form of Sprecher’s Subordinated Promissory Note to us.
Section 2 - Financial Information
Item 2.01 Completion of Acquisition or Disposition of Assets.
Information for this section is incorporated in full by reference to the information disclosed in Section 1, Item 1.01, above.
Forward- Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and Private Securities Litigation Reform Act, as amended, including those relating to the consummation of the transactions described herein and other statements that are predictive in nature. These forward-looking statements are based on current expectations, estimates, forecasts, and projections about the industry and markets in which we operate and management’s current beliefs and assumptions.
These statements may be identified by the use of forward-looking expressions, including, but not limited to, “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “potential,” “predict,” “project,” “should,” “would,” and similar expressions and the negatives of those terms. These statements relate to future events or our financial performance and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include those set forth in the Company’s filings with the SEC. Prospective investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to update any forward-looking statement publicly, whether as a result of new information, future events, or otherwise.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 10.58 | Form of Asset Purchase Agreement, dated as of September 26, 2023, between Sprecher Brewing Company, LLC, and the Registrant for a transaction that closed on September 29, 2023. | |
| 10.59 | Form of Bill of Sale of the Registrant to Sprecher Brewing Company, LLC for a transaction that closed on September 29, 2023. | |
| 10.60 | Form of Subordinated Promissory Note of Sprecher Brewing Company, LLC, and the Registrant for a transaction that closed on September 29, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: October 5, 2023 | Kona Gold Beverage, Inc. | |
| By: | /s/ Robert Clark | |
| Name: | Robert Clark | |
| Title: | President and Chief Executive Officer | |
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EXHIBIT INDEX
| Exhibit No. | Description | |
| 10.58 | Form of Asset Purchase Agreement, dated as of September 26, 2023, between Sprecher Brewing Company, LLC, and the Registrant for a transaction that closed on September 29, 2023. | |
| 10.59 | Form of Bill of Sale of the Registrant to Sprecher Brewing Company, LLC for a transaction that closed on September 29, 2023. | |
| 10.60 | Form of Subordinated Promissory Note of Sprecher Brewing Company, LLC, and the Registrant for a transaction that closed on September 29, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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