UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 29, 2009
KREIDO BIOFUELS, INC.
(Exact name of registrant as specified in its charter)
| | | | | |
| Nevada | | 333-130606 | | 20-3240178 |
| (State or other Jurisdiction of Incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
| | | |
1070 Flynn Road
Camarillo, California
| | 93012 |
| (Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s telephone number, including area code:(805) 389-3499
| |
Not applicable
|
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement.
On January 29, 2009, Kreido Biofuels, Inc., a Nevada corporation (the “Company”), entered into an asset purchase and other related agreements with Four Rivers BioEnergy Inc. ( “Four Rivers”), whereby Four Rivers intends to acquire identified assets owned by the Company, including certain machinery and intellectual property rights relating to the STT technology developed by the Company. The aggregate consideration to be paid by Four Rivers consists of $2.8 million in cash, the assumption of $260,000 of the Company’s purchase orders, 1.2 million shares of Four Rivers’ common stock and warrants to purchase 200,000 shares of Four Rivers’ common stock at an exercise price of $8.00 per share. Four Rivers plans to commercialize the STT technology for the production of bio-diesel fuel and other by-products.
The asset purchase agreement (the “Agreement”) includes the following material terms:
A. Concurrent with the execution and delivery of the Agreement, the Company received a loan from Four Rivers in an aggregate amount of $100,000, evidenced by a promissory note (the “Note”), the proceeds of which are to be used by the Company to pay amounts owed to one of its creditors to facilitate removal of a lien on certain assets being purchased. The loan is secured by a lien on some of the assets to be acquired and subject to any prior liens. Upon consummation of this transaction (the “Closing Date”), the Note shall be cancelled and deemed paid in full.
B. Four Rivers will deposit a portion of the purchase price in the aggregate amount of $250,000 into escrow (the “Escrow Deposit”) with The Bank of New York Mellon, as escrow agent. In the event that the Company terminates the Agreement due to Four Rivers’ failure to fulfill its obligations under the Agreement or Four Rivers has been the cause of the failure to consummate the transactions contemplated by the Agreement, the Escrow Deposit shall be disbursed to the Company. In the event that Four Rivers terminates the Agreement due to the Company’s failure to fulfill its obligations under the Agreement or the Company has been the cause of the failure to consummate the transactions contemplated by the Agreement, the Escrow Deposit shall be disbursed to Four Rivers. In the event of a mutual termination of the Agreement by the parties, 50% of the Escrow Deposit shall be disbursed to Four Rivers and 50% of the Escrow Deposit shall be disbursed to the Company.
C. On the Closing Date, Four Rivers will pay to the Company the sum of $2,442,000, less any amounts paid directly by Four Rivers to creditors of the Company with liens on the assets to be acquired, in accordance with the terms of the Agreement.
D. On the Closing Date, Four Rivers will issue to the Company a total of 1,200,000 shares of Four Rivers’ common stock, $0.001 par value per share (“Buyer Stock”), of which 300,000 shares shall be deposited in escrow with Four Rivers’ transfer agent, for delivery to the Company or its designee(s) solely upon exercise of certain warrants issued by the Company on or about January 12, 2007 and only to the extent required to meet its obligations under said warrants. Any escrowed Buyer Stock not delivered to the Company or its designee on or before January 31, 2012 shall be returned to Four Rivers to be cancelled and returned to the status of authorized and unissued capital stock. The Buyer Stock is subject to a lock-up for 360 days from the Closing Date and is entitled to piggyback registration rights. Some of the Buyer Stock not in escrow may be transferred by the Company to satisfy is creditors’ claims, subject to the lock-up. The 300,000 shares of Buyer Stock held in escrow are subject to an irrevocable proxy granted by the Company to Four Rivers’ President and Chief Financial Officer enabling those officers to vote such shares at any meeting of Four Rivers’ stockholders in such officer’s discretion.
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E. On the Closing Date, Four Rivers will issue to the Company a warrant to purchase up to 200,000 shares of Four Rivers’ common stock at an exercise price of $8.00 per share and having an expiration date five years after the Closing Date. The warrant provides for anti-dilution adjustment in limited circumstances and piggyback registration rights with respect to the underlying shares of common stock.
F. On the Closing Date, Four Rivers will assume certain contracts and related obligations of the Company, as set forth in the Agreement.
Under the terms of the Agreement, each party agrees to indemnify the other party for breaches of any representation, warranty, covenant or agreement by the other party. In addition, the Company will indemnify Four Rivers for: (i) any claim, suit or cause of action relating to any excluded liabilities (as such term is defined in the Agreement), whether occurring before or after the Closing Date; and (ii) any debts, liabilities and obligations of, and any violation of laws, rules, regulations or codes by, the Company that exist on the Closing Date, or that arise after the Closing Date but which are based upon or arise from any act, transaction or circumstance, including any sale or provision of works, materials, products or services, which occurred or existed on or before the Closing Date, except with respect to the assumed contracts and assumed liabilities (as those terms are defined in the Agreement). The indemnification is subject to a $50,000 basket (which when met, the indemnified party can recover from the first dollar of damages suffered) and a maximum cap of $1,000,000, except for claims of fraud or intentional misrepresentation of a material fact which are not subject to the cap. Any indemnification payments will be made in shares of Four Rivers’ common stock, with a share valued at $8.00 per share.
The Agreement contains typical representations and warranties by the Company about its business, operations and financial condition, which must be true and correct in all material respects as of the signing of the Agreement and the Closing Date. The Agreement also contains certain conditions to closing typically found in an agreement of this nature, including the condition that the Company receive the approval or consent of shareholders holding a majority of its issued and outstanding shares of common stock. The Agreement allows for Four Rivers to, after the Closing Date, hire certain identified employees of the Company as employees and/or consultants of Four Rivers. If all the conditions to closing are satisfied, it is anticipated that the closing will occur sometime in March 2009.
Item 9.01 Financial Statements and Exhibits
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| Exhibit Number | | Exhibit |
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| 99.1 | | Press release of Kreido Biofuels, Inc. issued January 29, 2009 |
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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Information included in this Form 8-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe the Company’s future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that any projections included in these forward-looking statements will come to pass. The Company’s actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company undertakes no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
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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
KREIDO BIOFUELS, INC.
Date: January 29, 2009
By:/s/ G.A. Ben Binninger
Name: G.A. Ben Binninger
Its: Chief Executive Officer
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EXHIBIT INDEX
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| Exhibit Number | | Exhibit |
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| 99.1 | | Press release of Kreido Biofuels, Inc. issued January 29, 2009 |
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