U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT ON FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 4, 2002
Commission File No. 0-22524
MENDOCINO BREWING COMPANY, INC.
(Exact name of small business issuer as specified in its charter)
California
(State or other jurisdiction of incorporation or organization)
68-0318293
(IRS Employer Identification Number)
13351 South Highway 101,
Hopland, California
(Address of principal executive offices)
95449
(Zip Code)
Registrant's telephone number, including area code: (707) 744-1015
Item 5. Other Events
Mature Promissory Notes under Master Line of Credit
On August 31, 1999, Mendocino Brewing Company Inc. (the "Company") and
United Breweries of America, Inc. ("UBA") entered into a Master Line of Credit
Agreement, which was subsequently amended on April 28, 2000, and February 12,
2001 (the "Agreement"). The terms of the Agreement provide the Company with a
line of credit in the principal amount of up to $1,600,000. As of the date of
this filing, the UBA has made thirteen (13) separate advances to the Company
under the Agreement, pursuant to a series of individual eighteen (18) month
promissory notes issued by the Company to UBA (the "Notes"). As of January 31,
2002, the aggregate outstanding principal amount of the Notes was $1,515,371,
and the accrued but unpaid interest thereon was equal to approximately $235,406.
The Notes require the Company to make quarterly interest payments to UBA on
the first day of April, July, October, and January. To date, UBA has permitted
the Company to capitalize all accrued interest. Upon maturity of any Note,
unless UBA has given the Company prior instructions to commence repayment of the
outstanding principal balance, the outstanding principal and accrued but unpaid
interest on such Note may be converted, at the option of UBA, into shares of the
Company's common stock. If UBA does not elect to so convert any Note upon
maturity, it has the option to extend the term of such Note for any period of
time mutually agreed upon by UBA and the Company. During the extended term of
any Note, UBA has the right to require the Company to repay the outstanding
principal balance of such Note, along with the accrued and unpaid interest
thereon, to UBA within sixty (60) days.
The first eight (8) Notes made pursuant to the Agreement matured during
2001 (the "Mature Notes"). As of January 31, 2002, the outstanding principal
balance of the Mature Notes was approximately $866,444, and the accrued but
unpaid interest thereon was approximately $171,074. Because UBA has neither (i)
delivered notice to the Company to commence repayment of the Mature Notes prior
to their maturity dates, nor (ii) converted the Mature Notes upon maturity, it
now has the right to require the Company to repay the outstanding principal
balance of any or all of the Mature Notes, along with accrued interest, at any
time, on sixty (60) days notice.
The remaining five (5) Notes (which did not mature in 2001) are scheduled
to mature during 2002, with the first maturing on March 10, 2002. As of January
31, 2002, the aggregate principal amount outstanding on these Notes was
approximately $649,296, and the accrued but unpaid interest thereon was
approximately $64,332. As of the date of this filing, UBA has not required that
the Company commence quarterly payments of the outstanding interest on the
Notes, nor has it required that Company repay the outstanding principal balance
on the Mature Notes, although it would be within its rights under the Agreement
to do so.
The Company and UBA executed an Extension of Term of Notes under Master
Line of Credit Agreement on February 14, 2002 (the "Extension Agreement"). The
Extension Agreement confirms the Company's and UBA's extension of the terms of
the Mature Notes, as contemplated in Section 3 of each of the Notes. The
Extension Agreement extends the terms of the Mature Notes, as well as the terms
of the next four (4) Notes made pursuant to the
2
Agreement, for a period of time ending on August 15, 2002. The last remaining
Note matures on a date following August 15, 2002, therefore, its terms were not
extended by the Extension Agreement.
The Company and UBA have entered into discussions regarding the repayment
and/or conversion of the Notes. On December 28, 2001, the Company and UBA
entered into a Confirmation of Waiver which provides a written confirmation that
as of August 13, 2001, UBA waived its rights with regard to all conversion rate
protection as set forth in the Notes. On January 14, 2002, the Special Committee
of the Company's Board of Directors made a formal offer to UBA to terminate the
Agreement and convert the principal amount plus accrued interest on all of the
Notes into the Company's common stock at a conversion rate of $1.00 per share.
As of the date of this filing, UBA has not accepted the Special Committee's
proposal.
Notification of Potential Delisting Action
The Company's common stock is currently listed for trading with the Pacific
Exchange, Inc. (the "Pacific Exchange"). On February 4, 2002, the Company
received notice from PCX Equities, Inc., a subsidiary of the Pacific Exchange
("PCXE") that the Company's common stock may be subject to the initiation of
delisting proceedings. The determination was based on the Company's
non-compliance with the PCXE requirement that the Company maintain a minimum bid
price of $1.00 per share. As of February 14, 2002, the bid price of the
Company's common stock was $0.46 per share.
PCXE will conduct a formal meeting on Tuesday, March 5, 2002, to review the
Company's listing status and any actions taken by the Company to address the
share bid price deficiency. Prior to the meeting, the Company may submit written
information to PCXE explaining why the Company believes its common stock should
not be delisted. If PCXE decides in favor of delisting, the Company's common
stock will be suspended from trading before the opening of business on
Wednesday, March 6, 2002, and the Company will have the right to apply, within
five (5) days, to the PCXE Board Appeals Committee for an appeal hearing.
If no appeal is requested, all trading in the Company's common stock will
remain suspended until the Securities and Exchange Commission (the "SEC")
strikes the Company's common stock from listing on the Pacific Exchange. If the
Company requests an appeal, trading in the Company's common stock will remain
suspended until the PCXE Board Appeals Committee comes to a final decision on
whether to delist the Company's common stock. If the Board Appeals Committee
determines that the Company's common stock should not be delisted, the
suspension will be lifted. However, if the PCXE Board Appeals Committee upholds
the initial decision to delist the Company's stock, then the suspension will
remain in effect until the SEC strikes the stock from listing on the Pacific
Exchange.
The Company's management is considering how best to respond to the notice
of potential delisting action. The Company has been in contact with PCXE and
will be delivering written materials to PCXE no later than February 25, 2002,
for PCXE's review at the formal meeting on March 5, 2002.
3
Item 7. Exhibits
Exhibit
No. Description
- ------- -----------
1. Master Line of Credit Agreement between Mendocino Brewing Company,
Inc., and United Breweries of America, Inc., dated August 31, 1999.
2. First Amendment to Master Line of Credit Agreement between Mendocino
Brewing Company, Inc., and United Breweries of America, Inc., dated
April 28, 2000.
3. Second Amendment to Master Line of Credit Agreement between Mendocino
Brewing Company, Inc., and United Breweries of America, Inc., dated
February 12, 2001.
4. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated September 7, 1999.
5. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated October 21, 1999.
6. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated November 12, 1999.
7. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated December 17, 1999.
8. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated December 31, 1999.
9. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated February 15, 2000.
10. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated February 16, 2000.
11. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated April 28, 2000.
12. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated September 11, 2000.
13. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated September 30, 2000.
14. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated December 31, 2000.
4
15. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated February 12, 2001.
16. Convertible Note made by Mendocino Brewing Company, Inc., in favor of
United Breweries of America, Inc., dated July 1, 2001.
17. Confirmation of Waiver between Mendocino Brewing Company, Inc. and
United Breweries of America, Inc., dated as of December 28, 2001.
18. Letter to Mendocino Brewing Company, Inc. from PCX Equities, Inc.,
dated February 4, 2002.
19. Extension of Term of Notes under Master Line of Credit Agreement
between Mendocino Brewing Company, Inc. and United Breweries of
America, Inc., dated February 14, 2002.
SIGNATURES
Pursuant to the requirements on 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.
MENDOCINO BREWING COMPANY, INC.
(Registrant)
Date: February 15, 2002 By: /s/ N. Mahadevan
---------------------------
N. Mahadevan, Secretary and
Chief Financial Officer
5
EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description Page
- ------- ----------- ------------
1. Master Line of Credit Agreement between Mendocino Brewing
Company, Inc., and United Breweries of America, Inc., dated
August 31, 1999. (1)
2. First Amendment to Master Line of Credit Agreement between
Mendocino Brewing Company, Inc., and United Breweries of
America, Inc., dated April 28, 2000. (2)
3. Second Amendment to Master Line of Credit Agreement between
Mendocino Brewing Company, Inc., and United Breweries of
America, Inc., dated February 12, 2001. (3)
4. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated September
7, 1999. (1)
5. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated October
21, 1999. (2)
6. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated November
12, 1999. (2)
7. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated December
17, 1999. (2)
8. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated December
31, 1999. (2)
9. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated February
15, 2000. (2)
10. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated February
16, 2000. (2)
11. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated April 28,
2000. (2)
12. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated September
11, 2000. (3)
13. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated September
30, 2000. (3)
6
14. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated December
31, 2000. (3)
15. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated February
12, 2001. (3)
16. Convertible Note made by Mendocino Brewing Company, Inc., in
favor of United Breweries of America, Inc., dated July 1,
2001. (4)
17. Confirmation of Waiver between Mendocino Brewing Company,
Inc. and United Breweries of America, Inc., dated as of
December 28, 2001. 8
18. Letter to Mendocino Brewing Company, Inc. from PCX Equities,
Inc., dated February 4, 2002. 10
19. Extension of Term of Notes under Master Line of Credit
Agreement between Mendocino Brewing Company, Inc. and United
Breweries of America, Inc., dated February 14, 2002. 13
- --------
(1) Previously filed as an Exhibit to Amendment No. 5 to
Schedule 13D, filed jointly by United Breweries of America,
Inc. and Dr. Vijay Mallya, on September 15, 1999, and by
this reference incorporated herein.
(2) Previously filed as an Exhibit to Amendment No. 6 to
Schedule 13D, filed jointly by United Breweries of America,
Inc. and Dr. Vijay Mallya, on May 12, 2000, and by this
reference incorporated herein.
(3) Previously filed as an Exhibit to Amendment No. 7 to
Schedule 13D, filed jointly by United Breweries of America,
Inc. and Dr. Vijay Mallya, on February 22, 2001, and by this
reference incorporated herein.
(4) Previously filed as Exhibit 2 to Amendment No. 8 to Schedule
13D, filed jointly by United Breweries of America, Inc. and
Dr. Vijay Mallya, on August 22, 2001, and by this reference
incorporated herein.
7