UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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): April 15, 2005
MENDOCINO BREWING COMPANY, INC.
(Exact name of issuer as specified in its charter)
California
(State or other jurisdiction of incorporation or organization)
0-22524 68-0318293
(Commission File No.) (IRS Employer Identification Number)
1601 Airport Road, Ukiah, California 95482
(Address of principal executive offices) (Zip Code)
(707) 463 6610
(Registrant's Telephone Number, Including Area Code)
N/A
(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 (SEE General Instruction A.2. below):
| | Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
| | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
| | Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
| | Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01. OTHER EVENTS.
(A) CONTINUED DELAY IN FILING 2004 ANNUAL REPORT ON FORM 10-K.
On March 31, 2005, the Company filed a Notification of Late Filing on Form
12b-25 with respect to its Annual Report on Form 10-K for the year ended
December 31, 2004. In the Notification of Late Filing, the Company indicated
that it anticipated filing its Annual Report on Form 10-K on or before April 15,
2005.
Despite its expectations, the Company has not yet filed its 2004 Annual
Report. The primary reason for the continued delay has been that the Company's
auditors have neither completed their review of the Company's financial
statements nor provided the Company with an auditors' opinion.
Management is not aware of any material disagreements between the Company
and its auditors over any factual or interpretive issue related to the Company's
2004 financial statements or the text of the Annual Report. It is anticipated
that the Annual Report will be filed on or before Friday, April 22, 2005.
(B) RECENT DEVELOPMENTS
Among the reasons cited in the Notification of Late Filing for the
Company's inability to timely file the Annual Report were that the Company was
in the process of addressing certain ongoing liquidity issues, including
payments scheduled to fall due under a credit agreement which was then scheduled
to expire on April 30, 2005, and a borrower under a temporary loan which was
then expected to expire on or about April 30, 2005, both of which are secured by
substantially all of the Company's assets. Also, the Company was then facing a
required installment payment, due on April 10, 2005, of certain delinquent
property taxes under the terms of a payment plan with Mendocino County.
In the interim, the due date for the temporary loan has been extended to
July 11, 2005, and the required property tax installment payment has been paid
to Mendocino County; however the credit agreement is still scheduled to expire
on April 30, 2005. Nevertheless, the Company still does not currently have
sufficient funds available to repay the loans in question as they become due.
The Company has recently obtained commitments from two lenders to refinance
the above debts. The first commitment is for a $4,500,000 mortgage on the
property and equipment of the brewery in Ukiah, California. The proceeds of this
loan would be used to pay off a $576,000 loan due in July 2005, the first
mortgage on the Ukiah property of approximately $2,299,000, and the balance due
to the County of Mendocino for the past due property taxes of approximately
$431,000. The second commitment will provide the Company with a line of credit
agreement for up to $2,000,000. The agreement will allow the Company to borrow
on the accounts receivable and inventory
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amounts of the U.S. operations up to certain defined limits. This line of credit
would be used to pay off the outstanding loan from CIT Group, which is due on
April 30, 2005.
(C) PROCEEDS FROM OPERATIONS INSUFFICIENT TO SUSTAIN OPERATIONS
Unused capacity at the Ukiah and Saratoga Springs facilities has continued
to place severe demands on the Company's working capital. Beginning
approximately in the second quarter of 1997, the time at which the Ukiah brewery
commenced operations, proceeds from operations have not been able to provide
sufficient working capital for day to day operations. To fund its operating
deficits, the Company has relied upon lines of credit and other credit
facilities such as those described above, as well as loans from Company
affiliates and loans and lines of credit from banks and other third party
lenders.
Continuing losses in its United States operations and the maturing of
certain of its debts in April and July of 2005 could have a serious adverse
effect on the Company's operations. The Company does not currently have
sufficient funds available to repay these currently maturing loans (which are
secured by substantially all of MBC's assets) as they become due. The Company
has successfully extended loans and negotiated refinancing arrangements in the
past, and as discussed above is currently in discussion with potential new
lenders to refinance the maturing debts. In the event that refinancing
negotiations are not successful, one of the Company's principal shareholders has
committed to provide financial assistance in order to avoid default under the
currently maturing loans when they become due, although the terms of such
financial assistance have not yet been agreed upon. Despite this commitment,
Management does not anticipate that renewing or replacing the existing loans
would in itself correct all of its ongoing operating deficits.
(D) GOING CONCERN OPINION
The Company has engaged in extensive discussions with its independent
auditors as to the effect of the foregoing issues on the registrant's financial
statements and the auditor's ability to provide an unqualified independent
report thereon. The auditors have informed the Company that under the current
circumstances they would be unable to issue such a report that was not qualified
on a "going concern" basis. The Company therefore expects that when the Annual
Report is filed it will contain such a "going concern" opinion.
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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: April 19, 2005 By:
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N. Mahadevan, Secretary and
Chief Financial Officer
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