UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of report (Date of earliest event reported) March 26, 2015 (March 24, 2015)
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MINERCO RESOURCES, INC.
(Exact name of registrant as specified in its charter)
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NEVADA | 333-156059 | 27-2636716 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
800 Bering Drive
Suite 201
Houston, TX 77057
(Address of principal executive offices, including zip code.)
(888) 473-5150
(Registrant’s telephone number, including area code)
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 (see General Instruction A.2. below):
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¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On October 24, 2014, through our subsidiary, Level 5 Beverage Company, Inc., (“Level 5”), we entered into an Agreement (the “Membership Interest Purchase Agreement”) with Avanzar Sales and Distribution, LLC, a California Limited Liability Company (“Avanzar”) to acquire an initial thirty percent (30%) equity position and fifty-one percent (51%) voting interest for the Purchase Price of $500,000 with a twenty-one percent (21%) Option and Second Option to acquire up to seventy-five percent (75%) of Avanzar. The Agreement is Effective as of September 15, 2014.
On February 10, 2015, the Company completed the initial acquisition. On March 24, 2015, the Level 5 exercised its Initial Purchase Option to acquire an additional twenty-one (21%). The consideration payable by Level 5 to Avanzar for the Initial Purchase Option to be acquired shall be an aggregate of Four Hundred Thousand Dollars ($400,000), of which $50,000 had been paid on February 27, 2015 and the remaining balance of Three Hundred Fifty Thousand Dollars ($350,000), will be payable as follows: additional payments in amounts of at least Twenty-five Thousand Dollars ($25,000) payable every 30 days until the aggregate of Four Hundred Thousand U.S Dollars ($400,000) is paid in full no later than December 31, 2015.
The foregoing description of the Initial Purchase Option is qualified in its entirety by reference to the full text of the Initial Purchase Option, attached as Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission and incorporated herein by reference.
On March 25, 2015, we issued the attached press release that included a description of the agreement. A copy of the press release is attached as Exhibit 99.1 to this Report on Form 8-K.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
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Exhibit | Document Description | Form | | Date | Number | Filed herewith |
10.1 | Notice of Exercise of Initial Purchase Option | | | | | X |
10.2 | Membership Interest Purchase Agreement | 8-K | | 10/27/14 | 10.1 | |
99.1 | Press Release, dated March 26, 2015 | | | | | X |
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 thereunto duly authorized.
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| MINERCO RESOURCES, INC. | |
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3/26/2015 | By: | /s/ V. Scott Vanis | |
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NOTICE OF EXERCISE OF INITIAL OPTION
Level 5 Beverage Company, Inc.
16501 Sherman Way, Suite 215
Van Nuys, California 91411
March 24, 2015
Avanzar Sales and Distribution, LLC
3260 Lilly Avenue
Long Beach, California 90808
Attention: William Juarez
Ladies and Gentlemen:
Reference is made to that certain Membership Interest Purchase Agreement (the “Purchase Agreement”), made and entered into on the 24th day of October, 2014, with an Effective Date of September 15, 2014, by and between Level 5 Beverage Company, Inc., a Delaware corporation, with offices located at 16501 Sherman Way, Suite 215, Van Nuys, California 91411 (the “Purchaser”), Avanzar Sales and Distribution, LLC, a California limited liability company with offices at 3260 Lilly Avenue, Long Beach, California 90808 (the “Company”), and William H. Juarez, Jr., Joseph A. Shippee and Robert Saunders, with an address at 3260 Lilly Avenue, Long Beach, California 90808. Capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
In accordance with Section 1.1, Section 1.2, Section 2.1 and Section 8.1 of the Purchase Agreement, the Purchaser hereby notifies the Company of its exercise of the Initial Option Membership Interests, which when added to the Initial Membership Interests and Initial Option Membership Interests issued to Purchaser, shall represent a right to fifty-one percent (51%) of the total economic benefits of the membership interests outstanding of the Company at the time of the issuance (which shall be thirty percent (30%) of the outstanding Class A Membership Interests after taking into account the issuance).
The parties hereto agree that the consideration payable by the Purchaser to the Company for the Initial Option Membership Interests to be acquired on the date of the term sheet, February 27, 2015, shall be an aggregate cash payment of Four Hundred Thousand Dollars ($400,000) of which: (i) the initial payment in an amount of $50,000 by the Purchaser was paid on February 27, 2015, and (ii) additional payments in amounts of at least $25,000 payable every 30 days until the aggregate of Four Hundred Thousand U.S Dollars ($400,000) is paid in full no later than December 31, 2015.
Please confirm that the foregoing is in accordance with your understanding by signing in the space provided below and returning to us a duplicate of this notice.
Very truly yours,
LEVEL 5 BEVERAGE COMPANY, INC.
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By: | /s/ V. Scott Vanis |
| Name: V. Scott Vanis |
| Title: Chief Executive Officer
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ACCEPTED AND AGREED TO:
AVANZAR SALES AND DISTRIBUTION, LLC
By: ___/s/ William Juarez, Jr.____________
Name: William Juarez, Jr.
Title: President
Minerco’s Level 5 Increases Equity Position in Avanzar Sales and Distribution
HOUSTON, TX -- March 26, 2015 -- Minerco Resources, Inc. (OTC:MINE), parent company of Level 5 Beverage Company, Inc., the makers of VitaminFIZZ®, announced that Level 5 has exercised its option to purchase an additional 21% equity stake in Avanzar Sales and Distribution, LLC in California. This option increases Level 5's equity of Avanzar from 30% to 51%.
“Part of our strategy to deliver greater long term value to shareholders is to increase our stockholders’ equity by acquiring cash flowing assets,” said V. Scott Vanis, Minerco's Chairman and CEO. “A larger stake in Avanzar is another step in achieving this goal. Avanzar has made huge strides in every aspect of growing the business since our initial partnership began six months ago. Furthermore, Avanzar was and is instrumental in growing VitaminFIZZ locations in Southern California.”
Avanzar is a leading full service broker and distributor of world-class consumables and products. At the time of Level 5’s initial acquisition in October 2014, Avanzar serviced 3,200 locations in the Southern California retail marketplace. Today, Avanzar has a footprint of over 5,300 locations including a 25% expansion in the San Diego metro market. These additional accounts include new contracts with Stater Bros., Walmart and Winco.
Bill Juarez, the President of Avanzar stated, “We couldn’t be more pleased with our partnership with Minerco and Level 5 and the organizational improvements that we have accomplished over these past 6 months. We know we are well positioned for exponential growth through this summer’s selling season and into 2016.”
Level 5's increased ownership of Avanzar was made in affiliation with Minerco, the parent company of Level 5. Under the terms of the deal, Level 5 will pay a fixed price of $400,000 in structured payments throughout 2015. The entire purchase price ($400,000.) was entered as a Minerco-owned asset on the day the Exercise of the Option Agreement was executed. Level 5 also holds a second option to purchase up to 75% of the total equity of Avanzar at a predetermined price or a fixed multiple of revenues.
The use of proceeds is to be deployed, in part, to expand Avanzar's distribution and brokerage business both in locations and key accounts. Additionally, proceeds will also be used to expand its recently launched Merchandising and Sampling Department, which is expected to grow rapidly due to the massive demand for professional merchandising and sampling in Southern California. The proceeds will also be used to strategically and methodically pay down debt held on the Avanzar books.
About Avanzar
Headquartered in Brea, California, Avanzar Sales and Distribution specializes in working with early stage, fast moving consumer brands to develop and implement sales and distribution strategies. The Company operates a full service brokerage which includes account management, trade development and logistics services as well as in house DSD operations throughout Southern California. Avanzar distributes products to some of the most trusted retailers in the United States, including Kroger, Albertsons, HEB, Golub (Price Chopper),
Whole Foods, Walgreens, 7-Eleven, Tesoro, Circle K, Chevron, Kmart, Walmart, Stater Bros., Gelson's and Winco. www.avanzarsales.com
About Minerco Resources, Inc.
Minerco Resources, Inc. (OTC:MINE), is the parent company of Level 5 Beverage Company, Inc. (Level 5), a specialty beverage company which develops, produces, markets and distributes a diversified portfolio of forward-thinking, good-for-you consumer brands. The Minerco - Level 5 brand umbrella includes: VitaminFIZZ®, Vitamin Creamer®, Coffee Boost™ and The Herbal Collection™. http://minercoresources.com
Public Disclosure
Details of the Company's business, finances and agreements can be found as part of the Company's continuous public disclosure as a fully reporting issuer under the Securities Exchange Act of 1934 filed with the Securities and Exchange Commission's ("SEC") EDGAR database. For more information, please visit: http://www.minercoresources.com. The above statements have not been evaluated by the Food and Drug Administration (FDA). These products are not intended to diagnose, treat, cure or prevent any disease.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 that are based upon current expectations or beliefs, as well as a number of assumptions about future events. Although we believe that the expectations and assumptions upon which they are based are reasonable, we can give no assurance that such expectations and assumptions will prove to have been correct. Some of these uncertainties include, without limitation, the company's ability to perform under existing contracts or to procure future contracts. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties, including without limitation, successful implementation of our business strategy and competition, any of which may cause actual results to differ materially from those described in the statements. We undertake no obligation and do not intend to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our expectations will materialize. Many factors could cause actual results to differ materially from our forward-looking statements.
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