Financial Data and Key Metrics Changes - Net sales for Q3 2025 increased 4% to $7.0 million compared to $6.8 million in the year-ago quarter, driven by higher volumes of Reed's branded products with recurring national customers [13] - Gross profit for Q3 2025 remained flat at $1.2 million, with gross margin decreasing to 17% from 18% in the previous year, primarily due to $0.1 million of inventory write-offs [13] - Net loss improved to $4.0 million, or negative $0.48 per share, compared to $4.2 million, or negative $4.91 per share in Q3 2024 [14] - Modified EBITDA loss was $3.9 million in Q3 2025 compared to $3.0 million in Q3 2024 [15] Business Line Data and Key Metrics Changes - Core product sales saw a 4% year-over-year growth across top accounts, including Kroger, Sprouts Farmers Market, and Giant Carlisle, indicating strong momentum within the core ginger ale, ginger beer, and Virgil's portfolio [5] - The company is focusing on regaining lost distribution with key regional wins at Harmons, Bashas', and Festival Foods, while also expanding presence in underrepresented channels like food service and convenience [6] Market Data and Key Metrics Changes - Delivery and handling costs were reduced by 14% to $1.1 million during Q3 2025, reflecting early progress from operational improvements [14] - The transition from glass to cans is expected to improve cost efficiency and sustainability, with anticipated margin strengthening as the transition progresses [11] Company Strategy and Development Direction - The company is redefining its approach with distributors, moving from short-term promotions to a fully integrated 52-week strategy to enhance predictability and control over trade spend [4] - A complete restage of the functional soda line is slated for July 2026, aimed at reestablishing Reed's as a category disruptor [7] - The leadership team has been strengthened with key appointments to enhance marketing, commercial execution, and governance [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operational foundation and key initiatives that will drive long-term growth and profitability, with a focus on improving margins and optimizing operations [12] - The company is preparing for an uplist to a major exchange, which is expected to enhance visibility and broaden access to institutional capital [12] Other Important Information - The company completed a review of finished goods inventory, writing down approximately $114,000 of obsolete products as part of a broader effort to rationalize SKUs [10] - A 1-for-6 reverse stock split was implemented effective October 31, 2025, to facilitate uplisting [12] Q&A Session Summary Question: Expectations for distribution gains and shelf resets - Management highlighted the restructuring of the sales team to focus on channels and customers not currently targeted, with plans for a core product restage in 2026 [18][19] Question: Transition from bottles to cans and P&L impacts - The transition is expected to yield long-term cost savings and margin benefits, with the process taking several months to complete [22][23] Question: Marketing strategy in a competitive category - The company plans to adopt a targeted and strategic approach to marketing spend, focusing on grassroots campaigns to build brand equity [25][26] Question: Timing for uplisting and regaining lost distribution - The reverse stock split was a milestone for uplisting, and management is actively working to regain lost distribution with key regional accounts [29][32] Question: Challenges in launching new products - Management believes that operational stability will help in regaining retailer confidence when launching new products [34]

Financial Performance - Net sales increased by 4% to $7.0 million compared to $6.8 million in Q3 2024, driven by higher volumes of Reed's branded products [4][7]. - Gross profit remained flat at $1.2 million, with a gross margin of 17%, down from 18% in the prior year; excluding inventory write-offs, gross profit was $1.3 million with a margin of 19% [4][8]. - Net sales for the three months ended September 30, 2025, were $7,033 million, an increase from $6,752 million in the same period of 2024, while net sales for the nine months ended September 30, 2025, decreased to $26,585 million from $28,221 million in 2024 [29]. - Gross profit for the three months ended September 30, 2025, was $1,224 million, slightly up from $1,215 million in 2024, but gross profit for the nine months ended September 30, 2025, dropped to $5,433 million from $8,459 million in 2024 [29]. - The net loss for the three months ended September 30, 2025, was $3,982 million, compared to a net loss of $4,150 million in 2024, while the net loss for the nine months ended September 30, 2025, increased to $12,061 million from $9,035 million in 2024 [29]. - Loss per share for the three months ended September 30, 2025, was $(0.48), an improvement from $(4.91) in 2024, while for the nine months, it was $(1.54) compared to $(12.10) in 2024 [29]. Expenses and Costs - Delivery and handling costs decreased by 14% to $2.50 per case, down from $2.99 per case in Q3 2024 [4][9]. - Selling, general and administrative expenses rose to $4.2 million from $3.1 million, primarily due to investments in personnel and marketing [4][10]. - Total operating expenses for the three months ended September 30, 2025, increased to $5,327 million from $4,353 million in 2024, with significant increases in general and administrative expenses from $1,791 million to $2,861 million [29]. Cash Flow and Debt - Cash used in operations was $2.8 million, contrasting with $1.1 million of cash provided by operating activities in Q3 2024 [4][12]. - The company had cash at the end of the period of $4,136 million, down from $10,391 million at the beginning of the period [33]. - Cash flows from operating activities for the nine months ended September 30, 2025, showed a net cash used of $13,230 million, significantly higher than $2,254 million in 2024 [33]. - The company repaid approximately $650,000 of debt and refinanced its credit facility to strengthen its balance sheet [5]. Management and Strategy - Management is preparing for an anticipated uplist to a major stock exchange to enhance visibility and improve liquidity [5]. - Two key appointments were made to strengthen the leadership team, aimed at advancing the 2026 go-to-market strategy and rebranding initiatives [3]. Modified EBITDA - Modified EBITDA loss was $3.9 million, compared to a loss of $3.0 million in the same quarter last year [4][11]. - The company reported a modified EBITDA of $(3,925) million for the three months ended September 30, 2025, compared to $(2,998) million in 2024, and $(10,205) million for the nine months ended September 30, 2025, compared to $(3,323) million in 2024 [34].

Core Insights - Reed's, Inc. reported a 4% increase in net sales for Q3 2025, reaching $7.0 million compared to $6.8 million in Q3 2024, driven by higher volumes of Reed's branded products with recurring national customers [5][7] - The company is focused on operational improvements, margin enhancement, and sales growth, with strategic leadership appointments aimed at advancing its marketing and sales initiatives [3][9] - A reverse stock split was executed on October 31, 2025, with approximately 8,945,620 shares outstanding post-split, aimed at enhancing visibility and liquidity [4] Financial Performance - Gross profit for Q3 2025 remained flat at $1.2 million, with a gross margin of 17%, down from 18% in the previous year, primarily due to $0.1 million in inventory write-offs [6][9] - Selling, general, and administrative expenses increased to $4.2 million from $3.1 million, reflecting investments in personnel and marketing [9] - The net loss improved to $4.0 million, or $(0.48) per share, compared to a net loss of $4.2 million, or $(4.91) per share, in Q3 2024 [9][10] Operational Highlights - Delivery and handling costs decreased by 14% to $2.50 per case, down from $2.99 per case in the previous year, indicating improved operational efficiency [8] - Cash used in operations for Q3 2025 was $2.8 million, a significant increase compared to $1.1 million of cash provided by operating activities in Q3 2024 [11] - As of September 30, 2025, the company had approximately $4.1 million in cash and $9.2 million in total debt, a decrease from $10.4 million in cash and $9.6 million in total debt at the end of 2024 [11] Strategic Initiatives - The company is preparing for an anticipated uplist to a major stock exchange, which is expected to enhance visibility and broaden access to institutional capital [3] - Key leadership appointments include Tina Reejsinghani as Chief Marketing Officer and Keith Johnson as Chief Go-To-Market and Customer Officer, aimed at driving growth and supporting rebranding initiatives [3] - The company is actively identifying opportunities to streamline operations to enhance efficiency and scalability [3]

Core Points - Reed's, Inc. will host a conference call on November 4, 2025, at 8:30 a.m. Eastern time to discuss its financial results for the three and nine months ended September 30, 2025 [1][2] - The conference call will include a question-and-answer period and will be accessible via toll-free and international dial-in numbers [2] - The call will also be available for live broadcast and replay on the investor relations section of the company's website [3] Company Overview - Reed's, Inc. is a leader in handcrafted, natural ginger beverages, established in 1989, and offers a portfolio of premium sodas under the Reed's®, Virgil's®, and Flying Cauldron® brand names [4] - The company's beverages are sold in over 32,000 stores nationwide, highlighting its extensive market reach [4] - Reed's is recognized as America's original ginger beer brand, with a product line that includes ginger beers, ginger ales, and a new functional soda line featuring adaptogenic ingredients [5] Product Lines - The Virgil's® brand offers award-winning craft sodas made with natural ingredients, free from GMOs and artificial preservatives, including flavors like Root Beer and Vanilla Cream [6] - Flying Cauldron® is a non-alcoholic butterscotch beer known for its creamy vanilla and butterscotch flavors, made with natural ingredients and no artificial additives [7]

As filed with the Securities and Exchange Commission on September 26, 2025 (State or jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) Delaware 2086 35-2177773 (I.R.S. Employer Identification Number) Registration No. 333-290411 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 REED'S, INC. (Exact name of registrant as specified in its charter) 501 Me ...

As filed with the Securities and Exchange Commission on September 19, 2025 Registration No. 333-___________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 REED'S, INC. (Exact name of registrant as specified in its charter) (State or jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) Delaware 2086 35-2177773 (I.R.S. Employer Identification Number) 501 Merritt 7 Corpor ...

Core Viewpoint - Reed's, Inc. has successfully closed a PIPE financing transaction, raising $5.0 million through the sale of 5,000,000 shares at $1.00 per share, aimed at enhancing working capital and supporting growth initiatives [1][2]. Group 1: Financing Details - The PIPE financing closed on September 15, 2025, generating gross proceeds of $5.0 million [1]. - The company sold 5,000,000 shares of common stock at a price of $1.00 per share [1]. Group 2: Strategic Intent - The proceeds from the financing will be used for working capital and general corporate purposes, allowing the company to invest in personnel, marketing, and product innovation [2]. - The CEO emphasized that the enhanced working capital position will provide greater flexibility to strengthen brand presence and expand market share [2]. Group 3: Leadership Changes - Michael Tu has been appointed to the Board of Directors as a corporate governance advisor and securities litigation expert, effective September 15, 2025, replacing Lee Edwards [2][3]. - Mr. Tu brings nearly three decades of experience in corporate governance and securities law, having previously worked as a partner at Orrick and Cooley [3]. Group 4: Company Overview - Reed's, Inc. is a leader in handcrafted, natural ginger beverages, with a portfolio that includes ginger beers, ginger ales, and a new functional soda line [5][6]. - The company was established in 1989 and its beverages are sold in over 32,000 stores nationwide [5].

Core Insights - Reed's, Inc. is undergoing a corporate reorganization to enhance operational efficiency and position the company for long-term success [2][4] - The company is making key investments to strengthen its commercial strategy, including the establishment of a dedicated field sales organization [2] - Tina Reejsinghani has been appointed as the new Chief Marketing Officer, bringing over 20 years of global marketing experience [3][4] Organizational Changes - The reorganization is part of a broader strategic realignment aimed at strengthening the company's foundation for future growth [2] - Chris Burleson, the Chief Commercial Officer, has resigned effective September 12, 2025, after contributing to strategic growth initiatives since February 2023 [4][5] Leadership Appointments - Tina Reejsinghani's previous experience includes leading marketing for a $500 million Cognac portfolio, achieving 30% year-over-year growth [3] - Reejsinghani's expertise in brand storytelling and experiential marketing is expected to play a crucial role in Reed's growth and brand expansion [3][4] Company Overview - Reed's is a leader in handcrafted, natural ginger beverages, with a portfolio that includes ginger beers, ginger ales, and a new functional soda line [6] - The company operates under the brand names Reed's®, Virgil's®, and Flying Cauldron®, with products sold in over 32,000 stores nationwide [5][6]

As filed with the Securities and Exchange Commission on August 27, 2025 Registration No. 333-___________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 REED'S, INC. (Exact name of registrant as specified in its charter) (State or jurisdiction of incorporation or organization) (Primary Standard Industrial Classification Code Number) Delaware 2086 35-2177773 (I.R.S. Employer Identification Number) 501 Merritt 7 Corporate ...

[General Information](index=1&type=section&id=General%20Information) [Cautionary Statement Regarding Forward-Looking Statements and Information](index=3&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements%20and%20Information) This disclaimer identifies forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially - The report contains 'forward-looking statements' identified by words like 'aim,' 'anticipate,' 'believe,' 'expect,' 'forecast,' 'intend,' 'may,' 'plan,' 'will,' or similar expressions, reflecting views about future performance[7](index=7&type=chunk) - These statements are based on currently available information, operating plans, and projections, but inherently involve risks and uncertainties that could cause actual results to differ materially[7](index=7&type=chunk) - Investors are cautioned not to place undue reliance on forward-looking statements, and the Company undertakes no obligation to update them[7](index=7&type=chunk) [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Financial%20Statements) Presents Reed's, Inc.'s unaudited condensed financial statements and notes, detailing balance sheets, operations, equity, and cash flows [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets%20%E2%80%93%20June%2030%2C%202025%20(Unaudited)%20and%20December%2031%2C%202024) | ASSETS (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------------------- | :------------ | :---------------- | | Cash | $2,677 | $10,391 | | Accounts receivable, net | $5,002 | $3,979 | | Inventory, net | $13,180 | $8,114 | | Total current assets | $21,890 | $23,311 | | Property and equipment, net | $1,165 | $1,185 | | Intangible assets | $650 | $644 | | **Total assets** | **$23,705** | **$25,140** | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | | | | Accounts payable | $8,478 | $6,956 | | Accrued expenses | $2,894 | $984 | | Senior secured loan, net | $9,736 | $9,571 | | Total current liabilities | $21,154 | $17,655 | | Total liabilities | $21,970 | $18,492 | | Total stockholders' equity | $1,735 | $6,648 | | **Total liabilities and stockholders' equity** | **$23,705** | **$25,140** | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) | (Amounts in thousands, except share and per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $9,523 | $11,874 | $19,552 | $21,469 | | Total cost of goods sold | $8,716 | $8,043 | $15,343 | $14,225 | | Gross profit | $807 | $3,831 | $4,209 | $7,244 | | Total operating expenses | $6,600 | $4,500 | $11,744 | $8,563 | | Loss from operations | $(5,793) | $(669) | $(7,535) | $(1,319) | | Interest expense | $(301) | $(1,150) | $(590) | $(2,173) | | Net loss | $(6,048) | $(3,212) | $(8,079) | $(4,885) | | Net Loss Attributable to Common Stockholders | $(6,053) | $(3,217) | $(8,084) | $(4,890) | | Loss per share – basic and diluted | $(0.13) | $(0.77) | $(0.18) | $(1.17) | | Weighted average number of shares outstanding | 46,367,047 | 4,187,291 | 45,871,898 | 4,187,291 | [Condensed Statements of Changes in Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) | (Amounts in thousands except share amounts) | Common Stock Shares | Common Stock Amount | Preferred Stock Shares | Preferred Stock Amount | Additional Paid In Capital | Accumulated Deficit | Total Stockholders' Equity (Deficit) | | :------------------------------------------ | :------------------ | :------------------ | :--------------------- | :--------------------- | :------------------------- | :------------------ | :----------------------------------- | | **Balance, December 31, 2024** | 45,371,247 | $5 | 9,411 | $94 | $158,433 | $(151,884) | $6,648 | | Fair value of vested options | - | - | - | - | $56 | - | $56 | | Dividends on Series A | - | - | - | - | - | $(5) | $(5) | | Common stock issued upon conversion of SAFE agreement | 76,668 | - | - | - | $115 | - | $115 | | Common stock issued for cash | 3,225,807 | - | - | - | $3,000 | - | $3,000 | | Net loss | - | - | - | - | - | $(8,079) | $(8,079) | | **Balance, June 30, 2025** | 48,673,722 | $5 | 9,411 | $94 | $161,604 | $(159,968) | $1,735 | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) | (Amounts in thousands) | June 30, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------ | | Net cash used in operating activities | $(10,410) | $(3,307) | | Net cash used in investing activities | $(101) | $(34) | | Net cash provided by financing activities | $2,797 | $3,064 | | Net decrease in cash | $(7,714) | $(277) | | Cash at beginning of period | $10,391 | $603 | | Cash at end of period | $2,677 | $326 | | Cash paid for interest | $400 | $1,146 | | Non-cash investing and financing activities: Reclass SAFE agreement from accounts payable to equity | $115 | - | | Dividends on Series A Convertible Preferred Stock | $5 | $5 | [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements%20for%20the%20three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Detailed notes for condensed financial statements, covering accounting policies, liquidity, asset/liability categories, equity, and commitments [1. Summary of Significant Accounting Policies](index=8&type=section&id=1.%20Summary%20of%20Significant%20Accounting%20Policies) - The Company reported a net loss of **$8,079 thousand** and used **$10,410 thousand** in cash from operations for the six months ended June 30, 2025, primarily due to a **$6,728 thousand** investment in inventory[23](index=23&type=chunk) - As of June 30, 2025, the Company had a cash balance of **$2,677 thousand** and **$100 thousand** availability under its Senior Secured Loan, which is due on November 14, 2025[23](index=23&type=chunk) - On June 4, 2025, the Company completed a private placement, issuing **3,225,807 common shares** for **$3,000 thousand**, with the majority stockholder participating as lead investor[25](index=25&type=chunk) - Management expects existing cash, cash from operations, and committed financing to fund operations for at least twelve months, but additional funding may be required for growth initiatives[26](index=26&type=chunk) - The Company is implementing strategies to improve operating performance and cash generation, including product portfolio optimization, sales increases, supply chain improvements, and vendor contract negotiations[28](index=28&type=chunk) - Market conditions, including inflation, Federal Reserve actions, energy prices, tariffs, and geopolitical events, create uncertainty and have led to supply chain challenges, increased lead times, and higher raw material, logistics, and labor costs[30](index=30&type=chunk) | Customer Concentration (Gross Billing) | Q2 2025 | H1 2025 | Q2 2024 | H1 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Customer 1 | 26% | 21% | 20% | 18% | | Customer 2 | 17% | 19% | 15% | 15% | | Customer 3 | 11% | 14% | 13% | 12% | | Accounts Receivable Concentration | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Customer 1 | 48% | 17% | | Customer 2 | 17% | 14% | - The Company relies on seven co-packers for **100%** of its product production, with a change in co-packers potentially causing production delays[42](index=42&type=chunk) - A new accounting pronouncement (ASU 2024-03) on expense disaggregation disclosures is effective for annual periods beginning after December 15, 2026, and the Company is evaluating its potential impact[49](index=49&type=chunk) [2. Inventory](index=11&type=section&id=2.%20Inventory) | Inventory (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Raw materials and packaging | $5,574 | $5,144 | | Finished products | $7,606 | $2,970 | | Total | $13,180 | $8,114 | | Inventory reserve | $2,245 | $1,296 | - During the six months ended June 30, 2025, the Company incurred **$1,661 thousand** in inventory write-offs due to product portfolio optimization by new management[51](index=51&type=chunk) [3. Property and Equipment](index=12&type=section&id=3.%20Property%20and%20Equipment) | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Right-of-use assets under operating leases | $832 | $832 | | Leasehold improvements | $139 | $84 | | Computer hardware and software | $593 | $553 | | Machinery and equipment | $352 | $352 | | Total cost | $1,916 | $1,821 | | Accumulated depreciation and amortization | $(751) | $(636) | | Net book value | $1,165 | $1,185 | - Depreciation expense for the six months ended June 30, 2025, was **$92 thousand**, and amortization of right-of-use assets was **$23 thousand**[52](index=52&type=chunk) [4. Intangible Assets](index=12&type=section&id=4.%20Intangible%20Assets) | Intangible Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Brand names | $576 | $576 | | Trademarks | $74 | $68 | | Total | $650 | $644 | [5. Senior Secured Loan Payable](index=12&type=section&id=5.%20Senior%20Secured%20Loan%20Payable) - The Senior Secured Loan has an aggregate commitment of **$10,000 thousand**, accrues interest at **8.00%** per annum, and is due on November 14, 2025[54](index=54&type=chunk) - As of June 30, 2025, the principal outstanding was **$9,900 thousand**, with **$100 thousand** remaining availability[54](index=54&type=chunk) - The loan is secured by substantially all of the Company's assets, and the Company was in compliance with all terms as of June 30, 2025[55](index=55&type=chunk) [6. Lease Liabilities](index=13&type=section&id=6.%20Lease%20Liabilities) - Lease costs for the six months ended June 30, 2025, totaled **$46 thousand**, down from **$89 thousand** in the prior year[57](index=57&type=chunk) - As of June 30, 2025, operating lease liabilities totaled **$862 thousand**, with a weighted average remaining lease term of **10.42 years** and a weighted average discount rate of **8.0%**[57](index=57&type=chunk)[58](index=58&type=chunk) [7. Issuance of Common Stock](index=13&type=section&id=7.%20Issuance%20of%20Common%20Stock) - On April 3, 2025, SAFE investments totaling **$115 thousand** were converted into **76,668 common shares**[59](index=59&type=chunk) - On June 4, 2025, the Company completed a private placement, issuing **3,225,807 common shares** for **$3,000 thousand**, with the majority stockholder participating for **$1,000 thousand**[60](index=60&type=chunk) [8. Stock-Based Compensation](index=13&type=section&id=8.%20Stock-Based%20Compensation) - The new CEO, Cyril Wallace, will be granted a restricted stock award of **280,000 shares** (1-year vesting) and performance-based stock options for up to **1,388,166 shares** (tranches 2025-2027, subject to performance metrics)[61](index=61&type=chunk) | Stock Option Activity (Shares) | Outstanding at Dec 31, 2024 | Outstanding at Jun 30, 2025 | | :----------------------------- | :-------------------------- | :-------------------------- | | Shares | 324,202 | 324,202 | | Weighted Average Exercise Price | $17.47 | $17.47 | | Weighted Average Remaining Contractual Terms (Years) | 8.03 | 7.54 | - The Company recognized **$56 thousand** in compensation expense for vested stock options during the six months ended June 30, 2025, with **$49 thousand** of unvested compensation remaining[63](index=63&type=chunk) [9. Stock Warrants](index=14&type=section&id=9.%20Stock%20Warrants) | Stock Warrant Activity (Shares) | Outstanding at Dec 31, 2024 | Outstanding at Jun 30, 2025 | | :------------------------------ | :-------------------------- | :-------------------------- | | Shares | 549,292 | 549,292 | | Weighted Average Exercise Price | $8.77 | $8.77 | | Weighted Average Remaining Contractual Terms (Years) | 1.84 | 1.34 | | Aggregate Intrinsic Value | - | - | - As of June 30, 2025, the outstanding and exercisable warrants had no aggregate intrinsic value, given a closing market price of **$1.00**[65](index=65&type=chunk) [10. Transactions with California Custom Beverage, LLC, former related party](index=14&type=section&id=10.%20Transactions%20with%20California%20Custom%20Beverage%2C%20LLC%2C%20former%20related%20party) - The Company has an ongoing arbitration with California Custom Beverage, LLC (CCB), a former related party, regarding disputed amounts[67](index=67&type=chunk) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Accounts receivable, net | $169 | $144 | | Accounts payable | - | $(144) | | Net (payable) receivable | $169 | - | - The Company believes the probability of realizing any loss on the demand from CCB is remote and has not recorded additional accruals[67](index=67&type=chunk) [11. Commitments and Contingencies](index=15&type=section&id=11.%20Commitments%20and%20Contingencies) - On July 1, 2025, the Company entered into a settlement agreement to pay an investment bank **$1,600 thousand**, releasing the Company from all liability[68](index=68&type=chunk) - Management evaluates routine claims and legal proceedings, providing for potential losses when estimable and probable, and believes no current matters will have a material adverse impact[69](index=69&type=chunk)[70](index=70&type=chunk) [12. Segment Information](index=15&type=section&id=12.%20Segment%20Information) - The Company operates and manages its business as a single reportable segment: a manufacturer of carbonated beverages under Reed's and Virgil's brand names[71](index=71&type=chunk) - The Chief Executive Officer, as the chief operating decision maker (CODM), reviews financial information and allocates resources based on net income (loss)[72](index=72&type=chunk) | Significant Segment Expenses (Six Months Ended June 30, in thousands) | 2025 | 2024 | | :------------------------------------------------------------------ | :--- | :--- | | Salaries | $2,449 | $1,892 | | Insurance | $250 | $259 | | Stock-based compensation | $57 | $222 | | Selling and marketing | $1,839 | $1,204 | | Freight and delivery | $2,549 | $2,222 | | Warehousing | $649 | $703 | | Other operating expenses | $3,951 | $2,061 | | Total operating expenses | $11,744 | $8,563 | | Interest and other expenses, net | $544 | $3,566 | | Net loss | $(8,079) | $(4,885) | [13. Subsequent Events](index=15&type=section&id=13.%20Subsequent%20Events) - On July 1, 2025, the Company entered into a settlement and release agreement with an investment bank, agreeing to pay **$1,600 thousand**[75](index=75&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of financial condition and results, detailing sales, costs, expenses, and liquidity [Overview](index=16&type=section&id=Overview) - The Company focused on driving sales growth through channel expansion, in-store placements, new product innovation, and improved sales execution[80](index=80&type=chunk) - Gross margin enhancement initiatives included product portfolio optimization, equitable supplier negotiations, streamlining co-packer processes, and efficient inventory management[80](index=80&type=chunk) - The Company began strategic expansion into new geographic markets in the Asia Pacific region, forming a wholly owned subsidiary (Reed's (Asia) Limited) and three additional subsidiaries in Hong Kong, Japan, and Hainan[81](index=81&type=chunk) [Recent Trends - Market Conditions](index=16&type=section&id=Recent%20Trends%20-%20Market%20Conditions) - Uncertainty in the economic environment persists due to inflation, Federal Reserve actions, energy price fluctuations, tariffs, and geopolitical events[82](index=82&type=chunk) - The Company experienced supply chain challenges, including increased lead times and inflation of raw materials, logistics, and labor costs[82](index=82&type=chunk) - Average shipping and handling costs increased to **$2.97 per case** for the six months ended June 30, 2025, compared to **$2.54 per case** for the same period in 2024, reflecting a volatile pricing environment[84](index=84&type=chunk) [Results of Operations – Three Months Ended June 30, 2025, as compared to Three Months Ended June 30, 2024](index=17&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20Months%20Ended%20June%2030%2C%202025%2C%20as%20compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) Q2 2025 financial performance declined significantly, with net sales down 20%, gross profit down 79%, and loss from operations up 766% [Sales, Cost of Sales, and Gross Margins](index=18&type=section&id=Sales%2C%20Cost%20of%20Sales%2C%20and%20Gross%20Margins_Q2) | Metric (in thousands) | Q2 2025 | Q2 2024 | % Change | | :-------------------- | :------ | :------ | :------- | | Gross billing | $11,569 | $13,584 | -15% | | Promotional allowances | $2,046 | $1,710 | 20% | | Net sales | $9,523 | $11,874 | -20% | | Cost of goods sold | $8,716 | $8,043 | 8% | | Gross profit | $807 | $3,831 | -79% | | Gross margin % of Net sales | 8% | 32% | -24 p.p. | - Core brand gross billing decreased by **15%** due to volume declines in Virgil's (**-19%**) and Reed's (**-10%**), despite a **1%** price increase[92](index=92&type=chunk) - Discounts as a percentage of gross sales increased to **18%** in Q2 2025 from **13%** in Q2 2024[93](index=93&type=chunk) - Cost of goods sold increased by **$673 thousand**, primarily driven by **$1,606 thousand** in inventory write-offs related to product portfolio optimization[94](index=94&type=chunk) - Total cost of goods sold per case increased to **$15.70** in Q2 2025 from **$12.34** in Q2 2024[95](index=95&type=chunk) [Operating Expenses](index=19&type=section&id=Operating%20Expenses_Q2) | Operating Expense (in thousands) | Q2 2025 | Q2 2024 | % Change | | :------------------------------- | :------ | :------ | :------- | | Delivery and handling expense | $1,572 | $1,423 | 10% | | Selling and marketing expense | $1,271 | $1,097 | 16% | | General and administrative expense | $3,757 | $1,980 | 90% | | Total operating expenses | $6,600 | $4,500 | 47% | - Delivery and handling expenses increased due to transportation costs associated with increased finished goods production, rising to **$2.83 per case** from **$2.18 per case**[97](index=97&type=chunk) - Selling and marketing expenses increased primarily due to higher employee-related costs and marketing expenditures[98](index=98&type=chunk) - General and administrative expenses increased significantly due to contract proceedings costs and investments in personnel and services for growth initiatives[100](index=100&type=chunk) [Loss from Operations](index=20&type=section&id=Loss%20from%20Operations_Q2) - Loss from operations increased by **766%** to **$(5,793) thousand** in Q2 2025, compared to **$(669) thousand** in Q2 2024, driven by decreased gross profit and increased operating expenses[101](index=101&type=chunk) [Interest and Other Expense](index=20&type=section&id=Interest%20and%20Other%20Expense_Q2) - Interest expense decreased to **$(301) thousand** in Q2 2025 from **$(1,150) thousand** in Q2 2024[102](index=102&type=chunk) - The change in fair value of SAFE investments was **$0** in Q2 2025, compared to **$(1,393) thousand** in Q2 2024[102](index=102&type=chunk) [Modified EBITDA](index=20&type=section&id=Modified%20EBITDA_Q2) | Modified EBITDA Reconciliation (in thousands) | Q2 2025 | Q2 2024 | | :------------------------------------------ | :------ | :------ | | Net loss | $(6,048) | $(3,212) | | Total EBITDA adjustments | $3,103 | $3,257 | | Modified EBITDA | $(2,945) | $45 | - Modified EBITDA decreased significantly from **$45 thousand** in Q2 2024 to **$(2,945) thousand** in Q2 2025[105](index=105&type=chunk) [Results of Operations – Six Months Ended June 30, 2025, as compared to Six Months Ended June 30, 2024](index=21&type=section&id=Results%20of%20Operations%20%E2%80%93%20Six%20Months%20Ended%20June%2030%2C%202025%2C%20as%20compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) H1 2025 financial performance deteriorated, with net sales down 9%, gross profit down 42%, and loss from operations up 471% [Sales, Cost of Sales, and Gross Margins](index=22&type=section&id=Sales%2C%20Cost%20of%20Sales%2C%20and%20Gross%20Margins_H1) | Metric (in thousands) | H1 2025 | H1 2024 | % Change | | :-------------------- | :------ | :------ | :------- | | Gross billing | $22,582 | $23,963 | -6% | | Promotional allowances | $3,030 | $2,494 | 21% | | Net sales | $19,552 | $21,469 | -9% | | Cost of goods sold | $15,343 | $14,225 | 8% | | Gross profit | $4,209 | $7,244 | -42% | | Gross margin % of Net sales | 22% | 34% | -12 p.p. | - Core brand gross billing decreased by **6%** due to volume declines in Reed's (**-6%**) and Virgil's (**-4%**), despite a **1%** price increase[113](index=113&type=chunk) - Discounts as a percentage of gross sales increased to **13%** in H1 2025 from **10%** in H1 2024[115](index=115&type=chunk) [Cost of Goods Sold](index=23&type=section&id=Cost%20of%20Goods%20Sold_H1) - Cost of goods sold increased by **$1,118 thousand**, primarily driven by **$1,661 thousand** in inventory write-offs related to product portfolio optimization[116](index=116&type=chunk) - Total cost of goods per case increased to **$14.27** in H1 2025 from **$12.36** in H1 2024[117](index=117&type=chunk) [Gross Margin](index=23&type=section&id=Gross%20Margin_H1) - Gross margin decreased to **22%** in H1 2025 from **34%** in H1 2024[118](index=118&type=chunk) [Operating Expenses](index=23&type=section&id=Operating%20Expenses_H1) | Operating Expense (in thousands) | H1 2025 | H1 2024 | % Change | | :------------------------------- | :------ | :------ | :------- | | Delivery and handling expense | $3,199 | $2,925 | 9% | | Selling and marketing expense | $2,773 | $2,190 | 27% | | General and administrative expense | $5,772 | $3,448 | 67% | | Total operating expenses | $11,744 | $8,563 | 37% | - Delivery and handling expenses increased due to transportation costs, rising to **$2.98 per case** from **$2.54 per case**[119](index=119&type=chunk) - Selling and marketing expenses increased due to higher employee-related costs and marketing expenditures[120](index=120&type=chunk) - General and administrative expenses increased significantly due to contract proceedings costs and investments in personnel and services for growth initiatives[121](index=121&type=chunk) [Loss from Operations](index=23&type=section&id=Loss%20from%20Operations_H1) - Loss from operations increased by **471%** to **$(7,535) thousand** in H1 2025, compared to **$(1,319) thousand** in H1 2024, driven by decreased gross profit and increased operating expenses[122](index=122&type=chunk) [Interest and Other Expense](index=23&type=section&id=Interest%20and%20Other%20Expense_H1) - Interest expense decreased to **$(590) thousand** in H1 2025 from **$(2,173) thousand** in H1 2024[123](index=123&type=chunk) - The change in fair value of SAFE investments was **$0** in H1 2025, compared to **$(1,393) thousand** in H1 2024[123](index=123&type=chunk) [Modified EBITDA](index=24&type=section&id=Modified%20EBITDA_H1) | Modified EBITDA Reconciliation (in thousands) | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | | Net loss | $(8,079) | $(4,885) | | Total EBITDA adjustments | $3,550 | $4,560 | | Modified EBITDA | $(4,529) | $(325) | - Modified EBITDA decreased significantly from **$(325) thousand** in H1 2024 to **$(4,529) thousand** in H1 2025[127](index=127&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) - For the six months ended June 30, 2025, the Company reported a net loss of **$8,079 thousand** and used **$10,410 thousand** in cash from operations, primarily due to a **$6,728 thousand** investment in inventory[130](index=130&type=chunk) - As of June 30, 2025, the Company had a cash balance of **$2,677 thousand** and **$100 thousand** availability under its Senior Secured Loan, which matures on November 14, 2025, and is currently being evaluated for refinancing[130](index=130&type=chunk) - The Company completed a private placement on June 4, 2025, raising **$3,000 thousand** through the issuance of common shares[132](index=132&type=chunk) - Management expects current cash, cash from operations, and committed financing to be sufficient for at least twelve months, but additional funding may be required for growth initiatives[133](index=133&type=chunk) - Net cash used in operating activities increased to **$10,410 thousand** in H1 2025 from **$3,307 thousand** in H1 2024, mainly due to increased inventory[137](index=137&type=chunk) - Net cash provided by financing activities was **$2,797 thousand** in H1 2025, primarily from the sale of common stock, compared to **$3,064 thousand** in H1 2024, which was mainly from a SAFE agreement[138](index=138&type=chunk) [Critical Accounting Policies and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Management's financial statements rely on estimates and assumptions for areas such as credit loss reserves, inventory valuation, asset impairment, deferred tax assets, and potential liabilities[140](index=140&type=chunk) - There were no changes to the critical accounting policies described in the Company's 2024 Form 10-K that impacted the condensed financial statements[140](index=140&type=chunk) [Recent Accounting Pronouncements](index=26&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2 of the Notes to Condensed Financial Statements for a discussion of recent accounting pronouncements[141](index=141&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Reed's, Inc. is exempt from detailed quantitative and qualitative market risk disclosures - The Company is a smaller reporting company and is not required to provide the information required by this Item[142](index=142&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures, concluding effectiveness as of June 30, 2025, with no material changes to internal controls [Evaluation of Disclosure Controls and Procedures](index=26&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The Company's disclosure controls and procedures were evaluated by management, including the CEO and CFO, and concluded to be effective as of June 30, 2025[143](index=143&type=chunk) [Changes in Internal Control Over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - There have been no changes in the Company's internal control over financial reporting during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[144](index=144&type=chunk) [PART II – OTHER INFORMATION](index=26&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in routine litigation, including arbitration, with management believing no material adverse financial impact - The Company is a party to ordinary, routine litigation incidental to its business, including matters tendered to insurance carriers[145](index=145&type=chunk) - Management evaluates exposure to claims and provides for potential losses if estimable and probable, believing that current litigation will not materially adversely impact financial position, liquidity, or results of operations[145](index=145&type=chunk)[146](index=146&type=chunk) - Additional information regarding legal proceedings is available in Note 10 ('Transactions with California Custom Beverage, LLC, former related party') and Note 11 ('Commitments and Contingencies')[146](index=146&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) Updates 2024 Form 10-K risk factors, highlighting Senior Secured Loan maturity, refinancing uncertainty, capital needs, and international expansion - The Senior Secured Loan matures on November 14, 2025, with **$9,900 thousand** outstanding as of June 30, 2025, and the Company is evaluating refinancing alternatives, with no assurance of favorable terms or availability[148](index=148&type=chunk) - Failure to secure refinancing for the Senior Secured Loan could impair the Company's ability to operate and adversely affect its financial position[148](index=148&type=chunk) - The Company may require additional capital for business expansion, new products, and infrastructure, and future equity or debt financings could lead to significant stockholder dilution or restrictive covenants[149](index=149&type=chunk)[150](index=150&type=chunk) - Expansion into new geographic markets, including the Asia Pacific region, poses challenges such as understanding consumer preferences, increased competition, political/legal risks, and higher costs, which could adversely affect the business[151](index=151&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or uses of proceeds have occurred that were not previously disclosed in a Form 8-K - No unregistered sales of equity securities or use of proceeds have occurred that have not been previously disclosed in a Current Report on Form 8-K[152](index=152&type=chunk) [Item 3. Defaults Upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reporting period - There have been no defaults upon senior securities[153](index=153&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company as its operations do not involve mining activities - This item is not applicable to the Company[154](index=154&type=chunk) [Item 5. Other Information](index=27&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - During the three months ended June 30, 2025, none of the Company's directors or executive officers adopted, modified, or terminated a 'Rule 10b5-1 trading arrangement' or a 'non-Rule 10b5-1 trading arrangement'[155](index=155&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed as part of this Form 10-Q, including organizational documents, agreements, and certifications - The section lists all exhibits filed as part of this Form 10-Q, including the Certificate of Incorporation, Amended and Restated Bylaws, executive employment agreements, securities purchase agreements, and certifications[162](index=162&type=chunk) - Exhibits include certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[162](index=162&type=chunk) - Many exhibits are incorporated by reference from previous SEC filings, such as Form 10-K and Form 8-K[162](index=162&type=chunk)