Reeds, Inc.(US:REED)2025-11-04 21:41Financial Performance - For the nine months ended September 30, 2025, gross billing increased by 4% to $9,279,000 compared to $8,901,000 for the same period in 2024[99]. - Net sales for the same period rose by 4% to $7,033,000 from $6,752,000[99]. - The company reported a net loss of $3,982,000 for the three months ended September 30, 2025, a decrease of 4% compared to a net loss of $4,150,000 in the same period of 2024[99]. - Gross billing for the nine months ended September 30, 2025, decreased by 3% to $31,861 million compared to $32,864 million in the same period last year[121]. - Net sales declined by 6% to $26,585 million from $28,221 million, attributed to lower volumes with recurring national customers and higher promotional allowances[128]. - Gross profit fell by 36% to $5,433 million, resulting in a gross margin of 20%, down from 30%[131]. - Loss from operations increased by 161% to $11,638 million compared to a loss of $4,457 million in the same period last year[136]. - Net loss for the nine months ended September 30, 2025, was $12,061 million, a 33% increase from $9,035 million[140]. - Modified EBITDA for the nine months ended September 30, 2025, was $(10,205) million, compared to $(3,323) million in the same period last year[140]. Cost and Expenses - The average cost of shipping and handling increased to $2.84 per case from $2.66 per case year-over-year[93]. - General and administrative expenses surged by 60% to $2,861,000, representing 41% of net sales, compared to 27% in the prior year[99]. - Cost of goods sold (COGS) increased by $272 in Q3 2025, with COGS as a percentage of net sales rising to 83% from 82% in the same period last year[107]. - Gross margin decreased to 17% in Q3 2025, down from 18% in the same period last year[109]. - Delivery and handling expenses decreased by $179 to $1,100 in Q3 2025, representing 16% of net sales, down from 19% in the same period last year[110]. - Total operating expenses rose by 32% to $17,071 million, with general and administrative expenses increasing by 65% to $8,633 million[135]. - Total cost of goods sold per case increased to $13.20 in Q3 2025, up from $12.94 in the same period last year[108]. Cash Flow and Financing - Cash used in operations was $13,230 million, primarily due to operating losses and working capital investments[142]. - As of September 30, 2025, the company had a cash balance of $4,136 million and no remaining availability under its Senior Secured Loan[142]. - The Company has existing cash of $4,136 and expects this, along with cash generated from operations and access to committed financing, to be sufficient to fund its operating plan for at least twelve months[148]. - Net cash used in operating activities totaled $13,230 for the nine months ended September 30, 2025, an increase from $2,254 for the same period in 2024, primarily due to operating losses and investment in strategic growth initiatives[153]. - Net cash provided by financing activities was $7,147 for the nine months ended September 30, 2025, compared to $2,015 for the same period in 2024, driven by proceeds from the sale of common stock in two private placements[155]. - Management may seek additional funding through equity, mezzanine, or debt securities, but there is no assurance that such financing will be available on favorable terms[150]. - The Company’s ability to obtain additional financing is subject to market conditions, performance, and investor sentiment[150]. Strategic Initiatives - The company formed a wholly owned subsidiary, Reed's (Asia) Limited, as part of its strategic expansion into the Asia Pacific region[90]. - A private placement on September 12, 2025, raised $5,000,000 by issuing 833,330 shares at $6.00 per share[94]. - The company amended its Senior Secured Loan Agreement, reducing the revolving credit commitment to $9,250,000 from $10,000,000[96]. - The Company is taking actions to improve operating performance, including product portfolio optimization and streamlining operations, but may face challenges in executing these actions[151]. - If the Company cannot raise additional capital or improve operating performance, it may need to curtail certain operations[152]. Operational Challenges - The company continues to face supply chain challenges, including increased lead times and inflation in raw materials and logistics costs[92]. - Modified EBITDA does not reflect cash expenditures for capital expenditures or changes in working capital needs[149]. - Management regularly evaluates key factors and assumptions for financial estimates, which could differ materially from actual results[156].