What changed in this filing

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Item 1. Business

2023-05-15 compared with 2022-04-15 · 331 added, 255 removed, 229 unchanged (72% of the section changed)

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this report) owns a leading portfolio of handcrafted, natural beverages that is sold in over 45,000 outlets nationwide.

outlets include the natural and specialty food channel, grocery stores, mass merchants, drug stores, convenience stores, club stores

and on-premise locations including bars and restaurants.

These outlets

include the natural and specialty food channel, grocery stores, mass merchants, drug stores, convenience stores, club stores, liquor

stores, and on-premises locations including bars and restaurants.

Reed’s two core brands are Reed’s, which includes Reed’s

Craft Ginger Beer and Reed’s Real Ginger Ale, and Virgil’s Handcrafted sodas.

Reed’s Craft Ginger

Beers are unique due to the proprietary process of using fresh ginger root combined with a Jamaican inspired recipe of natural spices,

honey and fruit juices.

Reed’s uses this same handcrafted approach in its Reed’s Real Ginger Ale and Virgil’s line

of great tasting, bold flavored craft sodas, including its award-winning Virgil’s Root Beer.

Reed’s is the leading ginger beer in the

Virgil’s is the independent natural full line craft soda and is a leader in the craft soda category.

Original Ginger Brew, created in 1987 by Christopher J.

Reed, our founder, was introduced to the

market in Southern California stores in 1989.

By 1990, we began marketing our products through United Natural Foods Inc.

and other natural food distributors and moved our production to a larger facility in Boulder, Colorado.

Craft Ginger Beer, Reed’s Real Ginger Ale, Reed’s Mules, and Reed’s Hard Ginger Ale, and Virgil’s Handcrafted

Reed’s Craft Ginger Beers are unique due to the proprietary process of using fresh ginger root combined with a Jamaican

inspired recipe of natural spices, honey and fruit juices.

Reed’s uses this same handcrafted approach in its Reed’s Real

Ginger Ale and Virgil’s line of great tasting, bold flavored craft sodas, including its award-winning Virgil’s Root Beer.

is the leading ginger beer in the US;

Virgil’s is an independent natural full line craft soda and is a leader in the craft soda

Original Ginger Brew, created in 1987, was introduced to the market in Southern California stores in 1989.

By 1990, we began marketing

our products through United Natural Foods Inc.

(“UNFI”) and other natural food distributors and moved our production to a

larger facility in Boulder, Colorado.

1991, we incorporated our business operations in the state of Florida under the name of Original Beverage Corporation and moved all production

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In 2000, we moved into an 18,000-square foot warehouse property,

the Brewery, in Los Angeles, California, to headquarters.

In 2001, pursuant to a reincorporation merger, we changed our state of incorporation

to Delaware and also changed our name to “Reed’s, Inc.”

the Brewery, in Los Angeles, California, as our headquarters.

In 2001, pursuant to a reincorporation merger, we changed our state of

incorporation to Delaware and also changed our name to “Reed’s, Inc.”

September 2018, we completed the relocation of its headquarters to Norwalk, Connecticut.

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shift in the nature of our operations and effectively eliminated our costs associated with excess manufacturing capacity.

Going Concern

The Company’s

financial statements as of December 31, 2021 were prepared on a going concern basis.

For the year ended December 31, 2021,

the Company recorded a net loss of $16,402 and used cash in operations of $17,589.

As of December 31, 2021, we had a cash balance of

$49 with borrowing capacity of $109, stockholders’ equity of $4,203 and a working capital of $2,981.

These conditions raise

substantial doubt about the Company’s ability to continue as a going concern.

The Company believes that its current level of cash

and cash equivalents are not sufficient to fund its operations for the next 12 months.

To alleviate these conditions, management is

currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or

debt securities, through arrangements with strategic partners or through obtaining credit from financial institutions.

As we seek additional

sources of financing, there can be no assurance that such financing will be available to us on favorable terms or at all.

to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions,

our performance and investor sentiment with respect to us and our industry.

offers its portfolio of natural hand-crafted beverages in the craft specialty foods industry as natural alternatives to the $25

billion mainstream carbonated soft drinks (“CSD”) market in the United States as measured by IRI Multi Outlet scan data.

Reed’s products are sold across the country and internationally in the following major channels:

natural food, specialty food,

grocery, mass merchant, convenience, club, drug, and on-premise locations (bars and restaurants).

after a year of the pandemic, overall sales growth of natural food and beverage products continues to outpace sales growth for conventional

products across all retail channels.

We see ample opportunity to scale our natural beverage business and grow our distribution in these

Reed’s has 45 products that are sold throughout the United States, Canada, the United Kingdom, South Africa and the European Union.

It produces its products through a network of nine independent manufacturers and distribution through five independent distribution centers.

The Company’s financial statements

as of December 31, 2022, were prepared on a going concern basis.

For the year ended December 31, 2022, the Company recorded a net

loss of $20,057 and used cash in operations of $15,530, and as of December 31, 2022, the Company had stockholders’ deficit of $8,470,

and negative working capital of $1,563.

These conditions raise substantial doubt about the Company’s ability to continue as a going

concern within one year of the date that the financial statements are issued.

In addition, the Company’s independent registered

public accounting firm, in their report on the Company’s December 31, 2022, audited financial statements, raised substantial doubt

about the Company’s ability to continue as a going concern.

As of December 31, 2022, we had a cash balance of $533 with borrowing

capacity of $1,663.

The Company believes that its current level of cash and cash equivalents are not sufficient to fund its operations

for the next 12 months.

Our ability to continue as a going concern is dependent upon our ability

to obtain additional financing, drive further operating efficiencies, reduce expenditures, and ultimately, create profitable operations.

We may not be able to obtain additional capital on reasonable terms.

Our financial statements do not include adjustments that would result

from the outcome of this uncertainty.

To alleviate these conditions, management is currently evaluating various funding alternatives and

may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners

or through obtaining credit from financial institutions.

As we seek additional sources of financing, there can be no assurance that such

financing will be available to us on favorable terms or at all.

Our ability to obtain additional financing in the debt and equity capital

markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to

us and our industry.

offers its portfolio of natural hand-crafted beverages in the craft specialty foods industry as natural alternatives to the $29 billion

mainstream carbonated soft drinks (“CSD”) market in the United States as measured by IRI Multi Outlet scan data.

products are sold across the country and internationally in the following major channels:

natural food, specialty food, grocery, mass

merchant, convenience, club, drug, liquor, and on-premises locations (bars and restaurants).

Soft Drink Industry Overview

The retail CSD category grew 9% during 2021

and the ginger ale segment grew 5% and is now a $1.3 billion dollar market.

Ginger ale growth, we believe, is driven primarily

by a consumer perception of ginger ale as a healthier alternative to other sodas.

Our new line of ginger ales made with real ginger

deliver on this perception and are poised to breakout in the segment.

a result of the COVID-19 pandemic, consumers

are shifting consumption to better-for-you products.

We believe there is significant growth potential from consumers switching away from

mainstream beverages that contain artificial ingredients and preservatives towards great-tasting, natural alternatives.

retail CSD category grew 14% during 2022 and the ginger ale segment grew 13% and is now a $1.5 billion-dollar market.

Ginger ale growth,

we believe, is driven primarily by a consumer perception of ginger ale as a healthier alternative to other sodas.

Our new line of ginger

ales made with real ginger deliver on this perception and are poised to breakout in the segment.

a result of the COVID-19 pandemic, consumers are shifting consumption to better-for-you products.

We believe there is significant growth

potential from consumers switching away from mainstream beverages that contain artificial ingredients and preservatives towards great-tasting,

natural alternatives.

Trends Driving Growth for Our Products

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A favorable trend for our zero-sugar beverages, 67% of consumers prefer low or no sugar soft drinks.

reducing their sugar intake.

Say they are reducing

their sugar intake.

39% of consumers actively try to eat more plant-based foods.

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More consumers are seeking non-alcoholic alternatives with bold and unique flavors.

Ready-to-Drink

Cocktails (RTD) :

The RTD category grew 126% in 2021 is exploding alongside hard seltzer as people seek novelty and

strategies will remain responsive to these macro consumer trends as we concentrate our efforts on developing the Company’s sales

and marketing functions.

make our hand-crafted beverages with only premium, natural ingredients.

Our products are free of genetically modified organisms

(“GMOs”) and artificial preservatives.

Over the years, Reed’s has developed several product offerings.

streamlined our focus to our core categories of Reed’s Ginger Beverages and Virgil’s Craft Sodas.

In April 2020, we

launched our new line of Reed’s Real Ginger Ales, in both Full Sugar and Zero Sugar varieties, made with 2,000 mg of fresh

organic ginger.

In 2021, we extended our Ginger Ale offerings with Mocktails and we entered the alcohol space with the launch of our

RTD Classic Mule that is 7% ALC and Zero Sugar.

We make our hand-crafted beverages with only premium,

natural ingredients.

Our products are free of genetically modified organisms (“GMOs”) and artificial preservatives.

years, Reed’s has developed several product offerings.

In 2019, we streamlined our focus to our core categories of Reed’s

Ginger Beverages and Virgil’s Craft Sodas.

In April 2020, we launched our new line of Reed’s Real Ginger Ales, in both Full

Sugar and Zero Sugar varieties, made with fresh organic ginger.

In 2021, we extended our Ginger Ale offerings with Mocktails, and we entered

the alcohol space with the launch of our RTD Classic Mule that is 7% alcohol by volume (“ABV”) and Zero Sugar and Hard Ginger

Ale which is 5% ABV and Zero Sugar

Craft Ginger Beer

Craft Ginger Beer is set apart from other ginger beers by its proprietary process of brewing fresh ginger root, its exclusive use of

Craft Ginger Beer is set apart from other ginger beers by its proprietary process of pressing fresh ginger root, its exclusive use of

natural ingredients, and its authentic Jamaican-inspired recipe.

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Strongest Ginger Beer – Contains 115% more fresh ginger than Reed’s Original for the strongest spice.

Zero Sugar Extra Ginger Beer – launched in 2019, it uses a proprietary natural sweetening system for a

zero-calorie version of our Reed’s Extra Ginger Beer.

Zero Sugar Extra Ginger Beer – launched in 2019, it uses a proprietary natural sweetening system for a zero-calorie version

of our Reed’s Extra Ginger Beer.

Real Ginger Ale

Reed’s Real Ginger Ale is unique for the

category because it combines real fresh ginger with the classic, refreshing taste that consumers love.

It contains nothing

artificial and is Non-GMO project verified.

Real Ginger Ale is unique for the category because it combines real fresh ginger with the classic, refreshing taste that consumers love.

It contains nothing artificial and is non-GMO project verified.

We offer two sweetener options:

one with cane sugar and the other with our zero-calorie proprietary

natural sweetening system.

one with cane sugar and the other with

our zero-calorie proprietary natural sweetening system.

Real Ginger Ale – launched in April 2020 in standard and sleek 12-ounce cans.

It is the only mass market ginger

ale made with organic fresh ginger.

It is the only mass market ginger ale made with

organic fresh ginger.

Zero Sugar Real Ginger Ale – also launched in April 2020 in standard and slim cans.

It uses proprietary sweetening

system to match the great taste of the cane sugar version in a zero-calorie drink.

It uses a proprietary sweetening system

to match the great taste of the cane sugar version in a zero-calorie drink.

Reed’s Mocktails – In 2021

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to match the great taste of the cane sugar version in a zero-calorie drink.

The two flavors are Shirley Tempting and

Reed’s Ready to Drink

Reed’s Zero Sugar Classic Mule:

Launched in 2020 and expanded to 37 states in 2021, Reed’s first-ever alcoholic offering is packed with REAL, fresh ginger

root and made through a unique handcrafted brewing and fermentation process.

It contains 7% alcohol, and a light-spice flavor profile

with no artificial colors, gluten, GMOs or caffeine.

It is the ultimate mule, made with fresh ginger root, to be enjoyed anytime,

New Ginger Beverages under the Reed’s brand

Wellness Ginger Shots – launched in February 2020 offered in two varieties:

Daily Ginger and Ginger Energize.

These convenient,

shelf-stable shots provide a ginger boost on the go.

The two flavors are Shirley Tempting and Transfusion.

Reed’s Real Cranberry Ginger Ale –

This seasonal product, launch in the fall of 2021 is our Real Ginger Ale with cranberry added.

It is a consumer favorite during the holiday

season and is available October through December.

Ready to Drink

Reed’s Zero Sugar Classic Mule – Launched

in 2020 and expanded to 42 states in 2022, Reed’s first-ever alcoholic offering is packed with REAL, fresh ginger root and made

through a unique handcrafted brewing and fermentation process.

It contains 7% ABV, and a light-spice flavor profile with no artificial

colors, gluten, GMOs or caffeine.

It is the ultimate mule, made with fresh ginger root, to be enjoyed anytime, anywhere.

Reed’s Zero Sugar Stormy Mule – Launched

in 2022 , the Stormy is the perfect companion to our Classic Mule, the Stormy Mule is the ultimate rum flavored alcohol and ginger

It contains 7% ABV, and a light-spice flavor profile with no artificial colors, gluten, GMOs or caffeine.

It is the ultimate stormy,

made with fresh ginger root, to be enjoyed anytime, anywhere.

Reed’s Zero Sugar Hard Ginger Ale - Launched

in late 2002, our line of light refreshing hard ginger ales are available in four flavors:

Mango, Cherry Lime, Strawberry Watermelon and

Pineapple Coconut.

They contain 5% ABV, 100 calories and zero carbohydrates and have no added sugar, artificial colors, gluten, GMOs or

They are made with fresh ginger root, to be enjoyed anytime, anywhere.

Handcrafted Sodas

is a premium handcrafted soda that uses only natural ingredients to create bold renditions of classic flavors.

any artificial preservatives, any artificial colors, or any GMO-sourced ingredients, and our Virgil’s line is certified kosher.

We don’t use any

artificial preservatives, any artificial colors, or any GMO-sourced ingredients, and our Virgil’s line is certified kosher.

Virgil’s line includes the following products:

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ever produced and has since won numerous awards.

Virgil’s difference is using natural ingredients to craft bold, classic soda

Virgil’s difference is using natural ingredients to craft bold, classic soda flavors.

Virgil’s Handcrafted line includes Root Beer, Vanilla Cream, Black Cherry, and Orange Cream.

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with a proprietary blend of natural sweeteners with no added sugars and is certified Keto.

This natural line of Zero Sugar

flavors includes Root Beer, Cola, Black Cherry, Vanilla Cream, Orange Cream, Lemon-Lime, Ginger Ale, Grapefruit and

Product Launches

the second quarter of 2021, Reed’s will launch the below:

Hard Ginger Ale in Variety 8 Packs

Zero Sugar in 12-ounce sleek 4 packs

Zero Sugar Stormy Mule

This natural line of Zero Sugar flavors includes

Root Beer, Cola, Black Cherry, Vanilla Cream, Orange Cream, Lemon-Lime, Ginger Ale, Grapefruit and Dr.

Primary Markets

target a smaller segment of the estimated $25 billion mainstream carbonated and non-carbonated soft drink markets in the United

target a smaller segment of the estimated $29 billion mainstream carbonated and non-carbonated soft drink markets in the United States.

Our brands are generally considered premium and natural, with upscale packaging.

They are loosely defined as the craft specialty

bottled carbonated soft drink category.

They are loosely defined as the craft specialty bottled

carbonated soft drink category.

have an experienced and geographically diverse sales force promoting our products, with senior sales representatives strategically placed

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Additionally, we have sales managers handling national

accounts for natural, specialty, grocery, mass, club, drug and convenience channels.

Our sales managers are responsible for all activities

related to the sales, distribution, and marketing of our brands to our entire retail partner and distributor network in North America.

The Company not only employs an internal sales force but has partnered with independent sales brokers and outside representatives to

promote our products in specific channels and key targeted accounts.

accounts for natural, specialty, grocery, mass, club, drug, liquor, and convenience channels.

Our sales managers are responsible for

all activities related to the sales, distribution, and marketing of our brands to our entire retail partner and distributor network in

North America.

The Company not only employs an internal sales force but has partnered with independent sales brokers and outside representatives

to promote our products in specific channels and key targeted accounts.

sell to well-known popular natural food and gourmet retailers, large grocery store chains, mass merchants, club stores, convenience and

drug stores, liquor stores, industrial cafeterias (corporate feeders), and to on-premise bars and restaurants nationwide and in some

drug stores, liquor stores, industrial cafeterias (corporate feeders), and to on-premises bars and restaurants nationwide and in some

international markets.

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and mass chains :

Kroger (and all Kroger banners), Albertson’s/Safeway, Publix, Food Lion, Stop & Shop, H.E.B.,

Wegmans, Target, Walmart

Costco and BJ’s

Kroger (and all Kroger banners), Albertson’s/Safeway, Publix, Food Lion, Stop & Shop, H.E.B., Wegmans,

Target, Walmart

BevMo!, Total Wine & More, Spec’s

& drug stores :

Circle K, CVS Health, Rite Aid, QuikTrip

CVS Health, Rite Aid

Distribution Network

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to Natural & Specialty Wholesale Distributors

natural and specialty distributor partners operate a distribution network delivering thousands of SKUs of natural and gourmet products

to thousands of small, independent, natural retail outlets around the U.S., along with national chain customers, both conventional and

This system of distribution allows our brands far reaching access to some of the most remote parts of North America.

the past year we expanded, and will continue to expand, in this distribution network.

Our natural and specialty

distributor partners operate a distribution network delivering thousands of SKUs of natural and gourmet products to thousands of small,

independent, natural retail outlets around the U.S., along with national chain customers, both conventional and natural.

This system of

distribution allows our brands far reaching access to some of the most remote parts of North America.

During the past year we have expanded,

and will continue to expand, in this distribution network.

to Store Distribution (“DSD”) Through Non-Alcoholic and Alcoholic Beverage Distributor Network

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delivery, but they recommend and prefer it as they have the capability to self-distribute and can realize significant savings with direct

Wholesale Distributor network handles the wholesale shipments of our products.

These distributors have a warehouse and distribution center,

and ship Reed’s and Virgil’s products directly to the retailer (or to customers who opt for drop shipping).

utilize a network of five independent distribution and consolidation centers across the United States to store and distribute our products.

Our Wholesale Distributor network handles the wholesale shipments of our products.

These distributors have a warehouse and distribution

center, and ship Reed’s and Virgil’s products directly to the retailer (or to customers who opt for drop shipping).

International

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International

sales to some areas of the world are cost prohibitive, except for some specialty sales, since our premium sodas were historically packed

in glass, which drives substantial freight costs when shipping overseas.

Despite these cost challenges, we believe there are good opportunities

to expand internationally, and we are increasing our marketing focus on these areas by adding freight friendly packages such as aluminum

We are open to exporting and co-packing internationally and expanding our brands into foreign markets, and we have held preliminary

discussions with trading companies and import/export companies for the distribution of our products throughout Asia, Europe, Australia,

and South America.

We believe these areas are a natural fit for Reed’s ginger products because of the popularity and importance

of ginger in international markets, especially the Asian market, where ginger is a significant part of the local diet and nutrition.

sales to some areas of the world are cost prohibitive, except for some specialty sales, since our premium sodas were historically

packed in glass, which drives substantial freight costs when shipping overseas.

Despite these cost challenges, we believe there are

good opportunities to expand internationally, and we are increasing our marketing focus on these areas by adding freight friendly

packages such as aluminum cans and also developing manufacturing partnerships in local markets whereby we ship concentrate rather

than finished goods.

We are open to exporting and co-packing internationally and expanding our brands into foreign markets, and we

have held preliminary discussions with trading companies and import/export companies for the distribution of our products throughout

Asia, Europe, Australia, and South America.

We believe these areas are a natural fit for Reed’s ginger products because of the

popularity and importance of ginger in international markets, especially the Asian market, where ginger is a significant part of the

local diet and nutrition.

believe the strength of our brands, innovation, and marketing, coupled with the quality of our products and flexibility of our distribution

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not automatically renew the agreement, we would be obligated to make certain payments to our distributor partners.

We constantly review

our distribution agreements with our partners across North America.

of our outside distributors are not bound by written agreements with us and may discontinue their relationship with us on short notice.

Most distributors handle a number of competitive products.

In addition, our products are sometimes a small part of our distributors’

constantly review our distribution agreements with our partners across North America.

Some of our outside distributors are not bound by

written agreements with us and may discontinue their relationship with us on short notice.

Most distributors handle a number of competitive

In addition, our products are sometimes a small part of our distributors’ businesses.

Manufacturing

of Reed’s products are produced by our co-pack partners.

They brew, blend, bottle, and package our products and charge

us a fee, generally by the case, for the products produced.

We have a long-standing relationship with two co-packers in Pennsylvania

and two in California.

During 2020 we entered into co-packing agreements with a co-packer on the East Coast, Clinton’s

Ditch, and on the West Coast, Noel Canning.

We are in discussions and negotiations with additional co-packers to secure added

capability for future production needs.

We periodically review our co-packing relationships to ensure that they are optimal with respect

to quality of production, cost and location.

They brew, blend, bottle, and package our products and charge us a fee,

generally by the case, for the products produced.

We have a long-standing relationship with three co-packers in Pennsylvania and two

in California.

During 2020 we entered into co-packing agreements with a co-packer on the East Coast, Clinton’s Ditch, and on the

West Coast, Noel Canning.

We are in discussions and negotiations with additional co-packers to secure added capability for future production

We periodically review our co-packing relationships to ensure that they are optimal with respect to quality of production, cost

and location.

some instances, subject to agreement, certain equipment may be purchased exclusively by us and/or jointly with our co-packers and installed

at their facilities to enable them to produce certain of our products.

In certain cases, such equipment remains our property and is required

to be returned to us upon termination of the packing arrangements with such co-packers, unless we are reimbursed by the co-packer over

a pre-determined number of cases that are produced at the facilities concerned.

For most of our products there are limited co-packing

facilities in our markets with adequate capacity and/or suitable equipment to package our products.

We believe a short disruption or

delay in production would not significantly affect our revenues;

however, as alternative co-packing facilities in our markets with adequate

long-term capacity may not be available for such products, either at commercially reasonable rates and/or within a reasonably short time

period, if at all, a lengthy disruption or delay in production of any of such products could significantly affect our revenues.

ability to estimate demand for our products is imprecise, particularly with new products, and may be less precise during periods of rapid

growth, including in new markets.

If we materially underestimate demand for our products, and/or are unable to secure sufficient ingredients

or raw materials, and/or procure adequate packing arrangements and/or obtain adequate or timely shipment of our products, we might not

be able to satisfy demand on a short-term basis.

continue to actively seek alternative and/or additional co-packing facilities with adequate capacity and capability for the production

of our various products to minimize transportation costs and transportation-related damages as well as to mitigate the risk of a disruption.

and Logistics are a significant portion of the Company’s operational costs.

In order to drive efficiency and reduce costs, on February

1, 2019 we entered into a strategic partnership with Veritiv Logistics Solutions to manage all freight movement for the Company.

is one of the largest distribution service providers in North America and has expertise that will provide a competitive advantage in

the movement of raw materials and finished goods.

This partnership will support planning and execution of all inventory movement, assessment

of storage needs and cost management.

1, 2019, we entered into a strategic partnership with FitzMark to manage all freight movement for the Company.

FitzMark is one of the

largest distribution service providers in North America and has expertise that will provide a competitive advantage in the movement of

raw materials and finished goods.

This partnership supports planning and execution of all inventory movement, assessment of storage needs

and cost management.

follow a “fill as needed” model to the best of our ability and have no significant order backlog.

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we have simplified our business and have streamlined a significant number of SKUs in order to further our primary objective of accelerating

the growth of the Reed’s and Virgil’s core product offerings, we believe significant opportunity remains in the natural

beverage space.

Healthier alternatives will be the future for carbonated soft drinks.

will continue to drive product development in the natural, no and low sugar offerings in the “better for you” beverage categories.

In addition, we believe there are powerful consumer trends that will help propel the growth of our brand portfolio including the increased

consumption of ginger as a recognized superfood, the growing use of ginger beer in today’s popular cocktail drinks, and consumers’

increased demand for higher quality, natural handcrafted beverages.

Reed, the Company’s founder continues to support our new product development efforts in 2022.

Reed possesses thirty

plus years of product development and innovation experience.

Recent innovations include our compelling line of full flavor, natural,

zero sugar, zero calorie sodas.

Reed’s has also begun to expand and broaden its product development capabilities by engaging and

working with larger, experienced beverage flavor houses and innovative ingredient research and supply companies.

the growth of the Reed’s and Virgil’s core product offerings, we believe significant opportunity remains in the natural beverage

alternatives will be the future for carbonated soft drinks.

We will continue to drive product development in the natural, no and low

sugar offerings in the “better for you” beverage categories.

In addition, we believe there are powerful consumer trends that

will help propel the growth of our brand portfolio including the increased consumption of ginger as a recognized superfood, the growing

use of ginger beer in today’s popular cocktail drinks, and consumers’ increased demand for higher quality, natural handcrafted

include our compelling line of full flavor, natural, zero sugar, zero calorie sodas.

Reed’s has also begun to expand and broaden

its product development capabilities by engaging and working with larger, experienced beverage flavor houses and innovative ingredient

research and supply companies.

believe our new business model enhances our ability to be nimble and innovative, producing category leading new products in a short period

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of manufacturers.

Many of these brands have enjoyed broad, well-established national recognition for years, through well-funded ad and

other branding campaigns.

Competitors in the ginger beer category include Goslings, Fever Tree, Bundaberg, Cock ‘n Bull and Q Tonic;

in the craft soda category we compete with brands such as Stewart’s, IBC, Zevia, Henry Weinhard’s,

Boylan, and Jones Soda;

In the Ginger Ale category we compete with Canada Dry, Schweppes, Seagram’s and Zevia.

Many of these brands have enjoyed broad, well-established national recognition for years, through well-funded advertising

and other branding campaigns.

Competitors in the ginger beer category include Goslings, Fever Tree, Bundaberg, Cock ‘n Bull and

in the craft soda category we compete with brands such as Stewart’s, IBC, Zevia, Henry Weinhard’s, Boylan, Sprechers,

and Jones Soda;

In the Ginger Ale category we compete with Canada Dry, Schweppes, Seagram’s, Vernor’s, and Zevia.

factors affecting our ability to compete successfully include the taste and flavor of products, trade and consumer promotions, rapid

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also cause our products to be unable to gain or even lose market share, or we could experience price erosion.

are also subject to increasing levels of regulatory issues including the registration and/or taxation of our products in certain new

international markets, which may put us at a competitive disadvantage.

(See “Government Regulation” below for additional

our products having a relatively high price for a craft premium beverage product, minimal mass media advertising to date, and a small

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packaging, use of premium ingredients, and a proprietary ginger processing formula provide us with a competitive advantage.

Our commitments

Our commitment

to the highest quality standards and brand innovation are keys to our success.

Reed’s Wellness Ginger Shot was introduced during 2020.

The shot category is very competitive, and a few mainstream companies dominate

the category, but there is room for an natural alternative.

Competition for market share and acceptance of new products is significant.

Main competitors are 5-Hour Energy, Ginger Time, and Rescue Ginger Shots.

Crystallized Ginger and Reed’s Ginger Chews restaged their product line up in 2020.

The category is small and there is not a significant number of entrants.

The category is small and there is not a significant

number of entrants.

Key competitors are Chimes and Gin Gins.

Ready to Drink:

The RTD category refers to canned cocktails

that offer convenience and quality for cocktail drinkers.

RTD sales held strong in 2021 with triple-digit growth.

NielsenIQ, year-over-year off-premise dollar sales increased 126 percent for RTD cocktails for the 52-week period ending October 2,

According to IRI, premixed cocktails spirits-based and malt-based seltzers accounted for just over $7 billion in

off-premise sales over the 52 weeks ending November 28, 2021.

The start of Covid-19, when restaurants and bars

closed in March 2020, helped propel the category with consumers bringing the on-premise cocktail occasion to their homes.

major boost for canned, single-serve RTDs.

Without the recent quality improvements of RTD cocktails, however, it’s unlikely that

the category would have taken off.

Today’s RTD cocktails bring much higher quality versus earlier wine coolers and malt-based hard

Premiumization has resulted in a new wave of products that boast less sugar and more transparency.

Variety has also

been a key driver, allowing consumers ways to experiment without buying costly ingredients or spirits.

Reed’s is poised to

leverage these trends bringing high-quality, crafted Mules made with real fresh ginger to the market.

Top selling brands in the category are High Noon,

Cutwater Spirits, On The Rocks, Jose Cuervo, Skinnygirl, 1800 Tequila, Buzzballz, Bacardi, The Long Drink Company, and Fisher’s

In the Mule segment, the key players include ‘Merican Mule, Cutwater Mule, and Copper Can.

RTD category refers to canned cocktails that offer convenience and quality for cocktail drinkers.

start of Covid-19, when restaurants and bars closed in March 2020, helped propel the category with consumers bringing the on-premises

cocktail occasion to their homes.

This was a major boost for canned, single-serve RTDs.

Without the recent quality improvements of RTD

cocktails, however, it’s unlikely that the category would have taken off.

Today’s RTD cocktails bring much higher quality

versus earlier wine coolers and malt-based hard lemonades.

Premiumization has resulted in a new wave of products that boast less sugar

and more transparency.

Variety has also been a key driver, allowing consumers ways to experiment without buying costly ingredients or

Reed’s is poised to leverage these trends by bringing high-quality, crafted Mules made with real fresh ginger to the market.

selling brands in the category are High Noon, Cutwater Spirits, On The Rocks, Jose Cuervo, 1800 Tequila, Buzzballz, Bacardi, The Long

Drink Company, and Fisher’s Island.

In the Mule segment, the key players include ‘Merican Mule, Cutwater Mule, and Copper

Substantially

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packers in accordance with our specifications.

Raw materials are delivered and stored at our various third-party co-packers.

the raw materials used in our products are obtained from domestic and foreign suppliers and many of the materials have multiple reliable

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are common ingredients and supply is easily accessible, we have few long-term contracts in place with our suppliers.

outside factors such as crop yield, weather, agricultural legislation, and the geopolitical climate could impact supply and price;

we do source certain ingredients from different regions and suppliers to mitigate some of this risk.

Industry-wide

shortages of certain ingredients could from time to time in the future be encountered, which could interfere with and/or delay production

of certain of our products.

Bottles and Aluminum Cans

significant component of our product cost is the purchase of glass bottles and aluminum cans.

In December 2017, we entered into an exclusive

strategic partnership with Owens-Illinois (glass), and in February 2018 we entered into a strategic partnership with Crown Cork &

Seal for aluminum cans.

During 2021 we entered into an agreement with a packaging broker to supply us with 25 million sleek 12-ounce

cans during 2022.

These suppliers provide expertise in emerging package and material innovation that can be leveraged to further

expand marketing and package offerings.

We are generally responsible for arranging

for the purchase and delivery to our third-party co-packers of the containers in which our beverage products are packaged.

2017, we entered into an exclusive strategic partnership with Owens-Illinois (glass), and in February 2018 we entered into a strategic

partnership with Crown Cork & Seal for aluminum cans.

During 2022 we entered into an agreement with a packaging broker to supply

us with 25 million sleek and standard 12-ounce cans during 2023.

These suppliers provide expertise in emerging package and material innovation

that can be leveraged to further expand marketing and package offerings.

Capital Practices

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improved vendor contracts and restructuring our selling prices.

During 2020 we entered into a licensing agreement

with Full Sail Brewery headquartered in Hood River, Oregon to manufacture and sell our new line of Reed’s Alcoholic Classic Mule

in 4 and 12 pack 12-ounce cans, and 12 pack 16-ounce cans.

Full Sail manages all aspects of production and distribution.

We subsequently

amended that agreement to assume the distribution rights from Full Sail and instead utilize Full Sail as a co-packer of our RTD Classic

We now fully control the sales and marketing process, and this change in distribution ownership enables us to recognize gross

revenue as opposed to a royalty fee going forward.

2020 we entered into a licensing agreement with Full Sail Brewery headquartered in Hood River, Oregon to manufacture and sell our new

line of Reed’s Alcoholic Classic Mule in 4 and 12 pack 12-ounce cans, and 12 pack 16-ounce cans.

Full Sail manages all aspects

of production and distribution.

We subsequently amended that agreement to assume the distribution rights from Full Sail and instead utilize

Full Sail as a co-packer of our RTD Classic Mule line.

We now fully control the sales and marketing process, and this change in distribution

ownership enables us to recognize gross revenue as opposed to a royalty fee going forward.

of our nonalcoholic beverages are somewhat seasonal with higher-than-average volume in the warmer months.

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to our co-packers and suppliers and other parties.

Reed’s ginger processing and brewing process finished beverage products

and concentrate formulas are among its most valuable trade secrets.

Reed’s ginger processing and brewing process finished beverage products and

concentrate formulas are among its most valuable trade secrets.

own trademarks in the United States that we consider material to our business.

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Reed is also subject to an intellectual property agreement with Reed’s restricting competition consistent with his fiduciary obligations

Our Company is required to comply, and it

is our policy to comply, with all applicable laws in all jurisdictions in which we do business.

Company is required to comply, and it is our policy to comply with all applicable laws in all jurisdictions in which we do business.

production, distribution and sale in the United States of many of our products are subject to the Federal Food, Drug, and Cosmetic Act,

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statutes and regulations.

The Safe Drinking Water and Toxic Enforcement

Act of 1986 (“Proposition 65”) of the state of California requires a specific warning to appear on any product containing

a component listed by the state as having been found to cause cancer or birth defects.

The state maintains lists of these substances

and periodically adds other substances to these lists.

Proposition 65 exposes all food and beverage producers to the possibility of having

to provide warnings on their products in California because it does not provide for any generally applicable quantitative threshold below

which the presence of a listed substance is exempt from the warning requirement.

Consequently, the detection of even a trace amount of

a listed substance can subject an affected product to the requirement of a warning label.

However, Proposition 65 does not require a

warning if the manufacturer of a product can demonstrate that the use of that product exposes consumers to a daily quantity of a listed

substance that is:

Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”) of the state of California requires a specific warning

to appear on any product containing a component listed by the state as having been found to cause cancer or birth defects.

maintains lists of these substances and periodically adds other substances to these lists.

Proposition 65 exposes all food and beverage

producers to the possibility of having to provide warnings on their products in California because it does not provide for any generally

applicable quantitative threshold below which the presence of a listed substance is exempt from the warning requirement.

Consequently,

the detection of even a trace amount of a listed substance can subject an affected product to the requirement of a warning label.

Proposition 65 does not require a warning if the manufacturer of a product can demonstrate that the use of that product exposes consumers

to a daily quantity of a listed substance that is:

a “safe harbor” threshold that may be established;

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that similar or more restrictive legal requirements may be proposed or enacted within our distribution territories in the future.

co-packers are subject to various environmental

protection statutes and regulations, including those relating to the use of water resources and the discharge of wastewater.

with these provisions has not had, and we do not expect such compliance to have, any material adverse effect on our capital expenditures,

net income or competitive position.

Legislation that would impose an excise tax on sweetened

beverages has been proposed in the U.S.

Congress, in some state legislatures and by some local governments, with excise taxes generally

ranging between $0.01 and $0.02 per ounce of sweetened beverage.

Berkeley, California became the first jurisdiction to pass such a measure,

and a general tax of $0.01 per ounce on certain sweetened drinks became effective on January 1, 2015.

jurisdictions have passed

similar measures, some of which have been challenged in litigation.

The imposition of such taxes on our products would increase the cost

of certain of our products or, to the extent levied directly on consumers, make certain of our products less affordable.

on sweetened beverages already are in effect in certain foreign countries, such as France, the United Kingdom, Ireland, South Africa,

Mexico and Colombia.

Other countries are considering similar measures.

Alcoholic beverages

are regulated by federal, state and local governments in both the U.S.

and abroad whose laws and regulations govern the production, distribution

and sale of alcohol beverages, including licensing, permitting, advertising and marketing.

The manufacturing and sale of alcohol products

requires numerous approvals, licenses and permits from governmental agencies, including, but not limited to, the U.S.

Department of Treasury,

the Alcohol and Tobacco Tax and Trade Bureau ( “ TTB ” ),

Department of Agriculture, the FDA, state alcohol regulatory agencies and state and federal environmental agencies.

Our third-party manufacturers, in particular, are subject to audits and inspections by TTB and applicable state alcohol regulatory agencies at any

Our alcohol beverages are also subject to various taxes, license fees, and the like levied by governmental entities as well as bonds

that such entities may deem necessary to ensure compliance with applicable laws and regulations.

Beginning in January 2018, the federal

excise taxes imposed on domestic brewers that produce less than 2 million barrels annually were reduced from $7.00 to $3.50 per barrel

on the first 60,000 barrels shipped annually.

State and local excise taxes, on the other hand, vary based on the alcohol content and type

Federal, state, or local governments may increase such excise taxes in the future.

co-packers are subject to federal, state and local environmental laws and regulations, including those relating to air emissions,

water discharges, the use of water resources, waste disposal, and recycling.

Changes in environmental compliance mandates, and any

expenditures necessary to comply with such requirements, could increase costs.

In addition, continuing concern over environmental

matters, including climate change, is expected to continue to result in new or increased legal and regulatory requirements (in and

outside of the United States), including to reduce or mitigate the potential effects of greenhouse gases, to limit or impose

additional costs on commercial water use due to local water scarcity concerns, or to expand mandatory reporting of certain

environmental, social and governance metrics.

Compliance with these provisions has not had, and we do not expect such compliance to

have, in the near future, any material adverse effect on our capital expenditures, net income or competitive position.

are also subject to various federal, state and international laws and regulations related to privacy and data protection, including the

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compliance programs and policies.

primary cost pertaining to environmental compliance activity is in recycling fees and redemption values.

We are required to collect redemption

values from our customers and remit those redemption values to the state, based upon the number of bottles or cans of certain products

sold in the state.

Our primary cost pertaining

to environmental compliance activity is in recycling fees and redemption values.

Various municipalities, states and foreign countries

require that a deposit be charged for certain non-refillable beverage containers.

The precise requirements imposed by these measures

vary by jurisdiction.

Other deposit, recycling, ecotaxes and/or product stewardship proposals have been, and may in the future be, introduced

and enacted at the federal, state, and local levels, and in foreign countries.

In California, we are required to collect redemption values

from our customers and to remit such redemption values to the State of California Department of Resources Recycling and Recovery based

upon the number of cans and bottles of certain carbonated and non-carbonated products sold.

In certain other states and countries where

our products are sold, we are also required to collect deposits from our customers and to remit such deposits to the respective jurisdictions

based upon the number of cans and bottles of certain carbonated and non-carbonated products sold in such states.

of December 31, 2022, we had 22 full-time equivalent employees on our corporate staff.

We employ additional people on a

part-time basis as needed.

We employ additional people on a part-time

basis as needed.

We have never participated in a collective bargaining agreement.

We believe relations with our employees

We believe relations with our employees are good.

Company maintains a website at the following address:

www.reedsinc.com.

www.drinkreeds.com.

The information on the Company’s website is not incorporated

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as amended (“Exchange Act”).

These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q

and our Current Reports on Form 8-K.

We make this information available on our website free of charge as soon as reasonably practicable

after we electronically file the information with, or furnish it to, the SEC.

In addition, we routinely post on the “Investors”

page of our website news releases, announcements and other statements about our business and results of operations, some of which may

contain information that may be deemed material to investors.

Therefore, we encourage investors to monitor the “Investors”

page of our website and review the information we post on that page.

The SEC maintains a website that contains reports, proxy and

information statements, and other information regarding issuers that file electronically with the SEC at the following address:

These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current

Reports on Form 8-K.

We make this information available on our website free of charge as soon as reasonably practicable after we electronically

file the information with, or furnish it to, the SEC.

In addition, we routinely post on the “Investors” page of our website

news releases, announcements and other statements about our business and results of operations, some of which may contain information

that may be deemed material to investors.

Therefore, we encourage investors to monitor the “Investors” page of our website

and review the information we post on that page.

The SEC maintains a website that contains reports, proxy and information statements,

and other information regarding issuers that file electronically with the SEC at the following address:

http://www.sec.gov.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business