What changed in this filing

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Item 1. Business

2024-04-01 compared with 2023-05-15 · 256 added, 285 removed, 275 unchanged (66% of the section changed)

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

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

Craft Ginger Beer, Reed’s Real Ginger Ale, Reed’s Classic 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

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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

is the first ginger beer in the US;

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

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

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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.

Our Move to the OTCQX “Best Market”

Our stock traded on the Nasdaq Capital Market from 2007 to 2013 and again

form May 2019 through February 16, 2023.

We voluntarily transferred to and from the NYSE American between 2013 and May 2019.

On August 16, 2021, we received a written notice from The Nasdaq Stock Market LLC (“Nasdaq”) that we

were no longer in compliance with the bid price rule.

On January 25, 2023, we effectuated a 1-for-50 reverse stock split of our

issued and outstanding shares of common stock.

On January 27, 2023, we achieved compliance with the bid price rule.

However, we fell out

of compliance with Nasdaq’s minimum stockholders’ equity rule, and, after evaluating options to achieve compliance, our board

of directors determined not to proceed with a dilutive capital raise.

On February 14, 2023, we were delisted from the Nasdaq Capital Market.

On February 16, 2023, our common stock began quotation on the OTCQX “Best Market”.

We are a reporting company currently registered

under section 12(g) of the Securities Exchange Act of 1934, as amended.

offers its portfolio of natural hand-crafted beverages in the craft specialty foods industry as natural alternatives to the $41 billion

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Trends Driving Growth for Our Products

following is a list of consumer trends that are accelerating as we exit the pandemic, and which support our brands.

Interest in natural products has gone mainstream.

62% of Americans are avoiding at least one ingredient.

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

Say they are reducing

their sugar intake.

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

Appeal continues to grow of higher-quality, independent, and more authentic brands.

The following is a list of consumer trends that are accelerating and support

Interest in natural products has gone mainstream with annual growth expected to be 11.4% from 2022 through 2030.

31% of all food and beverage launches between 2022 and 2030 contained clean labels.

Most consumers – 72% are looking to limit or avoid sugar.

The global reduced-sugar-food and beverage market is expected

to grow at an annual rate of 9% from 2022 to 2030.

consumers are consuming plant-based foods and beverages.

Appeal continues to grow of higher-quality, independent, and more authentic brands across many beverage categories.

Premiumization:

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including premium mixers.

54% of 18 to 34 year olds are likely to choose a premium drink.

Better-for-you

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

Annual growth is expected to be

3% from 2024 to 2028.

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

and marketing functions.

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

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.

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 entered the alcohol space

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

5% ABV and Zero Sugar

Craft Ginger Beer

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

Reed’s Mocktails – In 2021

Reed’s line extended its Zero Sugar Ginger Ale, with the launch of Mocktail Flavors.

It uses our proprietary sweetening system

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

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.

Real Cranberry Ginger Ale – Seasonal product, launch in the fall of 2021 is our Real Ginger Ale with cranberry added.

a consumer favorite during the holiday season and is available October through December.

Harvest Spiced Apple Cider – This seasonal product launched in the fall of 2022 and is a delicious holiday offering available

September 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

Zero Sugar Classic Mule – Launched in 2020 and now sold in 23 states, 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.

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 beer.

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.

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 caffeine.

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

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

Beginning in 2023 Virgil’s Handcrafted

soda will be offered in both glass and can formats.

Virgil’s launched a new line of Zero Sugar, Zero Calorie craft sodas in 2019.

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This natural line of Zero Sugar flavors includes

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

Root Beer, Cola, Black Cherry, Vanilla Cream, Orange Cream, and Dr.

Primary Markets

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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-premises bars and restaurants nationwide and in some

international markets.

We also sell our products and promotional merchandise directly to consumers via the Internet through our Amazon

storefront which can be accessed through our company web site www.drinkreeds.com .

We 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-premises bars and restaurants nationwide and in some international markets.

We also sell our products and

promotional merchandise directly to consumers via the Internet through our Amazon storefront which can be accessed through our company

web site www.drinkreeds.com .

In November 2023 we relaunched this ecommerce platform, which includes a reoccurring subscription

Changes to the retail landscape, including increased consolidation of

retail ownership, the continued growth of sales through e-commerce websites and mobile commerce applications, including through subscription

services and other direct-to-consumer businesses, the integration of physical and digital operations among retailers and the current

economic environment continue to increase the importance of major customers.

of our representative key customers include:

Whole Foods Market, Sprouts, Natural Grocers by Vitamin Cottage, Fresh Thyme Farmers Market, Mother’s

Whole Foods Market, Sprouts, Natural Grocers by Vitamin Cottage, Fresh Thyme, NDG, INFRA, Earthfare.

& specialty stores :

Trader Joe’s, Bristol Farms, Lazy Acres, The Fresh Market, Central Market

Trader Joe’s, Erewhon, Gelson’s, Harmon’s, Bristol Farms, The Fresh Market, Woodman’s

Cost Plus World Market, Cracker Barrel.

and mass chains :

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

Walmart, Raley’s, Savemart, Ingles, Harris Teeter, Hannaford, SEG/Winn Dixie, Giant, Spartan Nash, Food Land, Lowes, Smart

and Final, Winco, Bashes, Haggen, AFS, Market Basket, Meijer, Cub HvVee.

BevMo!, Total Wine & More.

& drug stores :

CVS Health, Rite Aid

Rite Aid, All Town Fresh Markets.

Distribution Network

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to Natural & Specialty Wholesale Distributors

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.

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 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

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

utilize a network of four 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.

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International markets

where our brands are present are France, UK, South Africa, portions of the Caribbean, Canada, Spain, Philippines, Israel and Australia.

where our brands are present are France, UK, South Africa, portions of the Caribbean, Canada, Spain, Philippines, Mexico, Vietnam, and

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 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.

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 have secured manufacturing partnerships in local markets whereby we ship concentrate rather than finished goods.

have production facilities in the U.K.

and will be expanding into the European Union during 2024.

We are open to exporting and co-packing

internationally and expanding our brands into foreign markets and believe that our new partnership with D and D Holdings will advance

our ability to successfully penetrate the continent of Asia.

We believe this area is a natural fit for Reed’s ginger products because

of the popularity and importance of ginger in international markets, 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

network, allows us to compete effectively.

have entered into agreements with some of our distributors that commit us to “termination fees” if we terminate our agreements

Our agreements with some of our distributors commit us to “termination fees” if we terminate our agreements

early or without cause.

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

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.

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’

We continually monitor our distribution agreements with our partners across North America to ensure that they are optimal.

Manufacturing

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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.

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

California, one in Washington state and one in New York state.

We are actively expanding co-packing capacity and building finished goods

During 2023, we entered into co-packing agreements with a new facility in the Southeast United States and a co-packer in North

Carolina, Battle Co-Packaging.

Our agreement with Battle Co-Packaging serves to expand our production for both bottles and cans and will

allows us to better serve our Southeast and south-central customers and grow our sales in the region.

We are also in discussions and

negotiations with additional co-packers to secure added capability for future production needs.

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

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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.

most of our products there are limited co-packing facilities in our markets with adequate capacity and/or suitable equipment to

package our products.

Further, our 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 are not be able to satisfy demand on a short-term

We have experienced disruptions and delays in production that have impacted our operations and revenues and there can

be no assurances that we will not encounter such disruptions in the future.

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

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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

Healthier alternatives will be the future for carbonated soft drinks.

We are in the process of formulating new products that leverage

fresh organic ginger to create a portfolio of beverages targeting the “better-for-you” lifestyle category.

We look forward

to unveiling these products in the back half of the year with a soft launch during Q4.

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 beverages.

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

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

in this competitive environment is dependent on effective promotion of existing products, effective introduction of new products and

reformulations of existing products, increased efficiency in production techniques, effective incorporation of technology and digital

tools across all areas of our business, the effectiveness of our advertising campaigns, marketing programs, product packaging and pricing,

new vending and dispensing equipment and brand and trademark development and protection.

We believe that the strength of our brands,

innovation and marketing, coupled with the quality of our products and flexibility of our distribution network, allows us to compete

nonalcoholic beverage segment of the commercial beverage industry is highly competitive, consisting of numerous companies ranging from

small or emerging to very large and well established.

The principal areas of competition include pricing, packaging, development of new

products and flavors, and marketing campaigns.

Our products compete with a wide range of drinks produced by a relatively large number

of manufacturers.

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;

Our nonalcoholic products compete on the basis of brand recognition and loyalty,

taste, price, value, quality, innovation, distribution, shelf space, advertising, marketing and promotional activity (including digital),

packaging, convenience, service and the ability to anticipate and effectively respond to consumer preferences and trends, including increased

consumer focus on health and wellness and sustainability and the continued acceleration of e-commerce and other methods of distributing

and purchasing products.

Our products compete with a wide range of drinks produced by a relatively large number of manufacturers.

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

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

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

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

and effective development of new, unique cutting-edge products, attractive and different packaging, branded product advertising, and

We also compete for distributors who will concentrate on marketing our products over those of our competitors, provide stable

and reliable distribution, and secure adequate shelf space in retail outlets.

Competitive pressures in the soft drink category could

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

but growing presence in the mainstream market compared to many of our competitors, we believe our natural innovative beverage recipes,

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

Our commitment

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

also compete for distributors who will concentrate on marketing our products over those of our competitors, provide stable and reliable

distribution, and secure adequate shelf space in retail outlets.

products have a relatively high price, we have minimal mass media advertising to date, and a small but growing presence in the mainstream

market compared to many of our competitors, Our success in this competitive market is dependent on our natural innovative beverage recipes,

brand innovation, packaging, commitment to the highest quality standards, use of premium ingredients, and our proprietary ginger processing

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

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Key competitors are Chimes and Gin Gins.

During 2023, the Company licensed its candy business to Rootstock Trading,

a company founded and owned by our former Chief Sales Officer, Neal Cohane.

As part of this agreement, Rootstock agreed to pay a royalty

on a percentage of its net sales of licensed products.

The royalty fees are 0% for 2023, 2% for 2024, 4% for 2025, and 5% thereafter.

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

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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.

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

however, we do source certain ingredients from different regions and suppliers to mitigate some of this

Bottles and Aluminum Cans

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

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.

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.

We source glass bottles directly from manufacturers or indirectly through brokers or co-packers, based on their cost and

availability regionally.

During 2022 we entered into a three year agreement with a packaging broker to supply us with sleek and

standard 12-ounce cans though the year 2025.

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

The volume of sales in the

beverage business may be affected by weather conditions.

The volume of sales in the beverage business is affected by weather conditions from time to time.

own copyrights, trademarks and trade secrets relating to our products and the processes for their production;

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Pursuant to our manufacturing and bottling agreements, we authorize our

bottlers to use applicable Reed’s trademarks in connection with their manufacture, sale and distribution of our products.

co-packers to use applicable Reed’s trademarks in connection with their manufacture, sale and distribution of our products.

registered and intend to obtain additional trademarks in international markets as may become necessary.

use confidentiality and non-disclosure agreements with employees, manufacturers and distributors to protect our proprietary rights.

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

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,

the Federal Trade Commission Act, the Lanham Act, state consumer protection laws, competition laws, federal, state and local workplace

health and safety laws, various federal, state and local environmental protection laws, and various other federal, state and local statutes

and regulations applicable to the production, transportation, sale, safety, advertising, labeling and ingredients of such products.

the United States, the distribution and sale of our many products and related operations are also subject to numerous similar and other

statutes and regulations.

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;

result of necessary cooking;

to another applicable exemption.

Company beverages produced for sale in California are currently required to display warnings under this law.

We are unable to predict

whether a component found in a Company product might be added to the California list in the future, although the state has initiated

a regulatory process in which caffeine and other natural occurring substances will be evaluated for listing.

Furthermore, we are also

unable to predict when or whether the increasing sensitivity of detection methodology may become applicable under this law and related

regulations as they currently exist, or as they may be amended, might result in the detection of an infinitesimal quantity of a listed

substance in a beverage of ours produced for sale in California.

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

laws and regulations that apply to our business and the production, distribution and sale of our products include, but are not limited

the Federal Food, Drug and Cosmetic Act and various state laws governing food safety and food labeling;

the Food Safety Modernization

the Occupational Safety and Health Act and various state laws and regulations governing workplace health and safety;

various federal,

state and local environmental protection laws, as discussed below;

the Federal Motor Carrier Safety Act;

the Federal Trade Commission

the Lanham Act and various state law statutory and common law duties regarding false advertising;

various federal and state laws

and regulations governing our employment practices, including those related to equal employment opportunity, such as the Equal Employment

Opportunity Act and the National Labor Relations Act and those related to overtime compensation, such as the Fair Labor Standards Act;

various state and federal laws pertaining to sale and distribution of alcohol beverages;

data privacy and personal data protection laws

and regulations, including the California Consumer Privacy Act of 2018 (as modified by the California Privacy Rights Act);

foreign trade laws and regulations, including laws regarding the import or export of our products or ingredients used in our products

laws regulating the sale of certain of our products in schools;

and laws regulating the ingredients or substances contained

in, or attributes of, our products.

We are subject to various state and local statutes and regulations, including state consumer protection

laws such as Proposition 65 in California, which requires that a specific warning appear on any product that contains a substance listed

by the State of California as having been found to cause cancer or birth defects, unless the amount of such substance in the product

is below a safe harbor level.

jurisdictions have either imposed, or are considering imposing, new or increased taxes on the manufacture, distribution or sale of, ingredients

or substances contained in, or attributes of, our products or commodities used in the production of our products.

These taxes vary in

scope and form:

some apply to all beverages, including non-caloric beverages, while others apply only to beverages with a caloric sweetener

(e.g., sugar).

Similarly, some measures apply a single tax rate per ounce/liter on beverages containing over a certain level of added

sugar (or other sweetener) while others apply a graduated tax rate depending upon the amount of added sugar (or other sweetener) in the

jurisdictions have either imposed or are considering imposing regulations designed to increase recycling rates, encourage waste reduction,

restrict the sale of products utilizing certain packaging or to carry warnings about the environmental impact of plastic packaging.

is possible that similar or more restrictive requirements may be proposed or enacted in the future.

jurisdictions have either imposed, or are considering imposing, new or increased taxes on the manufacture, distribution or sale of our

products, ingredients or substances contained in, or attributes of, our products or commodities used in the production of our products.

These taxes vary in scope and form:

some apply to all beverages, , while others apply only to beverages with a caloric sweetener (e.g.,

Similarly, some measures apply a single tax rate per ounce/liter on beverages containing over a certain level of added sugar

(or other sweetener) while others apply a graduated tax rate depending upon the amount of added sugar (or other sweetener) in the beverage

and some apply a flat tax rate on beverages containing a particular substance or ingredient, regardless of the level of such substance

or ingredient.

of our beverage products presently offer and use non-refillable, recyclable containers in the United States.

Some of these bottlers also

Some of these co-packers also

offer and use refillable containers, which are also recyclable.

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States and elsewhere.

has been proposed in Congress and by certain state and local governments which would prohibit the sale of soft drink products in non-refillable

bottles and cans or require a mandatory deposit as a means of encouraging the return of such containers, each in an attempt to reduce

solid waste and litter.

Similarly, we are aware of proposed legislation that would impose fees or taxes on various types of containers

that are used in our business.

We are not currently impacted by the policies in these types of proposed legislation, but it is possible

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

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.

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”), the U.S.

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 time.

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 of beverage.

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.

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.

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.

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

addition to the discussion in this section, see also “Item 1A.

Risk Factors.”

of December 31, 2023, we had 21 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

We have never participated in a collective bargaining agreement.

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by reference in this report.

We make available on or through our website certain reports and amendments to those reports that we file

with or furnish to the Securities and Exchange Commission (“SEC”) in accordance with the Securities Exchange Act of 1934,

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:

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