What changed in this filing

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Item 1. Business

2026-03-25 compared with 2025-03-28 · 241 added, 393 removed, 183 unchanged (78% of the section changed)

Inc., a Delaware corporation (“Reed’s”, the “Company,” “we,” or “us” throughout

this report) owns a leading portfolio of handcrafted, natural beverages that is sold in over 32,000 outlets nationwide.

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, Reed’s Real

Ginger Ale, Reed’s Classic Mules, and Reed’s Hard 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 pineapple flavors, 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 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.

has 50 products that are sold throughout the United States, Canada, the United Kingdom, South Africa the Caribbean and the European Union.

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

common stock has been quoted on the OTCQX “Best Market” since February 16, 2023.

We are a “smaller reporting company”,

meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0

million during the most recently completed fiscal year.

Our common stock is currently registered under section 12(g) of the Securities

Exchange Act of 1934, as amended.

Restructuring and Change of Control

2024, the Company experienced a change of control resulting from a series of investments by D&D Source of Life Holding Ltd., a Cayman

Islands entity (“D&D”).

D&D is currently the majority stockholder of Reed’s.

D&D is currently 100% owned

and controlled by Era Regenerative Medicine Ltd., a BVI company.

October 10, 2024, D&D purchased eight secured promissory notes of the company from funds affiliated with Whitebox Advisors, LLC (referred

to herein as “Whitebox”) for a total purchase price of $17,878,248.

November 14, 2024, the Company entered into a new secured one-year term loan with a principal amount of $10 million with Whitebox.

The term loan is secured by substantially all of the Company’s assets, including all intellectual property.

The Company used part

of the proceeds to pay off and close its then existing ABL revolving line of credit.

November 19, 2024, the Company and D&D entered into an exchange agreement, whereby D&D equitized the Notes, in full, for an aggregate

of 22,478,074 shares of common stock of the Company.

offers its portfolio of natural hand-crafted beverages in the craft specialty foods industry as natural alternatives to the $45 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 6% during 2024 and the

ginger ale segment grew 9% and is now a $2.1 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, as a result, we believe there is substantial growth in this segment.

Consumers are shifting consumption to better-for-you

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.

The CSD market has been impacted by the emergence

of functional or “modern soda” beverages that are formulated with functional ingredients to enhance hydration and provide

additional benefits such as gut health, cognitive enhancement, immune support, and energy.

Brands that have emerged and driving category

growth are Olipop, Poppi, Celsius, Alani Nu, and Culture Pop.

These beverages are low in sugar and calories and contain minerals, vitamins,

dietary fibers or adaptogens with an assortment of flavors.

The primary consumers are Gen Z and Millennials seeking healthier alternatives

to traditional soda.

Reed’s is set to launch a new

multi-functional soda line.

This innovative lineup is formulated with organic ginger, complex adaptogen mushroom extracts, and

prebiotic fiber.

Each serving contains only 5 grams of sugar, approximately 30 to 45 calories, 500 mg of adaptogens, and 2,000 to

5,000 mg of organic ginger.

The flavor profile includes Berry Bubbly, Strawberry Vanilla, Lemongrass Ginger, and Root Beer.

beverages cater to the rising demand for health-conscious, functional refreshment options and position us at the forefront of the

evolving beverage market.

The debut of this line is set for April 2025 and continuing for the balance of the year.

Presently the

Company has secured approximately 8,000 points of distribution.

Trends Driving Growth for Our Products

following is a list of consumer trends that are accelerating and supporting our brands.

Interest in natural products is growing and approximately 59% of shoppers think it’s important for their products to be

Sales of natural products increased 6% in 2024 and are expected to continue in the 4-6% range for the next few

The demand for clean label products has been steadily growing in recent years.

This trend is driven by factors such as increased consumer

awareness of food ingredients, rising health concerns, and a growing preference for natural and organic products.

consumers 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% through 2028.

consumers have made dietary changes to include more plant-based foods and beverages.

Ginger Based :

Consumer demand for ginger-based

products is growing due to increased awareness of ginger’s health benefits.

The global ginger market is expected to grow at an annual

rate of 9% from 2024 to 2032.

are a branded beverage company offering a portfolio of natural, premium, and functional beverages under the Reed’s and Virgil’s

Our products are sold in over 32,000 outlets across the United States and in select international markets.

We compete within

carbonated soft drink (“CSD”) market by providing alternatives that we believe are better-for-you,

with a focus on real ginger, clean-label ingredients, and functional formulations.

operate an asset-light business model that relies on a network of independent co-packers and distributors.

We believe this structure

allows us to scale production efficiently, expand distribution, and introduce innovation without significant capital expenditures.

further believe this model positions us to respond quickly to consumer demand shifts and to enter new categories and geographies in a

cost-efficient manner.

have 50 products that are sold throughout the United States

and the Asia-Pacific region.

We produce our products through a network of seven independent manufacturers and distribute our products

through five independent distribution centers.

CSD market grew approximately 2% to $46 billion in 2025 (source:

ginger ale market grew approximately

6% to $2.9 billion in 2025 (source:

The Business Research Company).

Functional and “modern soda” products are expanding at double-digit rates, led by consumer

demand for premium craft beverages with natural ingredients, lower sugar, and added functional benefits.

We believe these trends

create favorable conditions for our brand portfolio, which is aligned with the following macro-consumer drivers:

consumer recognition of ginger as a functional wellness ingredient

sugar consumption

label and natural ingredient demand

Premiumization,

A trend towards embracing quality has accelerated with consumers splurging on premium beverages at retail, including premium

The premium beverage market is expected to grow at an annual rate of 6% from 2024 to 2031.

The premium cocktail mixer

market is expected to grow at an annual rate of 8% from 2024 to 2033.

Nonalcoholic Beverages :

More consumers are seeking

nonalcoholic alternatives with bold and unique flavors.

Nonalcoholic drink consumption is expected to increase by a third by

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.

with consumers trading up to higher quality craft beverages

alternatives with bold flavors

make our craft 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.

streamlined our focus to core brands:

Reed’s Ginger Beverages and Virgil’s Craft Sodas.

In 2020, we launched our new

line of Reed’s Real Ginger Ales, in both Full Sugar and Zero Sugar varieties, made with pressed organic ginger.

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

Ginger Ale which is 5% ABV.

In 2025, we launched a new multi-functional soda line that is formulated with organic

Craft Ginger Beer

Reed’s 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.

We do not use artificial preservatives, artificial flavors, or colors, and Reed’s Ginger Beer is certified kosher.

We offer different

levels of fresh ginger content, ranging from our lightest-spiced Original, to our medium-spiced Extra, and finally to our spiciest Strongest.

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.

We do not use artificial preservatives, flavors, or colors.

Reed’s Ginger Beer is certified kosher.

We offer different levels of fresh ginger content, ranging from our lightest-spiced

Original, to our medium-spiced Extra, and finally to our spiciest Strongest.

We also offer three sweetener options:

one with cane sugar, and fruit juices;

one with cane sugar;

one with honey and pineapple juice;

and another without

sugar (Zero Sugar) made from an innovative blend of natural sweeteners.

In 2021, we expanded our Extra Ginger Beer portfolio into cans

of the end of 2024, the Reed’s Craft Ginger Beer line included five major varieties with a mix of bottles and cans:

Original Ginger Beer – O ur first to market product uses a Jamaican-inspired recipe that calls for fresh ginger root,

lemon,and lime, juice, honey and pineapple flavors, raw cane sugar, herbs and spices.

Premium Ginger Beer – Our Original Ginger Beer sweetened with honey and pineapple juice.

(No cane sugar added.)

and another without sugar (Zero Sugar) made with stevia, a natural zero-calorie sweetener.

Original Ginger Beer – Our first to market product uses a Jamaican-inspired recipe that calls for pressed organic ginger,

honey, pineapple juice, lemon and lime juices, cane sugar, and spices.

Premium Ginger Beer – Our Original Ginger Beer sweetened with honey and pineapple juice (no cane sugar added).

Extra Ginger Beer – Contains 50% more fresh ginger than Reed’s Original recipe for extra spice.

Strongest Ginger Beer – Contains 125% 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 – Our Extra Ginger Beer sweetened with stevia, a natural zero-calorie sweetener (no cane

sugar added).

Real Ginger Ale

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

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

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

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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.

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

It uses a proprietary sweetening system

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

Real Cranberry Ginger Ale – This seasonal product launched in the fall of 2021 and is a delicious holiday

offering available September 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.

Reed’s Real Blackberry Ginger Ale -

This seasonal product launched in the fall of 2024 and is a delicious holiday offering available September through December

stevia, a natural zero-calorie sweetener.

Real Ginger Ale –The only mass market ginger ale made with

pressed organic ginger.

Zero Sugar Real Ginger Ale –Our Real Ginger Ale sweetened with stevia, a natural zero-calorie sweetener (no cane sugar added).

Real Cranberry Ginger Ale – Our seasonal holiday offering

available September through December.

Real Blackberry Ginger Ale - Our seasonal product holiday offering available September through December.

Harvest Spiced Apple Cider – Our seasonal product holiday offering available September through December.

Ready to Drink

Zero Sugar Classic Mule – Launched in 2020 and currently sold in 14 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.

Handcrafted Sodas

Zero Sugar Classic Mule – Our first-ever alcohol offering made with pressed organic ginger and a handcrafted brewing and

fermentation process.

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

is currently sold in 14 states.

Zero Sugar Hard Ginger Ale – Our line of light refreshing hard ginger ales are available in four flavors:

Mango, 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.

It is currently sold in 14 states.

Functional Soda

2025, we launched a new multi-functional soda line.

This innovative lineup is formulated with pressed organic ginger, complex

adaptogen mushroom extracts, and prebiotic fiber.

Each serving contains only 5 grams of sugar, approximately 30 to 45 calories, 500

mg of adaptogens, and 2,000 to 5,000 mg of organic ginger.

The flavor profile includes Lemongrass Ginger, Berry Bubbly, Strawberry

Vanilla, and Root Beer.

Handcrafted Soda

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

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:

We do not use artificial

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

Virgil’s first Handcrafted soda was launched in 1994.

It began as one man’s passion to create the finest root

beer ever produced and has since won numerous awards.

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

soda flavors.

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

2023 Virgil’s Handcrafted soda will be offered in both glass and can formats.

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

Each Zero Sugar soda is sweetened

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, Vanilla Cream, Black Cherry, and Orange Cream.

Flying Cauldron Soda

Flying Cauldron is a non-alcoholic

butterscotch beer prized for its creamy vanilla and butterscotch flavors.

Sought after by beverage aficionados, Flying Cauldron is made

with natural ingredients and no artificial flavors, sweeteners, preservatives, gluten, caffeine, or GMOs.

Flying Cauldron is available

in 4-packs, single 12 oz bottles, and 16 oz swing-lid bottles.

Primary Markets

target a smaller segment of the estimated $45 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.

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

in multiple regions across the country, supported by local Reed’s sales staff.

Additionally, we have sales managers handling national

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.

It began as one person’s passion to create the finest

root beer ever produced and has since won numerous awards.

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

classic soda flavors.

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

Cream, and Cola.

Our Virgil’s Handcrafted Soda

sweetened with stevia, a natural zero-calorie sweetener (no cane sugar added).

This natural line of Zero Sugar flavors includes Root Beer, Vanilla Cream, Black Cherry,

Orange Cream, Cola.

Cauldron Soda

Cauldron is a non-alcohol butterscotch beer prized for its creamy vanilla and butterscotch flavors.

Sought after by beverage aficionados,

Flying Cauldron is made with natural ingredients and no artificial flavors, sweeteners, preservatives, gluten, caffeine, or GMOs.

believe our portfolio enables us to compete across multiple high-growth subcategories of the broader CSD market.

Operating Model

of Reed’s products are manufactured through independent co-packers.

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

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

We have relationships with one co-packer in Pennsylvania, three in California,

one in Washington, one in New York, and one in North Carolina.

We believe this model provides:

The ability to ramp production quickly without significant capital investment

The ability to shift production among multiple facilities to manage demand, reduce freight costs, and mitigate supply chain risks

The ability to drive down per-unit costs by introducing freight-friendly packaging, including a shift from glass bottles to aluminum

Recently, we entered into a strategic partnership with a leading national logistics provider to manage freight and warehousing.

this partnership enhances efficiency and cost control across our supply chain.

and Marketing

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

placed in multiple regions across the United States, supported by local Reed’s sales staff.

Additionally, we have sales managers

handling national accounts for natural, specialty, grocery, mass, club, drug, liquor, convenience and on-premise channels.

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 and in international markets.

In addition to our internal sales team, we

partner with independent sales brokers and outside representatives to promote our products in specific channels and key targeted

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

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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 model.

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.

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

website www.drinkreeds.com, Amazon, and third party e-commerce retailers.

of our representative key customers include:

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

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, and HvVee.

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

and Final, Bashes, Haggen, AFS, Market Basket, Meijer, Cub, and HyVee

BevMo!, ABC, and Total Wine and More

& drug stores :

Distribution Network

products are brought to market through an extremely flexible and fluid hybrid distribution model, which is a mix of direct-store-delivery,

products are brought to market through a flexible distribution model, which is a mix of direct-store-delivery,

customer warehouse, and distributor networks.

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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 have expanded and will continue to expand in this distribution network.

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

This system of distribution allows our brands far reaching access throughout North America.

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

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

independent distributor partners operate DSD systems which deliver primarily beverages, foods, and snacks directly to retail stores where

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DSD is especially well-suited to products frequently restocked and responds to in-store promotion and merchandising.

We are primarily

focused on expanding our DSD network on a national basis.

We are focused on expanding our DSD network on a national basis.

to Store Warehouse Distribution

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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 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.

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

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

These distributors have a warehouse and distribution

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International

presently export Reed’s and Virgil’s brands throughout international markets via US based exporters.

International

markets where our brands are present are Germany, France, UK, South Africa, Canada, Spain, Philippines,

Mexico, Vietnam, Australia, and portions of the Caribbean and Central America,

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 aluminium cans and have secured manufacturing partnerships in local markets whereby we ship concentrate rather than

finished goods.

We currently have production facilities in the U.K.

and will be expanding into the European Union during 2025.

are open to exporting and co-packing internationally and expanding our brands into foreign markets and believe that our new

partnership with D&D Holdings Ltd (“D&D”) will advance our ability to successfully penetrate the continent of

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.

agreements with some of our distributors commit us to “termination fees” if we terminate our agreements early or without

These agreements provide for our distributor partners to have the right to distribute our products to a defined type of retailer

within a defined geographic region.

As is customary in the beverage industry, if we should terminate the agreement or not automatically

renew the agreement, we would be obligated to make certain payments to our distributor partners.

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’

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

Manufacturing

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

They brew, blend, bottle, and package our products and charge us a fee, generally by the case, for the products produced.

have relationships with two co-packers in Pennsylvania and three in California, one in Washington state, one in Oregon,

one in New York state, and one in North Carolina.

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

During 2024, we entered into co-packing agreements with a new facility in Southern California, DrinkPak.

Our agreement with DrinkPak serves

to expand our production for cans and will allows us to better serve our Southwest and club 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

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.

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 may not be able to satisfy demand on a short-term basis.

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

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 Fitz Mark 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 movements, 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.

Product Development

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

Healthier alternatives will be the future for carbonated

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 the release of our new line of multi-functional beverages during

2025 with a launch during Q1.

This product is formulated with organic ginger, complex adaptogen mushroom extracts, and prebiotic fibre.

Each serving contains only 5 grams of sugar, approximately 30 to 45 calories, 500 mg of adaptogens, and 2,000 to 5,000 mg of organic ginger.

The flavor profile includes Berry Bubbly, Strawberry Vanilla, Lemongrass Ginger, and Root Beer.

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.

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

Non-alcoholic

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,

believe international markets represent a significant long-term growth opportunity.

In 2025, we established Reed’s (Asia) Limited,

with subsidiaries in Hong Kong, Japan, China and Singapore as part of our strategy to build a local presence in the Asia-Pacific region.

We expect continued investment in our Asia-Pacific growth initiative.

international strategy emphasizes local co-packing arrangements and concentrate models, which we believe allow us to reduce freight costs

and scale efficiently in markets where ginger is already a culturally relevant and widely consumed ingredient.

intend to grow our business through the following strategic priorities:

Distribution and Market Penetration.

We intend to broaden retail coverage across mass, club, convenience, and liquor channels, and

to expand our national DSD network to improve visibility and execution at the store level.

International Expansion.

We plan to leverage our newly formed Asia-Pacific subsidiaries to expand further into international

We believe select international regions provide natural alignment with our ginger-based portfolio.

Operational Efficiency and Reduce Costs.

We continue to transition packaging to aluminum cans, optimize our co-packer network, and

utilize consolidated freight and logistics services.

We believe these initiatives will lower unit costs, improve gross margin potential,

and reduce exposure to supply chain disruption.

Innovation in Modern Soda.

We intend to expand our healthier soda line with new SKUs and flavors and

continue to introduce beverages that align with health-conscious consumer trends favoring natural, premium, and functional alternatives.

in this competitive environment is dependent on effective promotion of existing products, introduction of new products, efficiency in production techniques, incorporation of technology and digital

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

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

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

non-alcoholic beverage segment of the commercial beverage industry is highly competitive, consisting of numerous companies ranging from

non-alcohol 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.

Our non-alcoholic products compete on the basis of brand recognition and loyalty,

Our non-alcohol 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),

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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.

The category is small and there is not a significant

number of entrants.

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 (Ready to Drink) 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

products have a relatively high price, we have conducted minimal mass media advertising to date, and we have 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 beverage recipes, brand innovation, packaging, commitment to the highest quality standards, use of premium

ingredients, and our proprietary ginger processing formula.

Ready to Drink (RTD) category refers to pre-mixed, single serve alcohol beverages that offer convenience and quality for cocktail

start of the Covid-19 pandemic, 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.

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

Without the recent quality

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

improvements of RTD cocktails, however, it is unlikely that the category would have taken off.

Today’s RTD cocktails

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Premiumization has resulted in a new wave of

products that boast less sugar and more transparency.

products that have less sugar and more transparency.

Variety has also been a key driver, allowing consumers ways to experiment

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Reed’s is poised to leverage these trends by bringing high-quality, crafted

Mules and Hard Ginger Ale 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

Mules and Hard Ginger Ale made with pressed organic ginger to the market.

in the RTD category include High Noon, Cutwater Spirits, Jack Daniel’s & Coca-Cola, NUTRL, BuzzBallz, On The Rocks, Jose

Cuervo, 1800 Tequila, Bacardi, The Long Drink Company, and Fisher’s Island.

In the Mule segment, competitors include Cutwater

Spirits, Mule 2.0, Copper Can, Crafthouse Cocktails, and Cardinal Spirits.

Substantially

all of the raw materials used in the preparation, bottling and packaging of our products are purchased by Reed’s or by our contract

packers in accordance with our specifications.

all of the raw materials used in the preparation, bottling and packaging of our products are purchased by Reed’s or by our co-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

This provides a level of protection against a major supply constriction or adverse cost or supply impacts.

Since our raw materials

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

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

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

Bottles and Aluminium Cans

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

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.

the raw materials used in our products are obtained from multiple domestic and foreign suppliers.

This provides a level of protection against a major supply constriction or adverse cost or supply

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

supply and price;

however, we source ingredients from multiple regions and suppliers to mitigate this

Aluminum Cans and Glass

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

We are generally

responsible for arranging the purchase, and delivery to our third-party co-packers, of the containers in which our beverage products

are packaged.

We source aluminum cans and glass bottles directly from manufacturers or indirectly through brokers or co-packers,

based on their cost and availability regionally.

These suppliers provide expertise in emerging package and material innovation that

can be leveraged to further expand marketing and package offerings.

Capital Practices

Historically,

we have financed our operations through public and private sales of common stock, issuance of preferred and common stock, convertible

debt instruments, term loans and credit lines from financial institutions, and cash generated from operations.

We have taken decisive

action to improve our margins, including fully outsourcing our manufacturing process, streamlining our product portfolio, negotiating

improved vendor contracts and restructuring our selling prices.

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 non-alcoholic beverages are somewhat seasonal with higher-than-average volume in the warmer months.

working capital practices focus on optimizing the cash conversion cycle by efficiently managing receivables, payables, and inventory.

Key working capital optimization strategies include implementing cash flow forecasts, digital invoicing, early pay discounts, involving

the sales team, extended payment terms with suppliers, electronic workflows and payments, technology to predict demand and reduce inventory

overstocking and related holding costs, and regular monitoring of key performance indicators to ensure liquidity and operational efficiency.

of our non-alcohol beverages are moderately seasonal with higher-than-average volume in the warmer months.

The volume of sales in the

beverage business is affected by weather conditions from time to time.

Additionally, a portion of our products are only available at certain times of the year.

Additionally, a portion of our products are seasonal and only

available at certain times of the year.

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

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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

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., 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 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.

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.

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Privacy Rights Act (“CPRA”), which took effect on January 1, 2023.

The interpretation and application of data privacy,

cross-border data transfers and data protection laws and regulations are often uncertain and are evolving in the United States and internationally.

The interpretation and application of data privacy, cross-border

data transfers and data protection laws and regulations are often uncertain and are evolving in the United States and internationally.

We monitor pending and proposed legislation and regulatory initiatives to ascertain their relevance to and potential impact on our business

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Risk Factors.”

Human Capital

Attracting, developing and retaining talent with

the right skills to drive our business is central to our growth strategy.

The strength of our workforce is one of the significant contributors

to our success.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and

integrating our existing and new employees, advisors and consultants.

The principal purposes of our 2024 Inducement Plan was to retain

and reward personnel through the granting of stock-options, in order to increase shareholder value and the success of our Company by

motivating such individuals to perform to the best of their abilities and achieve our objectives.

of December 31, 2024, we had 24 full-time equivalent employees on our corporate staff.

We employ additional people on a part-time basis

developing and retaining talent with the right skills to drive our business is central to our growth strategy.

The strength of our workforce

is one of the significant contributors to our success.

Our human capital resources objectives include, as applicable, identifying, recruiting,

retaining, incentivizing and integrating our existing and new employees, advisors and consultants.

The principal purpose of our equity plans was to retain and reward personnel through the granting of stock-options, in order to increase shareholder value and

the success of our Company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

of March 20, 2026, we had 44 full-time equivalent employees on our corporate staff.

We employ additional personnel on a part-time basis

We have never participated in a collective bargaining agreement.

We believe relations with our employees are good.

Company maintains websites at the following addresses:

www.drinkreeds.com

www.vigils.com

www.flyingcauldron.com

Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, proxy and information statements

and amendments to those reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Exchange Act are available through

the “Investors” portion of our website www.drinkreeds.com free of charge as soon as reasonably practicable after we electronically

file such material with, or furnish it to, the Securities and Exchange Commission, or SEC.

Information on our websites is not part of

this Annual Report or any of our other securities filings unless specifically incorporated herein by reference.

We have included our

website addresses in this Annual Report solely as inactive textual references.

Our filings with the SEC may be accessed through the SEC’s

website at www.sec.gov.

All statements made in any of our securities filings, including all forward-looking statements or information,

are made as of the date of the document in which the statement is included, and we do not assume or undertake any obligation to update

any of those statements or documents unless we are required to do so by law.

Corporate Information

Reed’s Original Ginger Brew, created in

1987, was introduced to the market in Southern California stores in 1989.

In 1991, we incorporated our business operations under the laws

of the State of Florida under the name of “Original Beverage Corporation.” In September 2001, pursuant to a reincorporation

merger, we changed our state of incorporation to the State of Delaware, and changed our name to “Reed’s, Inc.”

Our principal executive office is located at 501

Merritt 7 PH, Norwalk, Connecticut 06851.

Our telephone number is (800) 997-3337.

Our website address is https://investor.reedsinc.com.

Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form

10-K, and you should not consider information on our website to be part hereof.

The Reed’s logo, the name Reed’s,

and other trademarks of Reed’s, Inc.

are the property of Reed’s, Inc.

Other trade names, trademarks and service marks used

herein are the property of their respective owners.

We intend to announce material information

to the public through filings with the Securities and Exchange Commission (the “SEC”), on the investor relations page of our website,

which is located at https://investor.reedsinc.com, press releases, public conference calls and public webcasts.

The information

disclosed through the foregoing channels could be deemed to be material information.

As such, we encourage investors, the media, and

others to follow the channels listed above and to review the information disclosed through such channels.

We file electronically

with the SEC our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these

reports filed or furnished pursuant to Section13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange

We make available on our investor relations website, free of charge, copies of these reports and other information as soon as

reasonably practicable after we file such material with or furnish it to the SEC.

The SEC also maintains a website that contains our

SEC filings at www.sec.gov.

Information found on, or accessible through these websites is not part of, and is not incorporated into,

this Annual Report on Form 10-K or in any other report or document we file.

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