UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
For
the fiscal year ended December 31, 2025
For
the transition period from _______ to _______
Commission
File Number: 001-32501
REED’S,
INC.
(Exact
name of registrant as specified in its charter)
(State of incorporation) (I.R.S. Employer Identification No.)
(Address of principal executive offices) (Zip Code)
(800)997-3337
(Registrant’s
telephone number, including area code)
(Former
name, former address and former fiscal year, if changed since last report)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.0001 per share REED NYSE American LLC
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The
aggregate market value of the voting and non-voting common equity held by non-affiliates (excluding voting shares held by officers and
directors) as of June 30, 2025 was $18,457,633.
There were
a total of 11,820,429 shares of Common Stock outstanding as of March 20, 2026.
TABLE
OF CONTENTS
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 12
Item 1B. Unresolved Staff Comments 28
Item 1C. Cybersecurity 29
Item 2. Properties 29
Item 3. Legal Proceedings 29
Item 4. Mine Safety Disclosures 29
Item 6. [Reserved] 30
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 39
Item 8. Consolidated Financial Statements and Supplementary Data 40
Item 9A. Controls and Procedures 41
Item 9B. Other Information 41
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 41
PART III 42
Item 10. Directors, Executive Officers and Corporate Governance 42
Item 11. Executive Compensation 45
Item 14. Principal Accountant Fees and Services 50
Item 15. Exhibits and Financial Statement Schedules 52
i
Unless the context otherwise requires, the terms the “Company,”
“Reed’s,” “we,” “us,” “our,” and similar references in this Annual Report on Form
10-K refer to Reed’s, Inc. and its consolidated subsidiaries. This Annual Report on Form 10-K contains and incorporates by reference
market data and industry statistics and forecasts that are based on independent industry publications and other publicly available information.
Although we believe that these sources are reliable, we do not guarantee the accuracy or completeness of this information and we have
not independently verified this information.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
This
Annual Report on Form 10-K contains statements reflecting our views about our future performance that constitute “forward-looking
statements”. Statements that constitute forward-looking statements are generally identified through the inclusion of words such
as “aim,” “anticipate,” “believe,” “estimate,” “expect,”
“expressed confidence,” “forecast,” “future,” “goal,” “guidance,” “intend,”
“may,” “objective,” “outlook,” “plan,” “potential,”
“project,” “seek,” “should,” “strategy,” “target,” “will” or
similar statements or variations of such words and other similar expressions. All statements addressing our future operating performance,
and statements addressing events and developments that we expect or anticipate will occur in the future, are forward-looking statements.
These forward-looking statements are based on currently available information, operating plans and projections about future events and
trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in
any such forward-looking statement. These risks and uncertainties include, but are not limited to, those described in “Item 1A.
Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are
made. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
The discussion of risks in this report is by no means all-inclusive but is designed to highlight what we believe are important factors
to consider when evaluating our future performance.
ii
Summary
Risk Factors
Our
business is subject to a number of risks of which you should be aware before making a decision to invest in our securities. These risks
include, among others, the following:
● Damage to our reputation or brand image can adversely affect our business.
● Any inability to compete effectively can adversely affect our business.
iii
PART
I
Item
1. Business
Overview
We
are a branded beverage company offering a portfolio of natural, premium, and functional beverages under the Reed’s and Virgil’s
brands. Our products are sold in over 32,000 outlets across the United States and in select international markets. We compete within
the U.S. 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.
We
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. We
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.
We
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.
Industry
Overview
The
U.S. CSD market grew approximately 2% to $46 billion in 2025 (source: IBISWorld). The U.S. 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:
● Growing consumer recognition of ginger as a functional wellness ingredient
● Reduced sugar consumption
● Clean label and natural ingredient demand
● Premiumization, with consumers trading up to higher quality craft beverages
● Non-alcohol alternatives with bold flavors
Brand
Portfolio
We
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 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. In 2021, we
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
ingredients.
Reed’s
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, 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;
one with honey and pineapple juice; and another without sugar (Zero Sugar) made with stevia, a natural zero-calorie sweetener.
Reed’s
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.
Reed’s
Premium Ginger Beer – Our Original Ginger Beer sweetened with honey and pineapple juice (no cane sugar added).
Reed’s
Extra Ginger Beer – Contains 50% more fresh ginger than Reed’s Original recipe for extra spice.
Reed’s
Strongest Ginger Beer – Contains 125% more fresh ginger than Reed’s Original for the strongest spice.
Reed’s
Zero Sugar Extra Ginger Beer – Our Extra Ginger Beer sweetened with stevia, a natural zero-calorie sweetener (no cane
sugar added).
Reed’s
Real Ginger Ale
Reed’s
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. We offer two sweetener options: one with cane sugar and the other with
stevia, a natural zero-calorie sweetener.
Reed’s
Real Ginger Ale –The only mass market ginger ale made with
pressed organic ginger.
Reed’s
Zero Sugar Real Ginger Ale –Our Real Ginger Ale sweetened with stevia, a natural zero-calorie sweetener (no cane sugar added).
Reed’s
Real Cranberry Ginger Ale – Our seasonal holiday offering
available September through December.
Reed’s
Real Blackberry Ginger Ale - Our seasonal product holiday offering available September through December.
Reed’s
Harvest Spiced Apple Cider – Our seasonal product holiday offering available September through December.
Reed’s
Ready to Drink
Reed’s
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. It
is currently sold in 14 states.
Reed’s
Zero Sugar Hard Ginger Ale – Our line of light refreshing hard ginger ales are available in four flavors: Cherry Lime,
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.
Reed’s
Functional Soda
In
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.
Virgil’s
Handcrafted Soda
Virgil’s
is a premium handcrafted soda that uses only natural ingredients to create bold renditions of classic flavors. We do not use artificial
preservatives, artificial colors, or GMO-sourced ingredients, and our Virgil’s line is certified kosher.
Handcrafted
Line: Virgil’s first Handcrafted soda was launched in 1994. 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.
Zero
Sugar Line: 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.
Flying
Cauldron Soda
Flying
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.
We
believe our portfolio enables us to compete across multiple high-growth subcategories of the broader CSD market.
Scalable
Operating Model
All
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:
Recently, we entered into a strategic partnership with a leading national logistics provider to manage freight and warehousing. We believe
this partnership enhances efficiency and cost control across our supply chain.
Sales
and Marketing
We
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. 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 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
accounts.
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 Company
website www.drinkreeds.com, Amazon, and third party e-commerce retailers.
Some
of our representative key customers include:
● Club stores: Costco
● Liquor stores: BevMo!, ABC, and Total Wine and More
● Convenience & drug stores: Duane Reade
Distribution
Network
Our
products are brought to market through a flexible distribution model, which is a mix of direct-store-delivery,
customer warehouse, and distributor networks. The distribution system used depends on customer needs, product characteristics, and local
trade practices.
Our
product reaches the market in the following ways:
Direct
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 throughout North America. During the past year we have expanded and will continue to expand in this distribution network.
Direct
to Store Distribution (“DSD”) Through Non-Alcohol and Alcohol Beverage Distributor Network
Our
independent distributor partners operate DSD systems which deliver primarily beverages, foods, and snacks directly to retail stores where
the products are merchandised by their route sales and field sales employees. DSD enables us to merchandise with maximum visibility and
appeal. DSD is especially well-suited to products frequently restocked and responds to in-store promotion and merchandising. We are focused on expanding our DSD network on a national basis.
Direct
to Store Warehouse Distribution
Some
of our products are delivered from our co-packers and warehouses directly to customer warehouses. Some retailers mandate we deliver directly
to them, as it is more cost effective and allows them to pass savings along to their customers. Other retailers may not mandate direct
delivery, but they recommend and prefer it as they have the capability to self-distribute and can realize significant savings with direct
delivery.
Wholesale
Distribution
We
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
center, and ship Reed’s and Virgil’s products directly to the retailer (or to customers who opt for drop shipping).
International
Expansion
We
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.
Our
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.
Growth
Strategy
We
intend to grow our business through the following strategic priorities:
Competition
Non-alcohol
Beverages
Success
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. 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
effectively.
The
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-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),
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. 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, Barritt’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
Jones Soda; In the Ginger Ale category we compete with Canada Dry, Schweppes, Seagram’s, Vernor’s, and Zevia.
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.
Our
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
The
Ready to Drink (RTD) category refers to pre-mixed, single serve alcohol beverages that offer convenience and quality for cocktail
drinkers.
The
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 pre-mixed, single-serve RTDs. Without the recent quality
improvements of RTD cocktails, however, it is unlikely that the category would have taken off. Today’s RTD cocktails
bring much higher quality versus earlier wine coolers and malt-based hard lemonades. Premiumization has resulted in a new wave of
products that have less sugar and more transparency. Variety has also been a key driver, allowing consumers ways to experiment
without buying costly ingredients or spirits. Reed’s is poised to leverage these trends by bringing high-quality, crafted
Mules and Hard Ginger Ale made with pressed organic ginger to the market.
Competitors
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.
Raw
Materials
Substantially
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.
Generally,
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
impacts.
Many
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
risk.
Aluminum Cans and Glass
Bottles
A
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.
Working
Capital Practices
Our
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.
Seasonality
Sales
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 seasonal and only
available at certain times of the year.
Proprietary
Rights
We
own copyrights, trademarks and trade secrets relating to our products and the processes for their production; the packages used for our
products; and the design and operation of various processes and equipment used in our business. Some of our proprietary rights are licensed
to our co-packers and suppliers and other parties. Reed’s ginger processing and brewing process finished beverage products and
concentrate formulas are among its most valuable trade secrets.
We
own trademarks in the United States that we consider material to our business. Trademarks in the United States are valid as long as they
are in use and/or their registrations are properly maintained. Pursuant to our manufacturing and bottling agreements, we authorize our
co-packers to use applicable Reed’s trademarks in connection with their manufacture, sale and distribution of our products. We
have registered and intend to obtain additional trademarks in international markets as may become necessary.
We
use confidentiality and non-disclosure agreements with employees, manufacturers and distributors to protect our proprietary rights.
Regulation
We
are required to comply, and it is our policy to comply with all applicable laws in all jurisdictions in which we do business.
U.S.
laws and regulations that apply to our business and the production, distribution and sale of our products include, but are not limited
to: the Federal Food, Drug and Cosmetic Act and various state laws governing food safety and food labelling; the Food Safety Modernization
Act; 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
Act; 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); customs and
foreign trade laws and regulations, including laws regarding the import or export of our products or ingredients used in our products
and tariffs; 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.
Certain
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
beverages.
Certain
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. It
is possible that similar or more restrictive requirements may be proposed or enacted in the future.
Certain
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.
Co-packers
of our beverage products presently offer and use non-refillable, recyclable containers in the United States. Some of these co-packers
also offer and use refillable containers, which are also recyclable. Legal requirements apply in various jurisdictions in the United
States and overseas requiring deposits or certain taxes or fees be charged for the sale, marketing and use of certain non-refillable
beverage containers. The precise requirements imposed by these measures vary. Other types of beverage container-related deposit, recycling,
tax and/or product stewardship statutes and regulations also apply in various jurisdictions in the United States and overseas. We anticipate
additional, similar legal requirements may be proposed or enacted in the future at local, state and federal levels, both in the United
States and elsewhere.
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”), 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.
Our
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.
We
are also subject to various federal, state and international laws and regulations related to privacy and data protection, including the
California Consumer Privacy Act of 2018 (“CCPA”), which became effective on January 1, 2020, and its extension, the California
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.
We monitor pending and proposed legislation and regulatory initiatives to ascertain their relevance to and potential impact on our business
and develop strategies to address regulatory trends and developments, including any required changes to our privacy and data protection
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.
In
addition to the discussion in this section, see also “Item 1A. 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 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.
As
of March 20, 2026, we had 44 full-time equivalent employees on our corporate staff. We employ additional personnel on a part-time basis
as needed. We have never participated in a collective bargaining agreement. We believe relations with our employees are good.
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.
Available
Information
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
Act”). 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.
Item
1A. Risk Factors
A
description of the risks and uncertainties associated with our business is set forth below. You should carefully consider the risks and
uncertainties described below, as well as the other information contained in this Annual Report on Form 10-K, including our consolidated
financial statements and the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results
of Operations.” The occurrence of any of the events or developments described below could adversely affect our business, results
of operations, financial condition, reputation, and prospects. In such an event, the market price of our common stock could decline,
and you may lose all or part of your investment. These are not the only risks we face. There may be other risks we are
not currently aware of or that we currently deem not to be material but that may become material in the future.
Risks
Related to Our Business and Industry
We
have incurred and may continue to incur losses, and we may be unable to achieve or maintain profitability.
We incurred net losses of
$15,842 million and $13,152 million for the fiscal years ended December 31, 2025 and 2024, respectively. While we aim to reduce costs,
our operating expenses may increase over time as we continue to invest in growing our business, increasing our customer base, contract
manufacturers and distributors, and expanding our selling and marketing channels. Our expansion efforts may prove more expensive than
we anticipate, and there is no guarantee that these efforts will translate into sufficient sales to cover our expenses and result in profits.
In addition, if our efforts to increase the average selling price of our products over time result in outsized volume decreases, our net
sales may be adversely impacted and it will be challenging to achieve profitability or maintain pace with cost increases over time. We
incur significant expenses in developing our innovative products and delivering, handling and marketing our products. Accordingly, we
may not be able to achieve or maintain profitability, and we may continue to incur significant losses in the future.
Our
quarterly and annual operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts
or any guidance we may publicly provide, each of which may cause our stock price to fluctuate or decline.
We
expect our operating results to be subject to quarterly and annual fluctuations which may, in turn, cause the price of our common stock
to fluctuate substantially. Our net loss and other operating results will be affected by numerous factors, including:
● pricing pressures;
● recruitment and departures of key personnel; and
If
our quarterly or annual operating results fall below the expectations of investors or securities analysts or any forecasts or guidance
we may provide to the market, the price of our common stock could decline substantially. Such a stock price decline could occur even
when we have met any previously publicly stated guidance we may provide. We believe that quarterly or annual comparisons of our financial
results are not necessarily meaningful and should not be relied upon as an indication of our future performance.
Failure
to realize benefits from our productivity initiatives can adversely affect our financial performance.
Our
future growth depends, in part, on our ability to continue to reduce costs and improve efficiencies. We continue to identify and implement
initiatives that we believe will position our business for long-term sustainable growth by allowing us to achieve a lower cost structure,
improve decision-making and operate more efficiently. If we are unable to successfully implement our productivity initiatives as planned
or do not achieve expected savings as a result of these initiatives, we may not realize all or any of the anticipated benefits, resulting
in adverse effects on our financial performance.
Our
current indebtedness contains, and any future indebtedness may contain, restrictions on our business. If we are unable to secure additional
financing on favorable terms, or at all, when we require it, our ability to continue to grow our business or react to market conditions
could be impaired and in turn adversely affect our financial position and results of operations.
We
intend to continue to expand, grow and develop our business, which may require additional capital to develop new products, enhance our
platform, expand distribution, improve our operating infrastructure, react to market conditions and finance working capital requirements.
Accordingly, we may need to engage in additional equity or debt financings to secure additional capital. If we raise additional funds
through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any
new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
On September 26, 2025, we entered into the first amendment (the “Amendment”) to our Senior Secured Loan and Security Agreement
(as amended, the “Loan Agreement”) with certain funds affiliated with Whitebox Advisors, LLC (the “Lenders”)
and Cantor Fitzgerald Securities, as administrative agent and collateral agent, with respect to our revolving credit facility (the “Senior
Secured Facility”). The Amendment provides a revolving credit commitment in an aggregate amount of $9.25 million and, as of December
31, 2025, the principal amount outstanding was $9.25 million. The Senior Secured Facility is secured by substantially all of our
assets, including all intellectual property. Our current and future indebtedness, including the revolving credit commitment under the
Senior Secured Facility, may have significant negative effects on our operations, including:
We
intend to satisfy our current and future debt service obligations with our then existing cash and cash equivalents. However, we may not
have sufficient funds, and may be unable to arrange for additional financing, to pay the amounts due under the Senior Secured Facility
or any other debt instruments. In addition, the Senior Secured Facility contains, and the agreements governing our future indebtedness
may contain, restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interest. These
restrictive covenants include, among others, limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions,
sales of assets, investments (including acquisitions), dividends and other restricted payments and transactions with affiliates. Our
failure to make payments under or comply with other covenants contained in the documents governing our indebtedness could result in an
event of default which, if not cured or waived, could result in the acceleration of substantially all of our debt and potentially the
foreclosure on our assets in the event we are unable to repay all amounts owed.
If
we are unable to secure additional funding on favorable terms, or at all, when we require it, our ability to continue to grow our business
to react to market conditions could be impaired, which would adversely affect our financial position and results of operations.
Demand
for our products can fluctuate significantly and our management’s estimates of future product demand may be inaccurate, particularly