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What changed in REED'S, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of REED'S, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+342 added−251 removedSource: 10-K (2026-03-25) vs 10-K (2025-03-28)

Top changes in REED'S, INC.'s 2025 10-K

342 paragraphs added · 251 removed · 140 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

43 edited+27 added−65 removed29 unchanged
Biggest changeChanges 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. 4 Some of our representative key customers include: ● Natural stores : Whole Foods Market, Sprouts, Natural Grocers by Vitamin Cottage, Fresh Thyme, NCG, and INFRA. ● Gourmet & specialty stores : Trader Joe’s, Erewhon, Gelson’s, Harmon’s, Bristol Farms, The Fresh Market, Woodman’s, Cost Plus World Market, and Cracker Barrel. ● Grocery and mass chains : 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. ● Club stores : Costco ● Liquor stores : BevMo!, ABC, and Total Wine and More. ● Convenience & drug stores : Duane Reed.
Biggest changeWe 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. 4 Some of our representative key customers include: ● Natural stores : Whole Foods Market, Sprouts, Natural Grocers by Vitamin Cottage, Fresh Thyme, NCG, and INFRA ● Gourmet & specialty stores : Trader Joe’s, Erewhon, Gelson’s, Harmon’s, Bristol Farms, The Fresh Market, Woodman’s, Cost Plus World Market, and Cracker Barrel ● Grocery and mass chains : 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, SpartanNash, Food Land, Lowes, Smart and Final, Bashes, Haggen, AFS, Market Basket, Meijer, Cub, and HyVee ● 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.
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.
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.
Risk Factors.” 10 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.
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.
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.
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. 11 In addition to the discussion in this section, see also “Item 1A.
Our non-alcoholic 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 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 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 formula.
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.
We are generally responsible for arranging for the purchase and delivery to our third-party co-packers of the containers in which our beverage products are packaged. We source glass bottles directly from manufacturers or indirectly through brokers or co-packers, based on their cost and availability regionally.
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.
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. 7 The non-alcoholic 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.
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.
Generally, the raw materials used in our products are obtained from domestic and foreign suppliers and many of the materials have multiple reliable suppliers. This provides a level of protection against a major supply constriction or adverse cost or supply impacts.
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 do source certain ingredients from different regions and suppliers to mitigate some of this risk. 8 Glass Bottles and Aluminium Cans A significant component of our product cost is the purchase of glass bottles and aluminium cans.
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.
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. Direct to Store Warehouse Distribution Some of our products are delivered from our co-packers and warehouses directly to customer warehouses.
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.
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.
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.
In the Mule segment, the key players include ‘Merican Mule, Cutwater Mule, and Copper Can. 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 contract packers in accordance with our specifications. Raw materials are delivered and stored at our various third-party co-packers.
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.
As of December 31, 2024, we had 24 full-time equivalent employees on our corporate staff. We employ additional people on a part-time basis as needed. We have never participated in a collective bargaining agreement. We believe relations with our employees are good.
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.
We don’t use any artificial preservatives, any artificial colors, or any GMO-sourced ingredients, and our Virgil’s line is certified kosher. The Virgil’s line includes the following products: Handcrafted Line: 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.
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.
Seasonality Sales of our non-alcoholic beverages are somewhat 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.
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.
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. Top 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.
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. 8 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.
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. 9 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.
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 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 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.
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.
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.
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 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).
Direct to Store Distribution (“DSD”) Through Non-Alcoholic and Alcoholic 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.
During the past year we have expanded and will continue to expand in this distribution network. 5 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.
Competition Non-alcoholic Beverages Success in this competitive environment is dependent on effective promotion of existing products, effective introduction of new products and reformulations of existing products, increased efficiency in production techniques, effective incorporation of technology and digital tools across all areas of our business, the effectiveness of our advertising campaigns, marketing programs, product packaging and pricing, new vending and dispensing equipment and brand and trademark development and protection.
We 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. 7 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.
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.
This natural line of Zero Sugar flavors includes Root Beer, Vanilla Cream, Black Cherry, Orange Cream, Cola. 3 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.
The start of Covid-19, when restaurants and bars closed in March 2020, helped propel the category with consumers bringing the on-premises cocktail occasion to their homes. This was a major boost for canned, single-serve RTDs. Without the recent quality improvements of RTD cocktails, however, it’s unlikely that the category would have taken off.
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.
Wholesale Distribution We 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.
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).
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 Reed’s Ready to Drink Reed’s 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.
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. 2 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.
We 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.
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.
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.
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.
It contains nothing artificial and is non-GMO project verified. We offer two sweetener options: one with cane sugar and the other with our zero-calorie proprietary natural sweetening system. Reed’s 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.
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.
As of the end of 2024, the Reed’s Craft Ginger Beer line included five major varieties with a mix of bottles and cans: Reed’s 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.
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).
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. 2 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.
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.
It is the ultimate stormy, made with fresh ginger root, to be enjoyed anytime, anywhere. 3 Reed’s Zero Sugar Hard Ginger Ale – Launched in late 2002, our line of light refreshing hard ginger ales are available in four flavors: Mango, Cherry Lime, Strawberry Watermelon and Pineapple Coconut.
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.
We continually monitor our distribution agreements with our partners across North America to ensure that they are optimal. Manufacturing Our Products All of Reed’s products are produced by our co-pack partners. They brew, blend, bottle, and package our products and charge us a fee, generally by the case, for the products produced.
We 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.
Today’s RTD cocktails bring much higher quality versus earlier wine coolers and malt-based hard lemonades. Premiumization has resulted in a new wave of products that boast less sugar and more transparency. Variety has also been a key driver, allowing consumers ways to experiment without buying costly ingredients or spirits.
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.
Available Information The Company maintains websites at the following addresses: www.drinkreeds.com www.vigils.com www.flyingcauldron.com Our 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.
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”).
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.
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.
Our strategies will remain responsive to these macro consumer trends as we concentrate our efforts on developing the Company’s sales and marketing functions. Our Products We make our hand-crafted beverages with only premium, natural ingredients. Our products are free of genetically modified organisms (“GMOs”) and artificial preservatives. Over the years, Reed’s has developed several product offerings.
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.
This system of distribution allows our brands far reaching access to some of the most remote parts of North America. During the past year we have expanded and will continue to expand in this distribution network.
This system of distribution allows our brands far reaching access throughout North America.
Our Distribution Network Our products are brought to market through an extremely flexible and fluid hybrid 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.
The distribution system used depends on customer needs, product characteristics, and local trade practices.
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. Beginning in 2023 Virgil’s Handcrafted soda will be offered in both glass and can formats. Zero Sugar Line: V irgil’s launched a new line of Zero Sugar, Zero Calorie craft sodas in 2019.
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).
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.
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.
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.
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.
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Item 1. Business Overview Reed’s, 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.
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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.
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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.
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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.
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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.
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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.
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Reed’s 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. Reed’s has 50 products that are sold throughout the United States, Canada, the United Kingdom, South Africa the Caribbean and the European Union.
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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).
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It produces its products through a network of nine independent manufacturers and distribution through five independent distribution centers. Our common stock has been quoted on the OTCQX “Best Market” since February 16, 2023.
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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.
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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.
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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.
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Debt Restructuring and Change of Control During 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.
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In 2025, we launched a new multi-functional soda line that is formulated with organic ingredients. 1 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.
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On 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. On November 14, 2024, the Company entered into a new secured one-year term loan with a principal amount of $10 million with Whitebox.
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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.
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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.
Added
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: ● Scalability. The ability to ramp production quickly without significant capital investment ● Flexibility.
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On 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. 1 Industry Overview Reed’s 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.
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The ability to shift production among multiple facilities to manage demand, reduce freight costs, and mitigate supply chain risks ● Efficiency. The ability to drive down per-unit costs by introducing freight-friendly packaging, including a shift from glass bottles to aluminum cans. Recently, we entered into a strategic partnership with a leading national logistics provider to manage freight and warehousing.
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Reed’s products are sold across the country and internationally in the following major channels: natural food, specialty food, grocery, mass merchant, convenience, club, drug, liquor, and on-premises locations (bars and restaurants). Carbonated 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.
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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.
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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 products.
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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.
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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.
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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. 6 Growth Strategy We intend to grow our business through the following strategic priorities: ● Expand Distribution and Market Penetration.
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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.
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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. ● Drive International Expansion. We plan to leverage our newly formed Asia-Pacific subsidiaries to expand further into international markets.
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These 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.
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We believe select international regions provide natural alignment with our ginger-based portfolio. ● Enhance 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.
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Consumer Trends Driving Growth for Our Products The following is a list of consumer trends that are accelerating and supporting our brands. ● Natural : Interest in natural products is growing and approximately 59% of shoppers think it’s important for their products to be natural.
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We believe these initiatives will lower unit costs, improve gross margin potential, and reduce exposure to supply chain disruption. ● Leverage Innovation in Modern Soda.
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Sales of natural products increased 6% in 2024 and are expected to continue in the 4-6% range for the next few years. ● Clean Label : The demand for clean label products has been steadily growing in recent years.
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Variety has also been a key driver, allowing consumers ways to experiment without buying costly ingredients or spirits.
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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. ● Reduced Sugar : 72% of U.S. consumers are looking to limit or avoid sugar.
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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. 9 Seasonality Sales of our non-alcohol beverages are moderately seasonal with higher-than-average volume in the warmer months.
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The global reduced-sugar food and beverage market is expected to grow at an annual rate of 9% through 2028. ● Plant Based : 52% of U.S. 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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe possess intellectual property rights that are important to our business, including ingredient formulas, trademarks, copyrights, business processes and other trade secrets. The laws of various jurisdictions in which we operate have differing levels of protection of intellectual property.
Biggest changeIf we are unable to adequately protect our intellectual property rights, or if we are found to infringe on the intellectual property rights of others, our business can be adversely affected. We possess intellectual property rights that are important to our business, including ingredient formulas, trademarks, copyrights, business processes and other trade secrets.
Global economic uncertainty and unfavorable global economic conditions caused by political instability, changes in trade agreements and conflicts, such as the Russia-Ukraine conflict and the conflict in the Middle East, could adversely affect our business, financial condition, results of operations or prospects .
Global economic uncertainty and unfavorable global economic conditions caused by political instability, changes in trade agreements and conflicts, such as the Russia-Ukraine conflict and conflict in the Middle East, could adversely affect our business, financial condition, results of operations or prospects.
Failure to comply with laws and regulations applicable to our business can adversely affect our business.
Failure to comply with applicable laws and regulations can adversely affect our business.
Certain jurisdictions in which our products are sold have either imposed, or are considering imposing, new or increased taxes on the manufacture, distribution or sale of certain of our products, as a result of ingredients contained in our products.
In addition, certain jurisdictions in which our products are sold have either imposed, or are considering imposing, new or increased taxes on the manufacture, distribution or sale of certain of our products, as a result of ingredients contained in our products.
Responding to these matters, even those that are ultimately non-meritorious, requires us to incur significant expense and devote significant resources, and may generate adverse publicity that damages our reputation or brand image. Any of the foregoing can adversely affect our business. 17 Regulations concerning our alcohol beverages may adversely affect our business, financial condition or results of operations.
Responding to these matters, even those that are ultimately non-meritorious, requires us to incur significant expense and devote significant resources, and may generate adverse publicity that damages our reputation or brand image. Any of the foregoing can adversely affect our business. 22 Regulations concerning our alcohol beverages may adversely affect our business, financial condition or results of operations.
These tax measures, whatever their scope or form, have in the past and could continue to increase the cost of certain of our products, reduce overall consumption of our products or lead to negative publicity, resulting in an adverse effect on our business and financial performance. 15 Limitations on the marketing or sale of our products can adversely affect our business and financial performance.
These tax measures, whatever their scope or form, have in the past and could continue to increase the cost of certain of our products, reduce overall consumption of our products or lead to negative publicity, resulting in an adverse effect on our business and financial performance. 20 Limitations on the marketing or sale of our products can adversely affect our business and financial performance.
The following risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business or financial performance, which in turn can affect the price of our publicly traded securities. These are not the only risks we face.
The preceding risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business or financial performance, which in turn can affect the price of our publicly traded securities. These are not the only risks we face.
In addition, cybersecurity related risks including security breaches and cyber-attacks such as computer viruses, denial-of-service attacks, malicious code (including ransomware), social-engineering attacks (including phishing attacks) or other information security breaches could result in unauthorized disclosure or misappropriation of the Company’s confidential information. These threats also may be further enhanced in frequency or effectiveness through threat actors’ use of artificial intelligence.
In addition, cybersecurity related risks including security breaches and cyber-attacks such as computer viruses, denial-of-service attacks, malicious code (including ransomware), social-engineering attacks (including phishing attacks) or other information security breaches could result in unauthorized disclosure or misappropriation of our confidential information. These threats also may be further enhanced in frequency or effectiveness through threat actors’ use of artificial intelligence.
In addition, the current military conflict between Russia and Ukraine and the armed conflict in Israel and the Gaza Strip could disrupt or otherwise adversely impact our operations and those of third parties upon which we rely.
In addition, the current military conflict between Russia and Ukraine and the armed conflicts in Israel, the Gaza Strip, and Iran could disrupt or otherwise adversely impact our operations and those of third parties upon which we rely.
These uncertain or unfavorable economic conditions have resulted in and could continue to result in recessions or economic slowdowns; volatile commodity markets; labor shortages; highly inflationary economies; and stimulus measures. In 2024 we experienced moderate inflation.
These uncertain or unfavorable economic conditions have resulted in and could continue to result in recessions or economic slowdowns; volatile commodity markets; labor shortages; highly inflationary economies; and stimulus measures. In 2025, we experienced moderate inflation.
In addition, if the company’s information technology systems suffer severe damage, disruption or shutdown and the company’s business continuity plans do not effectively resolve the issues in a timely manner, the company may lose customers and suppliers and revenue and profits as a result of its inability to timely manufacture, distribute, invoice and collect payments from its customers, and could experience delays in reporting its financial results, including with respect to the company’s operations in emerging markets.
In addition, if our information technology systems suffer severe damage, disruption or shutdown and our business continuity plans do not effectively resolve the issues in a timely manner, we may lose customers and suppliers and revenue and profits as a result of its inability to timely manufacture, distribute, invoice and collect payments from our customers, and could experience delays in reporting our financial results, including with respect to our operations in emerging markets.
Product quality or safety issues could reduce consumer confidence and demand for our products, cause production and delivery disruptions, and result in increased costs (including payment of fines, judgments and legal fees, and costs associated with alternative sources of production) and damage our reputation, all of which can adversely affect our business.
Product quality or safety issues could reduce consumer confidence and demand for our products, cause production, inventory and delivery disruptions, and result in increased costs (including payment of fines, judgments and legal fees, and costs associated with alternative sources of production) and damage our reputation, all of which can adversely affect our business and financial condition.
A severe or prolonged economic downturn or political unrest could result in a variety of risks to our business, including but not limited to weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all.
A severe or prolonged economic downturn or political unrest could result in a variety of risks to our business, including but not limited to weakened demand for our products and our ability to raise additional capital when needed on acceptable terms, if at all.
Our inability to resolve a significant dispute with customers, a change in the business conditions (financial or otherwise) of either of these customers, even if unrelated to us, a significant reduction in sales to either of them, or the loss of either of them could adversely affect our business. 14 The beverage industry is highly competitive.
Furthermore, our inability to resolve a significant dispute with customers, a change in the business conditions (financial or otherwise) of either of these customers, even if unrelated to us, a significant reduction in sales to either of them, or the loss of either of them could adversely affect our business. 17 The beverage industry is highly competitive.
Concerns with any of the foregoing could lead consumers to reduce or publicly boycott the purchase or consumption of our products. Pandemics, epidemics or other disease outbreaks, such as COVID-19, and geopolitical events, wars and other military conflicts have also impacted and could continue to impact consumer preferences and demand for our products.
Concerns with any of the foregoing could lead consumers to reduce or publicly boycott the purchase or consumption of our products. Pandemics, epidemics or other disease outbreaks, such as COVID-19, and geopolitical events, international trade relations and tariffs, wars and other military conflicts have also impacted and could continue to impact consumer preferences and demand for our products.
Many of the jurisdictions in which our products are sold have experienced and could continue to experience uncertain or unfavorable economic conditions, such as high inflation and adverse changes in interest rates, tax laws or tax rates, including as a result of geopolitical events.
Changes in economic conditions can adversely impact our business. Many of the jurisdictions in which our products are sold have experienced and could continue to experience uncertain or unfavorable economic conditions, such as high inflation and adverse changes in interest rates, tax laws or tax rates, including as a result of geopolitical events.
These laws and regulations have in the past increased and could continue to increase the cost of our products, impact demand for our products, result in negative publicity and require us and our business partners, including our independent co-packers, to increase capital expenditures to invest in reducing the amount of virgin plastic or other materials used in our packaging, to develop alternative packaging or to revise product labelling, all of which can adversely affect our business and financial performance.
These laws and regulations have in the past increased and could continue to increase the cost of our products, impact demand for our products, result in negative publicity and require us and our business partners, including our independent co-packers, to increase capital expenditures to invest in reducing the amount of virgin plastic or other materials used in our packaging, to develop alternative packaging or to revise product labelling, all of which can adversely affect our business and financial performance. 21 Our manufacturing process is not patented.
While the company has security measures in place designed to protect the integrity of customer information and prevent data loss, misappropriation, and other security breaches, the Company’s information technology systems could nevertheless be penetrated by outside parties intent on extracting information, corrupting information or disrupting business processes (including for purposes of ransom demands or other forms of blackmail), particularly if the company’s information security training and compliance programs prove to be inadequate.
While we have security measures in place designed to protect the integrity of customer information and prevent data loss, misappropriation, and other security breaches, our information technology systems could nevertheless be penetrated by outside parties intent on extracting information, corrupting information or disrupting business processes (including for purposes of ransom demands or other forms of blackmail), particularly if our information security training and compliance programs prove to be inadequate.
Failure to comply with these laws and regulations or to otherwise protect personal data from unauthorized access, use or other processing, have in the past and could in the future result in litigation, claims, legal or regulatory proceedings, inquiries or investigations, damage to our reputation, fines or penalties, all of which can adversely affect our business. 16 Our manufacturing process is not patented.
Failure to comply with these laws and regulations or to otherwise protect personal data from unauthorized access, use or other processing, have in the past and could in the future result in litigation, claims, legal or regulatory proceedings, inquiries or investigations, damage to our reputation, fines or penalties, all of which can adversely affect our business.
Environmental Risk Factors Significant changes to or failure to comply with various environmental laws may our co-packers to liability or cause them to close, relocate or operate at reduced production levels, which could adversely affect our business, financial condition and results of operations.
Risks Related to Environmental Matters Significant changes to or failure to comply with various environmental laws may expose our co-packers to liability or cause them to close, relocate or operate at reduced production levels, which could adversely affect our business, financial condition and results of operations.
Our largest stockholder, D&D, holds a preemptive right to purchase its pro-rata share, based on the ratio of shares of the Company’s common stock it owns to all the outstanding shares of the Company’s common stock, of any investment in the equity securities or equity-linked securities of the Company. D&D beneficially owns approximately 59.5% of our common stock.
Our largest stockholder, D&D, holds a preemptive right to purchase its pro-rata share, based on the ratio of shares of our common stock it owns to all the outstanding shares of our common stock, of any investment in our equity securities or equity-linked securities.
Our reputation or brand image could be adversely impacted by a variety of factors, including: particular ingredients in our products, including concerns regarding whether certain of our products contribute to obesity and other health conditions; any product quality or safety issues, including the recall of any of our products; any failure to comply with laws and regulations; marketing programs, use of social media; or any failure to effectively respond to negative or inaccurate comments about us on social media or otherwise regarding any of the foregoing.
Our reputation or brand image could be adversely impacted by a variety of factors, including: particular ingredients in our products, including concerns regarding whether certain of our products contribute to obesity and other health conditions; any product quality or safety issues, including the recall of any of our products; any failure by us or by independent contract manufacturers and suppliers with whom we do business to comply with applicable laws and regulations or ethical business practices; marketing programs, use of social media; or any failure to effectively respond to negative or inaccurate comments about us on social media or otherwise regarding any of the foregoing.
The company relies on its information technology, and potential cyber-attack, data breach or other failure or disruption of its information technology could disrupt its operations and adversely affect its results of operations. The company’s business increasingly relies on the successful and uninterrupted functioning of its information technology systems to process, transmit, and store electronic information.
We rely on our information technology, and a potential cyber-attack, data breach or other failure or disruption of our information technology could disrupt our operations and adversely affect our results of operations. Our business increasingly relies on the successful and uninterrupted functioning of our information technology systems to process, transmit, and store electronic information.
Any inability on our part to anticipate or react to changes in consumer preferences and trends, or make the right strategic investments to do so, including investments in data analytics to understand consumer trends, can lead to reduced demand for our products, lead to inventory write-offs or erode our competitive and financial position, thereby adversely affecting our business.
Any inability on our part to anticipate or react to changes in consumer preferences and trends, or make the right strategic investments to do so, including investments in data analytics to understand consumer trends, can lead to reduced demand for our products, lead to inventory write-offs or erode our competitive and financial position, thereby adversely affecting our business and preventing us from gaining market share and achieving long-term profitability.
Related sanctions, export controls or other actions that may be initiated by nations including the United States, the EU or Russia (e.g., potential cyberattacks, disruption of energy flows, etc.), which could adversely affect our business and/or our supply chain and other third parties with which we conduct business.
Related sanctions, export controls or other actions that may be initiated by nations including the United States, the EU or Russia (e.g., potential cyberattacks, disruption of energy flows, etc.) or an increase in the price of fuel as a result of such conflicts could adversely affect our business and/or our supply chain and other third parties with which we conduct business.
In addition, we cannot predict how current or future economic conditions will affect our business partners, including financial institutions with whom we do business, and any negative impact on any of the foregoing may also have an adverse impact on our business. Future cyber incidents and other disruptions to our information systems can adversely affect our business.
In addition, we cannot predict how current or future economic conditions will affect our business partners, including financial institutions with whom we do business, and any negative impact on any of the foregoing may also have an adverse impact on our business.
Furthermore, if the company is unable to prevent security breaches, it may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to the company or to its customers or suppliers, and it may suffer indirect economic loss if its existing insurance policies and coverage related to information security risks prove to be insufficient.
Furthermore, if we are unable to prevent security breaches, we may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to us or to our customers or suppliers, and we may suffer indirect economic loss if our existing insurance policies and coverage related to information security risks prove to be insufficient.
Although the company has experienced decreases in freight costs, in the company’s opinion there remains a volatile environment and the company will continue to monitor pricing and availability in transportation. Mitigation plans have been implemented to manage this risk.
Although we have experienced decreases in freight costs and have implemented mitigation plans to manage this risk, in our opinion there remains a volatile environment, and we will continue to monitor pricing and availability in transportation.
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.
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.
We are continuously working to reduce calories and sugar in our products while launching additional products, to pair with existing brand extensions that round out our portfolio. Changes in economic conditions can adversely impact our business.
We are continuously working to reduce calories and sugar in our products while launching additional products, to pair with existing brand extensions that round out our portfolio.
Our products compete primarily on the basis of brand recognition and loyalty, taste, quality, innovation, distribution, shelf space, advertising, and promotional activity, packaging, convenience, and the ability to anticipate and effectively respond to consumer preferences and trends.
Our products compete primarily on the basis of brand recognition and loyalty, taste, quality, innovation, distribution, shelf space, advertising, and promotional activity, packaging, convenience, and the ability to anticipate and effectively respond to consumer preferences and trends. Some of our competitors have significantly more financial resources than we do.
In addition, our business operations, including our supply chain, are subject to disruption by geopolitical events, wars and other military conflicts, natural disasters, pandemics, epidemics or other events beyond our control that could negatively impact product availability and decrease demand for our products. 13 Damage to our reputation or brand image can adversely affect our business.
In addition, our business operations, including our supply chain, are subject to disruption by geopolitical events, international trade relations and tariffs, wars and other military conflicts, natural disasters, pandemics, epidemics or other events beyond our control that could negatively impact product availability and decrease demand for our products.
If we lose key personnel, our operations and ability to manage our business may be affected. Failure to attract, develop and maintain a highly skilled and diverse workforce or effectively manage changes in our workforce can have an adverse effect on our business. Our business requires that we attract, develop and maintain a highly skilled and diverse workforce.
Failure to attract, develop and maintain a highly skilled and diverse workforce or effectively manage changes in our workforce can have an adverse effect on our business. Our business requires that we attract, develop and maintain a highly skilled and diverse workforce.
Any unplanned turnover or failure to attract, develop and maintain a highly skilled and diverse workforce, can erode our competitive advantage or result in increased costs due to increased competition for employees or increased employee benefit costs. Changes in the retail landscape or in sales to any key customer can adversely affect our business.
Any unplanned turnover or failure to attract, develop and maintain a highly skilled and diverse workforce, can erode our competitive advantage or result in increased costs due to increased competition for employees or increased employee benefit costs.
Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our revenues and financial results. 12 Supply chain challenges have impacted our ability to benefit from strong demand for, and increased sales of our products and adversely impacted our business.
Our inability to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely affect our revenues and financial results.
As with all large systems, the Company’s information technology systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors or catastrophic events.
A significant portion of the communication between our personnel, customers, and suppliers depends on information technology. As with all large systems, our information technology systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors or catastrophic events.
Although we regularly monitor companies in our supply chain and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations. Reduction in future demand for our products would adversely affect our business.
Although we regularly monitor companies in our supply chain and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations, financial condition, results of operations, and cash flows.
If a co-packer terminates its relationship with us, we have in the past, and will likely in the future, experience a delay finding a suitable replacement, which will negatively impact or business and financial results.
If a co-packer terminates its relationship with us, we have in the past, and will likely in the future, experience a delay finding a suitable replacement, which will negatively impact our business and financial results. We depend on a limited number of customers for most of our revenue.
In order to reduce their inventory costs, independent distributors typically order products from us on a “just in time” basis in quantities and at such times based on the demand for the products in a particular distribution area.
Our independent distributors and national accounts are not required to place minimum monthly or annual orders for our products. In order to reduce their inventory costs, independent distributors typically order products from us on a “just in time” basis in quantities and at such times based on the demand for the products in a particular distribution area.
Damage to our reputation or brand image could decrease demand for our products, thereby adversely affecting our business. Product recalls or other issues or concerns with respect to product quality and safety can adversely affect our business. We have recalled, and could in the future recall, products due to product quality or safety issues, such as mislabelling, spoilage or malfunction.
Product recalls or other issues or concerns with respect to product quality and safety can adversely affect our business and financial condition. We have recalled, and could in the future recall, products due to product quality or safety issues, such as mislabeling, spoilage or malfunction.
It is possible that our competitors may either respond to industry conditions or consumer trends more rapidly or effectively or resort to price competition to sustain market share, which could adversely affect our sales and profitability.
It is possible that our competitors may either respond to industry conditions or consumer trends more rapidly or effectively or resort to price competition to sustain market share, which could adversely affect our sales and profitability. See also the risk factor captioned “Changes in the retail landscape or in sales to any key customer can adversely affect our business.
In addition, the rapid evolution and increased adoption of artificial intelligence technologies may increase our cybersecurity risks, including generative artificial intelligence augmenting threat actors’ technological sophistication to enhance existing or create new malware. We have not experienced a cyber security breach; however, a breach could have a material adverse effect on us in the future.
In addition, the rapid evolution and increased adoption of artificial intelligence technologies may increase our cybersecurity risks, including generative artificial intelligence augmenting threat actors’ technological sophistication to enhance existing or create new malware.
Further, we may be subject to a variety of other factors that impact timely production and shipment of our products. Our business and results of operations are impacted by product shortages as well as product surplus. Management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory.
Demand for our products can fluctuate significantly and our management’s estimates of future product demand may be inaccurate, particularly with new products. Further, we may be subject to a variety of other factors that impact timely production and shipment of our products. Our business and results of operations are impacted by product shortages as well as product surplus.
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. 11 Demand for our products can fluctuate significantly and our management’s estimates of future product demand may be inaccurate, particularly with new products.
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 our competitors develop substantially equivalent proprietary information or otherwise obtain access to our knowledge, we will have greater difficulty in competing with them for business, and our market share could decline If we are unable to adequately protect our intellectual property rights, or if we are found to infringe on the intellectual property rights of others, our business can be adversely affected.
If our competitors develop substantially equivalent proprietary information or otherwise obtain access to our knowledge, we will have greater difficulty in competing with them for business, and our market share could decline.
Failure or disruption of the company’s information technology systems, or the back-up systems, for any reason could disrupt the company’s operations and negatively impact the company’s cash flows or financial condition. Our largest stockholder’s preemptive right could dissuade a strategic investor from making an investment in the Company.
Failure or disruption of our information technology systems, or the back-up systems, for any reason could disrupt our operations and negatively impact our cash flows or financial condition.
In this changing retail landscape, retailers and buying groups have impacted and may continue to impact our ability to compete in these jurisdictions by demanding lower prices or increased promotional programs.
In this changing retail landscape, retailers and buying groups have impacted and may continue to impact our ability to compete in these jurisdictions by demanding lower prices or increased promotional programs. We may be required to grant retailers price concessions that negatively impact our margins and our profitability in order to compete with larger companies with significantly greater financial resources.
When we underestimate demand for our products, are unable to secure sufficient ingredients or raw materials or procure adequate packing arrangements to obtain adequate or timely shipment of our products, we are not able to satisfy demand on a short-term basis.
When we underestimate demand for our products, we are unable to secure sufficient ingredients or raw materials or procure adequate packing arrangements to obtain adequate or timely shipment of our products, as a result of which we are not able to satisfy demand on a short-term basis. 14 It is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us.
There has been a trend among some public health advocates and dietary guidelines to recommend a reduction in sweetened beverages, as well as increased public scrutiny, new taxes on sugar-sweetened beverages (as described below), and additional governmental regulations concerning the marketing and labelling/packing of the beverage industry.
There has been a trend among some public health advocates and dietary guidelines to recommend a reduction in sweetened beverages, as well as increased public scrutiny, new taxes on sugar-sweetened beverages (see also the risk factor captioned “Our effective tax rate or taxes aimed at our products can adversely affect our business or financial performance” for more information), and additional governmental regulations concerning the marketing and labelling/packing of the beverage industry.
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. Our disclosure controls and procedures may not prevent or detect all errors or acts of frau d. We are subject to the periodic reporting requirements of the Exchange Act.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. We are subject to the periodic reporting requirements of the Exchange Act.
As such, D&D’s exercise of its right could serve to dissuade a new strategic investor from proposing an investment in the Company or significantly decrease the size of a new investor’s investment. Legal, Tax and Regulatory Risks Taxes aimed at our products can adversely affect our business or financial performance.
As such, D&D’s exercise of its preemptive right could serve to dissuade a new strategic investor from proposing an investment in us or significantly decrease the size of a new investor’s investment.
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. Business and Operational Risks Failure to realize benefits from our productivity initiatives can adversely affect our financial performance.
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.
These laws and regulations may be interpreted and applied differently from country to country or, within the United States, from state to state, and can create inconsistent or conflicting requirements.
We are subject to a variety of continuously evolving and developing laws and regulations in numerous jurisdictions regarding personal data protection and privacy laws. These laws and regulations may be interpreted and applied differently from country to country or, within the United States, from state to state, and can create inconsistent or conflicting requirements.
Our reliance on distributors, retailers and brokers could affect our ability to efficiently and profitably distribute and market our products, maintain our existing markets and expand our business into other geographic markets.
However, there is no guarantee that our product lines will meet consumer expectations, shifting consumer preferences, or regulatory developments. 15 Our reliance on distributors, retailers and brokers could affect our ability to efficiently and profitably distribute and market our products, maintain our existing markets and expand our business into other geographic markets.
Dependence on Key Personnel Our performance significantly depends on the contributions of our executive officers and key employees, both individually and as a group and our ability to retain and motivate them. Certain of our officers and key personnel have many years of experience with us and in our industry and it may be difficult to replace them.
If we lose key personnel, our operations and ability to manage our business may be affected. Our performance significantly depends on the contributions of our executive officers and key employees, both individually and as a group and our ability to retain and motivate them.
Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations.
Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations. We have experienced, and may continue to experience, moderate inflationary impact because of recent trade and political tensions, include tariff discussions, between the United States and other countries.
Maintaining a positive reputation is critical to selling our products.
Damage to our reputation or brand image can adversely affect our business. Maintaining a positive reputation is critical to selling our products.
Supply chain constraints could cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations. We have experienced supply chain challenges, including increased lead times, as well as inflation of raw materials, logistics and labor costs due to availability constraints and high demand.
Supply chain challenges have impacted our ability to respond effectively or in a timely manner to increases in demand for our products and have adversely impacted our business. Supply chain constraints could cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations and financial performance.
The disruption caused by labor shortages, significant raw material cost inflation, logistics issues and increased freight costs, and ongoing port congestion, has resulted in suppressed margins.
We have experienced supply chain challenges. The disruption and increased lead times caused by labor shortages, significant raw material cost inflation, logistics issues, increased freight costs and ongoing port congestion have resulted in suppressed margins. The average cost of shipping and handling of our products during each of the years ended December 31, 2025 and 2024 was $2.75 per case.
The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations. 18 Item 1B. Unresolved Staff Comments Not applicable.
The effects of climate change and legal or regulatory initiatives to address climate change could have a long-term adverse impact on our business and results of operations. 23 Risks Related to Ownership of Our Common Stock and General Matters The market price of our common stock has been and may continue to be volatile or may decline regardless of our operating performance.
Failure to comply with personal data protection and privacy laws can adversely affect our business. We are subject to a variety of continuously evolving and developing laws and regulations in numerous jurisdictions regarding personal data protection and privacy laws.
We have not experienced a cyber security breach; however, a breach could have a material adverse effect on us in the future. 19 Failure to comply with personal data protection and privacy laws can adversely affect our business.
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Item 1A. Risk Factors The following risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business or financial performance, which in turn can affect the price of our publicly traded securities. These are not the only risks we face.
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Item 1A. Risk Factors A description of the risks and uncertainties associated with our business is set forth below.
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For example, during the prior Trump administration, increased tariffs were implemented on goods imported into the United States, particularly from China, Canada, and Mexico. On February 1, 2025, the United States imposed a 25% tariff on imports from Canada and Mexico, which were subsequently suspended for a period of one month, and a 10% additional tariff on imports from China.
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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.
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Historically, tariffs have led to increased trade and political tensions, between not only the United States and China, but also between the United States and other countries in the international community. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods.
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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.
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Until we know what policy changes are made, whether those policy changes are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.
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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.
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At December 31, 2024, and 2023, inventory has been reduced by cumulative write-downs for inventory aggregating $277 and $1,848, respectively.
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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.
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It is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us. Our independent distributors and national accounts are not required to place minimum monthly or annual orders for our products.
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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.
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During the year ended December 31, 2024, the average cost of shipping and handling was $2.75 per case, as compared to $3.07 per case for the year ended December 31, 2023.
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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.
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We compete in an industry characterized by rapid changes in consumer preferences and public perception, so our ability to continue developing new products to satisfy the changing preferences of consumers will determine our long-term success.
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Accordingly, we may not be able to achieve or maintain profitability, and we may continue to incur significant losses in the future. 12 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.
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Failure to introduce new brands, products or product extensions into the marketplace as current ones mature and to meet the changing preferences of consumers could prevent us from gaining market share and achieving long-term profitability. Product lifecycles can vary and consumer preferences and loyalties change over time.
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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.
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Although we try to anticipate these shifts and innovate new products to introduce to our consumers, we may not succeed. Consumer preferences also are affected by factors other than taste, such as health and nutrition considerations and obesity concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product and pricing pressures.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings We are a party to ordinary, routine litigation incidental to our business, including routine litigations matters tendered to our insurance carriers.
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Item 3. Legal Proceedings From time to time, we may be subject to actions, claims, suits and other legal proceedings arising in the ordinary course of business.
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Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and provides for potential losses on such litigation if the amount of the loss is estimable and the loss is probable.
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Our management believes that while the results of any litigation or other legal proceedings are uncertain, we are not currently party to any material pending legal proceedings that, if determined adversely to us, would have a material adverse effect on our business, financial position, results of operations or cash flows. Item 4. Mine Safety Disclosures Not applicable. 29 PART II
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We are not party to any material pending legal proceedings (including environmental proceedings), other than ordinary, routine litigation incidental to the business, at the current time.
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Although the results of such litigation matters and claims cannot be predicted with certainty, we believe that the final outcome of such ordinary, routine litigation will not have a material adverse impact on our financial position, liquidity, or results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock was delisted from The Nasdaq Capital Market on February 16, 2023. Concurrently, our common stock became quoted on the OTCQX Best Market. Our symbol remains “REED”. The OTCQX Best Market is an over-the-counter market.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our Common Stock was approved for listing and began trading on the NYSE American on December 5, 2025. Our symbol remains “REED”. Upon effectiveness of the listing on the NYSE American, trading of the Common Stock on the OTC Markets’ OTCQX Best Market terminated.
Equity Compensation Plans Pursuant to the SEC’s Regulation S-K Compliance and Disclosure Interpretation 106.01, the information required by this Item pursuant to Item 201(d) of Regulation S-K relating to securities authorized for issuance under the Corporation’s equity compensation plans is located in Item 12 of Part III of this Annual Report and is incorporated herein by reference.
Equity Compensation Plans Pursuant to the SEC’s Regulation S-K Compliance and Disclosure Interpretation 106.01, the information required by this Item pursuant to Item 201(d) of Regulation S-K relating to securities authorized for issuance under the Company’s equity compensation plans is located in Item 12 of Part III of this Annual Report and is incorporated herein by reference. Item 6. [Reserved]
As of March 17, 2025 there were approximately 170 holders of record of our common This number does not include “street name” or beneficial holders, whose shares are held of record by banks, brokers, financial institutions and other nominees. We currently have no expectation to pay cash dividends to holders of our common stock in the foreseeable future.
As of March 20, 2026 there were approximately 130 holders of record of our common stock. This number does not include “street name” or beneficial holders, whose shares are held of record by banks, brokers, financial institutions and other nominees. We currently have no expectation to pay cash dividends to holders of our common stock in the foreseeable future.
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Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. On December 21, 2021, our shareholders approved an increase in the number of authorized shares of common stock from 120 million to 180 million. On January 24, 2023, our shareholders approved a 1:50 reverse stock split of our common stock.
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On January 27, 2023, we effected the 1:50 reverse stock split of our common stock. On December 30, 2024, our majority stockholder approved the reduction in the number of authorized shares of common stock from 180 million to 60 million. The amendment was filed with the Delaware Secretary of State on February 5, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations – Year Ended December 31, 2024 The following table sets forth key statistics for the years ended December 31, 2024, and 2023, in thousands: Year Ended December 31, Pct. 2024 2023 Change Gross billing (A) $ 44,316 $ 50,689 -13 % Less: Promotional and other allowances (B) 6,362 5,978 6 % Net sales $ 37,954 $ 44,711 -15 % Cost of goods sold 26,578 31,884 -17 % % of Gross billing 60 % 63 % % of Net sales 70 % 71 % Product quality hold write-down - 1,848 -100 % % of Gross billing 0 % 4 % % of Net sales 0 % 4 % Provision for product hold - 1,267 -100 % % of Gross billing 0 % 2 % % of Net sales 0 % 3 % Gross profit $ 11,376 $ 9,712 17 % % of Net sales 30 % 22 % Expenses Delivery and handling $ 5,863 $ 7,561 -22 % % of Net sales 15 % 17 % Dollar per case ($) 2.75 3.07 Selling and marketing 4,405 4,865 -9 % % of Net sales 12 % 11 % General and administrative 9 ,109 6,118 49 % % of Net sales 24 % 14 % Provision for receivable with former related party 115 585 -80 % % of Net sales 0 % 1 % Total Operating expenses 19,492 19,129 2 % Loss from operations $ (8,116 ) $ (9,417 ) -14 % Interest expense and other expense $ (5,036 ) $ (6,106 ) -18 % Net loss $ (13,152 ) $ (15,523 ) -15 % Loss per share – basic and diluted $ (1.64 ) $ (4.39 ) -63 % Weighted average shares outstanding – basic & diluted 8,041,496 3,537,882 127 % 22 (A) We define gross billing as the total sales for the Company unadjusted for costs related to generating those sales.
Biggest changeThe registration statement was filed with the SEC on September 19, 2025, and declared effective on September 29, 2025. 32 Results of Operations – Years Ended December 31, 2025 and December 31, 2024 The following table sets forth key statistics for the years ended December 31, 2025, and 2024: Year Ended December 31, Pct. 2025 2024 Change Gross billing (A) $ 40,847 $ 44,316 -8 % Less: Promotional and other allowances (B) 6,782 6,362 7 % Net sales $ 34,065 $ 37,954 -10 % Cost of goods sold 27,103 26,578 2 % % of Gross billing 66 % 60 % % of Net sales 80 % 70 % Gross profit $ 6,962 $ 11,376 -39 % % of Net sales 20 % 30 % Expenses Delivery and handling $ 5,374 $ 5,863 -8 % % of Net sales 16 % 15 % Dollar per case ($) 2.75 2.75 Selling and marketing 5,271 4,405 20 % % of Net sales 15 % 12 % General and administrative 11,296 9,109 24 % % of Net sales 33 % 24 % Provision for receivable with former related party 169 115 47 % % of Net sales 0 % 0 % Total Operating expenses 22,110 19,492 13 % Loss from operations $ (15,148 ) $ (8,116 ) 87 % Interest expense and other expense $ (694 ) $ (5,036 ) -86 % Net loss $ (15,842 ) $ (13,152 ) 20 % Loss per share – basic and diluted $ (1.91 ) $ (9.81 ) -81 % Weighted average shares outstanding – basic & diluted 8,301,904 1,340,249 519 % (A) We define gross billing as the total sales for the Company unadjusted for costs related to generating those sales.
Modified EBITDA has limitations as an analytical tool, which includes, among others, the following: ● Modified EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; ● Modified EBITDA does not reflect changes in, or cash requirements for, our working capital needs; ● Modified EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and ● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Modified EBITDA does not reflect any cash requirements for such replacements.
EBITDA has limitations as an analytical tool, which includes, among others, the following: ● EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; ● EBITDA does not reflect changes in, or cash requirements for, our working capital needs; ● EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and ● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements.
You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Modified EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation.
You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation.
In addition, we use Modified EBITDA in developing our internal budgets, forecasts, and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; making compensation decisions; and in communications with our board of directors concerning our financial performance.
In addition, we use EBITDA in developing our internal budgets, forecasts, and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; making compensation decisions; and in communications with our board of directors concerning our financial performance.
In addition, we use Modified EBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; making compensation decisions; and in communications with our board of directors concerning our financial performance.
In addition, we use EBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; making compensation decisions; and in communications with our board of directors concerning our financial performance.
Our presentation of Modified EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
Our presentation of EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
Management utilizes gross billing as an indicator of and to monitor operating performance of products and salespersons before the effect of any promotional or other allowances, which are determined in accordance with GAAP, and can mask certain performance issues. We believe that the presentation of gross billing provides a useful measure of our operating performance.
Management utilizes gross billing as an indicator of and to monitor operating performance of products and salespersons before the effect of any promotional or other allowances, which are determined in accordance with U.S. GAAP, and can mask certain performance issues. We believe that the presentation of gross billing provides a useful measure of our operating performance.
GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions.
Management considers our core operating performance to be that which our managers can affect in any particular period through their management of the resources that affect our underlying revenue and profit generating operations during that period. Non-GAAP adjustments to our results prepared in accordance with GAAP are itemized below.
Management considers our core operating performance to be that which our managers can affect in any particular period through their management of the resources that affect our underlying revenue and profit generating operations during that period. Non-GAAP adjustments to our results prepared in accordance with U.S. GAAP are itemized below.
Additionally, gross billing may not be comparable to similarly titled measures used by other companies, as gross billing has been defined by our internal reporting practices . (B) We define promotional and other allowances as costs deducted from gross billing which are associated with generating those sales.
Additionally, gross billing may not be comparable to similarly titled measures used by other companies, as gross billing has been defined by our internal reporting practices . (B) We define promotional and other allowances as costs deducted from gross billing that are associated with generating those sales.
The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. The expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform to GAAP presentation requirements.
The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. The expenditures described in this line item are determined in accordance with U.S. GAAP and meet U.S. GAAP requirements, however the disclosure thereof does not conform to U.S. GAAP presentation requirements.
Modified EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity.
EBITDA is not a recognized measurement under U.S GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity.
As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all.
As we seek additional sources of financing, there can be no assurance that such financing will be available to us on favorable terms or at all.
In addition to our GAAP results, the following discussion includes Modified EBITDA as a supplemental measure of our performance. We present Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
GAAP”) results, the following discussion includes EBITDA as a supplemental measure of our performance. We present EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
Recent Trends – Market Conditions Although the U.S. economy continued to grow throughout 2024 and 2023, inflation, actions by the Federal Reserve to address inflation, fluctuations in energy prices, and the potential impacts of tariffs and geopolitical events create uncertainty about the future economic environment which will continue to evolve and may impact our business in future periods.
Recent Trends – Market Conditions Although the U.S. economy continued to grow in 2025, inflation, actions by the Federal Reserve to address inflation, fluctuations in energy prices, and the potential impacts of tariffs, trade tensions and geopolitical events create uncertainty about the future economic environment which will continue to evolve and may impact our business in future periods.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this report.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this report. In addition to our United States generally accepted accounting principles (“U.S.
Delivery costs for the year ended December 31, 2024, were 15% of net sales and $2.75 per case, compared to 17% of net sales and $3.07 per case during the same period last year. 24 Selling and Marketing Expenses Marketing expenses consist of direct marketing, marketing labor, and marketing support costs.
Delivery costs in the year ended December 31, 2025, were 16% of net sales and $2.75 per case, compared to 15% of net sales and $2.75 per case during the prior year. Selling and Marketing Expenses Marketing expenses consist of direct marketing, marketing labor, and marketing support costs.
Promotional and other allowances constitute a material portion of our marketing activities. The Company’s promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year.
Promotional and other allowances constitute a material portion of our marketing activities. The Company’s promotional allowance programs with its numerous distributors and/or retailers are executed through separate agreements in the ordinary course of business.
However, Modified EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity.
GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of liquidity. We define EBITDA as net income (loss), plus interest expense, tax expense, and depreciation and amortization.
Operating Expenses Delivery and Handling Expenses Delivery and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production. Delivery and handling expenses decreased by $1,698 for the year ended December 31, 2024, to $5,863 from $7,561 in the same period last year, driven by our efforts to mitigate inflationary costs.
Operating Expenses Delivery and Handling Expenses Delivery and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production. Delivery and handling expenses decreased by $489 in the year ended December 31, 2025, to $5,374 from $5,863 in the prior year, primarily driven by lower transportation costs.
Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry. Critical Accounting Policies and Estimates The preparation of the Company’s financial statements in conformity with generally accepted accounting principles in the United States (“U.S.
Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry.
Management utilizes gross billing to monitor operating performance of products and salespersons, which performance can be masked by the effect of promotional or other allowances. Management believes that the presentation of gross billing provides a useful measure of Reed’s operating performance. Amounts presented in the discussion below are in thousands, except share and per share amounts.
Management believes that the presentation of gross billing provides a useful measure of Reed’s operating performance. 30 Amounts presented in the discussion below are in thousands, except share and per share amounts.
Selling expenses consist of all other selling-related expenses including personnel and contractor support. Total selling and marketing expenses were $4,405 during the year ended December 31, 2024, compared to $4,865 during the same period last year.
Selling expenses consist of all other selling-related expenses including personnel and contractor support. Total selling and marketing expenses were $5,271 during the year ended December 31, 2025, compared to $4,405 during the prior year. The increase was primarily driven by higher employee related costs and marketing expenditures.
Although we regularly monitor companies in our supply chain, and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations. 21 During the year ended December 31, 2024, the average cost of shipping and handling was $2.75 per case, as compared to $3.07 per case for the year ended December 31, 2023.
Although we regularly monitor vendors in our supply chain, and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations.
Loss from Operations The loss from operations was $8,116 for the year ended December 31, 2024, as compared to a loss of $9,417 in the same period last year driven by increased gross profit and decreased operating expenses discussed above.
Loss from Operations The loss from operations was $15,148 for the year ended December 31, 2025, as compared to a loss of $8,116 in the prior year driven by lower gross profit and higher operating expenses discussed above. 35 Interest and Other Expense Interest and other expense for the year ended December 31, 2025, consisted of $1,108 of interest expense offset by $414 of other income.
As a percentage of net sales, selling and marketing expenses were 12% of net sales during the year ended December 31, 2024, as compared to 11% of net sales during the same period last year.
As a percentage of net sales, selling and marketing expenses were 15% of net sales during the year ended December 31, 2025, as compared to 12% of net sales during the prior year. General and Administrative Expenses General and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional fees.
The following discussion also includes the use of gross billing, a key performance indicator and metric. Gross billing represents invoiced amounts to distributors and retailers, excluding sales adjustments. Gross billing may include deductions from MSRP or “list price”, where applicable, and excludes promotional costs of generating such sales.
We define EBITDA as net income (loss), plus interest expense, tax expense, and depreciation and amortization. The following discussion also includes the use of gross billing, a key performance indicator and metric. Gross billing represents invoiced amounts to distributors and retailers, excluding sales adjustments.
The total cost of goods per case decreased to $12.46 per case for the year ended December 31, 2024, from $14.22 per case for the same period last year. The cost of goods sold per case on core brands was $12.46 during the year ended December 31, 2024, compared to $12.82 for the same period last year.
The total cost of goods per case increased to $13.89 per case in the year ended December 31, 2025, from $12.46 per case for the prior year. Gross Margin Gross margin was 20% for the year ended December 31, 2025, compared to 30% for the prior year.
The Company has been negatively impacted by supply chain challenges affecting our ability to benefit from strong demand for, and increased sales of our product. The disruption caused by labor shortages, significant raw material cost inflation, logistics issues and increased freight costs, and ongoing port congestion, resulted in suppressed margins.
The Company will continue to monitor pricing and availability in transportation and has implemented plans designed to manage this risk. In the past, the Company has been negatively impacted by supply chain challenges affecting our ability to benefit from strong demand for, and increased sales of our product.
Set forth below is a reconciliation of net loss to Modified EBITDA for the year ended December 31, 2024, and 2023 (in thousands): Year Ended December 31, 2024 2023 Net loss $ (13,152 ) $ (15,523 ) Modified EBITDA adjustments: Depreciation and amortization 289 281 Interest expense 5,481 6,106 Tax expense 111 251 Stock option and other noncash compensation 528 493 Provision for receivable with former related party 115 585 Product quality hold write-down 42 1,267 Inventory write-offs associated with exited categories and major packaging and formula changes - 1,848 Impairment of assets 473 - One-time change in policy for discounts - 756 Professional fees 393 - Contract Proceedings 1,593 12 Severance costs 57 256 Total EBITDA adjustments $ 9,082 $ 11,855 Modified EBITDA $ (4,070 ) $ (3,668 ) 25 We present Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
Set forth below is a reconciliation of net loss to EBITDA for the years ended December 31, 2025, and 2024: Year Ended December 31, 2025 2024 Net loss $ (15,842 ) $ (13,152 ) EBITDA adjustments: Interest expense 1,108 5,481 Tax expense (84 ) 111 Depreciation and amortization 206 293 Total EBITDA adjustments $ 1,230 $ 5,885 EBITDA $ (14,612 ) $ (7,267 ) 36 We present EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
Modified EBITDA In addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance.
During the prior year, interest and other expense consisted of $5,481 of interest expense offset by $445 of other income. EBITDA In addition to our U.S. GAAP results, we present EBITDA as a supplemental measure of our performance. However, EBITDA is not a recognized measurement under U.S.
Cost of Goods Sold Cost of goods sold decreased $5,306 during the year ended December 31, 2024, as compared to the same period last year. As a percentage of net sales, cost of goods sold for the year ended December 31, 2024, was 70% as compared to 71% for the same period last year.
As a percentage of net sales, cost of goods sold for the year ended December 31, 2025, was 80% as compared to 70% for the prior year. The increase in cost of goods sold was primarily driven by inventory write-offs related to changes in product portfolio optimization made by new management, in an amount of $2,013.
Results of Operations Overview During the year ended December 31, 2024, the Company continued to strengthen its supply chain, implement gross margin enhancement initiatives, drive efficiencies in transportation and warehouse costs and reduce operating expenses.
Results of Operations Overview During the year ended December 31, 2025, the Company continued its focus on profitable sales growth, improving gross margin, reducing freight costs, and optimizing selling, general & administrative expenses. The sales growth initiatives include channel expansion, in-store product placements, new product innovation and improved sales execution.
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We define Modified EBITDA as net income (loss), plus interest expense, tax expense, depreciation and amortization, stock-based compensation, changes in fair value of warrant expense, change in fair value of SAFE agreements, legal and insurance settlements, non-recurring professional fees, inventory write-offs associated with exited categories and major packaging and formula changes, one-time changes in policy, impact of changes to accounting methodology and one-time restructuring-related costs including employee severance and asset impairment.
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Gross billing may include deductions from MSRP or “list price”, where applicable, and excludes promotional costs of generating such sales. Management utilizes gross billing to monitor operating performance of products and salespersons, which performance can be masked by the effect of promotional or other allowances.
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In addition, it continues to build its innovation pipeline with sustained growth in Reed’s Real Ginger Ale, Virgil’s Zero Sugar handcrafted sodas, Reed’s Classic and Stormy Mule, and Reed’s Hard Ginger Ale. The Company remains focused on driving sales growth, improving gross margin, and reducing freight costs.
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The gross margin enhancement initiatives include product portfolio optimization, equitable supplier negotiations, streamlining co-packer processes, and efficient inventory management. Underpinning these initiatives is a focus on optimizing delivery and handling and selling, general & administrative expenses. During the year ended December 31, 2025, the Company began an expansion into new geographic markets in the Asia Pacific region.
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The sales growth focus is on channel expansion, increase in store placements, new product introduction and improved sales execution. The margin enhancement initiative is driven by packaging savings, co-packer upgrades, and better leveraged purchasing and improved efficiency. Underpinning these initiatives is a focus on strategically reducing operating costs particularly delivery and handling expenses.
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The Company formed a wholly owned subsidiary Reed’s (Asia) Limited (BVI). Reed’s (Asia) Limited subsequently formed five additional wholly owned subsidiaries, Reed’s (Hong Kong) Limited, Reed’s (Japan) Limited, Jiangzhi Beverage (Hainan) Co. Limited, Reed’s Beverages (Singapore) PTE Limited, and Shenshen Jiangzi Beverage Co. Limited. These subsidiaries are an early part of the Company’s strategic expansion in the Asia Pacific region.
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In addition, the Company continues to augment its co-packer network to drive further efficiencies and build proper levels of inventory at the appropriate location to maximize delivery metrics.
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The Company expects continued investment in its Asia Pacific growth initiative. Reed’s (Asia) Limited did not generate sales in the year ended December 31, 2025.
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Although the Company has experienced decreases in freight costs, in the Company’s opinion there remains a volatile environment and the Company will continue to monitor pricing and availability in transportation. Mitigation plans have been implemented to manage this risk.
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During the year ended December 31, 2025, the average cost of delivery and handling was $2.75 per case, consistent with the year ended December 31, 2024. The Company has experienced increases in freight costs and there remains a volatile pricing environment, including due to the armed conflict in Iran.
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The Company has experienced moderation in inflation and anticipates this continuing throughout 2025. Through December 31, 2024, we continued to generate cash flows to meet our short-term liquidity needs, and we expected to maintain access to the capital markets.
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Any disruption caused by labor shortages, significant raw material cost inflation, logistics issues, increased freight costs, or port congestion, may adversely impact margins in the future. Through December 31, 2025, we continued to finance our operations through existing cash balances, cash generated from operations, public and private issuance of common stock, and credit lines from financial institutions.
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Sales, Cost of Sales, and Gross Margins The following chart sets forth key statistics for the transition of the Company’s top line activity through the years ended December 31, 2024.
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As we seek additional financing, there can be no assurance that such financing will be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our operating performance and investor sentiment with respect to us and our industry.
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Total Total Per Case Per Case 2024 2023 vs PY 2024 2023 vs PY Cases: Reed’s 1,373 1,530 -10 % Virgil’s 760 870 -13 % Total Core 2,133 2,400 -11 % Non-Core - 60 -100 % Total 2,133 2,460 -13 % Gross Billing: Core $ 44,161 $ 48,778 -9 % $ 20.70 $ 20.32 2 % Non-Core 155 1,911 -92 % - 31.85 -100 % Total $ 44,316 $ 50,689 -13 % 20.78 20.60 1 % Discounts: Total $ (6,362 ) $ (5,978 ) 6 % $ (2.98 ) $ (2.43 ) 23 % COGS: Core $ (26,578 ) $ (30,777 ) -14 % $ (12.46 ) $ (12.82 ) -3 % Non-Core - (4,222 ) -100 % - $ (70.46 ) -100 % Total $ (26,578 ) $ (34,999 ) -24 % $ (12.46 ) $ (14.22 ) -12 % Gross Margin: $ 11,376 $ 9,712 17 % $ 5.33 $ 3.95 35 % as % Net Sales 30 % 22 % 23 Sales, Cost of Sales, and Gross Margins As part of the Company’s ongoing initiative to simplify and streamline operations the Company has identified core products on which to place its strategic focus.
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Recent Developments Underwritten Public Offering On December 4, 2025, we entered into an underwriting agreement (the “Underwriting Agreement”) with A.G.P./Alliance Global Partners, as representative of the underwriters (the “Underwriters”), pursuant to which we agreed to sell and issue to the Underwriters, in a public offering (the “Offering”), an aggregate of (i) 2,500,000 shares of common stock and (ii) warrants to purchase up to 2,500,000 shares of common stock.
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These core products consist of Reed’s and Virgil’s branded beverages. Non-core products consist primarily of Wellness Shots, candy and slower selling discontinued Reed’s and Virgil’s SKUs. Core beverage volume for the year ended December 31, 2024, represents 100% of all beverage volume.
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The Offering closed on December 8, 2025. Each share of common stock and accompanying warrant to purchase one share of common stock were sold together at a combined public offering price of $4.00 less underwriting discounts and commissions.
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Core brand gross billing decreased by 9% to $44,161 compared to $48,778 during the same period last year, driven by Reed’s volume decline of 10% and Virgil’s volume decline of 13%. The result is a decrease in total gross billing of 13%, to $44,316 during the year ended December 31, 2024, from $50,689 in the same period last year.
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Additionally, the Company granted the Underwriters a 45-day option (the “Overallotment Option”) to purchase up to an additional 375,000 shares of common stock and/or warrants at the public offering price, less underwriting discounts and commissions. 31 On December 5, 2025, the Underwriters notified us of their determination to partially exercise the Overallotment Option for warrants to purchase an aggregate of 375,000 shares of common stock.
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Price on our core brands increased 2% to $20.70 per case. The lower gross billings was a result of volume declines that have impacted the carbonated soft drink segment as a result of price increases coupled with the Company’s inability to produce sufficient levels of inventory to meet current demand as a result of tighter credit terms from suppliers.
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On December 12, 2025, the Underwriters notified us of their determination to exercise the remaining Overallotment Option to purchase an aggregate of 375,000 shares of common stock. All of the securities in the Offering, including the Overallotment Option, were sold by the Company.
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Discounts as a percentage of gross sales were 14% compared to 12% in the same period last year. As a result, net sales revenue decreased 15% during the year ended December 31, 2024, to $37,954, compared to $44,711 in the same period last year driven by lower sales and elevated trade spend.
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The net proceeds to the Company from the Offering, including the partial exercise of the Overallotment Option, were approximately $10.2 million, after deducting underwriting discounts and commissions and certain offering expenses.
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The decrease was primarily driven by lower supply chain and input costs. In December 2023, the Company wrote off $1,848 of inventory comprised of $1,452 of packaging and ingredients related to major changes in packaging and formulations, and $396 of candy as a result of exiting this line of business. These write-offs represented 4% of net sales.
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The Company currently intends to use the net proceeds from the Offering, together with its existing cash and cash equivalents, to fund growth initiatives, working capital and other general corporate purposes, which may include repayment of debt. Each warrant issued in the Offering has an exercise price per share of common stock equal to $4.50, subject to certain adjustments.
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During 2023 the Company discovered a closure failure in our seasonal swing-lid products which resulted in a product quality hold write-down. The Company recorded expense of $1,267 related to costs associated with the product quality hold write-down for the year ended December 31, 2023. An insurance claim is pending.
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The warrants are immediately exercisable upon issuance and will expire on December 8, 2030 (the “Expiration Date”), provided that the holder will be prohibited, subject to certain exceptions, from exercising the warrant for shares of the Company’s common stock to the extent that immediately after giving effect to such exercise, the holder, together with its affiliates and other attribution parties, would own more than 4.99% or 9.99% (as elected by the holder) of the total number of shares of the Company’s common stock then issued and outstanding, which percentage may be changed at the holder’s election to a higher or lower percentage not in excess of 9.99% upon 61 days’ prior notice from the holder to the Company subject to the terms of the warrants.
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Excluding the write-offs and provision for product quality hold write-down, total cost of goods sold per case during the year ended December 31, 2023, would have been $12.96. Gross Margin Gross margin increased to 30% for the year ended December 31, 2024, compared to 22% for the same period last year.
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If, and only if, there is no effective registration statement at the time of exercise, the warrants may be exercised cashlessly. Reverse Stock Split On October 31, 2025, the Company effected a 1-for-6 reverse stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of common stock.
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The decrease was driven by lower employee related costs, syndicated data fees, customer fees, and product sampling expenses partially offset by higher broker fees and e-commerce delivery costs. General and Administrative Expenses General and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional fees.
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The Reverse Stock Split reduced the number of shares of the Company’s issued and outstanding common stock, as well as the number of shares subject to then-outstanding warrants and the exercise price thereof and the number of shares available for future issuance under the Company’s equity plans, the number of shares subject to such awards and purchase rights and the exercise and purchase price of, and other terms and conditions relating to, such awards and purchase rights.
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General and administrative expenses increased in the year ended December 31, 2024, to $9,109 from $6,118, an increase of $2,991 over the same period last year. The increase was driven by contract proceedings, impairment of assets, professional fees, and quality assurance costs partially offset by lower bad debt and franchise tax expense.
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The conversion terms of the Preferred Stock have also been adjusted automatically such that each share of Series A Convertible Preferred Stock will be convertible into the number of shares of common stock that would have been issuable if all of the outstanding shares of Preferred Stock were converted into common stock immediately prior to the Reverse Stock Split.
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Interest and Other Expense Interest and other expense was $5,036 for the year ended December 31, 2024, consisted of $5,481 of interest expense and $445 of other income related to the reversal of accrued expense from prior years. During the same period last year, interest and other expense consisted of $6,106 of interest expense.
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No fractional shares were distributed as a result of the Reverse Stock Split, and stockholders were entitled to a cash payment in lieu of fractional shares. The Reverse Stock Split did not affect the par value or total number of authorized shares of common stock.
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We define Modified EBITDA as net income (loss), plus interest expense, tax expense, depreciation and amortization, stock-based compensation, changes in fair value of warrant expense, change in fair value of SAFE agreements, legal and insurance settlements, non-recurring professional fees, inventory write-offs associated with exited categories and major packaging and formula changes, one-time changes in policy, impact of changes to accounting methodology and one-time restructuring-related costs including employee severance and asset impairment.
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The share and per share amounts included in this Annual Report on Form 10-K have been adjusted to account for the Reverse Stock Split.
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Liquidity For the year ended December 31, 2024, the Company recorded a net loss of $13,152 and used cash in operations of $6,124. During 2024, the Company took significant steps to convert high interest debt to equity, raise additional equity, and refinance its credit facility.
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Amended Senior Secured Loan On September 26, 2025, the Company entered into the Amended Loan Agreement governing the Senior Secured Loan with certain funds affiliated with Whitebox Advisors LLC, as lenders, and Cantor Fitzgerald Securities, as administrative agent and collateral agent.
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In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern , the Company’s management has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying financial statements were issued.
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The Amended Loan Agreement (i) reduced the aggregate principal amount of the revolving credit commitment to $9,250 from $10,000, (ii) changed interest payments on the revolving loan to be due monthly in arrears from quarterly in arrears, (iii) and extended the maturity date to September 30, 2026.
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As of the issuance date of these financial statements, management expects that the Company’s existing cash of $10,391 will be sufficient to fund the Company’s current operating plan for at least twelve months from the date of issuance of these financial statements.
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Private Placement On September 12, 2025, we entered into a securities purchase agreement with six accredited investors for the issuance and sale in a private placement of 833,330 shares of our common stock, at a purchase price of $6.00 per share, for aggregate gross proceeds of $5,000 (the “September 2025 Private Placement”).
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The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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The September 2025 Private Placement closed on September 15, 2025 (the “September 2025 PIPE Closing Date”).
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Management’s assessment whether there is sufficient cash on hand, together with expected capital raises, to assure operations for a period of at least twelve months from the date these financial statements are issued, is based on conditions that are known and reasonably knowable to management, considering various scenarios, projections, and estimates and certain key assumptions.

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