FILED PURSUANT TO RULE 424(B)(3)
REGISTRATION NO. 333-274035
Dated
August 28, 2023
PRELIMINARY
PROSPECTUS
3,313,278
Shares of Common Stock
This
prospectus covers the resale by the selling shareholders of Reed’s, Inc. (“Reed’s,” “we,” “us”,
“our” or the “Company”) identified in the “Selling Shareholders” section of this prospectus of up
to an aggregate of 3,313,278 shares of our common stock, including 3,055,535 shares issuable upon conversion of, or in satisfaction of
amortization or interest make-whole payments with respect to, our 10% secured convertible promissory notes, as amended (the “Notes’).
We will not receive any of the proceeds from the sale of shares of our common stock or conversion of the Notes by the selling shareholders.
The
selling shareholders or their permitted transferees, pledgees, assignees, distributees, donees or successors or others who later
hold any of the selling shareholders’ interests in the shares of common stock described this prospectus may offer and sell the
shares of common stock described in this prospectus in a number of different ways and at varying prices. We provide more information
about how a selling shareholder may sell its shares of common stock in the section titled “Plan of Distribution”
appearing elsewhere in this prospectus. If necessary, the specific manner in which the shares may be offered and sold will be
described in a supplement to this prospectus. We will pay the expenses incurred in registering the securities covered by the
prospectus, including legal and accounting fees.
Our
common stock is listed on OTC Markets, Inc. OTCQX Best Market under the symbol “REED.” The last reported sale price of our
common stock on August 25, 2023 was $3.75 per share.
You
should read this prospectus, together with additional information described under the headings “Information Incorporated
by Reference” and “Where You Can Find More Information,” carefully before you invest in any of our securities.
Investing
in our securities involves risks. See the section titled “Risk Factors” beginning on page 6 of this prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is August 28, 2023
TABLE
OF CONTENTS
INFORMATION
CONTAINED IN THIS PROSPECTUS
We
incorporate by reference important information into this prospectus. You may obtain the information incorporated by reference without
charge by following the instructions under “Where You Can Find More Information.” You should carefully read this prospectus
as well as additional information described under “Incorporation of Certain Information by Reference,” before deciding to
invest in our securities.
Unless
the context otherwise requires, “Reed’s,” “Company,” “we,” “us” and “our”
refer to Reed’s, Inc., and “selling shareholders” and “selling shareholder” refer to one or more selling
shareholders identified in the “Selling Shareholders” section of this prospectus and their respective permitted transferees,
pledgees, assignees, distributees, donees or successors or others who later hold any of the selling shareholders’ interests in
any of the securities. References to “securities” include any security that we or the selling shareholders might offer under
this prospectus or any prospectus supplement.
We
have filed or incorporated by reference exhibits to the registration statement of which this prospectus forms a part. You should read
the exhibits carefully for provisions that may be important to you.
We
have not authorized any dealer, salesperson or other person to give any information or to make any representation other than those contained
or incorporated by reference in this prospectus. You must not rely upon any information or representation not contained or incorporated
by reference in this prospectus. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities
other than the registered securities to which it relates, nor does this prospectus constitute an offer to sell or the solicitation of
an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
You should not assume that the information contained in this prospectus is accurate on any date subsequent to the date set forth on its
front cover or that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated
by reference, even though this prospectus is delivered or securities are sold on a later date. Our business, financial condition, results
of operations and prospects may have changed since those dates.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act for the securities being offered by this prospectus.
This prospectus, which is part of the registration statement, does not contain all of the information included in the registration statement
and the exhibits. For further information about us and the securities offered by this prospectus, you should refer to the registration
statement and its exhibits. References in this prospectus to any of our contracts or other documents are not necessarily complete, and
you should refer to the exhibits attached to the registration statement for copies of the actual contract or document. SEC filings are
also available to the public at the SEC’s website at www.sec.gov.
We
are subject to the reporting and information requirements of the Exchange Act and, as a result, we file periodic and current reports,
proxy statements and other information with the SEC. We make our periodic reports and other information filed with or furnished to the
SEC, available, free of charge, through our website as soon as reasonably practicable after those reports and other information are filed
with or furnished to the SEC. Additionally, these periodic reports, proxy statements and other information are available for inspection
and copying at the public reference room and website of the SEC referred to above.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” information from other documents that we file with it, which means that we can
disclose important information to you by referring you to those documents. The information incorporated by reference is considered to
be part of this prospectus. Information in this prospectus supersedes information incorporated by reference that we filed with the SEC
prior to the date of this prospectus. We incorporate by reference into this prospectus and the registration statement of which this prospectus
is a part the information or documents listed below that we have filed with the SEC (other than any filing or portion thereof that is
furnished, rather than filed, under applicable SEC rules):
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our
Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on May 15, 2023; |
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our
Quarterly Reports on Form
10-Q for the periods ended March 31, 2023, and June 30, 2023, filed with the SEC on June 1, 2023 and August
10, 2023, respectively; |
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our
Current Reports on Form 8-K dated January 24, 2023 (as filed January 26, 2023), February 6, 2023 (as filed February 6, 2023), February 10, 2022 (as filed February 14, 2023), March 1, 2023 (as filed March 7, 2023), March 31, 2023 (as filed March 31, 2023); May 24, 2023 (as filed May 31, 2023), July 7, 2023 (as filed July 12, 2023); and |
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the
description of our common stock contained in our Registration Statement on Form 8-A (File No. 001-32501), filed with the SEC pursuant
to Section 12(b) of the Exchange Act on May 9, 2019, as may be amended, including any further amendment or report filed hereafter
for the purpose of updating such description. |
Additionally,
all documents filed by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after (i) the date of the initial
registration statement and prior to effectiveness of the registration statement, and (ii) the date of this prospectus and before the
termination or completion of any offering hereunder, shall be deemed to be incorporated by reference into this prospectus from the respective
dates of filing of such documents, except that we do not incorporate any document or portion of a document that is “furnished”
to the SEC, but not deemed “filed.”
Upon
written or oral request made to us at the address or telephone number below, we will, at no cost to the requester, provide to each person,
including any beneficial owner, to whom this prospectus is delivered, a copy of any or all of the information that has been incorporated
by reference in this prospectus (other than an exhibit to a filing, unless that exhibit is specifically incorporated by reference into
that filing), but not delivered with this prospectus. You may also access this information on our website at www.reedsinc.com and the
URL where incorporated reports and other reports may be accessed is http://reedsinc.com/investors/sec-filings/.
Investor
Relations at Reed’s Inc.
201
Merritt 7 Corporate Park
Norwalk,
Connecticut 06851
ir@reedsinc.com
(800)
997-3337 Ext. 2 or (617) 956-6736
Except
as expressly provided above, no other information, including none of the information on our website, is incorporated by reference into
this prospectus or any supplement to this prospectus. You should not consider any information on, or that can be accessed through, our
website as part of this prospectus or any supplement to this prospectus (other than those filings with the SEC that we specifically incorporate
by reference into this prospectus or any supplement to this prospectus).
Any
statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed modified,
superseded or replaced for purposes of this prospectus to the extent that a statement contained in this prospectus modifies, supersedes
or replaces such statement.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference into this prospectus contain forward-looking statements within the meaning of
Section 27A of the Securities Act, and Section 21E of the Exchange Act. All statements, other than statements of historical facts, contained
in this prospectus, including statements regarding strategy, future operations, future financial position, projected costs, prospects,
plans and objectives of management, are forward-looking statements. Words such as, but not limited to, “anticipate,” “aim,”
“believe,” “contemplate,” “continue,” “could,” “design,” “estimate,”
“expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “seek,” “should,” “suggest,” “strategy,”
“target,” “will,” “would,” and similar expressions or phrases, or the negative of those expressions
or phrases, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying
words.
Although
we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these
statements are based on our projections of the future that are subject to known and unknown risks and uncertainties and other factors
that may cause our actual results, level of activity, performance or achievements expressed or implied by these forward-looking statements,
to differ. Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside
of our control, involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially
from the statements made, including, but not limited to, the following risk factors:
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Our
ability to absorb, mitigate or pass on cost increases to our bottlers/distributors and/or customers; |
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The
impact of rising costs, interest rates, and inflation on the discretionary income of our consumers, particularly the rising cost
of energy; |
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Uncertainties
associated with an economic slowdown or recession that could negatively impact the financial condition of our customers and could
result in a reduced demand for our products; |
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The
impact of the military conflict in Ukraine, including supply chain disruptions, volatility in commodity prices, increased economic
uncertainty and escalating geopolitical tensions; |
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The
impact of logistical issues and delays; |
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Our
ability to effectively manage our inventories and/or our accounts receivables; |
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Our
ability to continue to generate sufficient cash flows to support our expansion plans and general operating activities; |
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Changes
in demand that are weather, or season related and/or for other reasons, including changes in product category and/or package consumption
and changes in cost and availability of certain key ingredients including aluminum cans, as well as disruptions to the supply chain,
as a result of climate change and poor or extreme weather conditions; |
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The
impact on our business of competitive products and pricing pressures and our ability to gain or maintain our share of sales in the
marketplace as a result of actions by competitors; |
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Our
ability to implement and/or maintain price increases, including through reductions in promotional allowances; |
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The
effectiveness of sales and/or marketing efforts by us and/or by distributors of our products, most of whom distribute products that
may be regarded as competitive with our products; |
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The
costs and/or effectiveness, now or in the future, of our advertising, marketing and promotional strategies; |
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The
failure of our co-packers to manufacture our products on a timely basis or at all; |
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Our
ability to make suitable arrangements and/or procure sufficient capacity for the co-packing of any of our products, the timely replacement
of discontinued co-packing arrangements and/or limitations on co-packing availability; |
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Volatility
of stock prices which may restrict stock sales, stock purchases or other opportunities as well as negatively impact the motivation
of equity award grantees; |
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Any
disruption in and/or lack of effectiveness of our information technology systems, including a breach of cyber security, which disrupts
our business or negatively impacts customer relationships, as well as cybersecurity incidents involving data shared with third parties; |
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The
imposition of additional regulation imposing excise taxes and/or sales taxes on sweetened beverages or alcoholic beverages; and |
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Recruitment
and retention of senior management, other key employees and our employee base in general. |
We
may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place
undue reliance on our forward-looking statements. All forward-looking statements are qualified in their entirety by this cautionary statement.
Forward-looking statements should be regarded solely as our current plans, estimates and beliefs. We have included important factors
in the cautionary statements included in this document, particularly in the section entitled “Risk Factors” appearing
elsewhere in this prospectus relating to factors that we believe could cause actual results or events to differ materially from the forward-looking
statements that we make. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time.
It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent
to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking
statements we may make. The forward-looking statements contained in this prospectus or in any document or report incorporated by this
prospectus are made as of the date of this prospectus or such documents or reports, and we do not assume any obligation to update any
forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
RISK
FACTORS
Our
business is subject to numerous risks, as more fully described in the section entitled “Risk Factors” in Part I, Item 1A
of our Annual Report on Form 10-K for the year ended December 31, 2022, Part II, Item 1A of our Quarterly report on Form 10-Q for the
period ended March 31, 2023 and as may be described in our future filings with the SEC, which are incorporated by reference in this prospectus.
Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may become important factors that
affect us. You should also carefully consider the other information included or incorporated by reference in this prospectus. Each of
the risks described in these documents could materially and adversely affect our business, financial condition, results of operations
and prospects, and could result in a partial or complete loss of your investment.
Available
Information
We
maintain a website at the following address: www.reedsinc.com. The information on our website is not incorporated by reference in this
report. We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the
Securities and Exchange Commission (“SEC”) in accordance with the Securities Exchange Act of 1934, as amended (“Exchange
Act”). These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. We
make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information
with, or furnish it to, the SEC. In addition, we routinely post on the “Investors” page of our website news releases, announcements
and other statements about our business and results of operations, some of which may contain information that may be deemed material
to investors. Therefore, we encourage investors to monitor the “Investors” page of our website and review the information
we post on that page. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC at the following address: http://www.sec.gov.
THE
COMPANY
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 45,000 outlets nationwide. These outlets
include the natural and specialty food channel, grocery stores, mass merchants, drug stores, convenience stores, club stores, liquor
stores, and on-premises locations including bars and restaurants. Reed’s two core brands are Reed’s, which includes Reed’s
Craft Ginger Beer, Reed’s Real Ginger Ale, Reed’s Mules, and Reed’s Hard Ginger Ale, and Virgil’s Handcrafted
sodas. Reed’s Craft Ginger Beers are unique due to the proprietary process of using fresh ginger root combined with a Jamaican
inspired recipe of natural spices, honey and fruit juices. Reed’s uses this same handcrafted approach in its Reed’s Real
Ginger Ale and Virgil’s line of great tasting, bold flavored craft sodas, including its award-winning Virgil’s Root Beer.
Reed’s
is the leading ginger beer in the US; Virgil’s is an independent natural full line craft soda and is a leader in the craft soda
category.
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. In 2019, we streamlined our focus
to our core categories of Reed’s Ginger Beverages and Virgil’s Craft Sodas. In April 2020, we launched our new line of Reed’s
Real Ginger Ales, in both Full Sugar and Zero Sugar varieties, made with fresh organic ginger. In 2021, we extended our Ginger Ale offerings
with Mocktails, and we entered the alcohol space with the launch of our RTD Classic Mule that is 7% alcohol by volume (“ABV”)
and Zero Sugar and Hard Ginger Ale which is 5% ABV and Zero Sugar
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, 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. We also offer three sweetener options: one with cane sugar,
honey and fruit juices; one with honey and pineapple juice; and another without sugar (Zero Sugar) made from an innovative blend of natural
sweeteners. In 2021, we expanded our Extra Ginger Beer portfolio into cans offerings.
As
of the end of 2022, the Reed’s Craft Ginger Beer line included five major varieties with a mix of bottles and cans:
Reed’s
Original Ginger Beer – Our first to market product uses a Jamaican-inspired recipe that calls for fresh ginger root, lemon,
lime, pineapple juice, honey, raw cane sugar, herbs and spices.
Reed’s
Premium Ginger Beer – Our Original Ginger Beer sweetened with honey and pineapple juice. (No cane sugar added.)
Reed’s
Extra Ginger Beer – Contains 50% more fresh ginger than Reed’s Original recipe for extra spice.
Reed’s
Strongest Ginger Beer – Contains 115% more fresh ginger than Reed’s Original for the strongest spice.
Reed’s
Zero Sugar Extra Ginger Beer – launched in 2019, it uses a proprietary natural sweetening system for a zero-calorie version
of our Reed’s Extra Ginger Beer.
Reed’s
Real Ginger Ale
Reed’s
Real Ginger Ale is unique for the category because it combines real fresh ginger with the classic, refreshing taste that consumers love.
It contains nothing artificial and is non-GMO project verified. 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
Zero Sugar Real Ginger Ale – also launched in April 2020 in standard and slim cans. It uses a proprietary sweetening system
to match the great taste of the cane sugar version in a zero-calorie drink.
Reed’s
Mocktails – In 2021 Reed’s line extended its Zero Sugar Ginger Ale, with the launch of Mocktail Flavors. It uses our
proprietary sweetening system to match the great taste of the cane sugar version in a zero-calorie drink. The two flavors are Shirley
Tempting and Transfusion.
Reed’s
Real Cranberry Ginger Ale – This seasonal product, launch in the fall of 2021 is our Real Ginger Ale with cranberry added.
It is a consumer favorite during the holiday season and is available October through December.
Reed’s
Ready to Drink
Reed’s
Zero Sugar Classic Mule – Launched in 2020 and expanded to 42 states in 2022, Reed’s first-ever alcoholic offering is
packed with REAL, fresh ginger root and made through a unique handcrafted brewing and fermentation process. It contains 7% ABV, and a
light-spice flavor profile with no artificial colors, gluten, GMOs or caffeine. It is the ultimate mule, made with fresh ginger root,
to be enjoyed anytime, anywhere.
Reed’s
Zero Sugar Stormy Mule – Launched in 2022, the Stormy is the perfect companion to our Classic Mule, the Stormy Mule
is the ultimate rum flavored alcohol and ginger beer. It contains 7% ABV, and a light-spice flavor profile with no artificial colors,
gluten, GMOs or caffeine. It is the ultimate stormy, made with fresh ginger root, to be enjoyed anytime, anywhere.
Reed’s
Zero Sugar Hard Ginger Ale - Launched in late 2002, our line of light refreshing hard ginger ales are available in four flavors:
Mango, Cherry Lime, Strawberry Watermelon and Pineapple Coconut. They contain 5% ABV, 100 calories and zero carbohydrates and have no
added sugar, artificial colors, gluten, GMOs or caffeine. They are made with fresh ginger root, to be enjoyed anytime, anywhere.
Virgil’s
Handcrafted Sodas
Virgil’s
is a premium handcrafted soda that uses only natural ingredients to create bold renditions of classic flavors. We don’t use any
artificial preservatives, any artificial colors, or any GMO-sourced ingredients, and our Virgil’s line is certified kosher.
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. Virgil’s difference is using natural ingredients to craft bold, classic soda flavors.
Virgil’s Handcrafted line includes Root Beer, Vanilla Cream, Black Cherry, and Orange Cream.
Zero
Sugar Line: Virgil’s launched a new line of Zero Sugar, Zero Calorie craft sodas in 2019. Each Zero Sugar soda is sweetened
with a proprietary blend of natural sweeteners with no added sugars and is certified Keto. This natural line of Zero Sugar flavors includes
Root Beer, Cola, Black Cherry, Vanilla Cream, Orange Cream, Lemon-Lime, Ginger Ale, Grapefruit and Dr. Better.
Our
Primary Markets
We
target a smaller segment of the estimated $29 billion mainstream carbonated and non-carbonated soft drink markets in the United States.
Our brands are generally considered premium and natural, with upscale packaging. They are loosely defined as the craft specialty bottled
carbonated soft drink category.
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. 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.
We
sell to well-known popular natural food and gourmet retailers, large grocery store chains, mass merchants, club stores, convenience and
drug stores, liquor stores, industrial cafeterias (corporate feeders), and to on-premises bars and restaurants nationwide and in some
international markets. We also sell our products and promotional merchandise directly to consumers via the Internet through our Amazon
storefront which can be accessed through our company web site www.drinkreeds.com.
Some
of our representative key customers include:
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Natural
stores: Whole Foods Market, Sprouts, Natural Grocers by Vitamin Cottage, Fresh Thyme Farmers Market, Mother’s |
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Gourmet
& specialty stores: Trader Joe’s, Bristol Farms, Lazy Acres, The Fresh Market, Central Market |
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Grocery
and mass chains: Kroger (and all Kroger banners), Albertson’s/Safeway, Publix, Food Lion, Stop & Shop, H.E.B., Wegmans,
Target, Walmart |
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Club
stores: Costco |
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Liquor
stores: BevMo! Total Wine & More, Spec’s |
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Convenience
& drug stores: CVS Health, Rite Aid |
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.
Our
product reaches the market in the following ways:
Direct
to Natural & Specialty Wholesale Distributors
Our
natural and specialty distributor partners operate a distribution network delivering thousands of SKUs of natural and gourmet products
to thousands of small, independent, natural retail outlets around the U.S., along with national chain customers, both conventional and
natural. This system of distribution allows our brands far reaching access 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.
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. 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. Some retailers mandate we deliver directly
to them, as it is more cost effective and allows them to pass savings along to their customers. Other retailers may not mandate direct
delivery, but they recommend and prefer it as they have the capability to self-distribute and can realize significant savings with direct
delivery.
Wholesale
Distribution
We
utilize a network of five independent distribution and consolidation centers across the United States to store and distribute our products.
Our Wholesale Distributor network handles the wholesale shipments of our products. These distributors have a warehouse and distribution
center, and ship Reed’s and Virgil’s products directly to the retailer (or to customers who opt for drop shipping).
International
Distribution
We
presently export Reed’s and Virgil’s brands throughout international markets via US based exporters. International markets
where our brands are present are France, UK, South Africa, portions of the Caribbean, Canada, Spain, Philippines, Israel and Australia.
International
sales to some areas of the world are cost prohibitive, except for some specialty sales, since our premium sodas were historically packed
in glass, which drives substantial freight costs when shipping overseas. Despite these cost challenges, we believe there are good opportunities
to expand internationally, and we are increasing our marketing focus on these areas by adding freight friendly packages such as aluminum
cans and also developing manufacturing partnerships in local markets whereby we ship concentrate rather than finished goods. We are open
to exporting and co-packing internationally and expanding our brands into foreign markets, and we have held preliminary discussions with
trading companies and import/export companies for the distribution of our products throughout Asia, Europe, Australia, and South America.
We believe these areas are a natural fit for Reed’s ginger products because of the popularity and importance of ginger in international
markets, especially the Asian market, where ginger is a significant part of the local diet and nutrition.
We
believe the strength of our brands, innovation, and marketing, coupled with the quality of our products and flexibility of our distribution
network, allows us to compete effectively.
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 have a long-standing relationship with three co-packers in Pennsylvania and two
in California. During 2020 we entered into co-packing agreements with a co-packer on the East Coast, Clinton’s Ditch, and on the
West Coast, Noel Canning. We are in discussions and negotiations with additional co-packers to secure added capability for future production
needs. We periodically review our co-packing relationships to ensure that they are optimal with respect to quality of production, cost
and location.
In
some instances, subject to agreement, certain equipment may be purchased exclusively by us and/or jointly with our co-packers and installed
at their facilities to enable them to produce certain of our products. In certain cases, such equipment remains our property and is required
to be returned to us upon termination of the packing arrangements with such co-packers, unless we are reimbursed by the co-packer over
a pre-determined number of cases that are produced at the facilities concerned. For most of our products there are limited co-packing
facilities in our markets with adequate capacity and/or suitable equipment to package our products. We believe a short disruption or
delay in production would not significantly affect our revenues; however, as alternative co-packing facilities in our markets with adequate
long-term capacity may not be available for such products, either at commercially reasonable rates and/or within a reasonably short time
period, if at all, a lengthy disruption or delay in production of any of such products could significantly affect our revenues.
Our
ability to estimate demand for our products is imprecise, particularly with new products, and may be less precise during periods of rapid
growth, including in new markets. If we materially underestimate demand for our products, and/or are unable to secure sufficient ingredients
or raw materials, and/or procure adequate packing arrangements and/or obtain adequate or timely shipment of our products, we might not
be able to satisfy demand on a short-term basis.
We
continue to actively seek alternative and/or additional co-packing facilities with adequate capacity and capability for the production
of our various products to minimize transportation costs and transportation-related damages as well as to mitigate the risk of a disruption.
Warehousing
and Logistics are a significant portion of the Company’s operational costs. In order to drive efficiency and reduce costs, on February
1, 2019, we entered into a strategic partnership with FitzMark to manage all freight movement for the Company. FitzMark is one of the
largest distribution service providers in North America and has expertise that will provide a competitive advantage in the movement of
raw materials and finished goods. This partnership supports planning and execution of all inventory movement, assessment of storage needs
and cost management.
We
follow a “fill as needed” model to the best of our ability and have no significant order backlog.
New
Product Development
While
we have simplified our business and have streamlined a significant number of SKUs in order to further our primary objective of accelerating
the growth of the Reed’s and Virgil’s core product offerings, we believe significant opportunity remains in the natural beverage
space.
Healthier
alternatives will be the future for carbonated soft drinks. We will continue to drive product development in the natural, no and low
sugar offerings in the “better for you” beverage categories. In addition, we believe there are powerful consumer trends that
will help propel the growth of our brand portfolio including the increased consumption of ginger as a recognized superfood, the growing
use of ginger beer in today’s popular cocktail drinks, and consumers’ increased demand for higher quality, natural handcrafted
beverages.
Innovations
include our compelling line of full flavor, natural, zero sugar, zero calorie sodas. Reed’s has also begun to expand and broaden
its product development capabilities by engaging and working with larger, experienced beverage flavor houses and innovative ingredient
research and supply companies.
We
believe our new business model enhances our ability to be nimble and innovative, producing category leading new products in a short period
of time.
DESCRIPTION
OF COMMON STOCK
The
following is a summary of the material terms of our common stock. This summary does not purport to be exhaustive and is qualified in
its entirety by reference to our certificate of incorporation, as amended (“Certificate”) and our amended and restated bylaws,
as further amended (“Bylaws”) and to the applicable provisions of Delaware law.
We
are authorized to issue 180,000,000 shares of common stock, $0.0001 par value. Holders of common stock are each entitled to cast one
vote for each share held of record on all matters presented to shareholders. Cumulative voting is not authorized; the holders of a majority
of our outstanding shares of common stock may elect all directors. Holders of common stock are entitled to receive such dividends as
may be declared by our board out of funds legally available and, in the event of liquidation, to share pro rata in any distribution of
our assets after payment of liabilities. Our directors are not obligated to declare a dividend. It is not anticipated that dividends
will be paid in the foreseeable future. Holders of common stock do not have preemptive rights to subscribe to any additional shares we
may issue in the future. There is no conversion, redemption, sinking fund or similar provision regarding the common stock. All outstanding
shares of common stock are fully paid and nonassessable.
As
of August 9, 2023, we had 4,169,131 shares of common stock issued and outstanding.
Anti-Takeover
Effects of Certain Provisions of Delaware Law and Our Certificate and Bylaws
We
are subject to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), an anti-takeover law.
Subject to certain exceptions, the statute prohibits a publicly held Delaware corporation from engaging in a “business combination”
with an “interested stockholder” for a period of three years after the date of the transaction in which the person became
an interested stockholder unless:
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● |
prior
to such date, the board of directors of the corporation approved either the business combination or the transaction which resulted
in the stockholder becoming an interested stockholder; |
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|
|
| |
● |
upon
consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes
of determining the number of shares outstanding those shares owned (1) by persons who are directors and also officers and (2) by
employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange offer; or |
| |
|
|
| |
● |
on
or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting
of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is
not owned by the interested stockholder. |
For
purposes of Section 203, a “business combination” includes a merger, asset sale or other transaction resulting in a financial
benefit to the interested stockholder, and an “interested stockholder” is a person who, together with affiliates and associates,
owns, or within three years prior to the date of determination whether the person is an “Interested Stockholder” did own,
15% or more of the corporation’s voting stock.
In
addition, our authorized but unissued shares of common stock are available for our board to issue without stockholder approval. We may
use these additional shares for a variety of corporate purposes, including future public or private offerings to raise additional capital,
corporate acquisitions and employee benefit plans. The existence of our authorized but unissued shares of common stock could render more
difficult or discourage an attempt to obtain control of our company by means of a proxy contest, tender offer, merger or other transaction.
Our authorized but unissued shares may be used to delay, defer or prevent a tender offer or takeover attempt that a stockholder might
consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our
stockholders. The board of directors is also authorized to adopt, amend or repeal our Bylaws (provided, however, that no such adoption,
amendment, or repeal shall be valid with respect to bylaw provisions which have been adopted, amended, or repealed by the stockholders;
and further provided, that bylaw provisions adopted or amended by the board of directors and any powers thereby conferred may be amended,
altered, or repealed by the stockholders) which could delay, defer or prevent a change in control.
We
are subject to the laws of Delaware on corporate matters, including their indemnification provisions. Section 102 of the DGCL permits
a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages
for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged
in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation
of Delaware corporate law or obtained an improper personal benefit.
Section
145 of the DGCL, as the same exists or may hereafter be amended, provides that a Delaware corporation may indemnify any persons who were,
or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided
such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation’s best
interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal.
A Delaware corporation may indemnify any persons who are, were or are threatened to be made, a party to any threatened, pending or completed
action or suit by or in the right of the corporation by reason of the fact that such person was a director, officer, employee or agent
of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation
or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted
without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer,
director, employee, or agent is successful on the merits or otherwise in the defense of any action referred to above, the corporation
must indemnify him or her against the expenses which such officer or director has actually and reasonably incurred.
Section
145 of the DGCL further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee
or agent of another corporation or enterprise, against any liability asserted against him or her and incurred by him or her in any such
capacity, arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify him or
her under Section 145 of the DGCL.
Our
Certificate provides that, to the fullest extent permitted by Delaware law, as it may be amended from time to time, none of our directors
will be personally liable to us or our stockholders for monetary damages resulting from a breach of fiduciary duty as a director. Our
Certificate also provides discretionary indemnification for the benefit of our directors, officers and employees, to the fullest extent
permitted by Delaware law, as it may be amended from time to time. Pursuant to our Bylaws, we are required to indemnify our directors,
officers, employees and agents, and we have the discretion to advance his or her related expenses, to the fullest extent permitted by
law.
We
do currently provide liability insurance coverage for our directors and officers. We also have entered into indemnification agreements
with certain of our officers and directors.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”) may be permitted
to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Market
Listing
Our
common stock is quoted on the OTC Markets, Inc.’s OTCQX Best Market under the symbol “REED”.
Transfer
Agent
The
transfer agent for the Company’s common stock is Transfer Online, Inc., telephone (503) 227-2950.
PRIVATE
PLACEMENT OF NOTES
In
May 2022, the Company entered into a note purchase agreement and issued $11,250,000 aggregate principal amount of 10% secured convertible
promissory notes to certain funds managed or advised by Whitebox Advisors LLC (collectively, “Whitebox”). As part of the
note purchase agreement, the Company also granted Whitebox the option to purchase up to an additional $12,000,000 aggregate principal
amount of 10% secured convertible promissory notes on identical terms (other than with respect to the issue date) to the notes issued
in May 2022. The current outstanding aggregate principal balance of all convertible notes issued to Whitebox is referred to herein as
the “Notes”, the current outstanding aggregate principal balance of all convertible notes issued to Whitebox in May 2022
is referred to herein as the “Initial Notes”, and the current outstanding aggregate principal balance of all convertible
notes issued to Whitebox pursuant to the purchase option granted in the note purchase agreement, as amended, is referred to herein as
the “Option Notes”.
The Initial Notes bear interest at a rate of 10% per annum (with 5% per
annum payable in cash and 5% per annum payable in kind (“PIK”) by adding such PIK interest to the principal amount of the
Notes). The Notes are secured by substantially all of the Company’s assets (including all of its intellectual property) and are
subject to a collateral sharing agreement with ACS, the Company’s existing secured lender. The Initial Notes mature on May 9, 2025.
Beginning
in August 2022, the Company was required to make monthly amortization payments on the Initial Notes consisting of principal of
$200,000 plus accrued interest and a partial interest make-whole payment on the amortized principal amount. The Company is permitted
to make these amortization payments in in cash or, subject to certain limitations, in shares of the Company’s common stock at
the option of the Company. Amortization payments that are paid in shares are priced at 90% of the average of the daily volume
weighted average prices of the Company’s common stock during the five trading days prior to the date of amortization payment.
During the year ended December 31, 2022, the Company made monthly amortization principal payments aggregating $800,000, made up of
$600,000 in cash, and the issuance of 32,362 shares of common stock. Remaining amortization
payments of principal are scheduled to total approximately $600,000 in 2023, $2,400,000 in 2024, and $1,000,000 in 2025,
leaving a principal balance of the convertible notes of approximately $7,700,000 due at maturity on May 9,
2025.
The
Notes permit indebtedness to our asset based lender, as an asset based loan (“ABL”) up to $6,000,000. In February 2023, and
again in May 2023, Whitebox waived the Company’s covenant violation of excess ABL amounts and deferred payment of such ABL fees.
At June 30, 2023, the excess ABL fees totaled $1,672,000 and are due September 29, 2023.
In September 2022, the Company
issued an additional $2,500,000 of Option Notes to Whitebox. In November 2022, the Company repurchased these Option Notes for a combination
of $2,500,000 in cash and 69,680 shares of common stock.
At December 31, 2022, the
balance of the Notes was $10,450,000. In February 2023 and May 2023, the Company issued $2,550,026 and $1,500,000, respectively,
aggregate principal amount of Option Notes to Whitebox that substantially have the same terms as the Initial Notes, except that the
Option Notes (i) bear interest at a rate of 10% per annum, payable in cash, (ii) mature on September 29, 2023, (iii) do not require
any amortization payments prior to maturity, (iv) do not require any interest make-whole payments to be made upon conversion and (v)
may be prepaid by the Company in cash at any time at 100% of the principal amount thereof plus accrued and unpaid interest thereon
through the prepayment date. At June 30, 2023, the balance of the Notes was $14,500,026.
At
December 31, 2022, the balance of accrued interest was $1,052,000. During the six months ended June 30, 2023, the Company recorded interest
of $1,773, 000, made up of $749,000 of interest on the Notes, and $1,024,000 related to the excess ABL fees. In addition, accrued interest
of $268,000 was paid. At June 30, 2023, the balance of accrued interest was $2,557,000.
At
December 31, 2022, the unamortized debt discount was $976,000. During the six months ended June 30, 2023, the Company incurred $253,000
of direct costs of issuing loans and issued 82,438 shares of the Company’s common stock valued at $273,000 as inducement for the
aforementioned waivers. These costs have been capitalized and are being amortized over the term of the Notes or waiver period. For the
six months ended June 30, 2023, amortization of debt discount was $642, 000 and as of June 30, 2023, the remaining unamortized debt discount
balance is $860,000.
The
Notes are convertible at an initial conversion rate of 0.0831 shares of the Company’s common stock per one dollar of principal
converted, or approximately $12.03 per share, subject to customary anti-dilution adjustments. In addition, if certain corporate events
occur that constitute a make-whole fundamental change, then the holders are, under certain circumstances, are entitled to an increase
in the conversion rate, provided that the aggregate conversion rate (as increased) is limited to 0.1216 shares of common stock per one
dollar of principal, or approximately $8.22 per share.
Upon
conversion, holders of the Initial Notes are also entitled to receive an interest make-whole payment. The make-whole amount is equal
to the sum of the remaining scheduled payments of interest on the Notes to be converted that would be due at maturity, payable, at the
Company’s option in cash or in shares of common stock. The Company’s ability to settle conversions and make amortization
payments and interest make-whole payments using shares of the Company’s common stock is subject to certain limitations set forth
in the Notes.
At
June 30, 2023, the Notes, including accrued interest, are convertible into 1,415,826 shares of the Company’s common stock.
In
February 2023, the Notes were amended so if the Company experiences a fundamental change as defined in the Notes, the holders of the
Notes have the right to require the Company to repurchase the Notes for cash at a repurchase price equal to 110% (amended from 100%)
of the principal amount, plus accrued interest, and among other amendments. In May 2023, subject to the satisfaction of conditions precedent
Whitebox waived any requirement pursuant to Section 6 of the Notes that the Company conduct a repurchase of Notes as a result of the
delisting of the Company’s common stock from Nasdaq, prior to September 29, 2023, provided, that, for all purposes under
the Notes, the Company treat the delisting, and the resulting fundamental change and make-whole fundamental change, as if they occurred
and became effective on and as of September 29, 2023.
The
Company is subject to a registration rights agreement dated May 9, 2023 and amended May 30, 2023 with the holders, pursuant to which
the Company agreed to register for resale shares issuable under the Notes.
SUMMARY
OF THE OFFERING
| Common
stock offered by the selling shareholder |
|
Up
to up to an aggregate of 3,313,278 shares of our common stock, including 3,055,535 shares issuable upon conversion of,
or in satisfaction of amortization or interest make-whole payments with respect to, our 10% secured convertible promissory notes, as amended
(the “Notes’). |
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|
|
| Use
of Proceeds |
|
We
will not receive any of the proceeds from the sale of the shares of common stock or conversion of Notes by the selling shareholders
pursuant to this prospectus. |
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|
|
| Offering
Price |
|
The
selling shareholders may sell all or a portion of their shares through public or private transactions at prevailing market prices
or privately negotiated prices. |
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| Risk
Factors |
|
An
investment in our securities involves a high degree of risk. See the section entitled “Risk Factors” of this prospectus
and the similarly titled sections in the documents incorporated by reference into this prospectus. |
| |
|
|
| Nasdaq
Capital Market symbol |
|
REED |
USE
OF PROCEEDS
We
will not receive any of the proceeds from the sale of the shares of common stock pursuant to this prospectus. We will not receive
any proceeds from the conversion of Notes.
SELLING
SHAREHOLDERS
The shares of common
stock being offered by the selling shareholders are those currently held by the selling shareholders and those issuable to the
selling shareholders pursuant to the terms of the Notes, including upon conversion or as amortization or interest make whole
payments. We are registering the shares of common stock in order to permit the selling shareholders to offer the shares for resale
from time to time. Except for the ownership of the Notes, the selling shareholders have not had any material relationship with us
within the past three years.
For purposes of this prospectus,
“selling shareholders” includes the shareholders listed below and their permitted transferees, pledgees, assignees, distributees,
donees or successors or others who later hold any of the selling shareholders’ interests in the securities. To the extent required,
we will file a supplement to this prospectus (or a post-effective amendment hereto, if necessary) to name successors to any named selling
shareholders who are able to use this prospectus to resell the ordinary shares registered hereby.
The table below lists the
selling shareholders and other information regarding the beneficial ownership of the shares of common stock by each of the selling shareholders.
The second column lists the number of shares of common stock beneficially owned by each selling shareholder, based on its ownership of
the shares of common stock and the Notes, as of June 22, 2023, assuming full conversion of the Notes held by the selling shareholders
on that date, without regard to any limitation on conversion.
In accordance with the
terms of the registration rights agreement with the holders of the Notes, this prospectus generally covers the resale of that number
of shares of common stock equal to the number of shares of common stock currently held by the selling stockholders and the maximum
number of shares of common stock issuable upon conversion of, or in satisfaction of amortization or interest make-whole payments
with respect to, the Notes assuming a price per share of common stock equal to $2.80, which was the closing price of our common
stock on the OTC Markets, Inc. OTCQX Best Market on August 9, 2023.
The amounts listed in the
third and fourth columns reflect the number of shares being offered by each selling shareholder and the number of shares remaining following
the sale of such shares, respectively. The amounts listed do not assume sales by any other selling shareholder and are subject to the
maximum number of shares that may be resold under this prospectus.
Under the terms of the
Notes, a selling shareholder may not convert or be issued shares of common stock to the extent such conversion or issuance would
cause such selling shareholders, together with its affiliates and attribution parties and any group of which it is a member, to beneficially own a number of shares of
common stock which would exceed 9.9% of our then outstanding common stock following such conversion or issuance. The number
of shares in the second and fourth columns do not reflect this limitation. The selling shareholders may sell all, some or none of
their shares in this offering. See “Plan of Distribution.”
| Name and Address of Selling Shareholder | |
Number of Shares of Common Stock
Owned Prior to Offering (1) | | |
Maximum
Number of Shares of
Common Stock to be Sold Pursuant to this Prospectus | | |
Shares of
Common Stock to
be Owned After Offering (1) | |
| Whitebox Multi-Strategy Partners, LP (2)(3) | |
| 1,888,946 | | |
| 1,888,946 | | |
| — | |
| | |
| | | |
| | | |
| | |
| Whitebox Relative Value Partners, LP (2)(4) | |
| 1,046,187 | | |
| 1,046,187 | | |
| — | |
| | |
| | | |
| | | |
| | |
| Pandora Select Partners, LP (2)(5) | |
| 218,305 | | |
| 218,305 | | |
| — | |
| | |
| | | |
| | | |
| | |
| Whitebox GT Fund, LP (2)(6) | |
| 159,840 | | |
| 159,840 | | |
| — | |
| 1 |
“Beneficial
ownership” is a term broadly defined in Rule 13d-3 under the Exchange Act and includes
more than the typical form of stock ownership, that is, stock held in a person’s name.
The term also includes what is referred to as “indirect ownership,” meaning ownership
of shares as to which a person has or shares investment power. For purposes of this column,
a person or group of persons is deemed to have “beneficial ownership” of any
shares that are currently exercisable or exercisable within 60 days of August 9, 2023.
The
amounts listed do not give effect to any limitation on conversion or the issuance of shares pursuant to the terms of the Notes
(including the limitations on beneficial ownership discussed above).
|
| |
|
| 2 |
Whitebox
Advisors LLC is the investment manager of Whitebox Multi-Strategy Partners, LP, Whitebox Relative Value Partners, LP, Pandora Select
Partners, LP and Whitebox GT Fund, LP (the “Whitebox Funds”) and holds voting and dispositive power over the shares of
common stock beneficially owned by the Whitebox Funds. Whitebox Advisors LLC is owned by Robert Vogel, Jacob Mercer, Nick Stukas
Brian Lutz, Paul Roos and Dyal Capital Partners II (A), a non-voting member. Such individuals
and entity disclaim beneficial ownership of the securities referenced herein except to the extent of its or his direct or indirect
pecuniary interest, if any, in Whitebox Advisors LLC or such Whitebox Funds. The address of these persons is 3033 Excelsior Blvd.,
Suite 500, Minneapolis, Minnesota 55416. |
| |
|
| 3 |
Includes
(i) 148,916 shares of common stock and (ii) 1,740,030 shares issuable upon conversion of, or in satisfaction of amortization or interest
make-whole payments with respect to, $8,683,455.50 aggregate principal amount of Notes held by the selling stockholder (but without giving
effect to the limitation on beneficial ownership contained therein). |
| |
|
| 4 |
Includes
(i) 82,477 shares of common stock and (ii) 963,710 shares issuable upon conversion of, or in satisfaction of amortization or
interest make-whole payments with respect to, $4,809,298.24 aggregate principal amount of Notes held by the selling stockholder (but
without giving effect to the limitation on beneficial ownership contained therein). |
| |
|
5
|
Includes
(i) 13,747 shares of common stock and (ii) 204,558 shares issuable upon conversion of, or in satisfaction of amortization or
interest make-whole payments with respect to, $801,549.70 aggregate principal amount of Notes held by the selling shareholder (but
without giving effect to the limitation on beneficial ownership contained therein). |
| |
|
|
6
|
Includes
(i) 12,603 shares of common stock and (ii) 147,237 shares issuable upon conversion of, or in satisfaction of amortization or interest
make-whole payments with respect to, $734,753.57 aggregate principal amount of Notes held by the Selling Stockholder (but without giving
effect to the limitation on beneficial ownership contained therein).
|
PLAN
OF DISTRIBUTION
We
are registering the shares of common stock described in this prospectus to permit the resale of these shares of common stock by the holders
from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale of the shares of common
stock or conversion of the Notes by the selling shareholders. We will bear all fees and expenses incident to our obligation to
register the shares of common stock.
Sales
of shares of our common stock by the selling shareholders named in this prospectus may be made from time to time in one or more transactions
in the over-the-counter market, on any exchange or quotation system on which shares of our common stock may be listed or quoted, in negotiated
transactions or in a combination of any such methods of sale, at fixed prices that may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at negotiated prices. The shares may be offered directly, to or through
agents designated from time to time or to or through brokers or dealers, or through any combination of these methods of sale. The methods
by which the shares may be sold include:
| |
● |
block
trades (which may involve crosses) in which the broker or dealer will attempt to sell the shares as agent but may position and resell
a portion of the block as principal to facilitate the transaction; |
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|
|
| |
● |
purchases
by a broker or dealer as principal and resales by the broker or dealer for its own account pursuant to this prospectus; |
| |
|
|
| |
● |
exchange
distributions or secondary distributions in accordance with the rules of the applicable exchange; |
| |
|
|
| |
● |
ordinary
brokerage transactions and transactions in which the broker or dealer solicits purchasers; |
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|
|
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● |
privately
negotiated transactions; |
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|
|
| |
● |
the
writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| |
|
|
| |
● |
the
settlement of short sales; |
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|
|
| |
● |
a
combination of any of the foregoing methods of sale; and |
| |
|
|
| |
● |
any
other method permitted by applicable law. |
An
agent, broker or dealer may receive compensation in the form of discounts, concessions or commissions from the selling shareholders or
the purchasers of the shares for whom such brokers or dealers may act as agents or to whom they sell as principals, or both (which compensation
as to a particular broker or dealer might be in excess of customary commissions). A member firm of an exchange on which our common stock
is traded may be engaged to act as the selling shareholders’ agent in the sale of shares by the selling shareholders.
In
connection with distributions of the shares of our common stock offered by this prospectus or otherwise, the selling shareholders may
enter into hedging transactions with brokers or dealers or other financial institutions with respect to our common stock. In connection
with these transactions, the brokers or dealers or other financial institutions may engage in short sales of our common stock in the
course of hedging the positions they assume with the selling shareholders. The selling shareholders may also sell our common stock short
to effect its hedging transactions and deliver shares of common stock covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales. The selling shareholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.
In
addition, any shares of our common stock covered by this prospectus that qualify for sale pursuant to Rule 144 of the Securities Act
may be sold under Rule 144 rather than pursuant to this prospectus.
The
aggregate proceeds to the selling shareholders from the sale of the shares of common stock offered by it pursuant to this prospectus
will be the purchase price of the shares less discounts or commissions, if any. The selling shareholders reserve the right to accept
and, together with its agents from time to time, to reject, in whole or in part, any proposed purchase of shares of common stock to be
made directly or through agents.
To
the extent required, the shares to be sold, the name of the selling shareholders, the respective purchase prices and public offering
prices, the names of any agents, dealers or underwriters, any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement
that includes this prospectus.
Each
broker-dealer that receives our common stock for its own account pursuant to this prospectus must acknowledge that it will deliver the
prospectus in connection with any sale of our common stock. If required, this prospectus may be amended or supplemented on a continual
basis to describe a specific plan of distribution. We will make copies of this prospectus available to the selling shareholders, brokers
and dealers for purposes of satisfying the prospectus delivery requirements of the Securities Act, if applicable.
In
order to comply with the securities laws of some states, if applicable, the shares of common stock offered by this prospectus may be
sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the shares may not be
sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available
and is complied with as part of such sale.
The
selling shareholders and any other person participating in such distribution will be subject to certain provisions of the Exchange Act.
The Exchange Act rules include Regulation M, which may limit the timing of purchases and sales of any of our common stock by the selling
shareholders and any other such person. In addition, Regulation M of the Exchange Act may restrict the ability of any person engaged
in the distribution of our common stock to engage in market-making activities with respect to the common stock. In addition, the anti-manipulation
rules under the Exchange Act may apply to sales of the securities in the market. All of the foregoing may affect the marketability of
the securities and the ability of any person to engage in market-making activities with respect to the securities.
The
selling shareholders and any brokers, dealers, agents or others that participate with the selling shareholders in the distribution of
the shares offered by this prospectus may be deemed to be “underwriters” within the meaning of the Securities Act, and any
underwriting discounts, commissions or fees received by such persons and any profit on the resale of the shares purchased by such persons
may be deemed to be underwriting commissions or discounts under the Securities Act. If the selling shareholders is deemed to be an “underwriter”
within the meaning of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act. We will make
copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling shareholders, brokers and
dealers for the purpose of satisfying the prospectus delivery requirements of the Securities Act, if applicable.
There
can be no assurance that the selling shareholders will sell any or all of the shares of our common stock offered hereby.
We
will bear all fees and expenses in connection with the preparation and filing of the registration statement of which this prospectus
is a part. The fees and expenses of registration to be borne by us referred to in the foregoing sentence shall include registration,
filing and qualification fees, word processing, duplicating, printers’ and accounting fees, listing fees, messenger and delivery
expenses, all fees and expenses of complying with state securities or blue sky laws, fees and disbursements of our counsel. We estimate
that the total expenses payable by us in connection with the preparation and filing of the registration statement of which this prospectus
is a part will be $20,500. We will indemnify the selling shareholders against liabilities, including certain liabilities under the Securities
Act. We may be indemnified by the selling shareholders against liabilities, including certain liabilities under the Securities Act, that
may arise from any written information furnished to us by the selling shareholder specifically for use in this prospectus.
Any
underwriter, dealers and agents engaged by the selling shareholders may engage in transactions with us or the selling shareholders, or
perform services for us or the selling shareholders, in the ordinary course of business.
LEGAL
MATTERS
The
validity of the rights and the shares of common stock offered by this prospectus have been passed upon for us by Barton LLP, Los Angeles,
California.
EXPERTS
The
financial statements of Reed’s Inc. as of December 31, 2022 and 2021, and for the years then ended, appearing in Reed’s Inc.’s
Annual Report on Form 10-K for the year ended December 31, 2022, have been audited by Weinberg & Company, P.A., independent registered
public accounting firm, as set forth in their report thereon (which contains an explanatory paragraph describing conditions that raise
substantial doubt about the Company’s ability to continue as a going concern), included therein, and incorporated herein by reference.
Such financial statements are incorporated herein by reference in reliance upon such report of Weinberg & Company, P.A. pertaining
to such financial statements given on the authority of such firm as experts in auditing and accounting.
MATERIAL
CHANGES
There
have been no material changes in the registrant’s affairs which have occurred since the end of the latest fiscal year ended December
31, 2022 for which audited financial statements were included in the latest Form 10-K and that have not been described in a Form 10-Q
or Form 8-K filed under the Exchange Act.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable. In addition, indemnification may be limited by state securities
laws.
3,313,278 Shares of Common Stock
PROSPECTUS
August 28,
2023
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