REED Reeds Inc

On March 10, 2022, Reed’s, Inc., a Delaware corporation (the “Company”) entered into a Securities Purchase Agreement (“Purchase Agreement”) with certain institutional and accredited investors (the “Purchasers”) pursuant to which the Purchasers agreed to purchase, and the Company agreed to issue and sell to the Purchasers in a private placement, an aggregate of 18,594,571 shares (“Shares”) of the Company’s common stock, $0.0001 par value (“Common Stock”), and warrants (“Warrants”) to purchase an aggregate of 9,297,289 shares of Common Stock (the “Private Placement”). The purchase price per share of common stock and associated warrant was $0.28 for the investors (other than officers and directors of the Company) and $0.3502 for the officers and directors of the Company in compliance with the rules of the Nasdaq Stock Market. Each whole warrant entitles the holder to purchase one share of common stock at an exercise price of $0.2877 per share. The warrants are exercisable at a per share exercise price of $0.2877 for a period of five years commencing six months from the closing date. The warrants also contain customary beneficial ownership limitations that may be waived at the option of each holder upon 61 days’ notice to the Company. Officers and directors of the Company purchased approximately $1.1 million of the securities in the offering. The Private Placement closed on March 11, 2022. The gross proceeds to the Company, before deducting placement agent fees and other offering expenses, are approximately $5.4 million.

The Purchase Agreement includes standard representations, warranties and covenants of the Company and Purchasers. The Purchase Agreement also provides for the payment by the Company customary penalties and liquidated damages in the event of legend removal failure.

The Company intends to use the net proceeds from the Private Placement for general working capital and general corporate purposes.

On March 10, 2022, in connection with the Private Placement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers, pursuant to which the Company agreed to file a registration statement on Form S-3 to register for resale the Shares and any shares of the Company’s common stock issuable upon exercise of the Warrants within 45 days of the closing of the Private Placement. The Company is subject to penalties and liquidated damages in the event it does not meet certain filing requirements and deadlines set forth in the Registration Rights Agreement.

Roth Capital Partners, LLC (the “Placement Agent’) was engaged by the Company to act as its placement agent for the Private Placement. The Company agreed to pay the Placement Agent a cash fee equal to 6.5% of the gross proceeds received by the Company in the Private Placement. For a period of 90 days after the closing of the Private Placement, the Company is prohibited from issuing or agreeing to issue shares of common stock or common stock equivalents other than under equity compensation plans or pursuant to any outstanding rights to acquire common stock or common stock equivalents.

The foregoing descriptions of the Purchase Agreement, the Warrants and the Registration Rights Agreement do not purport to be complete and are qualified by reference to the full text of such agreements, which are attached to this Current Report on Form 8-K as Exhibits 4.1, 10.1, and 10.2, respectively, and are incorporated herein by reference.