Moving on to the upside of the business. Damian Warshall, our Chief Operating Officer, has now completed his first full quarter with Reeds. His initial focus was on inventory control, supply chain management, vendor relationships, and production efficiency. During this time, we launched a comprehensive review of our contract manufacturing network, consolidating production to align each item with the optimal facility and region we believe that work is already producing results we were rationalized two co-manufacturers in our legacy network whose combined production and outbound logistics cost we're wanting running well above the benchmarks we are achieving elsewhere tightening our cost structure and reinforcing our foundation as we scale. We've also deployed new operations software that we believe meaningfully strengthens how we forecast and manage raw material purchasing on national basis, enabling us to operate leaner, reducing the aggregate inventory we carry ahead of production while preserving our ability to serve demand. Stepping back, the second quarter demonstrated sequential progress in gross margin, inventory management, and overall operating performance, but we recognize that substantial work remains. As we move through the second half of the year, we are focused on disciplined commercial execution, continued margin improvement, and positioning reads for profitable and sustainable In the third quarter, we see continued opportunity to bring national inventory levels down further as we make efforts to build out our inventory planning and management capabilities. All this work is expected to free up working capital and improve the efficiency of our production footprint. Over the past two months, our team has taken the initiative to develop an in-house proprietary sales and demand planning tool purposely built for how this organization plans, tracking the baseline needs of our customers while dynamically accounting for seasonality and the distribution gains we expect to capture through the annual sales cycle. We believe this positions us for continued working capital gains as we keep optimizing inventory across the network. Finally, we are also evaluating financing alternatives to support our growth going forward. With that, I'll turn the call over to Doug, our CFO, who will discuss the second quarter results in greater detail. Doug?

Thank you, Neil. Turning to our results for the second quarter of 2026, all variance commentary is on a year over year basis unless otherwise noted. Net sales for the second quarter of 2026 were 7.5 million compared to 9.5 million in the prior year period. The decrease was primarily driven by lower volumes with recurring national customers. On a sequential basis, net sales increased 5% from the first quarter of 2026, reflecting early progress with our profitable growth initiatives. Gross profit for the second quarter increased to $1.8 million compared to $0.8 million in the prior year period. Gross margin increased to 24 percent compared to 8 percent in the prior year period. The improvement was primarily driven by lower inventory write-offs, which declined to $0.1 million from $1.6 million in the prior year period. Delivery and handling costs decreased 30% to $1.1 million during the second quarter of 2026, compared to $1.6 million in the second quarter of 2025, primarily driven by continued improvements in logistics efficiency and freight optimization. Delivery and handling costs were 15% of net sales, or $2.54 per case, compared to 17% of net sales, or $2.95 per case, during the same period last year. Selling general and administrative expenses decreased 6% to $4.7 million, compared to $5.0 million in the prior year period. The decrease was primarily driven by lower legal settlements and continuing efforts to optimize selling general and administrative expenses, offset by investment in personnel and related services to support our Asia growth initiative. Net loss during the second quarter of 2026 decreased 29% to $4.3 million, or negative $0.36 per share, compared to a net loss of $6.0 million, or negative $0.78 per share in the prior year period. EBITDA loss decreased 30% to $4.0 million in the second quarter of 2026, compared to $5.7 million in the year-ago period. Cash used in operations decreased to $2.2 million in the second quarter of 2026, compared to cash used in operations of $5.0 million in the year-ago period. As of June 30, 2026, REEDS had $2.4 million of cash and $9.2 million of total debt net of deferred financing fees. This compares to $10.4 million of cash and $9.2 million of total debt net of deferred financing fees at December 31, 2025. As Neil noted, we are evaluating financing alternatives to support the business going forward. This concludes our prepared remarks. Operator, you may open the line for questions.

Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. For using a speakerphone, please lift the handset before pressing any keys. One more, please, for your first question. Your first question comes from Aaron Gray from Alliance Global Partners. Please, go ahead.

Good morning, and thank you very much for the questions. And I guess first one for me, regarding some of the vendor relationships that you referred to, maybe talk about, you know, where those stand. You know, I know there's been some changes, probably some disruption. So how do some of those key relationships stand today in terms of retaining or maybe gaining back some shell space to some of those key partners?

Yeah, Aaron, this is Neil. It's a great question. And I have to tell you, we reduced the size of our sales team because we now have a broker partner. I can tell you, I've got the four best salespeople in the country today. I would match them up to any other small beverage company like ourselves. We've touched almost every one of our big customers. Not completed yet. Some are still ready to go. But we've touched and spoken with, and myself personally involved, Food Lion, Publix, Sprouts, Kroger, Wegmans, Ingalls, Harris Teeter, Albertsons, across the country. We've talked to everybody. Everybody loves the brand. Everybody wanted to make sure we were, A, staying in stock and we could handle their business. Two, some want the glass bottle back, so we're bringing glass bottles back into some locations, which will be extremely helpful. I think it was very, very tough. This brand was born on glass bottles back in 1986, 87. It was our legacy was the glass bottle. And it was eliminated overnight, which hurt us and impacted our business significantly at places like Whole Foods. which is just one of our largest volume-per-outlet customers, completely hurt us there. But we have a meeting coming up with Whole Foods in October, meeting personally with the buyer. And I can tell you, I believe that's going to be a very, very effective meeting. We have a lot to talk about. So long answer to a short question, yes, our relationships are very much intact. And our business is only going to get better. And we're seeing the results right now. While we're getting commitments now, we'll start seeing those commitments come to fruition sometime around the end of this third, mid-third to going into first quarter of next year.

Okay, great. Really appreciate that, Collar, and glad to hear in terms of some of that progress there. I guess, you know, it's assuming that we get some of these, you know, accounts back, get some shelf space. How should we think about then ensuring that you're properly inventoryed and capitalized on those growth opportunities, particularly as we think about, you know, where the balance sheet stands today and there might be some constraints? Thanks.

Yeah. Yeah. The one thing that, you know, bringing Damien on, Damien knew our system very, very well. Damien also knows our bottling network very, very well. We have also met with the bottlers, we've met with our production houses, and we also are using Chris Reed, the founder of the company, and his production facility out in the West Coast. It's allowing us to reduce our minimum order quantities. So as we start bringing on new SKUs, we're not going to have to have and produce 20,000 and 30,000 cases per new SKU. We're going to be able to get it to a very, very reasonable amount, which will preserve cash, and it will allow us kind of to seed the market, test the market, see where we need to make improvement. We're much smarter about how we do things in terms of creating, you know, rather than creating tons of inventory which will tie up cash, we're going to be very strategic how we do it. Probably one of the best things we have going right now is our relationships with these guys.

Okay, that's great to hear.

Maybe last question from me, just on the gross margin, right next to see some of the sequential improvement during the quarter, you know, given all the puts and takes of what you were just talking about, you know, being able to be more nimble and efficient in terms of the new SKU launches and obviously having a big prioritization in terms of, you know, profitable sales. as you now go forward and look for growth. How should we think about the evolution of the gross margin profile over the next 12 months?

Aaron, we have implemented and installed a system right now that is best in class. I would hold it up against any major beverage company in the country. We're using AI in a very strategic way to help us look and evaluate how our business is in every single one of our, and I'll just say start with our top 25 customers because those customers drive a big part of our business, 90%, 85% to 90% of our business. We now can look and perform an ROI in minutes when it used to take a little while longer than that and not be as accurate. So we can see what our mix looks like. We can see what's driving the business quickly. We'll know it. We have it at our fingertips. But we're also working on some strategic price increases. It's not an across-the-board, but across SKUs that we know need to have a slight more bit of a little push so we can get our margins into the, you know, as Doug said, into the 30s and mid-30s and above range.

Okay. Thanks for the cover there. in the queue.

All right. Thank you. As a reminder, if you wish to ask a question, please press star one. There are no further questions at this time. I will now turn the call over to Mr. Kohane for the closing remark. Please continue.

Thanks for joining the call today. We believe the actions we are taking will position REEDs for continued improvement going forward and long-term sustainable growth. We appreciate your continued interest in REEDs, and we look forward to updating you on progress during the next call. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

Have a good day.