8-K - REED - Equibles

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

FORM8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 16, 2020

REED’S,INC.

(Exact name of registrant as specified in its charter)

Delaware	001-32501	35-2177773
(State<br> or other jurisdiction<br><br> <br>of<br> incorporation)	(Commission<br><br> <br>File<br> Number)	(IRS<br> Employer<br><br> <br>Identification<br> No.)

201 Merritt 7 Corporate Park, Norwalk, CT 06851

(Address of principal executive offices and zip code)

Not applicable

(Former name or former address if changed since last report)

Registrant’s telephone number, including area code: (310) 217-9400

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]	Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]	Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]	Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]	Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchanged on Which Registered
Common<br> Stock, $.0001 par value per share	REED	The<br> NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Item2.02 Results of Operations and Financial Condition.

On April 16, 2020, Reed’s Inc., a Delaware corporation (the “Company”) issued a press release announcing financial guidance for the fiscal first quarter and full year ended December 31, 2020. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

ForwardLooking Statements

Some portions of the press release, particularly those describing the Company’s goals and strategies, contain “forward-looking statements.” These forward-looking statements can generally be identified as such because the context of the statement will include words, such as “expects,” “should,” “believes,” “anticipates” or words of similar import. Similarly, statements that describe future plans, objectives or goals are also forward-looking statements. While the Company is working to achieve those goals and strategies, actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These risks and uncertainties include difficulty in marketing its products and services, maintaining and protecting brand recognition, the need for significant capital, dependence on third party distributors, dependence on third party brewers, increasing costs of fuel and freight, protection of intellectual property, competition and other factors, any of which could have an adverse effect on the Company’s business plans, its reputation in the industry or its expected financial return from operations and results of operations. In light of significant risks and uncertainties inherent in forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by the Company that they will achieve such forward-looking statements. For further details and a discussion of these and other risks and uncertainties, please see our most recent reports on Form 10-K and Form 10-Q, as filed with the Securities and Exchange Commission, as they may be amended from time to time. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise

Useof Non-GAAP Measures

In addition to our GAAP results, we present Modified EBITDA as a supplemental measure of our performance. 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. We define Modified EBITDA as net income (loss), plus interest expense, depreciation and amortization, stock-based compensation, changes in fair value of warrant expense, and one-time restructuring-related costs including employee severance and asset impairment.

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 that period. Non-GAAP adjustments to our results prepared in accordance with GAAP are itemized below. 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. 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.

A reconciliation of net income (loss) to Modified EBITDA for the three months ended March 31, 2019 is included in the accompanying press release. For further information, please refer to the Company’s Quarterly Report on Form 10-Q to be filed with the SEC on or about May 15, 2020, available online at www.sec.gov.

(d)Exhibits.

The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

99.1 Press Release of Reed’s Inc. dated April 16, 2020

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	REEDS,<br> INC.,
	a<br> Delaware corporation
Dated:<br> April 16, 2020	By:	/s/ Thomas J. Spisak
		Thomas<br> J. Spisak
		Chief<br> Financial Officer

Exhibit99.1

Reed’s,Inc. Provides Preliminary First Quarter 2020 Results and Reiterates Fiscal 2020 Annual Guidance

FirstQuarter 2020 Net Sales are Expected to Increase 4.2% to 6.5% YOY

FirstQuarter Modified EBITDA Estimated to Improve to Between ($1.8) Million to ($1.6) Million Compared to ($2.3) Million inthe Prior Year

ReiteratesFiscal 2020 Core Brand Net Sales Growth Expectation of Approximately 10.0% YOY

NORWALK, CT, April 16, 2020 (GLOBE NEWSWIRE) — Reed’s Inc. (Nasdaq:REED), owner of the nation’s leading portfolio of handcrafted, all-natural beverages, today reiterated its fiscal 2020 net sales and gross margin guidance and provided preliminary financial results for the first quarter of fiscal 2020, as reflected in the Company’s Current Report on Form 8-K filed on April 15, 2020 with the Securities and Exchange Commission.

EstimatedFirst Quarter 2020 Financial Results

●	Net<br> sales are expected to increase between 4.2% to 6.5% to approximately $8.8 million to $9.0 million compared to $8.4 million<br> in the prior year period;
●	Gross<br> margin is estimated to be approximately 28.5% to 29.5% compared to 29.6% in the prior year;
●	Operating<br> expense is expected to decrease 3.5% to 7.2% to approximately $5.0 million to $5.2 million compared to $5.4 million in the<br> prior year period;
●	Operating<br> expenses as a percentage of net sales are expected to improve to between 55.6% and 59.1% compared to 63.7% in the prior year;
●	Modified<br> EBITDA is estimated to narrow by approximately 22.6% to 31.2% to a range of ($1.8) million to ($1.6) million from ($2.3) million<br> in the prior year.

Fiscal2020 Full Year Guidance

●	Fiscal<br> 2020 core brand net sales are expected to increased approximately 10.0% to $37.2 million, compared to $33.8 million in the<br> prior year;
●	Gross<br> margin for the full year is expected to be approximately 32.0%, up from 23.3% in the prior year.

FourWeek and Twelve Week Multi-Outlet Scan Performance Captured by IRI

Multi-Outlet scan performance captured by IRI showed strong growth in sales dollars for both Reed’s (+8.1%) and Virgil’s (+17.0%) for the 12-week period ended March 22, 2020 versus the same period last year. In the 4-week period ended March 22, 2020, the growth on both brands accelerated, with sales dollars increasing +26.2% on Reed’s and increasing +20.9% on Virgil’s versus the same time period last year. The growth in the 4-week period ended March 22, 2020 was driven by a +22.2% increase in all commodities volume to 38.6%, pricing growth of +12.6% to +$0.57/unit and velocity growth of +10.3% to 6.7 units per point of distribution.

This preliminary financial information and guidance has been prepared by our management and should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. These estimated preliminary results are subject to completion of our customary quarterly financial closing and audit and review procedures and are not a comprehensive statement of our financial results for the three months ending March 31, 2020 and year ended December 31, 2020. In addition, this preliminary financial information is not necessarily indicative of the results to be achieved in any future period.

ModifiedEBITDA

We present Modified EBITDA as a supplemental measure of our performance. 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. We define Modified EBITDA as net income (loss), plus interest expense, depreciation and amortization, stock-based compensation, changes in fair value of warrant expense, and one-time restructuring-related costs including employee severance and asset impairment. 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 in our 10-K for the period ended December 31, 2019, as filed with the SEC on March 18, 2020 and amended on April 8, 2020, and 10-Q for the period ended March 31, 2019, as filed with SEC on May 14, 2019. Readers are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Modified EBITDA, the reader 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. Our presentation of Modified EBITDA should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items.

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. 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. Modified EBITDA has limitations as an analytical tool, which includes, among others, the following:

●	Modified<br> EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
●	Modified<br> EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
●	Modified<br> EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments,<br> on our debts; and
●	Although<br> depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced<br> in the future, and Modified EBITDA does not reflect any cash requirements for such replacements.
	Three Months Ended<br><br> March 31 2019
---	---	---	---
Net loss	$	(3,264	)
Modified EBITDA adjustments:
Depreciation and amortization		13
Interest expense		335
Stock option and other noncash compensation		606
Change in fair value of warrant liability		(47	)
Severance		33
Total EBITDA adjustments	$	940
Modified EBITDA	$	(2,324	)

AboutReed’s, Inc.

Established in 1989, Reed’s is America’s best-selling Ginger Beer brand and has been the leader and innovator in the ginger beer category for decades. Virgil’s is America’s best-selling independent, full line of natural craft sodas. The Reed’s Inc. portfolio is sold in over 35,000 retail doors nationwide. Reed’s Ginger Beers are unique due to the proprietary process of using fresh ginger root combined with a Jamaican inspired recipe of natural spices and fruit juices. The Company uses this same handcrafted approach in its award-winning Virgil’s line of great tasting, bold flavored craft sodas.

For more information about Reed’s, please visit the Company’s website at: http://www.drinkreeds.com or call 800-99-REEDS. Follow Reed’s on Twitter, Instagram, and Facebook @drinkreeds.

For more information about Virgil’s please visit Virgil’s website at: http://www.virgils.com. Follow Virgil’s on Twitter and Instagram @drinkvirgils and on Facebook @drinkvirgilssoda.

SafeHarbor Statement

Some portions of this press release, particularly those describing Reed’s goals and strategies, contain “forward-looking statements.” These forward-looking statements can generally be identified as such because the context of the statement will include words, such as “expects,” “should,” “believes,” “anticipates” or words of similar import. Similarly, statements that describe future plans, objectives or goals are also forward-looking statements. While Reed’s is working to achieve those goals and strategies, actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These risks and uncertainties include difficulty in marketing its products and services, maintaining and protecting brand recognition, the need for significant capital, dependence on third party distributors, dependence on third party brewers, increasing costs of fuel and freight, protection of intellectual property, competition and other factors, any of which could have an adverse effect on the business plans of Reed’s, its reputation in the industry or its expected financial return from operations and results of operations. In light of significant risks and uncertainties inherent in forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by Reed’s that they will achieve such forward-looking statements. For further details, please see our most recent reports on Form 10-K and Form 10-Q, as filed with the Securities and Exchange Commission, as they may be amended from time to time. Reed’s undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

CONTACTS:

Investor Relations

Scott Van Winkle, ICR

(800) 997-3337 Ext 6

Or (617) 956-6736

Email: [email protected]