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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2024

 TRANSITION REPORT PURSUANT TO SECTION 13 OR
 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the transition period from _______ to _______

 Commission
File Number: 001-32501

INC.

 (Exact
name of registrant as specified in its charter)

 Delaware

 35-2177773

 (State
 of incorporation)

 (I.R.S.
 Employer

 Identification
 No.)

 Merritt 7, Norwalk, CT

 06851

 (Address
 of principal executive offices)

 (Zip
 Code)

 (800) 997-3337

 (Registrant's
telephone number, including area code)

 (Former
name, former address and former fiscal year, if changed since last report)

registered pursuant to Section 12(b) of the Act: none.

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 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.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of the voting and non-voting common equity held by non-affiliates (excluding voting shares held by officers and
directors) as of June 30, 2024 was $ 2,745,501.

the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. There was
a total of 45,371,247 shares of Common Stock outstanding as of March 19, 2025.

 TABLE
OF CONTENTS

 PART
 I

 Item
 1. Business

 Item
 1A. Risk Factors

 Item
 1B. Unresolved Staff Comments

 Item
 1C. Cybersecurity

 Item
 2. Properties

 Item
 3. Legal Proceedings

 Item
 4. Mine Safety Disclosures

 PART
 II

 Item
 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 6. [Reserved]

 Item
 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 7A. Quantitative and Qualitative Disclosures About Market Risk

 Item
 8. Financial Statements and Supplementary Data

 Item
 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 9A. Controls and Procedures

 Item
 9B. Other Information

 Item
 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 PART
 III

 Item
 10. Directors, Executive Officers and Corporate Governance

 Item
 11. Executive Compensation

 Item
 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 13. Certain Relationships and Related Transactions, and Director Independence

 Item
 14. Principal Accountant Fees and Services

 PART
 IV

 Item
 15. Exhibits and Financial Statement Schedules

 Item
 16. Form 10-K Summary

 i

 CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION

 This Annual Report on Form 10-K contains statements
reflecting our views about our future performance that constitute "forward-looking statements". Statements that constitute
forward-looking statements are generally identified through the inclusion of words such as "aim," "anticipate,"
"believe," "drive," "estimate," "expect," "expressed confidence," "forecast,"
"future," "goal," "guidance," "intend," "may," "objective," "outlook,"
"plan," "position," "potential," "project," "seek," "should,"
"strategy," "target," "will" or similar statements or variations of such words and other similar
expressions. All statements addressing our future operating performance, and statements addressing events and developments that we expect
or anticipate will occur in the future, are forward-looking statements. These forward-looking statements are based on currently available
information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could
cause actual results to differ materially from those predicted in any such forward-looking statement. These risks and uncertainties include,
but are not limited to, those described in "Item 1A. Risk Factors" and "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations." Investors are cautioned not to place undue reliance on any such forward-looking
statements, which speak only as of the date they are made. We undertake no obligation to update any forward-looking statement, whether
as a result of new information, future events or otherwise. The discussion of risks in this report is by no means all-inclusive but is
designed to highlight what we believe are important factors to consider when evaluating our future performance.

 ii

 PART
I

 Item
1. Business

 Overview

 Reed's,
Inc., a Delaware corporation ("Reed's", the "Company," "we," or "us" throughout
this report) owns a leading portfolio of handcrafted, natural beverages that is sold in over 32,000 outlets nationwide.

 These outlets include the natural and specialty food
channel, grocery stores, mass merchants, drug stores, convenience stores, club stores, liquor stores, and on-premises locations including
bars and restaurants. Reed's two core brands are Reed's, which includes Reed's Craft Ginger Beer, Reed's Real
Ginger Ale, Reed's Classic Mules, and Reed's Hard Ginger Ale, and Virgil's Handcrafted sodas. Reed's Craft Ginger
Beers are unique due to the proprietary process of using fresh ginger root combined with a Jamaican inspired recipe of natural spices,
honey and pineapple flavors, and fruit juices. Reed's uses this same handcrafted approach in its Reed's Real Ginger Ale and
Virgil's line of great tasting, bold flavored craft sodas, including its award-winning Virgil's Root Beer.

is the first ginger beer in the US; Virgil's is an independent natural full line craft soda and is a leader in the craft soda category.

has 50 products that are sold throughout the United States, Canada, the United Kingdom, South Africa the Caribbean and the European Union.
It produces its products through a network of nine independent manufacturers and distribution through five independent distribution centers.

 Our
common stock has been quoted on the OTCQX "Best Market" since February 16, 2023. We are a "smaller reporting company",
meaning that the market value of our stock held by non-affiliates is less than $700.0 million and our annual revenue is less than $100.0
million during the most recently completed fiscal year. Our common stock is currently registered under section 12(g) of the Securities
Exchange Act of 1934, as amended.

 Debt
Restructuring and Change of Control

2024, the Company experienced a change of control resulting from a series of investments by D&D Source of Life Holding Ltd., a Cayman
Islands entity ("D&D"). D&D is currently the majority stockholder of Reed's. D&D is currently 100% owned
and controlled by Era Regenerative Medicine Ltd., a BVI company.

 On
October 10, 2024, D&D purchased eight secured promissory notes of the company from funds affiliated with Whitebox Advisors, LLC (referred
to herein as "Whitebox") for a total purchase price of $17,878,248.

 On
November 14, 2024, the Company entered into a new secured one-year term loan with a principal amount of $10 million with Whitebox.
The term loan is secured by substantially all of the Company's assets, including all intellectual property. The Company used part
of the proceeds to pay off and close its then existing ABL revolving line of credit.

 On
November 19, 2024, the Company and D&D entered into an exchange agreement, whereby D&D equitized the Notes, in full, for an aggregate
of 22,478,074 shares of common stock of the Company.

 Industry
Overview

offers its portfolio of natural hand-crafted beverages in the craft specialty foods industry as natural alternatives to the $45 billion
mainstream carbonated soft drinks ("CSD") market in the United States as measured by IRI Multi Outlet scan data. Reed's
products are sold across the country and internationally in the following major channels: natural food, specialty food, grocery, mass
merchant, convenience, club, drug, liquor, and on-premises locations (bars and restaurants).

 Carbonated
Soft Drink Industry Overview

 The retail CSD category grew 6% during 2024 and the
ginger ale segment grew 9% and is now a $2.1 billion-dollar market. Ginger ale growth, we believe, is driven primarily by a consumer perception
of ginger ale as a healthier alternative to other sodas. Our new line of ginger ales made with real ginger deliver on this perception
and, as a result, we believe there is substantial growth in this segment.

 Consumers are shifting consumption to better-for-you
products. We believe there is significant growth potential from consumers switching away from mainstream beverages that contain artificial
ingredients and preservatives towards great-tasting, natural alternatives.

 The CSD market has been impacted by the emergence
of functional or "modern soda" beverages that are formulated with functional ingredients to enhance hydration and provide
additional benefits such as gut health, cognitive enhancement, immune support, and energy. Brands that have emerged and driving category
growth are Olipop, Poppi, Celsius, Alani Nu, and Culture Pop. These beverages are low in sugar and calories and contain minerals, vitamins,
dietary fibers or adaptogens with an assortment of flavors. The primary consumers are Gen Z and Millennials seeking healthier alternatives
to traditional soda.

 Reed's is set to launch a new
multi-functional soda line. This innovative lineup is formulated with organic ginger, complex adaptogen mushroom extracts, and
prebiotic fiber. Each serving contains only 5 grams of sugar, approximately 30 to 45 calories, 500 mg of adaptogens, and 2,000 to
5,000 mg of organic ginger. The flavor profile includes Berry Bubbly, Strawberry Vanilla, Lemongrass Ginger, and Root Beer. These
beverages cater to the rising demand for health-conscious, functional refreshment options and position us at the forefront of the
evolving beverage market. The debut of this line is set for April 2025 and continuing for the balance of the year. Presently the
Company has secured approximately 8,000 points of distribution.

 Consumer
Trends Driving Growth for Our Products

 The
following is a list of consumer trends that are accelerating and supporting our brands.

 Natural:
 Interest in natural products is growing and approximately 59% of shoppers think it's important for their products to be
 natural. Sales of natural products increased 6% in 2024 and are expected to continue in the 4-6% range for the next few
 years.

 Clean
 Label: The demand for clean label products has been steadily growing in recent years. This trend is driven by factors such as increased consumer
awareness of food ingredients, rising health concerns, and a growing preference for natural and organic products.

 Reduced
 Sugar: 72% of U.S. consumers are looking to limit or avoid sugar. The global reduced-sugar food and beverage market is expected
 to grow at an annual rate of 9% through 2028.

 Plant
 Based: 52% of U.S. consumers have made dietary changes to include more plant-based foods and beverages.

 Ginger Based: Consumer demand for ginger-based
products is growing due to increased awareness of ginger's health benefits. The global ginger market is expected to grow at an annual
rate of 9% from 2024 to 2032.

 Premiumization:
 A trend towards embracing quality has accelerated with consumers splurging on premium beverages at retail, including premium
 mixers. The premium beverage market is expected to grow at an annual rate of 6% from 2024 to 2031. The premium cocktail mixer
 market is expected to grow at an annual rate of 8% from 2024 to 2033.

 Nonalcoholic Beverages: More consumers are seeking
 nonalcoholic alternatives with bold and unique flavors. Nonalcoholic drink consumption is expected to increase by a third by
 2026.

 Our
strategies will remain responsive to these macro consumer trends as we concentrate our efforts on developing the Company's sales
and marketing functions.

 Our
Products

 We
make our hand-crafted beverages with only premium, natural ingredients. Our products are free of genetically modified organisms ("GMOs")
and artificial preservatives. Over the years, Reed's has developed several product offerings. 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 entered the alcohol space
with the launch of our RTD Classic Mule that is 7% alcohol by volume ("ABV") with Zero Sugar and Hard Ginger Ale which is
5% ABV and Zero Sugar.

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, 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 2024, the Reed's Craft Ginger Beer line included five major varieties with a mix of bottles and cans:

Original Ginger Beer – O ur first to market product uses a Jamaican-inspired recipe that calls for fresh ginger root,
lemon,and lime, juice, honey and pineapple flavors, raw cane sugar, herbs and spices.

Premium Ginger Beer – Our Original Ginger Beer sweetened with honey and pineapple juice. (No cane sugar added.)

Extra Ginger Beer – Contains 50% more fresh ginger than Reed's Original recipe for extra spice.

Strongest Ginger Beer – Contains 125% more fresh ginger than Reed's Original for the strongest spice.

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.

Real Ginger Ale

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.

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.

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.

Real Cranberry Ginger Ale – This seasonal product launched in the fall of 2021 and is a delicious holiday
offering available September through December.

Harvest Spiced Apple Cider – This seasonal product launched in the fall of 2022 and is a delicious holiday offering available
September through December.

 Reed's Real Blackberry Ginger Ale -
This seasonal product launched in the fall of 2024 and is a delicious holiday offering available September through December

Ready to Drink

Zero Sugar Classic Mule – Launched in 2020 and currently sold in 14 states, Reed's first-ever alcoholic offering is packed
with REAL, fresh ginger root and made through a unique handcrafted brewing and fermentation process. 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.

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.

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, Cola, Vanilla Cream, Black Cherry, and Orange Cream. Beginning in
2023 Virgil's Handcrafted soda will be offered in both glass and can formats.

 Zero
Sugar Line: V irgil's launched a new line of Zero Sugar, Zero Calorie craft sodas in 2019. Each Zero Sugar soda is sweetened
with a proprietary blend of natural sweeteners with no added sugars and is certified Keto. This natural line of Zero Sugar flavors includes
Root Beer, Cola, Vanilla Cream, Black Cherry, and Orange Cream.

 Flying Cauldron Soda

 Flying Cauldron is a non-alcoholic
butterscotch beer prized for its creamy vanilla and butterscotch flavors. Sought after by beverage aficionados, Flying Cauldron is made
with natural ingredients and no artificial flavors, sweeteners, preservatives, gluten, caffeine, or GMOs. Flying Cauldron is available
in 4-packs, single 12 oz bottles, and 16 oz swing-lid bottles.

 Our
Primary Markets

 We
target a smaller segment of the estimated $45 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. In November 2023 we relaunched this ecommerce
platform, which includes a reoccurring subscription model.

 Changes
to the retail landscape, including increased consolidation of retail ownership, the continued growth of sales through e-commerce websites
and mobile commerce applications, including through subscription services and other direct-to-consumer businesses, the integration of
physical and digital operations among retailers and the current economic environment continue to increase the importance of major customers.

 Some
of our representative key customers include:

 Natural
 stores: Whole Foods Market, Sprouts, Natural Grocers by Vitamin Cottage, Fresh Thyme, NCG, and INFRA.

 Gourmet
 & specialty stores: Trader Joe's, Erewhon, Gelson's, Harmon's, Bristol Farms, The Fresh Market, Woodman's,
 Cost Plus World Market, and Cracker Barrel.

 Grocery
 and mass chains: Kroger (and all Kroger banners), Albertson's/Safeway, Publix, Food Lion, Stop & Shop, H.E.B., Wegmans,
 Walmart, Raley's, Savemart, Ingles, Harris Teeter, Hannaford, SEG/Winn Dixie, Giant, Spartan Nash, Food Land, Lowes, Smart
 and Final, Winco, Bashes, Haggen, AFS, Market Basket, Meijer, Cub, and HvVee.

 Club
 stores: Costco

 Liquor
 stores: BevMo!, ABC, and Total Wine and More.

 Convenience
 & drug stores: Duane Reed.

 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 four independent distribution and consolidation centers across the United States to store and distribute our products.
Our Wholesale Distributor network handles the wholesale shipments of our products. 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 Germany, France, UK, South Africa, Canada, Spain, Philippines,
Mexico, Vietnam, Australia, and portions of the Caribbean and Central America,

 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 aluminium cans and have secured manufacturing partnerships in local markets whereby we ship concentrate rather than
finished goods. We currently have production facilities in the U.K. and will be expanding into the European Union during 2025. We
are open to exporting and co-packing internationally and expanding our brands into foreign markets and believe that our new
partnership with D&D Holdings Ltd ("D&D") will advance our ability to successfully penetrate the continent of
Asia. We believe this area is a natural fit for Reed's ginger products because of the popularity and importance of ginger in
international markets, 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.

 Distribution
Agreements

 Our
agreements with some of our distributors commit us to "termination fees" if we terminate our agreements early or without
cause. These agreements provide for our distributor partners to have the right to distribute our products to a defined type of retailer
within a defined geographic region. As is customary in the beverage industry, if we should terminate the agreement or not automatically
renew the agreement, we would be obligated to make certain payments to our distributor partners.

 Some
of our outside distributors are not bound by written agreements with us and may discontinue their relationship with us on short notice.
Most distributors handle a number of competitive products. In addition, our products are sometimes a small part of our distributors'
businesses.

 We
continually monitor our distribution agreements with our partners across North America to ensure that they are optimal.

 Manufacturing
Our Products

 All of Reed's products are produced by our co-pack
partners. They brew, blend, bottle, and package our products and charge us a fee, generally by the case, for the products produced. We
have relationships with two co-packers in Pennsylvania and three in California, one in Washington state, one in Oregon,
one in New York state, and one in North Carolina. We are actively expanding co-packing capacity and building finished goods inventory.
During 2024, we entered into co-packing agreements with a new facility in Southern California, DrinkPak. Our agreement with DrinkPak serves
to expand our production for cans and will allows us to better serve our Southwest and club customers and grow our sales in the region.
We are also in discussions and negotiations with additional co-packers to secure added capability for future production needs.

 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. Further, 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 may not be able to satisfy demand on a short-term basis. We have experienced
disruptions and delays in production that have impacted our operations and revenues and there can be no assurances that we will not encounter
such disruptions in the future.

 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 Fitz Mark 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 movements, 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 are in the process of formulating new products that leverage fresh organic ginger to create a portfolio of beverages targeting
the "better-for-you" lifestyle category. We look forward to the release of our new line of multi-functional beverages during
2025 with a launch during Q1. This product is formulated with organic ginger, complex adaptogen mushroom extracts, and prebiotic fibre.
Each serving contains only 5 grams of sugar, approximately 30 to 45 calories, 500 mg of adaptogens, and 2,000 to 5,000 mg of organic ginger.
The flavor profile includes Berry Bubbly, Strawberry Vanilla, Lemongrass Ginger, and Root Beer.

 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.

 Competition

 Non-alcoholic
Beverages

 Success
in this competitive environment is dependent on effective promotion of existing products, effective introduction of new products and
reformulations of existing products, increased efficiency in production techniques, effective incorporation of technology and digital
tools across all areas of our business, the effectiveness of our advertising campaigns, marketing programs, product packaging and pricing,
new vending and dispensing equipment and brand and trademark development and protection. We believe that the strength of our brands,
innovation and marketing, coupled with the quality of our products and flexibility of our distribution network, allows us to compete
effectively.

 The
non-alcoholic beverage segment of the commercial beverage industry is highly competitive, consisting of numerous companies ranging from
small or emerging to very large and well established. Our non-alcoholic products compete on the basis of brand recognition and loyalty,
taste, price, value, quality, innovation, distribution, shelf space, advertising, marketing and promotional activity (including digital),
packaging, convenience, service and the ability to anticipate and effectively respond to consumer preferences and trends, including increased
consumer focus on health and wellness and sustainability and the continued acceleration of e-commerce and other methods of distributing
and purchasing products. Our products compete with a wide range of drinks produced by a relatively large number of manufacturers. Many
of these brands have enjoyed broad, well-established national recognition for years, through well-funded advertising and other branding
campaigns. Competitors in the ginger beer category include Goslings, Barritt's, Fever Tree, Bundaberg, Cock 'n Bull and Q;
in the craft soda category we compete with brands such as Stewart's, IBC, Zevia, Henry Weinhard's, Boylan, Sprechers, and
Jones Soda; In the Ginger Ale category we compete with Canada Dry, Schweppes, Seagram's, Vernor's, and Zevia.

 We
also compete for distributors who will concentrate on marketing our products over those of our competitors, provide stable and reliable
distribution, and secure adequate shelf space in retail outlets.

 Our
products have a relatively high price, we have minimal mass media advertising to date, and a small but growing presence in the mainstream
market compared to many of our competitors, Our success in this competitive market is dependent on our natural innovative beverage recipes,
brand innovation, packaging, commitment to the highest quality standards, use of premium ingredients, and our proprietary ginger processing
formula.

 Candy

Crystallized Ginger and Reed's Ginger Chews restaged their product line up in 2020. The category is small and there is not a significant
number of entrants. Key competitors are Chimes and Gin Gins. During 2023, the Company licensed its candy business to Rootstock Trading,
a company founded and owned by our former Chief Sales Officer, Neal Cohane. As part of this agreement, Rootstock agreed to pay a royalty
on a percentage of its net sales of licensed products. The royalty fees are 0% for 2023, 2% for 2024, 4% for 2025, and 5% thereafter.

 Ready
to Drink:

 The
RTD (Ready to Drink) category refers to canned cocktails that offer convenience and quality for cocktail drinkers.

 The
start of Covid-19, when restaurants and bars closed in March 2020, helped propel the category with consumers bringing the
on-premises cocktail occasion to their homes. This was a major boost for canned, single-serve RTDs. Without the recent quality
improvements of RTD cocktails, however, it's unlikely that the category would have taken off. Today's RTD cocktails
bring much higher quality versus earlier wine coolers and malt-based hard lemonades. Premiumization has resulted in a new wave of
products that boast less sugar and more transparency. Variety has also been a key driver, allowing consumers ways to experiment
without buying costly ingredients or spirits. Reed's is poised to leverage these trends by bringing high-quality, crafted
Mules and Hard Ginger Ale made with real fresh ginger to the market.

 Top
selling brands in the category are High Noon, Cutwater Spirits, On The Rocks, Jose Cuervo, 1800 Tequila, Buzzballz, Bacardi, The Long
Drink Company, and Fisher's Island. In the Mule segment, the key players include 'Merican Mule, Cutwater Mule, and Copper
Can.

 Raw
Materials

 Substantially
all of the raw materials used in the preparation, bottling and packaging of our products are purchased by Reed's or by our contract
packers in accordance with our specifications. Raw materials are delivered and stored at our various third-party co-packers.

 Generally,
the raw materials used in our products are obtained from domestic and foreign suppliers and many of the materials have multiple reliable
suppliers. This provides a level of protection against a major supply constriction or adverse cost or supply impacts. Since our raw materials
are common ingredients and supply is easily accessible, we have few long-term contracts in place with our suppliers.

 Many
outside factors such as industry wide shortages, crop yield, weather, agricultural legislation, and the geopolitical climate impact supply
and price; however, we do source certain ingredients from different regions and suppliers to mitigate some of this risk.

 Glass
Bottles and Aluminium Cans

 A
significant component of our product cost is the purchase of glass bottles and aluminium cans. We are generally responsible for arranging
for the purchase and delivery to our third-party co-packers of the containers in which our beverage products are packaged. We source
glass bottles directly from manufacturers or indirectly through brokers or co-packers, based on their cost and availability regionally.
During 2022 we entered into a three-year agreement with a packaging broker to supply us with sleek and standard 12-ounce cans though
the year 2025. These suppliers provide expertise in emerging package and material innovation that can be leveraged to further expand
marketing and package offerings.

 Working
Capital Practices

 Historically,
we have financed our operations through public and private sales of common stock, issuance of preferred and common stock, convertible
debt instruments, term loans and credit lines from financial institutions, and cash generated from operations. We have taken decisive
action to improve our margins, including fully outsourcing our manufacturing process, streamlining our product portfolio, negotiating
improved vendor contracts and restructuring our selling prices.

 Licensing

2020 we entered into a licensing agreement with Full Sail Brewery headquartered in Hood River, Oregon to manufacture and sell our new
line of Reed's Alcoholic Classic Mule in 4 and 12 pack 12-ounce cans, and 12 pack 16-ounce cans. Full Sail manages all aspects
of production and distribution. We subsequently amended that agreement to assume the distribution rights from Full Sail and instead utilize
Full Sail as a co-packer of our RTD Classic Mule line. We now fully control the sales and marketing process, and this change in distribution
ownership enables us to recognize gross revenue as opposed to a royalty fee going forward.

 Seasonality

 Sales
of our non-alcoholic beverages are somewhat seasonal with higher-than-average volume in the warmer months. The volume of sales in the
beverage business is affected by weather conditions from time to time. Additionally, a portion of our products are only available at certain times of the year.

 Proprietary
Rights

 We
own copyrights, trademarks and trade secrets relating to our products and the processes for their production; the packages used for our
products; and the design and operation of various processes and equipment used in our business. Some of our proprietary rights are licensed
to our co-packers and suppliers and other parties. Reed's ginger processing and brewing process finished beverage products and
concentrate formulas are among its most valuable trade secrets.

 We
own trademarks in the United States that we consider material to our business. Trademarks in the United States are valid as long as they
are in use and/or their registrations are properly maintained. Pursuant to our manufacturing and bottling agreements, we authorize our
co-packers to use applicable Reed's trademarks in connection with their manufacture, sale and distribution of our products. We
have registered and intend to obtain additional trademarks in international markets as may become necessary.

 We
use confidentiality and non-disclosure agreements with employees, manufacturers and distributors to protect our proprietary rights.

 Regulation

 We
are required to comply, and it is our policy to comply with all applicable laws in all jurisdictions in which we do business.

 U.S.
laws and regulations that apply to our business and the production, distribution and sale of our products include, but are not limited
to: the Federal Food, Drug and Cosmetic Act and various state laws governing food safety and food labelling; the Food Safety Modernization
Act; the Occupational Safety and Health Act and various state laws and regulations governing workplace health and safety; various federal,
state and local environmental protection laws, as discussed below; the Federal Motor Carrier Safety Act; the Federal Trade Commission
Act; the Lanham Act and various state law statutory and common law duties regarding false advertising; various federal and state laws
and regulations governing our employment practices, including those related to equal employment opportunity, such as the Equal Employment
Opportunity Act and the National Labor Relations Act and those related to overtime compensation, such as the Fair Labor Standards Act;
various state and federal laws pertaining to sale and distribution of alcohol beverages; data privacy and personal data protection laws
and regulations, including the California Consumer Privacy Act of 2018 (as modified by the California Privacy Rights Act); customs and
foreign trade laws and regulations, including laws regarding the import or export of our products or ingredients used in our products
and tariffs; laws regulating the sale of certain of our products in schools; and laws regulating the ingredients or substances contained
in, or attributes of, our products. We are subject to various state and local statutes and regulations, including state consumer protection
laws such as Proposition 65 in California, which requires that a specific warning appear on any product that contains a substance listed
by the State of California as having been found to cause cancer or birth defects, unless the amount of such substance in the product
is below a safe harbor level.

jurisdictions have either imposed, or are considering imposing, new or increased taxes on the manufacture, distribution or sale of, ingredients
or substances contained in, or attributes of, our products or commodities used in the production of our products. These taxes vary in
scope and form: some apply to all beverages, including non-caloric beverages, while others apply only to beverages with a caloric sweetener
(e.g., sugar). Similarly, some measures apply a single tax rate per ounce/liter on beverages containing over a certain level of added
sugar (or other sweetener) while others apply a graduated tax rate depending upon the amount of added sugar (or other sweetener) in the
beverages.

jurisdictions have either imposed or are considering imposing regulations designed to increase recycling rates, encourage waste reduction,
restrict the sale of products utilizing certain packaging or to carry warnings about the environmental impact of plastic packaging. It
is possible that similar or more restrictive requirements may be proposed or enacted in the future.

jurisdictions have either imposed, or are considering imposing, new or increased taxes on the manufacture, distribution or sale of
our products, ingredients or substances contained in, or attributes of, our products or commodities used in the production of our
products. These taxes vary in scope and form: some apply to all beverages while others apply only to beverages with a caloric
sweetener (e.g., sugar). Similarly, some measures apply a single tax rate per ounce/liter on beverages containing over a certain
level of added sugar (or other sweetener) while others apply a graduated tax rate depending upon the amount of added sugar (or other
sweetener) in the beverage and some apply a flat tax rate on beverages containing a particular substance or ingredient, regardless
of the level of such substance or ingredient.

 Co-packers
of our beverage products presently offer and use non-refillable, recyclable containers in the United States. Some of these co-packers
also offer and use refillable containers, which are also recyclable. Legal requirements apply in various jurisdictions in the United
States and overseas requiring deposits or certain taxes or fees be charged for the sale, marketing and use of certain non-refillable
beverage containers. The precise requirements imposed by these measures vary. Other types of beverage container-related deposit, recycling,
tax and/or product stewardship statutes and regulations also apply in various jurisdictions in the United States and overseas. We anticipate
additional, similar legal requirements may be proposed or enacted in the future at local, state and federal levels, both in the United
States and elsewhere.

 Alcoholic
beverages are regulated by federal, state and local governments in both the U.S. and abroad whose laws and regulations govern the production,
distribution and sale of alcohol beverages, including licensing, permitting, advertising and marketing. The manufacturing and sale of
alcohol products requires numerous approvals, licenses and permits from governmental agencies, including, but not limited to, the U.S.
Department of Treasury, the Alcohol and Tobacco Tax and Trade Bureau ("TTB"), the U.S. Department of Agriculture, the FDA,
state alcohol regulatory agencies and state and federal environmental agencies. Our third-party manufacturers, in particular, are subject
to audits and inspections by TTB and applicable state alcohol regulatory agencies at any time. Our alcohol beverages are also subject
to various taxes, license fees, and the like levied by governmental entities as well as bonds that such entities may deem necessary to
ensure compliance with applicable laws and regulations. Beginning in January 2018, the federal excise taxes imposed on domestic brewers
that produce less than 2 million barrels annually were reduced from $7.00 to $3.50 per barrel on the first 60,000 barrels shipped annually.
State and local excise taxes, on the other hand, vary based on the alcohol content and type of beverage. Federal, state, or local governments
may increase such excise taxes in the future.

 Our
co-packers are subject to federal, state and local environmental laws and regulations, including those relating to air emissions, water
discharges, the use of water resources, waste disposal, and recycling. Changes in environmental compliance mandates, and any expenditures
necessary to comply with such requirements, could increase costs. In addition, continuing concern over environmental matters, including
climate change, is expected to continue to result in new or increased legal and regulatory requirements (in and outside of the United
States), including to reduce or mitigate the potential effects of greenhouse gases, to limit or impose additional costs on commercial
water use due to local water scarcity concerns, or to expand mandatory reporting of certain environmental, social and governance metrics.

 We
are also subject to various federal, state and international laws and regulations related to privacy and data protection, including the
California Consumer Privacy Act of 2018 ("CCPA"), which became effective on January 1, 2020, and its extension, the California
Privacy Rights Act ("CPRA"), which took effect on January 1, 2023. The interpretation and application of data privacy,
cross-border data transfers and data protection laws and regulations are often uncertain and are evolving in the United States and internationally.
We monitor pending and proposed legislation and regulatory initiatives to ascertain their relevance to and potential impact on our business
and develop strategies to address regulatory trends and developments, including any required changes to our privacy and data protection
compliance programs and policies.

 Our
primary cost pertaining to environmental compliance activity is in recycling fees and redemption values. Various municipalities, states
and foreign countries require that a deposit be charged for certain non-refillable beverage containers. The precise requirements imposed
by these measures vary by jurisdiction. Other deposit, recycling, ecotaxes and/or product stewardship proposals have been, and may in
the future be, introduced and enacted at the federal, state, and local levels, and in foreign countries. In California, we are required
to collect redemption values from our customers and to remit such redemption values to the State of California Department of Resources
Recycling and Recovery based upon the number of cans and bottles of certain carbonated and non-carbonated products sold. In certain other
states and countries where our products are sold, we are also required to collect deposits from our customers and to remit such deposits
to the respective jurisdictions based upon the number of cans and bottles of certain carbonated and non-carbonated products sold in such
states.

 In
addition to the discussion in this section, see also "Item 1A. Risk Factors."

 Human Capital

 Attracting, developing and retaining talent with
the right skills to drive our business is central to our growth strategy. The strength of our workforce is one of the significant contributors
to our success. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and
integrating our existing and new employees, advisors and consultants. The principal purposes of our 2024 Inducement Plan was to retain
and reward personnel through the granting of stock-options, in order to increase shareholder value and the success of our Company by
motivating such individuals to perform to the best of their abilities and achieve our objectives.

 As
of December 31, 2024, we had 24 full-time equivalent employees on our corporate staff. We employ additional people on a part-time basis
as needed. We have never participated in a collective bargaining agreement. We believe relations with our employees are good.

 Available
Information

 The
Company maintains websites at the following addresses:

 www.drinkreeds.com

 www.vigils.com

 www.flyingcauldron.com

 Our
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, proxy and information statements
and amendments to those reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Exchange Act are available through
the "Investors" portion of our website www.drinkreeds.com free of charge as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the Securities and Exchange Commission, or SEC. Information on our websites is not part of
this Annual Report or any of our other securities filings unless specifically incorporated herein by reference. We have included our
website addresses in this Annual Report solely as inactive textual references. Our filings with the SEC may be accessed through the SEC's
website at www.sec.gov. All statements made in any of our securities filings, including all forward-looking statements or information,
are made as of the date of the document in which the statement is included, and we do not assume or undertake any obligation to update
any of those statements or documents unless we are required to do so by law.

 Item
1A. Risk Factors

 The
following risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business
or financial performance, which in turn can affect the price of our publicly traded securities. These are not the only risks we face.
There may be other risks we are not currently aware of or that we currently deem not to be material but that may become material in the
future.

 Our
disclosure controls and procedures may not prevent or detect all errors or acts of frau d.

 We
are subject to the periodic reporting requirements of the Exchange Act. We have designed our disclosure controls and procedures to reasonably
assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management,
and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

 However,
any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system will be met. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the
controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not
be detected.

 Global
economic uncertainty and unfavorable global economic conditions caused by political instability, changes in trade agreements and conflicts,
such as the Russia-Ukraine conflict and the conflict in the Middle East, could adversely affect our business, financial condition, results
of operations or prospects.

 Our
business, financial condition, results of operations or prospects could be adversely affected by unstable economic and political conditions
within the United States and foreign jurisdictions, including as a result of an economic downturn and geopolitical events, such as changes
in U.S. federal policy that affect the geopolitical landscape. Changes to policy implemented by the U.S. Congress, the Trump administration
or any new administration have impacted and may in the future impact, among other things, the U.S. and global economy, international
trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. For example,
during the prior Trump administration, increased tariffs were implemented on goods imported into the United States, particularly from
China, Canada, and Mexico. On February 1, 2025, the United States imposed a 25% tariff on imports from Canada and Mexico, which were
subsequently suspended for a period of one month, and a 10% additional tariff on imports from China. Historically, tariffs have led to
increased trade and political tensions, between not only the United States and China, but also between the United States and other countries
in the international community. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political
tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between
major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial
markets. Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse
effect on our financial condition or results of operations. Until we know what policy changes are made, whether those policy changes
are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors
over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.

 In
addition, the current military conflict between Russia and Ukraine and the armed conflict in Israel and the Gaza Strip could disrupt
or otherwise adversely impact our operations and those of third parties upon which we rely. Related sanctions, export controls or other
actions that may be initiated by nations including the United States, the EU or Russia (e.g., potential cyberattacks, disruption of energy
flows, etc.), which could adversely affect our business and/or our supply chain and other third parties with which we conduct business.
A severe or prolonged economic downturn or political unrest could result in a variety of risks to our business, including but not limited
to weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all.
A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay
making payments for our services. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the
current political and economic climate and financial market conditions could adversely impact our business.

 We
are a "smaller reporting company" and we cannot be certain if the reduced reporting requirements applicable to "smaller
reporting companies" will make our common stock less attractive to investors.

 We
are a "smaller reporting company," meaning that the market value of our stock held by non-affiliates is less than $700.0
million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a "smaller
reporting company" until (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual
revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates
is less than $700.0 million as of the prior June 30.

 Our
designation as a "smaller reporting company," allows us to take advantage of many of the same exemptions from disclosure
requirements, including presenting only the two most recent fiscal years of audited financial statements in our Annual Report on Form
10-K not being required to comply with the independent auditor attestation requirements of Section 404 and reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stock
less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may
be a less active trading market for our common stock and our share price may be more volatile.

 The
following risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business
or financial performance, which in turn can affect the price of our publicly traded securities. These are not the only risks we face.
There may be other risks we are not currently aware of or that we currently deem not to be material but that may become material in the
future.

 Business
and Operational Risks

to realize benefits from our productivity initiatives can adversely affect our financial performance.

 Our
future growth depends, in part, on our ability to continue to reduce costs and improve efficiencies. We continue to identify and implement
initiatives that we believe will position our business for long-term sustainable growth by allowing us to achieve a lower cost structure,
improve decision-making and operate more efficiently. If we are unable to successfully implement our productivity initiatives as planned
or do not achieve expected savings as a result of these initiatives, we may not realize all or any of the anticipated benefits, resulting
in adverse effects on our financial performance.

 Demand
for our products can fluctuate significantly and our management's estimates of future product demand may be inaccurate, particularly
with new products. Further, we may be subject to a variety of other factors that impact timely production and shipment of our products.
Our business and results of operations are impacted by product shortages as well as product surplus.

 Management's
estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess
and obsolete inventory. At December 31, 2024, and 2023, inventory has been reduced by cumulative write-downs for inventory aggregating
$277 and $1,848, respectively.

 When
we underestimate demand for our products, are unable to secure sufficient ingredients or raw materials or procure adequate packing arrangements
to obtain adequate or timely shipment of our products, we are not able to satisfy demand on a short-term basis.

 It
is difficult to predict the timing and amount of our sales because our distributors are not required to place minimum orders with us.
Our independent distributors and national accounts are not required to place minimum monthly or annual orders for our products. In order
to reduce their inventory costs, independent distributors typically order products from us on a "just in time" basis in quantities
and at such times based on the demand for the products in a particular distribution area. Accordingly, we cannot predict the timing or
quantity of purchases by any of our independent distributors or whether any of our distributors will continue to purchase products from
us in the same frequencies and volumes as they may have done in the past. Additionally, our larger distributors and partners may make
orders that are larger than we have historically been required to fill.

 Further,
all of our products are produced by our co-pack partners. 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. If a co-packer terminates its relationship with us, we have in the past, and will likely in the future, experience a delay finding a suitable replacement, which will negatively impact or business
and financial results.

 Our
reliance on distributors, retailers and brokers could affect our ability to efficiently and profitably distribute and market our products,
maintain our existing markets and expand our business into other geographic markets.

 Our
ability to maintain and expand our existing markets for our products, and to establish markets in new geographic distribution areas,
is dependent on our ability to establish and maintain successful relationships with reliable distributors, retailers and brokers strategically
positioned to serve those areas. Most of our distributors, retailers and brokers sell and distribute competing products and our products
may represent a small portion of their businesses. The success of this network will depend on the performance of the distributors, retailers
and brokers of this network. Our ability to incentivize and motivate distributors to manage and sell our products is affected by competition
from other beverage companies who have greater resources than we do. To the extent that our distributors, retailers and brokers are distracted
from selling our products or do not employ sufficient efforts in managing and selling our products, including re-stocking the retail
shelves with our products, our sales and results of operations could be adversely affected. Furthermore, such third parties' financial
position or market share may deteriorate, which could adversely affect our distribution, marketing and sales activities. Our ability
to maintain and expand our distribution network and attract additional distributors, retailers and brokers will depend on a number of
factors, some of which are outside our control. Some of these factors include: (i) the level of demand for our brands and products in
a particular distribution area; (ii) our ability to price our products at levels competitive with those of competing products; and (iii)
our ability to deliver products in the quantity and at the time ordered by distributors, retailers and brokers. We may not be able to
successfully manage all or any of these factors in any of our current or prospective geographic areas of distribution. Our inability
to achieve success with regards to any of these factors in a geographic distribution area will have a material adverse effect on our
relationships in that particular geographic area, thus limiting our ability to maintain or expand our market, which will likely adversely
affect our revenues and financial results.

 Supply chain challenges have impacted our ability
to benefit from strong demand for, and increased sales of our products and adversely impacted our business. Supply chain constraints could
cause a disruption in our ability to obtain raw materials required to manufacture our products and adversely affect our operations.

 We have experienced supply chain challenges, including
increased lead times, as well as inflation of raw materials, logistics and labor costs due to availability constraints and high demand.
During the year ended December 31, 2024, the average cost of shipping and handling was $2.75 per case, as compared to $3.07 per case for
the year ended December 31, 2023. Although the company has experienced decreases in freight costs, in the company's opinion there
remains a volatile environment and the company will continue to monitor pricing and availability in transportation. Mitigation plans have
been implemented to manage this risk. The disruption caused by labor shortages, significant raw material cost inflation, logistics issues
and increased freight costs, and ongoing port congestion, has resulted in suppressed margins. Although we regularly monitor companies
in our supply chain and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our
ability to obtain raw materials required to manufacture our products and adversely affect our operations.

 Reduction
in future demand for our products would adversely affect our business.

 Demand
for our products depends in part on our ability to innovate and anticipate and effectively respond to shifts in consumer trends and preferences,
including the types of products our consumers want and how they browse for, purchase and consume them. Consumer preferences continuously
evolve due to a variety of factors, including: changes in consumer demographics, consumption patterns, diet (whether due to changes in
consumer behavior and eating habits, the use of weight-loss drugs or other factors) and channel preferences (including continued increases
in the e-commerce and online-to-offline channels); pricing; product quality; concerns or perceptions regarding packaging and its environmental
impact (such as single-use and other plastic packaging); and concerns or perceptions regarding the nutrition profile and health effects
of, or location of origin of, ingredients or substances in our products or packaging, including due to the results of third-party studies
(whether or not scientifically valid). Concerns with any of the foregoing could lead consumers to reduce or publicly boycott the purchase
or consumption of our products. Pandemics, epidemics or other disease outbreaks, such as COVID-19, and geopolitical events, wars and
other military conflicts have also impacted and could continue to impact consumer preferences and demand for our products. Consumer preferences
are also influenced by perception of our brand image or the brand images of our products, the success of our advertising and marketing
campaigns, our ability to engage with our consumers in the manner they prefer, including through the use of digital media or assets,
and the perception of our use of social media and our response to political and social issues, geopolitical events, wars and other military
conflicts or catastrophic events. These and other factors have reduced and could continue to reduce consumers' willingness to purchase
certain of our products, including as a result of public boycotts. Any inability on our part to anticipate or react to changes in consumer
preferences and trends, or make the right strategic investments to do so, including investments in data analytics to understand consumer
trends, can lead to reduced demand for our products, lead to inventory write-offs or erode our competitive and financial position, thereby
adversely affecting our business. In addition, our business operations, including our supply chain, are subject to disruption by geopolitical
events, wars and other military conflicts, natural disasters, pandemics, epidemics or other events beyond our control that could negatively
impact product availability and decrease demand for our products.

 Damage
to our reputation or brand image can adversely affect our business.

 Maintaining
a positive reputation is critical to selling our products. Our reputation or brand image could be adversely impacted by a variety of
factors, including: particular ingredients in our products, including concerns regarding whether certain of our products contribute to
obesity and other health conditions; any product quality or safety issues, including the recall of any of our products; any failure to
comply with laws and regulations; marketing programs, use of social media; or any failure to effectively respond to negative or inaccurate
comments about us on social media or otherwise regarding any of the foregoing. Damage to our reputation or brand image could decrease
demand for our products, thereby adversely affecting our business.

 Product
recalls or other issues or concerns with respect to product quality and safety can adversely affect our business.

 We
have recalled, and could in the future recall, products due to product quality or safety issues, such as mislabelling, spoilage or malfunction.
Product quality or safety issues could reduce consumer confidence and demand for our products, cause production and delivery disruptions,
and result in increased costs (including payment of fines, judgments and legal fees, and costs associated with alternative sources of
production) and damage our reputation, all of which can adversely affect our business. Any perception or allegation (whether or not valid)
of failure to maintain adequate oversight over product quality or safety can result in product recalls, litigation, government investigations
or inquiries or civil, all of which may result in fines, penalties and damages. In addition, while we currently maintain insurance coverage
that, subject to its terms and conditions, is intended to address costs associated with certain aspects of product recalls, this insurance
coverage may not, depending on the specific facts and circumstances surrounding an incident, cover all losses or all types of claims
that arise from an incident, or the damage to our reputation or brands that may result from an incident.

 Any
inability to compete effectively can adversely affect our business.

 Our
products compete against products of international beverage companies as well as regional, local and private label and economy brand
manufacturers and other competitors, including smaller companies developing and selling micro brands directly to consumers through e-commerce
platforms or through retailers focused on locally sourced products. Our products compete primarily on the basis of brand recognition
and loyalty, taste, quality, innovation, distribution, shelf space, advertising, and promotional activity, packaging, convenience, and
the ability to anticipate and effectively respond to consumer preferences and trends. Our business can be adversely affected if we are
unable to effectively promote or develop our existing products or introduce and effectively market new products, if we are unable to
improve operating efficiencies, if we are unable to effectively respond to supply disruptions, pricing pressure (including as a result
of commodity inflation) or otherwise compete effectively, and we may be unable to grow or maintain sales or category share or we may
need to increase capital, marketing or other expenditures. It is possible that our competitors may either respond to industry conditions
or consumer trends more rapidly or effectively or resort to price competition to sustain market share, which could adversely affect our
sales and profitability.

 Dependence on Key Personnel

 Our performance significantly depends on the contributions
of our executive officers and key employees, both individually and as a group and our ability to retain and motivate them. Certain of
our officers and key personnel have many years of experience with us and in our industry and it may be difficult to replace them. If we
lose key personnel, our operations and ability to manage our business may be affected.

to attract, develop and maintain a highly skilled and diverse workforce or effectively manage changes in our workforce can have an adverse
effect on our business.

 Our
business requires that we attract, develop and maintain a highly skilled and diverse workforce. Our employees are highly sought after
by our competitors and other companies and our continued ability to compete effectively depends on our ability to attract, retain, develop
and motivate highly skilled personnel for all areas of our organization. Our ability to do so has been and may continue to be impacted
by challenges in the labor market, which has experienced and may continue to experience wage inflation, labor shortages, increased employee
turnover, changes in availability of our workforce and changing worker expectations regarding flexible work models. Any unplanned turnover
or failure to attract, develop and maintain a highly skilled and diverse workforce, can erode our competitive advantage or result in
increased costs due to increased competition for employees or increased employee benefit costs.

 Changes
in the retail landscape or in sales to any key customer can adversely affect our business.

 The retail industry is impacted by the actions and
increasing power of retailers, including as a result of increased consolidation of ownership resulting in large retailers or buying groups
with increased purchasing power, particularly in North America, Europe and Latin America. In this changing retail landscape, retailers
and buying groups have impacted and may continue to impact our ability to compete in these jurisdictions by demanding lower prices or
increased promotional programs. Our inability to resolve a significant dispute with customers, a change in the business conditions (financial
or otherwise) of either of these customers, even if unrelated to us, a significant reduction in sales to either of them, or the loss
of either of them could adversely affect our business.

 The
beverage industry is highly competitive. We compete with other beverage companies not only for consumer acceptance but also for shelf
space in retail outlets and for marketing focus by our distributors, all of whom also distribute other beverage brands. Our products
compete with all non-alcoholic beverages, most of which are marketed by companies with substantially greater financial resources than
ours. Some of these competitors are placing severe pressure on independent distributors not to carry competitive sparkling brands such
as ours. We also compete with regional beverage producers and "private label" soft drink suppliers.

 Our
direct competitors in the sparkling beverage category include traditional large beverage companies and distributors, and regional premium
soft drink companies. These national and international competitors have advantages such as lower production costs, larger marketing budgets,
greater financial and other resources and more developed and extensive distribution networks than ours. We may not be able to grow our
volumes or maintain our selling prices, whether in existing markets or as we enter new markets.

 Increased
competitor consolidations, market-place competition, particularly among branded beverage products, and competitive product and pricing
pressures could impact our earnings, market share and volume growth. If, due to such pressure or other competitive threats, we are unable
to sufficiently maintain or develop our distribution channels, we may be unable to achieve our current revenue and financial targets.
As a means of maintaining and expanding our distribution network, we intend to introduce product extensions and additional brands.
We may not be successful in doing this, or it may take us longer than anticipated to achieve market acceptance of these new products
and brands, if at all. Other companies may be more successful in this regard over the long term. Competition, particularly from companies
with greater financial and marketing resources than ours, could have a material adverse effect on our existing markets, as well as on
our ability to expand the market for our products.

 We
compete in an industry characterized by rapid changes in consumer preferences and public perception, so our ability to continue developing
new products to satisfy the changing preferences of consumers will determine our long-term success.

to introduce new brands, products or product extensions into the marketplace as current ones mature and to meet the changing preferences
of consumers could prevent us from gaining market share and achieving long-term profitability. Product lifecycles can vary and consumer
preferences and loyalties change over time. Although we try to anticipate these shifts and innovate new products to introduce to our
consumers, we may not succeed. Consumer preferences also are affected by factors other than taste, such as health and nutrition considerations
and obesity concerns, shifting consumer needs, changes in consumer lifestyles, increased consumer information and competitive product
and pricing pressures. Sales of our products may be adversely affected by the negative publicity associated with these issues. If
we do not adequately anticipate or adjust to respond to these and other changes in consumer preferences, we may not be able to maintain
and grow our brand image and our sales may be adversely affected.

 We
may experience a reduced demand for some of our products due to health concerns (including obesity) and legislative initiatives against
sweetened beverages.

 Consumers
are concerned about health and wellness; public health officials and government officials are increasingly vocal about obesity and its
consequences. There has been a trend among some public health advocates and dietary guidelines to recommend a reduction in sweetened
beverages, as well as increased public scrutiny, new taxes on sugar-sweetened beverages (as described below), and additional governmental
regulations concerning the marketing and labelling/packing of the beverage industry. Additional or revised regulatory requirements, whether
labelling, tax or otherwise, could have a material adverse effect on our financial condition and results of operations. Further, increasing
public concern with respect to sweetened beverages could reduce demand for our beverages and increase desire for more low-calorie soft
drinks, water, enhanced water, coffee-flavored beverages, tea, and beverages with natural sweeteners. We are continuously working to
reduce calories and sugar in our products while launching additional products, to pair with existing brand extensions that round
out our portfolio.

 Changes
in economic conditions can adversely impact our business.

 Many
of the jurisdictions in which our products are sold have experienced and could continue to experience uncertain or unfavorable economic
conditions, such as high inflation and adverse changes in interest rates, tax laws or tax rates, including as a result of geopolitical
events. These uncertain or unfavorable economic conditions have resulted in and could continue to result in recessions or economic slowdowns;
volatile commodity markets; labor shortages; highly inflationary economies; and stimulus measures. In 2024 we experienced moderate inflation.
In addition, we cannot predict how current or future economic conditions will affect our business partners, including financial institutions
with whom we do business, and any negative impact on any of the foregoing may also have an adverse impact on our business.

 Future
cyber incidents and other disruptions to our information systems can adversely affect our business.

 We
work with a third-party vendor, which has extensive cybersecurity expertise to help protect and defend against cybersecurity threats.
This vendor has advised us on material cybersecurity-related risks and is helping us establish controls designed to protect, detect,
respond to, and recover from cybersecurity incidents. These controls include firewall protection, antivirus software protection, two-factor
authentication enforced on all endpoints including Windows PCs and laptops, and intrusion prevention software designed to automatically
block any unauthorized access attempts on our servers. Our cybersecurity controls are embedded within our overall risk management processes
and technology, including a 24/7 threat monitoring system provided by the vendor.

 Cyberattacks
and other cyber incidents are occurring more frequently, the techniques used to gain access to information technology systems and data,
disable or degrade service or sabotage systems are constantly evolving and becoming more sophisticated in nature and are being carried
out by groups and individuals with a wide range of expertise and motives. In addition, the rapid evolution and increased adoption of
artificial intelligence technologies may increase our cybersecurity risks, including generative artificial intelligence augmenting threat
actors' technological sophistication to enhance existing or create new malware. We have not experienced a cyber security breach;
however, a breach could have a material adverse effect on us in the future.

 The
company relies on its information technology, and potential cyber-attack, data breach or other failure or disruption of its information
technology could disrupt its operations and adversely affect its results of operations.

 The
company's business increasingly relies on the successful and uninterrupted functioning of its information technology systems to process,
transmit, and store electronic information. A significant portion of the communication between the company's personnel, customers, and
suppliers depends on information technology. As with all large systems, the Company's information technology systems may be susceptible
to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases or components thereof,
power outages, hardware failures, telecommunication failures, user errors or catastrophic events. In addition, cybersecurity related
risks including security breaches and cyber-attacks such as computer viruses, denial-of-service attacks, malicious code (including ransomware),
social-engineering attacks (including phishing attacks) or other information security breaches could result in unauthorized disclosure
or misappropriation of the Company's confidential information. These threats also may be further enhanced in frequency or
effectiveness through threat actors' use of artificial intelligence.

 While
the company has security measures in place designed to protect the integrity of customer information and prevent data loss, misappropriation,
and other security breaches, the Company's information technology systems could nevertheless be penetrated by outside parties intent
on extracting information, corrupting information or disrupting business processes (including for purposes of ransom demands or other
forms of blackmail), particularly if the company's information security training and compliance programs prove to be inadequate. In addition,
if the company's information technology systems suffer severe damage, disruption or shutdown and the company's business continuity plans
do not effectively resolve the issues in a timely manner, the company may lose customers and suppliers and revenue and profits as a result
of its inability to timely manufacture, distribute, invoice and collect payments from its customers, and could experience delays in reporting
its financial results, including with respect to the company's operations in emerging markets. Furthermore, if the company is unable
to prevent security breaches, it may suffer financial and reputational damage because of lost or misappropriated confidential information
belonging to the company or to its customers or suppliers, and it may suffer indirect economic loss if its existing insurance policies
and coverage related to information security risks prove to be insufficient. Failure or disruption of the company's information technology
systems, or the back-up systems, for any reason could disrupt the company's operations and negatively impact the company's cash flows
or financial condition.

 Our
largest stockholder's preemptive right could dissuade a strategic investor from making an investment in the Company.

 Our
largest stockholder, D&D, holds a preemptive right to purchase its pro-rata share, based on the ratio of shares of the
Company's common stock it owns to all the outstanding shares of the Company's common stock, of any investment in the
equity securities or equity-linked securities of the Company. D&D beneficially owns approximately 59.5% of our common stock. As
such, D&D's exercise of its right could serve to dissuade a new strategic investor from proposing an investment in the
Company or significantly decrease the size of a new investor's investment.

 Legal,
Tax and Regulatory Risks

 Taxes
aimed at our products can adversely affect our business or financial performance.

jurisdictions in which our products are sold have either imposed, or are considering imposing, new or increased taxes on the manufacture,
distribution or sale of certain of our products, as a result of ingredients contained in our products. These taxes vary in scope and
form: some apply to all beverages, including non-caloric beverages, while others apply only to beverages with a caloric sweetener (e.g.,
sugar). Similarly, some measures apply a single tax rate per ounce/liter on beverages containing over a certain amount of added sugar
(or other sweetener), some apply a graduated tax rate depending upon the amount of added sugar (or other sweetener) in the beverage and
others apply a flat tax rate on beverages containing any amount of added sugar (or other sweetener). These tax measures, whatever their
scope or form, have in the past and could continue to increase the cost of certain of our products, reduce overall consumption of our
products or lead to negative publicity, resulting in an adverse effect on our business and financial performance.

 Limitations
on the marketing or sale of our products can adversely affect our business and financial performance.

jurisdictions in which our products are sold or may be sold have either imposed, or are considering imposing, limitations on the marketing
or sale of our products as a result of ingredients or substances in our products or product packaging. These limitations require that
we highlight perceived concerns about a product or product packaging, warn consumers to avoid consumption of certain ingredients or substances
present in our products, restrict the age of consumers to whom products are marketed or sold, limit the location in which our products
may be available or discontinue the use of certain ingredients or packaging. Certain jurisdictions have imposed or are considering imposing
color-coded labelling requirements where colors such as red, yellow and green are used to indicate various levels of a particular ingredient,
such as sugar, sodium or saturated fat, in products. The imposition or proposed imposition of additional limitations on the marketing
or sale of our products has in the past reduced and could continue to reduce overall consumption of our products, lead to negative publicity
or leave consumers with the perception that our products do not meet their health and wellness needs, resulting in an adverse effect
on our business and financial performance.

 Laws
and regulations related to the use or disposal of plastics or other packaging materials can adversely affect our business and financial
performance.

 We
rely on diverse packaging solutions to safely deliver products to our customers and consumers. Certain of our products are sold in packaging
designed to be recyclable, commercially compostable, biodegradable or reusable. However, not all packaging is recovered, whether due
to lack of infrastructure, improper disposal or otherwise, and certain of our packaging is not currently recyclable, commercially compostable,
biodegradable or reusable. Packaging waste not properly disposed of that displays one or more of our brands has in the past resulted
in and could continue to result in negative publicity, litigation, government investigations or other action or reduced consumer demand
for our products, adversely affecting our financial performance. Many jurisdictions in which our products are sold have imposed or are
considering imposing laws, regulations or policies intended to encourage the use of sustainable packaging, waste reduction, increased
recycling rates or decreased use of single-use plastics or to restrict the sale of products utilizing certain packaging. These laws,
regulations and policies vary in form and scope and include extended producer responsibility policies, plastic or packaging taxes, minimum
recycled content requirements, restrictions on certain products and materials, restrictions or bans on the use of certain types of packaging,
including single-use plastics and packaging containing PFAS, restrictions on labelling related to recyclability, requirements to charge
deposit fees and requirements to scale reusable or refillable packaging. For example, the European Union and certain states in the United
States, among other jurisdictions, have imposed a minimum recycled content requirement for beverage bottle packaging and similar legislation
is under consideration in other jurisdictions. These laws and regulations have in the past increased and could continue to increase the
cost of our products, impact demand for our products, result in negative publicity and require us and our business partners, including
our independent co-packers, to increase capital expenditures to invest in reducing the amount of virgin plastic or other materials used
in our packaging, to develop alternative packaging or to revise product labelling, all of which can adversely affect our business and
financial performance.

to comply with personal data protection and privacy laws can adversely affect our business.

 We
are subject to a variety of continuously evolving and developing laws and regulations in numerous jurisdictions regarding personal data
protection and privacy laws. These laws and regulations may be interpreted and applied differently from country to country or, within
the United States, from state to state, and can create inconsistent or conflicting requirements. For example. the California Consumer
Privacy Act, which was significantly modified by the California Privacy Rights Act, as well as comprehensive privacy legislation in Virginia,
Colorado, Utah and Connecticut that became effective in 2023, as well as the European Union's General Data Protection Regulation
(GDPR), the U.K. General Data Protection Regulation (which implements the GDPR into U.K. law) and China's Personal Information
Protection Act, impose significant costs and challenges that are likely to continue to increase over time, particularly as additional
jurisdictions continue to adopt similar regulations. Failure to comply with these laws and regulations or to otherwise protect personal
data from unauthorized access, use or other processing, have in the past and could in the future result in litigation, claims, legal
or regulatory proceedings, inquiries or investigations, damage to our reputation, fines or penalties, all of which can adversely affect
our business.

 Our
manufacturing process is not patented.

 None
of the manufacturing processes used in producing our products are subject to a patent or similar intellectual property protection. Our
only protection against a third party using our recipes and processes is confidentiality agreements with the companies that produce our
beverages and with our employees who have knowledge of such processes. If our competitors develop substantially equivalent proprietary
information or otherwise obtain access to our knowledge, we will have greater difficulty in competing with them for business, and our
market share could decline

 If
we are unable to adequately protect our intellectual property rights, or if we are found to infringe on the intellectual property rights
of others, our business can be adversely affected.

 We
possess intellectual property rights that are important to our business, including ingredient formulas, trademarks, copyrights, business
processes and other trade secrets. The laws of various jurisdictions in which we operate have differing levels of protection of intellectual
property. Our competitive position and the value of our products and brands can be reduced and our business adversely affected if we
fail to obtain or adequately protect our intellectual property, including our ingredient formulas, or if there is a change in law that
limits or removes the current legal protections afforded our intellectual property. Also, in the course of developing new products or
improving the quality of existing products, we could in the future infringe or be alleged to infringe, on the intellectual property rights
of others. Such infringement or allegations of infringement could result in expensive litigation and damages, damage to our reputation,
disruption to our operations, injunctions against development, manufacturing, use and/or sale of certain products, inventory write-offs
or other limitations on our ability to introduce new products or improve the quality of existing products, resulting in an adverse effect
on our business.

to comply with laws and regulations applicable to our business can adversely affect our business.

 The
conduct of our business is subject to numerous laws and regulations relating to the production, storage, distribution, sale, display,
advertising, marketing, labelling, content (including whether a product contains genetically engineered ingredients), quality, safety,
transportation, supply chain, traceability, sourcing (including pesticide use), packaging, disposal, recycling and use of our products
or raw materials, employment and occupational health and safety, environmental, social and governance matters and reporting (including
climate change), machine learning and artificial intelligence and data privacy and protection. The imposition of new laws, changes in
laws or regulatory requirements or changing interpretations thereof, changes in the enforcement priorities of regulators, and differing
or competing regulations and standards across the markets where our products or raw materials are made, manufactured, distributed or
sold, have in the past and could continue to result in higher compliance costs, capital expenditures and higher production costs, resulting
in adverse effects on our business. For example, increasing governmental and societal attention to environmental, social and governance
matters has resulted and could continue to result in new laws or regulatory requirements, including expanded disclosure requirements
that are expected to continue to expand the nature, scope and complexity of matters on which we are required to report. In addition,
the entry into new markets or categories has resulted in and could continue to result in our business being subject to additional regulations
resulting in higher compliance costs. If one jurisdiction imposes or proposes to impose new laws or regulations that impact the manufacture,
distribution or sale of our products, other jurisdictions may follow. Failure to comply with such laws or regulations (or allegations
thereof) can subject us to criminal or civil investigations or enforcement actions, including voluntary and involuntary document requests,
fines, injunctions, product recalls, penalties, disgorgement of profits or activity restrictions, all of which can adversely affect our
business.

 Potential
liabilities and costs from litigation, claims, legal or regulatory proceedings, inquiries or investigations inherent in our business
can have an adverse impact on our business.

 We
have been party to a variety of litigation, claims, legal or regulatory proceedings, inquiries and investigations, including but not
limited to disputes with our contractors, matters related to our ingredients, personal injury and employment, matters. These matters
are uncertain and there is no guarantee that we will be successful in defending ourselves or that our assessment of the materiality of
these matters and the likely outcome or potential losses and established reserves will be consistent with the ultimate outcome of such
matters. Responding to these matters, even those that are ultimately non-meritorious, requires us to incur significant expense and devote
significant resources, and may generate adverse publicity that damages our reputation or brand image. Any of the foregoing can adversely
affect our business.

 Regulations
concerning our alcohol beverages may adversely affect our business, financial condition or results of operations.

 Governmental
agencies heavily regulate the alcohol beverage industry. In particular, they monitor and regulate licensing, warehousing, trade and pricing
practices, permitted and required labelling, including warning labels, signage, advertising, relations with wholesalers and retailers,
and, in control states, product listings. There may also be a focus on companies with established non-alcohol beverages lines of business
that have expanded into the alcohol beverage industry, since marketing practices that are acceptable in the non-alcohol space may have
regulatory challenges in the alcohol space. In addition, other countries in which we may sell alcohol beverages could impose duties,
excise taxes and/or other related taxes. If, in the future, we are unable to comply with certain regulations, sales of our products could
decrease significantly. Additionally, if such agencies or jurisdictions, foreign or domestic, choose to implement new or revised laws,
regulations, fees, taxes, or other such requirements, our business could be adversely affected. If such governmental bodies require increased
additional product labelling, warning requirements, or limitations on the marketing or sale of our alcohol products due to their contents
or allegations concerning their potential to cause adverse health effects, our sales of alcohol beverages may be adversely affected.

 Environmental
Risk Factors

 Significant
changes to or failure to comply with various environmental laws may our co-packers to liability or cause them to close, relocate or operate
at reduced production levels, which could adversely affect our business, financial condition and results of operations.

 Our
co-packers are subject to a wide and increasingly broad array of federal, state, regional, local, and international environmental laws,
including statutes and regulations, which aim to regulate emissions and impacts to air, land, and water. Their operations may result
in odors, noise, or other pollutants being emitted. Failure to comply with any environmental laws or any future changes to them could
result in alleged harm to employees or others near facilities. Significant costs to satisfy environmental compliance, remediation or
compensatory requirements, or the imposition of penalties or restrictions on operations by governmental agencies or courts may adversely
affect our business, financial condition, and results of operations. Increasing concern over sustainability matters, including climate
change, will likely result in new or revised laws and regulations aimed at reducing or mitigating the potential effects of greenhouse
gases, restricting or increasing the costs of commercial water use due to local water scarcity concerns, or increasing mandatory reporting
of certain sustainability metrics, such as recycling.

 Water
scarcity and poor quality could negatively impact our costs and capacity.

 Water
is a main ingredient in substantially all of our products, it is vital to the production of the agricultural ingredients on which our business
relies and is needed in our manufacturing process. Lack of available water of acceptable quality, actions by governmental and non-governmental
organizations, investors, customers and consumers on water scarcity and increasing pressure to conserve and replenish water in areas
of scarcity and stress, including due to the effects of climate change, can lead to: supply chain disruption; adverse effects on our
operations or the operations of our business partners; higher compliance costs; increased capital expenditures; higher production costs,
including less favorable pricing for water; perception of our failure to act responsibly with respect to water use or to effectively
respond to legal or regulatory requirements concerning water scarcity; or damage to our reputation, any of which can adversely affect
our business.

 Climate
change and legal or regulatory responses thereto may have a long-term adverse impact on our business and results of operations.

 There
is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other
greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe and an increase in the frequency
and severity of natural disasters. Decreased agricultural productivity in certain regions of the world as a result of changing weather
patterns may limit the availability or increase the cost of key agricultural commodities, which are important sources of ingredients
for our products, and could impact the food security of communities around the world. Climate change may also exacerbate water scarcity
and cause a further deterioration of water quality in affected regions, which could limit water availability for our independent co-packers.
Increased frequency or duration of extreme weather conditions could also impair production capabilities, disrupt our supply chain or
impact demand for our products. Increasing concern over climate change also may result in additional legal or regulatory requirements
designed to reduce or mitigate the effects of carbon dioxide and other greenhouse gas emissions on the environment. Increased energy
or compliance costs and expenses due to increased legal or regulatory requirements may cause disruptions in, or an increase in the costs
associated with, the manufacturing and distribution of our beverage products. There is an increased focus in many jurisdictions in which
our products are manufactured, distributed or sold regarding environmental policies relating to climate change, biodiversity loss, regulating
greenhouse gas emissions and energy policies and sustainability. This increased focus may result in new or increased legal and regulatory
requirements, such as potential carbon pricing programs or revised product labelling requirements or other regulatory measures, which
could result in significant increased costs. The effects of climate change and legal or regulatory initiatives to address climate change
could have a long-term adverse impact on our business and results of operations.

 Item
1B. Unresolved Staff Comments

 Not
applicable.

 Item
1C. Cybersecurity

 Risk
Management

 We
work with a third-party vendor, which has extensive cybersecurity expertise to help protect and defend against cybersecurity threats.
 This vendor has advised us on material cybersecurity-related risks and is helping us establish controls designed to protect, detect,
respond to, and recover from cybersecurity incidents. These controls include firewall protection, antivirus software protection, two-factor
authentication enforced on all endpoints including Windows PCs and laptops, and intrusion prevention software designed to automatically
block any unauthorized access attempts on our servers. Our cybersecurity controls are embedded within our overall risk management processes
and technology, including a 24/7 threat monitoring system provided by the vendor.

 Governance

 The
 audit committee of our board of directors is responsible for oversight of the Company's cybersecurity and other information technology
risks, controls and procedures, including the Company's plans to mitigate cybersecurity risks and to respond to data breaches.
The board receives and provides feedback on regular updates from management, including from the Company's Chief Financial Officer,
regarding the status of projects to strengthen internal cybersecurity, results from third-party assessments, and also discusses recent
incidents at other companies and the emerging threat landscape. Our Chief Financial Officer is informed about and monitors the prevention
and detection of cybersecurity incidents, with the support of our third-party cybersecurity vendor.

 As
 of the date of this Report, we are not
 aware
 of any cybersecurity threats that have materially affected or are reasonably likely to materially
 affect us, including our business strategy, results of operations, or financial condition.
 However, the sophistication of cyber threats continues to increase, and the preventative
 actions we take to reduce the risk of cyber incidents and protect our systems and information
 may be insufficient. Accordingly, no matter how well our controls are designed or implemented,
 we will not be able to anticipate all security breaches, and we may not be able to implement
 effective preventive measures against such security breaches in a timely manner.

 Item
2. Properties

 The
Company leases 5,154 square feet of office space in Norwalk, Connecticut, which serves as our principal executive office. The lease
commenced December 1, 2024, and continues in effect for a period of 11 years.

 Item
3. Legal Proceedings

 We are a party to ordinary, routine litigation incidental
to our business, including routine litigations matters tendered to our insurance carriers. Our management evaluates our exposure to these
claims and proceedings individually and in the aggregate and provides for potential losses on such litigation if the amount of the loss
is estimable and the loss is probable.

 We are not party to any material pending legal proceedings
(including environmental proceedings), other than ordinary, routine litigation incidental to the business, at the current time. Although
the results of such litigation matters and claims cannot be predicted with certainty, we believe that the final outcome of such ordinary,
routine litigation will not have a material adverse impact on our financial position, liquidity, or results of operations.

 Item
4. Mine Safety Disclosures

 Not
applicable.

 PART
II

 Item
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

 Our
common stock was delisted from The Nasdaq Capital Market on February 16, 2023. Concurrently, our common stock became quoted on the OTCQX
Best Market. Our symbol remains "REED". The OTCQX Best Market is an over-the-counter market. Over-the-counter market quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

 On
December 21, 2021, our shareholders approved an increase in the number of authorized shares of common stock from 120 million to 180 million.
On January 24, 2023, our shareholders approved a 1:50 reverse stock split of our common stock. On January 27, 2023, we
effected the 1:50 reverse stock split of our common stock.

 On December 30, 2024, our majority stockholder approved the reduction in the number of authorized shares of common stock from 180 million
to 60 million. The amendment was filed with the Delaware Secretary of State on February 5, 2025.

 As
of March 17, 2025 there were approximately 170 holders of record of our common This number does not include "street name"
or beneficial holders, whose shares are held of record by banks, brokers, financial institutions and other nominees.

 We
currently have no expectation to pay cash dividends to holders of our common stock in the foreseeable future.

 Unregistered
Sales of Equity Securities

 None that have not previously been included on a Current Report on Form 8-K or Quarterly Report on Form10-Q.

Compensation Plans

 Pursuant
to the SEC's Regulation S-K Compliance and Disclosure Interpretation 106.01, the information required by this Item pursuant to
Item 201(d) of Regulation S-K relating to securities authorized for issuance under the Corporation's equity compensation plans
is located in Item 12 of Part III of this Annual Report and is incorporated herein by reference.

 Item
6. [Reserved]

 Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial
statements and the related notes appearing elsewhere in this report.

 In
addition to our GAAP results, the following discussion includes Modified EBITDA as a supplemental measure of our performance. We present
Modified EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent
basis by excluding items that we do not believe are indicative of our core operating performance. 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 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, tax expense, depreciation
and amortization, stock-based compensation, changes in fair value of warrant expense, change in fair value of SAFE agreements, legal
and insurance settlements, non-recurring professional fees, inventory write-offs associated with exited categories and major packaging
and formula changes, one-time changes in policy, impact of changes to accounting methodology and one-time restructuring-related costs
including employee severance and asset impairment.

 The
following discussion also includes the use of gross billing, a key performance indicator and metric. Gross billing represents invoiced
amounts to distributors and retailers, excluding sales adjustments. Gross billing may include deductions from MSRP or "list price",
where applicable, and excludes promotional costs of generating such sales. Management utilizes gross billing to monitor operating performance
of products and salespersons, which performance can be masked by the effect of promotional or other allowances. Management believes that
the presentation of gross billing provides a useful measure of Reed's operating performance.

 Amounts
presented in the discussion below are in thousands, except share and per share amounts.

 Results
of Operations

 Overview

the year ended December 31, 2024, the Company continued to strengthen its supply chain, implement gross margin enhancement initiatives,
drive efficiencies in transportation and warehouse costs and reduce operating expenses. In addition, it continues to build its innovation
pipeline with sustained growth in Reed's Real Ginger Ale, Virgil's Zero Sugar handcrafted sodas, Reed's Classic and
Stormy Mule, and Reed's Hard Ginger Ale.

 The
Company remains focused on driving sales growth, improving gross margin, and reducing freight costs. The sales growth focus is on channel
expansion, increase in store placements, new product introduction and improved sales execution. The margin enhancement initiative is
driven by packaging savings, co-packer upgrades, and better leveraged purchasing and improved efficiency. Underpinning these initiatives
is a focus on strategically reducing operating costs particularly delivery and handling expenses. In addition, the Company continues
to augment its co-packer network to drive further efficiencies and build proper levels of inventory at the appropriate location to maximize
delivery metrics.

 Recent
Trends – Market Conditions

 Although
the U.S. economy continued to grow throughout 2024 and 2023, inflation, actions by the Federal Reserve to address inflation,
fluctuations in energy prices, and the potential impacts of tariffs and geopolitical events create uncertainty about the future
economic environment which will continue to evolve and may impact our business in future periods. We have experienced supply chain
challenges, including increased lead times, as well as inflation of raw materials, logistics and labor costs due to availability
constraints and high demand. Although we regularly monitor companies in our supply chain, and use alternative suppliers when
necessary and available, supply chain constraints could cause a disruption in our ability to obtain raw materials required to
manufacture our products and adversely affect our operations.

the year ended December 31, 2024, the average cost of shipping and handling was $2.75 per case, as compared to $3.07 per case for the
year ended December 31, 2023. Although the Company has experienced decreases in freight costs, in the Company's
opinion there remains a volatile environment and the Company will continue to monitor pricing and availability in transportation. Mitigation
plans have been implemented to manage this risk. The Company has been negatively impacted by supply chain challenges affecting our ability
to benefit from strong demand for, and increased sales of our product. The disruption caused by labor shortages, significant raw material
cost inflation, logistics issues and increased freight costs, and ongoing port congestion, resulted in suppressed margins. The Company
has experienced moderation in inflation and anticipates this continuing throughout 2025.

 Through
December 31, 2024, we continued to generate cash flows to meet our short-term liquidity needs, and we expected to maintain access to
the capital markets.

 Results
of Operations – Year Ended December 31, 2024

 The
following table sets forth key statistics for the years ended December 31, 2024, and 2023, in thousands:

 Year
 Ended December 31,

 Pct.

 2024

 2023

 Change

 Gross billing (A)

 $
 44,316

 $
 50,689

 -13
 %

 Less: Promotional and
 other allowances (B)

 6,362

 5,978

 %

 Net sales

 $
 37,954

 $
 44,711

 -15
 %

 Cost of goods sold

 26,578

 31,884

 -17
 %

 % of Gross billing

 %

 %

 %

 %

 Product quality hold
 write-down

 -

 1,848

 -100
 %

 % of Gross billing

 %

 %

 %

 %

 Provision for product hold

 -

 1,267

 -100
 %

 % of Gross billing

 %

 %

 %
 of Net sales

 %

 %

 Gross
 profit

 $
 11,376

 $
 9,712

 %

 %

 %

 Expenses

 Delivery and handling

 $
 5,863

 $
 7,561

 -22
 %

 %

 %

 Dollar per case ($)

 2.75

 3.07

 Selling and marketing

 4,405

 4,865

 -9
 %

 %

 %

 General and administrative

 9,109

 6,118

 %

 %

 %

 Provision for receivable
 with former related party

 -80
 %

 %
 of Net sales

 %

 %

 Total Operating expenses

 19,492

 19,129

 %

 Loss from operations

 $
 (8,116
)

 $
 (9,417
)

 -14
 %

 Interest expense and other
 expense

 $
 (5,036
)

 $
 (6,106
)

 -18
 %

 Net
 loss

 $
 (13,152
)

 $
 (15,523
)

 -15
 %

 Loss
 per share – basic and diluted

 $
 (1.64
)

 $
 (4.39
)

 -63
 %

 Weighted average shares outstanding – basic & diluted

 8,041,496

 3,537,882

 %

 (A)
We define gross billing as the total sales for the Company unadjusted for costs related to generating those sales. Management utilizes
gross billing as an indicator of and to monitor operating performance of products and salespersons before the effect of any promotional
or other allowances, which are determined in accordance with GAAP, and can mask certain performance issues. We believe that the presentation
of gross billing provides a useful measure of our operating performance. Additionally, gross billing may not be comparable to similarly
titled measures used by other companies, as gross billing has been defined by our internal reporting practices.

 (B)
We define promotional and other allowances as costs deducted from gross billing which are associated with generating those sales. Management
utilizes promotional and other allowances as an indicator of and to monitor operating performance of products, salespersons, and customer
agreements. We believe that the presentation of promotional and other allowances provides a useful measure of our operating performance.
The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and
the spending levels incurred or correlated with such sales. The expenditures described in this line item are determined in accordance
with GAAP and meet GAAP requirements, the disclosure thereof does not conform to GAAP presentation requirements. Additionally, our definition
of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances
primarily include consideration given to the Company's distributors or retail customers including, but not limited to the following:
(i) reimbursements given to the Company's distributors for agreed portions of their promotional spend with retailers, including
slotting, shelf space allowances and other fees for both new and existing products; (ii) the Company's agreed share of fees given
to distributors and/or directly to retailers for in-store marketing and promotional activities; (iii) the Company's agreed share
of slotting, shelf space allowances and other fees given directly to retailers; (iv) incentives given to the Company's distributors
and/or retailers for achieving or exceeding certain predetermined sales goals; and (v) discounted or free products. Promotional and other
allowances constitute a material portion of our marketing activities. The Company's promotional allowance programs with its numerous
distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally
provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year.

 Sales,
Cost of Sales, and Gross Margins

 The
following chart sets forth key statistics for the transition of the Company's top line activity through the years ended December
31, 2024.

 Total

 Total

 Per Case

 Per Case

 2024

 2023

 vs
 PY

 2024

 2023

 vs
 PY

 Cases:

 1,373

 1,530

 -10
 %

 Virgil's

 -13
 %

 Total Core

 2,133

 2,400

 -11
 %

 Non-Core

 -

 -100
 %

 Total

 2,133

 2,460

 -13
 %

 Gross Billing:

 Core

 $
 44,161

 $
 48,778

 -9
 %

 $
 20.70

 $
 20.32

 %

 Non-Core

 1,911

 -92
 %

 -

 31.85

 -100
 %

 Total

 $
 44,316

 $
 50,689

 -13
 %

 20.78

 20.60

 %

 Discounts: Total

 $
 (6,362
)

 $
 (5,978
)

 %

 $
 (2.98
)

 $
 (2.43
)

 %

 COGS:

 Core

 $
 (26,578
)

 $
 (30,777
)

 -14
 %

 $
 (12.46
)

 $
 (12.82
)

 -3
 %

 Non-Core

 -

 (4,222
)

 -100
 %

 -

 $
 (70.46
)

 -100
 %

 Total

 $
 (26,578
)

 $
 (34,999
)

 -24
 %

 $
 (12.46
)

 $
 (14.22
)

 -12
 %

 Gross Margin:

 $
 11,376

 $
 9,712

 %

 $
 5.33

 $
 3.95

 %

 as % Net Sales

 %

 %

 Sales,
Cost of Sales, and Gross Margins

 As
part of the Company's ongoing initiative to simplify and streamline operations the Company has identified core products on which
to place its strategic focus. These core products consist of Reed's and Virgil's branded beverages. Non-core products consist
primarily of Wellness Shots, candy and slower selling discontinued Reed's and Virgil's SKUs.

 Core
beverage volume for the year ended December 31, 2024, represents 100% of all beverage volume.

 Core
brand gross billing decreased by 9% to $44,161 compared to $48,778 during the same period last year, driven by Reed's volume decline
of 10% and Virgil's volume decline of 13%. The result is a decrease in total gross billing of 13%, to $44,316 during the year ended
December 31, 2024, from $50,689 in the same period last year. Price on our core brands increased 2% to $20.70 per case. The lower gross
billings was a result of volume declines that have impacted the carbonated soft drink segment as a result of price increases coupled
with the Company's inability to produce sufficient levels of inventory to meet current demand as a result of tighter credit terms
from suppliers.

 Discounts
as a percentage of gross sales were 14% compared to 12% in the same period last year. As a result, net sales revenue decreased 15% during
the year ended December 31, 2024, to $37,954, compared to $44,711 in the same period last year driven by lower sales and elevated trade
spend.

 Cost
of Goods Sold

 Cost
of goods sold decreased $5,306 during the year ended December 31, 2024, as compared to the same period last year. As a percentage of
net sales, cost of goods sold for the year ended December 31, 2024, was 70% as compared to 71% for the same period last year. The decrease
was primarily driven by lower supply chain and input costs.

 In
December 2023, the Company wrote off $1,848 of inventory comprised of $1,452 of packaging and ingredients related to major changes in
packaging and formulations, and $396 of candy as a result of exiting this line of business. These write-offs represented 4% of net sales.

2023 the Company discovered a closure failure in our seasonal swing-lid products which resulted in a product quality hold
write-down. The Company recorded expense of $1,267 related to costs associated with the product quality hold write-down for the year ended December 31, 2023. An
insurance claim is pending.

 The
total cost of goods per case decreased to $12.46 per case for the year ended December 31, 2024, from $14.22 per case for the same period
last year. The cost of goods sold per case on core brands was $12.46 during the year ended December 31, 2024, compared to $12.82 for
the same period last year. Excluding the write-offs and provision for product quality hold write-down, total cost of goods sold per case
during the year ended December 31, 2023, would have been $12.96.

 Gross
Margin

 Gross
margin increased to 30% for the year ended December 31, 2024, compared to 22% for the same period last year.

 Operating
Expenses

 Delivery
and Handling Expenses

 Delivery
and handling expenses consist of delivery costs to customers and warehousing costs incurred for handling our finished goods after production.
Delivery and handling expenses decreased by $1,698 for the year ended December 31, 2024, to $5,863 from $7,561 in the same period last
year, driven by our efforts to mitigate inflationary costs. Delivery costs for the year ended December 31, 2024, were 15% of net sales
and $2.75 per case, compared to 17% of net sales and $3.07 per case during the same period last year.

 Selling
and Marketing Expenses

 Marketing
expenses consist of direct marketing, marketing labor, and marketing support costs. Selling expenses consist of all other
selling-related expenses including personnel and contractor support. Total selling and marketing expenses were $4,405 during the
year ended December 31, 2024, compared to $4,865 during the same period last year. As a percentage of net sales, selling and
marketing expenses were 12% of net sales during the year ended December 31, 2024, as compared to 11% of net sales during the same
period last year. The decrease was driven by lower employee related costs, syndicated data fees, customer fees, and product sampling
expenses partially offset by higher broker fees and e-commerce delivery costs.

 General
and Administrative Expenses

 General
and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional
fees. General and administrative expenses increased in the year ended December 31, 2024, to $9,109 from $6,118, an increase of $2,991
over the same period last year. The increase was driven by contract proceedings, impairment
of assets, professional fees, and quality assurance costs partially offset by lower bad debt and franchise tax expense.

 Loss
from Operations

 The
loss from operations was $8,116 for the year ended December 31, 2024, as compared to a loss of $9,417 in the same period last year driven
by increased gross profit and decreased operating expenses discussed above.

 Interest
and Other Expense

 Interest
and other expense was $5,036 for the year ended December 31, 2024, consisted of $5,481 of interest expense and $445 of other income
related to the reversal of accrued expense from prior years. During the same period last year, interest and other expense consisted
of $6,106 of interest expense.

 Modified
EBITDA

 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, tax expense, depreciation and amortization, stock-based compensation, changes in fair value of warrant expense,
change in fair value of SAFE agreements, legal and insurance settlements, non-recurring professional fees, inventory write-offs associated
with exited categories and major packaging and formula changes, one-time changes in policy, impact of changes to accounting methodology
and one-time restructuring-related costs including employee severance and asset impairment.

 Management
considers our core operating performance to be that which our managers can affect in any particular period through their management of
the resources that affect our underlying revenue and profit generating operations during that period. Non-GAAP adjustments to our results
prepared in accordance with GAAP are itemized below. 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.

 Set
forth below is a reconciliation of net loss to Modified EBITDA for the year ended December 31, 2024, and 2023 (in thousands):

 Year
 Ended December 31,

 2024

 2023

 Net loss

 $
 (13,152
)

 $
 (15,523
)

 Modified EBITDA adjustments:

 Depreciation and amortization

 Interest expense

 5,481

 6,106

 Tax expense

 Stock option and other noncash compensation

 Provision for receivable with former related
 party

 Product quality hold write-down

 1,267

 Inventory write-offs associated with exited
 categories and major packaging and formula changes

 -

 1,848

 Impairment of assets

 -

 One-time change in policy for discounts

 -

 Professional fees

 -

 Contract Proceedings

 1,593

 Severance costs

 Total
 EBITDA adjustments

 $
 9,082

 $
 11,855

 Modified EBITDA

 $
 (4,070
)

 $
 (3,668
)

 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
 EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

 Modified
 EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

 Modified
 EBITDA does not reflect future interest expense, or the cash requirements necessary to service interest or principal payments, on
 our debts; and

 Although
 depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in
 the future, and Modified EBITDA does not reflect any cash requirements for such replacements.

 Liquidity

 For
the year ended December 31, 2024, the Company recorded a net loss of $13,152 and used cash in operations of $6,124. During 2024, the Company took significant steps to convert high interest debt to equity, raise additional equity,
and refinance its credit facility. In accordance with
Accounting Standards Codification ("ASC") 205-40, Going Concern, the Company's management has evaluated whether
there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue
as a going concern within one year after the date the accompanying financial statements were issued. As of the issuance date of these
financial statements, management expects that the Company's existing cash of $10,391 will be sufficient to fund the Company's
current operating plan for at least twelve months from the date of issuance of these financial statements. The financial statements do
not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 Management's
assessment whether there is sufficient cash on hand, together with expected capital raises, to assure operations for a period of at least
twelve months from the date these financial statements are issued, is based on conditions that are known and reasonably knowable to management,
considering various scenarios, projections, and estimates and certain key assumptions. These assumptions include, among other factors,
management's ability to raise additional capital, and the expected timing and nature of the Company's forecasted cash expenditures.

 Historically,
the Company has financed its operations through public and private sales of common stock, convertible debt instruments, credit lines
from financial institutions, and cash generated from operations. As we seek additional sources of financing, there can be no assurance
that such financing would be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and
equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment
with respect to us and our industry.

 Critical
Accounting Policies and Estimates

 The
preparation of the Company's financial statements in conformity with generally accepted accounting principles in the United States
("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of expenses during the reporting period. Some of those judgments can
be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or
conditions. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in
relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates
the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances,
historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates. Significant estimates include those related to assumptions used in estimates for reserves
of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long-term
tangible and intangible assets, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing
stock instruments issued for services. There were no changes to our critical accounting policies described in the financial
statements included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2024, that impacted our condensed consolidated
financial statements and related notes included herein.

 Recent
Accounting Pronouncements

 See
Note 2 of the financial statements for a discussion of recent accounting pronouncements.

 Item
7A. Quantitative and Qualitative Disclosures about Market Risk

 As
a smaller reporting company, Reed's is not required to provide the information required by this Item 7A.

 Item
8. Financial Statements and Supplementary Data

 Report
 of Independent Registered Public Accounting Firm (PCAOB Firm ID: 572)

 Financial
 Statements:

 Balance
 Sheets as of December 31, 2024 and December 31, 2023

 Statements
 of Operations for the years ended December 31, 2024 and 2023

 Statements
 of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 2024 and 2023

 Statements
 of Cash Flows for the years ended December 31, 2024 and 2023

 Notes
 to Financial Statements for the years ended December 31, 2024 and 2023

 F- 1

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Stockholders and Board of Directors of Reed's, Inc.

 Opinion
on the Financial Statements

 We have audited the accompanying balance sheets of Reed's, Inc. (the
"Company") as of December 31, 2024 and 2023, the related statements of operations, changes in stockholders' equity (deficit),
and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In
our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

 Basis
for Opinion

 These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control
over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical
Audit Matters

 The critical audit matters communicated below are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.

Valuation

 As of December 31, 2024, the Company's inventory totaled $8.1 million.
As explained in Note 2 to the financial statements, inventories are stated at the lower of cost or net realizable value, with cost determined
on a first-in, first-out ("FIFO") basis. The Company assesses inventory at each reporting date in order to assert that it
is recorded at net realizable value. In determining net realizable value, management considers historical usage, forecasted demand in
relation to inventory on hand, market conditions, and other factors.

 F- 2

 We
identified the evaluation of slow-moving and obsolete inventories at net realizable value as a critical audit matter because a high degree
of auditor judgment and effort was required to evaluate the Company's ability to sell certain products.

 The
primary procedures we performed to address this critical audit matter included:

 We
 obtained management's analysis for estimated excess or obsolete inventories and evaluated the appropriateness of management's
 approach.

 We
 developed an independent expectation of the net realizable value of inventory using historic inventory activity and compared our
 independent expectation to the amount recorded in the financial statements.

 Evaluation of the Company's
Liquidity

 As discussed in Note 1 to the financial statements, the Company recorded
a net loss of $13.2 and used cash in operations of $6.1 million during the year ended December 31, 2024. During 2024, management took
steps to convert high interest bearing debt to equity, and to raise additional equity. Management believes that the Company's ongoing
business, existing cash, and credit facilities are sufficient to fund operations for twelve months from the date of issuance of these
financial statements.

 We identified the evaluation of Management's
assessment of the Company's ability fund its operations over the next twelve months as a critical audit matter due to the high degree
of subjective auditor judgment required to evaluate the Company's forecasted cash flows used in its liquidity analysis due to uncertainty
in certain assumptions, specifically forecasted sales, gross profit margins, and feasibility of the Company's expense management
activities.

 The primary procedures we performed to address this
critical audit matter included:

 We
 obtained management's cash flow forecast and evaluated the reasonableness of the cash
 flow forecast by comparing it to historical operating results, considering management's
 ability to accurately forecast and perform sensitivity analysis on revenue, cash expenditures,
 and commitments.

 We
 considered the effects of the Company's restructured debt and expected projected interest
 and finance costs

 We
 performed sensitivity analyses on the forecasted revenue and operating margins used in the
 Company's cash flow forecast to evaluate the impact on the conclusions reached by management.

 We
 considered the Company's historical ability to raise financing and re-finance its debt,
 if necessary.

 We
 assessed the appropriateness and sufficiency of the Company's liquidity disclosures
 and compared to other audit evidence obtained to determine whether such information is consistent
 with the Company's disclosures.

 Liability Claims

 As described in Notes 15 and 16 of the financial statements,
the Company is subject to periodic lawsuits, claims, vendor disputes and other matters (the "Claims"). The Company accrues
an estimated reserve related to the resolution cost of these matters for which management believes a loss is probable of occurring, and
the amount of the loss is reasonably estimable. Due to the uncertainty of potential costs to be incurred related to the Claims, and the
uncertainty of the ultimate outcome of each of the individual Claims, management applies significant judgments and estimates in determining
the probability that a loss has been incurred and the amount to accrue for such loss.

 We identified the accrual and disclosure of the Claims
as a critical audit matter due to the significant judgments made by management when assessing the probability of a loss as well as the
ultimate resolution costs of the Claims. Auditing management's estimates and assumptions required a high degree of auditor judgment
and increased audit effort due to the impact these assumptions have on the accrued reserves and disclosures.

 The primary procedures we performed to address this critical audit matter
included:

 We
obtained management's evaluation of the Claims for accrual and disclosure and management's evaluation of the probability
that a loss has been incurred, and management's estimate of the amount of the loss.

 We
 tested the accuracy and completeness of the initial agreements that served as the basis for management's estimates of the
 probability that a loss has been incurred, the amount of the loss, and any settlement activity.

 We
evaluated the assumptions used by management to develop the estimate of the probability a loss has been incurred.

 We
 performed confirmation procedures with the Company's external legal counsel to corroborate
 management's assertions regarding claim information, claim status, the probability
 the Company has incurred a loss, and the estimated amount of any potential loss.

 We
have served as the Company's auditor since 2004.

 /s/ Weinberg & Company,
P.A.

& Company, P.A.

 Los
Angeles, California

 March

 F- 3

INC,

 BALANCE
SHEETS

 (Amounts
in thousands, except share amounts)

 31,
 2024

 31,
 2023

 ASSETS

 Current assets:

 Cash

 $
 10,391

 $

 Accounts receivable, net of allowance of $ 859
 and $ 860, respectively

 3,979

 3,571

 Inventory, net

 8,114

 11,300

 Receivable from former related party

 Prepaid expenses and other
 current assets

 2,028

 Total current assets

 23,311

 17,761

 Property and equipment, net of accumulated
 depreciation of $ 636 and $ 1,068, respectively

 1,185

 Intangible assets

 Total
 assets

 $
 25,140

 $
 18,883

 LIABILITIES AND STOCKHOLDERS'
 EQUITY (DEFICIT)

 Current liabilities:

 Accounts payable

 $
 6,956

 $
 9,133

 Accrued expenses

 1,096

 Revolving line of credit, net of capitalized
 financing costs of $ 201

 -

 9,758

 Senior secured loan, net of capitalized financing costs of $ 329

 9,571

 -

 Payable to former related party

 Current portion of convertible notes payable,
 net of debt discount of $ 424

 -

 6,737

 Current portion of lease
 liabilities

 -

 Total current liabilities

 17,655

 27,190

 Convertible note payable, net of debt discount
 of $ 148 less current portion

 -

 10,874

 Lease liabilities, less
 current portion

 -

 Total
 liabilities

 18,492

 38,064

 Commitments and Contingencies

 Stockholders' equity
 (deficit):

 Series A Convertible Preferred stock, $ 10 par
 value, 500,000 shares authorized, 9,411 shares issued and outstanding

 Common stock, $.0001 par value, 180,000,000
 shares authorized; 45,371,247 and 4,187,291 shares issued and outstanding, respectively

 -

 Additional paid in capital

 158,435

 119,452

 Accumulated deficit

 ( 151,884
)

 ( 138,727
)

 Total
 stockholders' equity (deficit)

 6,648

 ( 19,181
)

 Total
 liabilities and stockholders' equity

 $
 25,140

 $
 18,883

 The
accompanying notes are an integral part of these financial statements.

 F- 4

INC.

 STATEMENTS
OF OPERATIONS

 For
the Years Ended December 31, 2024 and 2023

 (Amounts
in thousands, except share and per share amounts)

 2024

 2023

 Year
 Ended December 31,

 2024

 2023

 Net Sales

 $
 37,954

 $
 44,711

 Cost of goods sold

 26,578

 31,884

 Inventory write-offs associated with exited
 categories and major packaging and formula changes

 -

 1,848

 Product quality hold write-down

 -

 1,267

 Gross
 profit

 11,376

 9,712

 Operating expenses:

 Delivery and handling expense

 5,863

 7,561

 Selling and marketing expense

 4,405

 4,865

 General and administrative expense

 9,109

 6,118

 Provision for receivable
 with former related party

 Total
 operating expenses

 19,492

 19,129

 Loss from operations

 ( 8,116
)

 ( 9,417
)

 Other Income

 -

 Interest expense, net

 ( 5,481
)

 ( 6,106
)

 Net loss

)

)

 Dividends
 on Series A Convertible Preferred Stock

 ( 5
)

 ( 5
)

 Net
 loss attributable to common stockholders

 $
 ( 13,157
)

 $
 ( 15,528
)

 Loss
 per share – basic and diluted

 $
 ( 1.64
)

 $
 ( 4.39
)

 Weighted average number of shares outstanding – basic and diluted

 8,041,496

 3,537,882

 The
accompanying notes are an integral part of these financial statements.

 F- 5

INC.

 STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

 For
the Years Ended December 31, 2024 and 2023

 (Amounts
in thousands except share amounts)

 Amount

 Amount

 Capital

 Deficit

 (Deficit)

 Common
 Stock

 Preferred
 Stock

 Additional
 Paid In

 Accumulated

 Total
Stockholders'

 Amount

 Amount

 Capital

 Deficit

 (Deficit)

 Balance, December 31, 2022

 2,519,485

 $
 -

 9,411

 $

 $
 114,635

 $
 ( 123,199
)

 $
 ( 8,470
)

 Fair value of vested options

 -

 -

 -

 -

 -

 Fair value of vested restricted shares granted
 to officers

 -

 -

 -

 -

 Repurchase of common stock

 ( 274
)

 -

 -

 -

 ( 1
)

 ( 1
)

 Common shares issued for financing costs

 82,438

 -

 -

 -

 Dividends on Series A Convertible Preferred
 Stock
Preferred Stock

 -

 -

 -

 -

 -

 ( 5
)

 ( 5
)

 Common shares issued as compensation

 18,160

 -

 -

 Common shares issued for cash, net of offering
 costs

 1,566,732

 -

 -

 4,016

 -

 4,016

 Net Loss

 -

 -

 -

 -

 -

)

)

 Balance, December 31, 2023

 4,187,291

 9,411

 119,452

 ( 138,727
)

 ( 19,181
)

 Balance

 4,187,291

 9,411

 119,452

 ( 138,727
)

 ( 19,181
)

 Fair value of vested options

 -

 -

 -

 -

 -

 Dividends on Series A Convertible Preferred
 Stock
Preferred Stock

 -

 -

 -

 -

 -

 ( 5
)

 ( 5
)

 Issuance of shares for conversion of convertible
 notes payable to related party

 22,478,074

 -

 -

 20,230

 -

 20,232

 Capital contribution upon conversion of notes
 payable

 -

 -

 -

 2,248

 -

 2,248

 Common shares issued for cash

 15,974,677

 -

 -

 11,881

 -

 11,882

 Common shares issued upon conversion of SAFE
 agreement with related entities

 2,731,205

 4,096

 4,096

 Net Loss

 -

 -

 -

 -

 -

)

)

 Balance, December 31,
 2024

 45,371,247

 $

 9,411

 $

 $
 158,435

 $
 ( 151,884
)

 $
 6,648

 Balance

 45,371,247

 9,411

 $

 $
 158,435

 $
 ( 151,884
)

 $
 6,648

 The
accompanying notes are an integral part of these financial statements.

 F- 6

INC.

 STATEMENTS
OF CASH FLOWS

 For
the Years Ended December 31, 2024 and 2023

 (Amounts
in thousands)

 Cash flows from operating
 activities:

 Net loss

 $
)

 $
)

 Adjustments to reconcile
 net loss to net cash used in operating activities:

 Depreciation

 Loss on disposal of property
 & equipment

 -

 Amortization of debt discount

 1,057

 1,137

 Fair value of vested options

 Fair value of vested restricted
 shares granted to directors and officers for services

 -

 Common shares issued for
 compensation

 -

 Product quality hold write-down

 -

 1,267

 Allowance for estimated
 credit losses

 -

 Provision for receivable
 with former related party

 Inventory write down

 Accrued interest on convertible
 note

 3,409

 2,831

 Lease liability

 ( 205
)

 ( 187
)

 Changes in operating assets
 and liabilities:

 Accounts receivable

 ( 408
)

 2,909

 2,653

 Prepaid expenses and other
 assets

 Decrease in right of use
 assets

 Accounts payable

 ( 1,393
)

 ( 1,073
)

 Accrued
 expenses

 ( 116
)

 Net cash used in operating
 activities

 ( 6,124
)

 ( 4,266
)

 Cash flows from investing
 activities:

 Intangible asset trademark
 costs

 ( 15
)

 ( 3
)

 Purchase of property and
 equipment

 ( 152
)

 ( 85
)

 Sale
 of property and equipment

 -

 Net cash used in investing
 activities

 ( 167
)

 ( 20
)

 Cash flows from financing
 activities:

 Proceeds from line of credit

 29,195

 43,836

 Payments on the line of
 credit

 ( 39,153
)

 ( 45,213
)

 Proceeds from sale of common
 stock

 4,016

 Proceeds from senior
 secured loan payable,
 net of expenses

 9,524

 -

 Proceeds from convertible
 note payable, net of expenses

 1,400

 3,751

 Proceeds received from
 SAFE agreement

 4,096

 -

 Proceeds received from
 rights offering

 11,883

 -

 Payment of convertible
 note payable

 ( 514
)

 ( 200
)

 Amounts from former related
 party, net

 ( 115
)

 ( 1,833
)

 Payment of costs recorded
 as debt discount

 ( 237
)

 -

 Repurchase
 of common stock

 -

 ( 1
)

 Net
 cash provided by financing activities

 16,079

 4,356

 Net increase in cash

 9,788

 Cash at beginning of period

 Cash at end of period

 $
 10,391

 $

 Supplemental disclosures
 of cash flow information:

 Cash paid for interest

 $

 $
 1,046

 Non-cash investing and financing
 activities:

 Dividends on Series A Convertible Preferred
 Stock

 $

 $

 Common Shares issued for financing costs

 $
 -

 Common Shares issued upon conversion of convertible
 notes payable

 $
 22,478

 $
 -

 Common Shares issued upon conversion of SAFE
 agreement

 $
 4,096

 $
 -

 Initial recognition of right of use asset and
 operating lease liability upon execution of new lease

 $

 $
 -

 The
accompanying notes are an integral part of these financial statements.

 F- 7

INC.

 NOTES
TO FINANCIAL STATEMENTS

 For
the Years Ended December 31, 2024 and 2023

 (In
thousands, except share and per share amounts)

 1.
 Operations and Liquidity

 Reed's,
Inc., (the "Company") is the owner and maker of Reed's Craft Ginger Beer, Reed's Real Ginger Ale, Reed's
Classic and Stormy Mules, and Reed's Hard Ginger Ales and Virgil's Handcrafted Sodas. The Company was established in 1989
and is incorporated in the state of Delaware.

 Liquidity

 For
the year ended December 31, 2024, the Company recorded a net loss of $ 13,152 and used cash in operations of $ 6,124. During 2024, the Company took significant steps to convert high interest debt to equity, raise additional equity,
and refinance its credit facility. In accordance with
Accounting Standards Codification ("ASC") 205-40, Going Concern, the Company's management has evaluated whether
there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue
as a going concern within one year after the date the accompanying financial statements were issued. As of the issuance date of these
financial statements, management expects that the Company's existing cash of $ 10,391 will be sufficient to fund the Company's
current operating plan for at least twelve months from the date of issuance of these financial statements. The financial statements do
not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 Management's
assessment whether there is sufficient cash on hand, together with expected capital raises, to assure operations for a period of at least
twelve months from the date these financial statements are issued, is based on conditions that are known and reasonably knowable to management,
considering various scenarios, projections, and estimates and certain key assumptions. These assumptions include, among other factors,
management's ability to raise additional capital, and the expected timing and nature of the Company's forecasted cash expenditures.

 Historically,
the Company has financed its operations through public and private sales of common stock, convertible debt instruments, credit lines
from financial institutions, and cash generated from operations. As we seek additional sources of financing, there can be no assurance
that such financing would be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and
equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment
with respect to us and our industry.

 Recent
Trends – Market Conditions

 Although
the U.S. economy continued to grow throughout 2024 and 2023, inflation, actions by the Federal Reserve to address inflation,
fluctuations in energy prices, and the potential impacts of tariffs and geopolitical events create uncertainty about the future economic environment which will continue to evolve and may impact our business
in future periods. We have experienced supply chain challenges, including increased lead times, as well as inflation of raw materials,
logistics and labor costs due to availability constraints and high demand. Although we regularly monitor companies in our supply chain,
and use alternative suppliers when necessary and available, supply chain constraints could cause a disruption in our ability to obtain
raw materials required to manufacture our products and adversely affect our operations.

the year ended December 31, 2024, the average cost of shipping and handling was $ 2.75
per case, as compared to $ 3.07
per case for the year ended December 31, 2023. Although the Company has experienced decreases in freight costs, in the Company's opinion there remains a volatile environment and the Company will continue to monitor pricing and
availability in transportation. Mitigation plans have been implemented to manage this risk. The Company has been negatively impacted
by supply chain challenges affecting our ability to benefit from strong demand for, and increased sales of our product. The
disruption caused by labor shortages, significant raw material cost inflation, logistics issues and increased freight costs, and
ongoing port congestion, has resulted in suppressed margins. In 2024 the Company experienced moderation in inflation.

 Please
refer to Notes 6, 7 and 8 in the accompanying financial statements for a description of our line of credit, senior secured loan, and notes payable.

 F- 8

 2.
 Significant Accounting Policies

 Use
of Estimates

 The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates. Those estimates and assumptions include estimates for credit loss reserves for accounts receivable, assumptions
used in valuing inventories at net realizable value, impairment testing of recorded long-term tangible and intangible assets, the realizability
of deferred tax assets and the related valuation allowance, accruals for potential liabilities, assumptions made in valuing stock instruments
issued for services, and assumptions used in the determination of the Company's liquidity.

Receivable

receivable are generally recorded at the invoiced amounts net of an allowance for credit losses, which
is an estimate of amounts that may not be collectible. The Company evaluates the collectability of its trade accounts receivable
based on a number of factors. In circumstances where the Company becomes aware of a specific customer's inability to meet its financial
obligations to the Company, a specific reserve for credit losses is estimated and recorded, which reduces the recognized receivable to
the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential
credit losses, credit losses are recorded based on the Company's historical losses and an overall assessment of past due trade
accounts receivable outstanding. A s of December 31, 2024 and December 31, 2023, the allowance for
credit losses was $ 859 and $ 860, respectively.

is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out ("FIFO") basis.
The Company regularly reviews inventory quantities on hand and record a provision for excess and obsolete inventory based primarily
on our estimated forecast of product demand and our ability to sell the product(s) concerned. Demand for our products can fluctuate
significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general
market conditions or other factors, which may result in cancellations of advance orders or a reduction in the rate of reorders
placed by customers. Additionally, our management's estimates of future product demand may be inaccurate, which could result
in an understated or overstated provision required for excess and obsolete inventory. At December 31, 2024, and 2023, inventory has
been reduced by allowances for write-downs for inventory aggregating $ 277
and $ 1,848,
respectively.

 Property
and Equipment

 Property
and equipment are stated at cost. Expenditures for major renewals and improvements that extend the useful lives of property and equipment
or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. Depreciation
is calculated using accelerated and straight-line methods over the estimated useful lives of the assets as follows:

 Schedule of Estimated Useful Lives of Property and Equipment and Related Depreciation

 Property
 and Equipment Type

 Years
 of Depreciation

 Computer
 hardware and software

 3 - 5
 years

 Machinery
 and equipment

 years

 Management
assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. If there is an indication of impairment, management prepares an estimate of future cash flows expected to result
from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment
loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2024 and 2023, the Company determined
there were no indicators of impairment of its property and equipment.

 F- 9

 Intangible
Assets

 Intangible
assets are comprised of indefinite-lived brand names acquired, so classified because we anticipate that these brand names will contribute
cash flows to the Company perpetually. Indefinite-lived intangible assets are not amortized but are assessed for impairment annually,
or more frequently if events or circumstances indicate that assets might be impaired and evaluated annually to determine whether the
indefinite useful life is appropriate. As part of our impairment test, we first assess qualitative factors to determine whether it is
more likely than not the asset is impaired. If further testing is necessary, we compare the estimated fair value of our asset with its
book value. If the carrying amount of the asset exceeds its fair value, as determined by its discounted cash flows, an impairment loss
is recognized in an amount equal to that excess. For the years ended December 31, 2024 and 2023, the Company determined there was no
impairment of its indefinite-lived brand names.

 Revenue
Recognition

 The
Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers
("ASC 606"). Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally
occurs upon shipment from our facilities. The Company's performance obligations are satisfied at that time. The Company does not
have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives
or discounts that could cause revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the
customer obtains control of the goods and therefore represent a fulfilment activity rather than a promised service to the customer. All
of the Company's products are offered for sale as finished goods only, and there are no performance obligations required post-shipment
for customers to derive the expected value from them.

 The
Company does not allow for returns, except for damaged products when the damage occurred pre-fulfilment. Damaged product returns have
historically been insignificant. Because of this, the stand-alone nature of our products, and our assessment of performance obligations
and transaction pricing for our sales contracts, we do not currently maintain a contract asset or liability balance for obligations.
We assess our contracts and the reasonableness of our conclusions on a quarterly basis.

 Cost
of Goods Sold

 Cost
of goods sold is comprised of the costs of raw materials and packaging utilized in the manufacture of products, co-packing fees, repacking
fees, in-bound freight charges, as well as certain internal transfer costs. Additionally, cost of goods sold includes direct production
costs in excess of charges allocated to finished goods in production. Charges for labor and overhead allocated to finished goods are
determined on a market cost basis, which may be lower than the actual costs incurred. Plant costs in excess of production allocations
are expensed in the period incurred rather than added to the cost of finished goods produced. Expenses not related to the production
of our products are classified as operating expenses.

 Delivery
and Handling Expense

 Shipping
and handling costs are comprised of purchasing and receiving, inspection, warehousing, transfer freight, and other costs associated with
product distribution after manufacture and are included as part of operating expenses.

 Advertising
Costs

 Advertising
costs are expensed as incurred and are included in selling and marketing expense. Advertising costs aggregated $ 63 and $ 24 for the years
ended December 31, 2024 and 2023, respectively.

 Stock
Compensation Expense

 The
Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions
for services and for financing costs. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock
Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense
on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner
as if the Company had paid cash for the services.

 F- 10

 The
fair value of the Company's stock options is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain
assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or restricted stock, and future
dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based
on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense
recorded in future periods.

 Income
Taxes

 The
Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of
deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach,
deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets
if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility
is uncertain. The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

 Loss
per Common Share

 Basic
earnings (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number
of shares of common stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income applicable
to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would
have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares
are excluded from the computation when their effect is antidilutive.

 For
the years ended December 31, 2024 and 2023, the calculations of basic and diluted loss per share are the same because potential dilutive
securities would have had an anti-dilutive effect. The potentially dilutive securities consisted of the following:

of Potentially Dilutive Securities

 Warrants

 Common stock equivalent of Series A Convertible
 Preferred Stock

 Convertible note payable

 -

 1,514,055

 323,878

 145,012

 Total

 873,923

 2,209,112

 Anti-dilutive Securities

 873,923

 2,209,112

 Each
share of Preferred Stock can be converted into 0.08 shares of the Company's common stock.

 Fair
Value of Financial Instruments

 The
Company uses various inputs in determining the fair value of its financial assets and liabilities and measures these assets on a recurring
basis. Financial assets recorded at fair value are categorized by the level of subjectivity associated with the inputs used to measure
their fair value. Accounting Standards Codification Section 820 defines the following levels of subjectivity associated with the inputs:

 F- 11

 Level
1—Quoted prices in active markets for identical assets or liabilities.

 Level
2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

 Level
3—Unobservable inputs in which there is little or no market data for the asset or liability which requires the Company to develop
its own assumptions.

 The
Company believes the carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, short-term
bank loans, accounts payable, notes payable and other payables, approximate their fair values because of the short-term nature of such
instruments. The carrying values of capital lease obligations and long-term financing obligations approximate their fair values because
interest rates on these obligations are based on prevailing market interest rates.

 Segments

 The
Company's President and Chief Executive Officer is the Company's Chief Operating Decision Maker ("CODM") and
evaluates performance and makes operating decisions about allocating resources based on internal financial data. The Company has determined
that it operates in a single reportable segment, which consists of manufacturing carbonated beverages under Reed's and Virgil's
brand names and comprises the financial results of the Company. The required segment information, including significant segment
expenses, is presented at Note 17.

 Concentrations

 The
Company's cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $ 250. Generally,
the Company's policy is to minimize borrowing costs by immediately applying cash receipts to borrowings against its credit facility.
From time to time, however, the Company may be exposed to risk for the amounts of funds held in bank accounts in excess of the FDIC limit.
To minimize the risk, the Company's policy is to maintain cash balances with high quality financial institutions.

 Gross
sales. During the year ended December 31, 2024, the Company's largest three customers accounted 19 %, 15 % and 11 % of gross
sales, respectively. During the year ended December 31, 2023, the Company's largest two customers accounted for 24 % and 15 % of
gross sales, respectively. For the years ending December 31, 2024 or 2023, no other customer accounted for more than 10% revenue.

receivable. As of December 31, 2024, the Company had accounts receivable from two customers which comprised 17 % and 14 % of its gross
accounts receivable, respectively. As of December 31, 2023, the Company had accounts receivable from three customers which comprised
 24 %, 15 % and 11 % of its gross accounts receivable, respectively. At December 31, 2024 or 2023, no other customers accounted for more
than 10% of accounts receivable.

 The
Company utilizes co-packers to produce 100% of its products. During the year ended December 31, 2024 and 2023, the Company utilized
nine separate co-packers for most its production and bottling of beverage products in the United States. Although there are other co-packers, a change in co-packers may cause a delay in the production process,
which could ultimately affect operating results.

 Purchases
from vendors. During the year ended December. 31, 2024, no vendor accounted for more than 10% of all purchases During the year ended December 31, 2023, the Company's largest vendor accounted for approximately 12 %
of all purchases.

payable. As of December 31, 2024, no vendor accounted for more than 10 % of total accounts payable. As of December 31, 2023, two vendors
accounted for 10 % and 10 % of total accounts payable, respectively.

 Reclassifications

prior year amounts have been reclassified for consistency with the current period presentation. Collection from customers amounting
to $ 1,217
that was previously presented as a deduction from prepaid expenses at December 31, 2023 have been reclassified as an offset against
accounts receivable. This reclassification had no effect on the reported results of operations or cash flows.

 F- 12

 Recent
Accounting Pronouncements

 In
November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, which
is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense
categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment's
profit or loss. The update also requires all annual disclosures about a reportable segment's profit or loss and assets to be provided
in interim periods and for entities with a single reportable segment to provide all the disclosures required by ASC 280, Segment Reporting,
including the significant segment expense disclosures. This standard became effective for the Company on January 1, 2024. The adoption
of 2023-7 did not have a material impact on the Company's results of operations, financial position or cash flows.

 In
November 2024, FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures
(Subtopic 220-40) Disaggregation of Income Statement Expenses. The guidance in ASU 2024-03 requires public business entities to disclose
in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases
of inventory; employee compensation; and depreciation and amortization expense for each caption on the income statement where such expenses
are included. The update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning
after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the
effective date or retrospectively to all periods presented in the financial statements. We are currently evaluating the provisions of
this guidance and assessing the potential impact on our financial statement disclosures.

 Other
recent accounting pronouncements and guidance issued by the FASB, its Emerging Issues Task Force, the American Institute of Certified
Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on
the Company's present or future financial statements.

 3.

consisted of the following (in thousands):

of Inventory

 Raw materials and packaging

 $
 5,144

 $
 6,445

 Finished products

 2,970

 4,855

 Total

 $
 8,114

 $
 11,300

the year ended December 31, 2024 the Company incurred $ 277
of inventory charges related to inventory obsolescence. During the year ended December 31, 2023, the Company incurred inventory
charges of totaling $ 1,848,
which includes a $ 1,452
impairment charge related to major packaging and formula changes and $ 396
for the markdown of inventory related to exited categories.

 4.
 Property and Equipment

 Property
and equipment are comprised of the following (in thousands):

 Schedule of Property and Equipment

 Right-of-use assets under operating
 leases

 $

 $

 Leasehold improvements

 -

 Computer hardware and software

 Machinery and equipment

 Construction in progress

 -

 Total cost

 1,821

 1,561

 Accumulated depreciation
 and amortization

 ( 636
)

 ( 1,068
)

 Net book value

 $
 1,185

 $

 F- 13

 Depreciation
expense for the years ended December 31, 2024, and 2023 was $ 125 and $ 142, respectively, and amortization of right-of-use assets for
the years ended December 31, 2024, and 2023 as $ 169 and $ 140, respectively.

the year ended December 31, 2023, the Company disposed of its equipment costing $ 77 and recorded a loss on disposal of $ 8.

 5.
 Intangible Assets

 Intangible
assets consisted of the following (in thousands):

of Intangible Assets

 Brand names

 $

 $

 Trademarks

 Total

 $

 $

 Intangible
assets are comprised of acquired brand names, specifically Virgil's, and costs related to trademarks. They have been
assigned an indefinite life, as we currently anticipate that they will contribute cash flows to the Company perpetually. These
indefinite-lived intangible assets are not amortized but are assessed for impairment annually and evaluated annually to determine
whether the indefinite useful life remains appropriate. We first assess qualitative factors to determine whether it is more likely
than not that the asset is impaired. If further testing is necessary, we compare the estimated fair value of our asset with its book
value. If the carrying amount of the asset exceeds its fair value, as determined by the discounted cash flows expected to be
generated by the asset, an impairment loss is recognized in an amount equal to that excess. Based on management's assessment,
there were no indications of impairment at December 31, 2024.

the year ended December 31, 2024, and 2023, the Company capitalized costs of $ 15 and $ 3, respectively, pertaining to legal and other
fees incurred in applying for international trademarks for Reeds and Virgil's brands.

 6.
 Line of Credit

 The
Company's credit facility consisted of the following (in thousands):

of Amount Outstanding Under Credit Facilities

 31,
 2024

 31,
 2023

 Line of credit – Alterna
 Capital Solutions

 $
 -

 $
 9,959

 Less: capitalized financing
 costs

 -

 ( 201
)

 Total

 $
 -

 $
 9,758

 On
March 28, 2022, the Company entered into a financing agreement for a line of credit with Alterna Capital Solutions
("ACS"). The ACS line of credit was for a term of 3
years, provided for borrowings of up to $ 13,000, was secured by eligible accounts receivable and inventory, and was subject to a collateral sharing agreement with Whitebox
Advisors, LLC ("Whitebox"), another secured lender (see Note 7). An over advance rider provided for up to $ 400
of additional borrowing above the collateralized base (the "Over Advance") up to total borrowings of $ 13,000.
As of December 2023, the remaining availability under the line of credit was $ 23
of current availability, and $ 3,041
of borrowing capacity available.

 Borrowings
based on receivables accrued interest at a rate equal to prime plus 4.75% but not less than 8.00% (13.25% at December 31, 2023).
Borrowings based on inventory accrued interest at a rate equal to prime plus 5.25% but not less than 8.50% (13.90 % at December, 31,
2023). The additional over advance rider accrued interest at a rate equal to prime plus 12.75%, but not less than 16.00% (18.00% at
December 31, 2023). Additionally, the line of credit was subject to a monthly monitoring fee of $1 with a minimum usage requirement
on the credit facility. Any loan balance of less than $ 1,500 accrued interest at a rate equal to account receivables advances plus the monthly monitoring fee of $ 1.

 On
November 14, 2024 the Company repaid the full outstanding principal amount of $ 6,569
of the line of credit.

 The
Company incurred $ 483 of direct costs associated with the line of credit transaction, consisting primarily of broker, bank and legal fees. These costs were
capitalized and amortized over the 3 -year life of the ACS agreement. The unamortized debt discount balance was $ 201 at December
31, 2023. For the year ended December 31, 2024, amortization of debt discount was $ 121, and upon repayment of the outstanding principal amount, the remaining unamortized
debt discount of $ 81 was written off.

 F- 14

 7.
 Senior Secured Loan Payable

of Secured Notes Payable

 31,
 2024

 31,
 2023

 Secured Convertible Note Payable

 $
 9,900

 $
 -

 Capitalized financing
 costs

 ( 329
)

 -

 Total

 $
 9,571

 $
 -

 On November 14, 2024, the Company entered into a
Senior Secured Loan and Security Agreement (the "Loan Agreement") with certain funds affiliated with Whitebox, as
lenders, and Cantor Fitzgerald Securities, as administrative agent and collateral agent. The Loan Agreement provides a revolving
credit commitment in an aggregate amount of $ 10,000
(the "Senior Secured Loan"). The Senior Secured Loan accrues interest at a per annum rate equal to 8.00 %
on the principal amount outstanding, payable quarterly in arrears. The Senior Secured Loan also accrues an unused fee at a rate per
annum equal to 3.00% on the excess, if any, of the revolving credit commitment over the average principal amount outstanding from
time to time during the preceding fiscal quarter, payable quarterly in arrears. The Senior Secured Loan is secured by substantially
all of the Company's assets, including all intellectual property. As of December 31, 2024, the principal amount outstanding on
the Senior Secured Loan was $ 9,900
and the remaining availability was $ 100.

 The financing agreement with Whitebox includes customary restrictions that
limit our ability to engage in certain types of transactions. Additionally, the agreement contains a financial covenant that
requires us to meet a certain minimum cash balance and liquidity threshold as of the end of each month. We were in compliance with the
terms of our agreement with Whitebox as of December 31, 2024.

 The
Company incurred $ 376
of direct costs associated with the Senior Secured Loan transaction, consisting primarily of broker, bank and legal fees. These
costs have been capitalized and are being amortized over the 1 -year
life of the agreement. For the year ended December 31, 2024, amortization of debt discount was $ 47.
The unamortized debt discount balance was $ 329
at December 31, 2024.

 8.
 Secured Convertible Notes Payable

 Amounts
outstanding under secured convertible notes payable are as follows (in thousands):

of Secured Convertible Notes Payable

 31,
 2024

 31,
 2023

 Secured Convertible "Original"
 Note Payable (A)

 $
 -

 $
 10,250

 Secured "Option" Notes Payable
 (B)

 -

 4,050

 Secured Convertible "Option"
 Notes Payable

 -

 4,050

 Accrued interest (includes excess ABL fees
 of $ 2,176 and $ 648)

 -

 3,883

 Capitalized financing
 costs

 -

 ( 572
)

 Total

 $
 -

 $
 17,611

 Current portion

 -

 ( 6,737
)

 Long term portion due
 through May, 2025

 $
 -

 $
 10,874

 F- 15

 Convertible
notes

 (A)

 In
 May 2022, the Company issued $ 11,250
 of convertible notes payable (the "Original Notes") to entities affiliated with Whitebox. The
 Original Notes bear interest at 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), 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 Alterna
 Capital (ACS), the Company's existing secured lender. The Original Notes mature the earlier of September
 30, 2025 or the scheduled maturity of any unsecured indebtedness incurred by the Company that is junior in right of payment
 to Note obligations. At each of December 31, 2024 and December 31, 2023, the principal balance of the Original Notes was $ 0 and
 $ 10,250, respectively.

 Upon
 conversion or early payment, holders of the Original Notes are entitled to receive an interest make-whole payment, as defined, equal
 to the sum of the remaining scheduled payments of interest on the Original Notes that would be due at maturity, payable, at the Company's
 option, in cash or in shares of common stock. On August 1, 2022, the Original Notes were amended to add a 10 % fee ("Excess
 ABL Fee') commencing with the fiscal month ending October 31, 2022 for the amount that the Company's line of credit with
 ACS exceeds (i) (x) prior to November 30, 2024, $9,500 and (y) on and after November 30, 2024, $6,500, if the Company has not publicly
 announced or is not actively pursuing a proposed transaction as a result of which the Company reasonably believes that its Common
 Stock will be listed on a national securities exchange) or $9,500 otherwise, minus (ii) any amounts repaid to ACS pursuant to the
 Option Notes (not to exceed $500) plus (iii) the aggregate principal amount of Original Notes voluntarily converted into Conversion
 Consideration (as defined therein), in each case subject to the terms of the collateral sharing agreement; provided that the sum
 of the amounts in clauses (i), (ii) and (ii) above shall not exceed $10,500 minus any amounts repaid ACS as contemplated by the Option
 Notes (not to exceed $500).

 The
 Original Notes have an amortization feature which requires the Company to make monthly payments of principal of $ 200 plus accrued
 interest, payable in cash or in shares of the Company's common stock at the option of the Company, based on 90 % of the average
 prices of the Company's common stock, as defined. During 2023, Whitebox waived the requirement for the Company to pay the December
 2022 to October 2023 monthly amortization payments on the Original Notes. The November 2023 amortization payment of $ 200 principal
 was paid, and the amortization payment for December 2023 to May 2024 was waived. The amortization period resumed on June 1, 2024.

 (B)

 At
 the time of issuance of the Original Notes, the Company also granted the investors an option to purchase up to an additional $ 12,000
 aggregate principal amount of "Option Notes". At December 31, 2023, the principal balance of the Option Notes was $ 4,050.

 On
 August 1, 2024, the Company entered into an Option Exercise and Nineth Amendment ("Exercise and Amendment Agreement")
 to the Notes with Whitebox. Pursuant to the Exercise and Amendment Agreement, holders of the Original Notes exercised an option to
 purchase an aggregate of approximately $ 6,504 Option Notes, which consisted of (i) an exchange of $ 4,050 of existing notes, (ii)
 additional cash proceeds to the Company of $ 1,400, and (iii) an additional finance cost of $ 1,054 The Option Notes mature on the
 earlier of December 15, 2024, and ninety one days before the schedule maturity of any unsecured indebtedness incurred by the Company
 that is junior in right of payment to its Note obligations. The Option Notes bear interest in arrears on the outstanding principal
 amount at a rate of 11.13 % per annum, payable in cash. The Option Notes may be prepaid without premium or penalty. Unless $ 1,400
 of the principal amount is prepaid, payment of any Option Note on the maturity date (or due to an acceleration (whether declared
 or automatic)) shall be accompanied by an additional amount (such amount, the "MOIC Deficiency Amount"), if any, sufficient
 to achieve a 1.13:1.00 multiple of invested capital since August 1, 2024 (the "MOIC") on the aggregate principal amount
 of the Option Notes being paid. The MOIC Deficiency Amount shall be calculated based on (i) the sum of all fees, original issue discount,
 interest, premiums, principal and other payments received in cash by the applicable holders in respect of the Option Notes since
 August 1, 2024 (excluding any reimbursement of out-of-pocket costs or expenses reimbursed and any indemnification payments made to
 the applicable Holders in respect of the Option Notes), as the numerator, and (ii) the aggregate principal amount of the Option Notes
 on August 1, 2024, as the denominator.

 On
 October 10, 2024, Whitebox sold and assigned its entire interest in the $ 10,250 Secured Convertible Note Payable, interest
 added to Original Note of $ 1,124 and the $ 6,504 Option Note Payable to the Company's majority stockholder, D&D Source of
 Life Holding LTD ("D&D") including accrued interest of $ 4,600 in the aggregate amount of $ 22,478.

 F- 16

 Accrued
Interest

 At
December 31, 2023, the balance of accrued interest was $ 3,883. During the year ended December 31, 2024, the Company recorded interest
of $ 3,409, made up of $ 2,100 interest on the Notes, and $ 1,309 related to the excess ABL fees, made payments of $ 514 towards accrued
interest and $ 2,178 was added to principal. At November 14, 2024, the balance of accrued interest was $ 4,600.

 On
November 19, 2024, the Company entered into an exchange agreement with D&D wherein outstanding principal of the convertible notes
amounting to $ 17,878 and accrued interest of $ 4,600 or an aggregate of $ 22,478 were converted into 22,478,074 shares of the Company's
common stock (see Note 10).

 Debt
Discount

 At
December 31, 2023, the unamortized debt discount was $ 572.
During the period ended December 31, 2024, the Company incurred $ 237
of costs for the aforementioned waivers. These costs have been capitalized and are being amortized over the term of the Notes or
waiver period. For the year ended December 31, 2024, amortization of debt discount was $ 606. Upon conversion of the notes to common shares, the Company wrote-off the remaining unamortized debt discount balance of $ 203
to interest expense.

 9.
 Lease Liabilities

 The
Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company's right
to use an underlying asset during the lease term, and lease liabilities represent the Company's obligation to make lease payments
arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present
value of unpaid lease payments over the lease term. The Company leases its headquarters office, and certain office equipment and automobiles.
Leases with an initial term of 12 months or less are not included on the balance sheets.

 As
of December 31, 2023, operating lease liabilities pertaining to its former office facility totaled $ 207. In May 2024, the Company entered
into a long-term non-cancellable lease agreement for its new office facility that requires aggregate average monthly payments of $ 9 beginning
December 2024. The lease terminates in November 2035. The Company classified the lease as an operating lease and determined that the
value of the right of use asset and lease liability at the adoption date was $ 835, respectively, using a discount rate of 8.00 %.

the year ended December 31, 2024, the Company made aggregate payments of $ 205 towards its operating lease liability. As of December 31,
2024, operating lease liabilities totaled $ 837.

 F- 17

the years ended December 31, 2024, and 2023, lease costs totaled $ 134 and $ 178, respectively.

 Future
minimum lease payments under the leases are as follows (in thousands):

of Future Minimum Lease Payments Under Leases

 Years
 Ending December 31,

 Amounts

 2025

 $

 2026

 2027

 2028

 Thereafter

 Total payments

 1,238

 Less: Amount representing
 interest

 ( 401
)

 Present value of net minimum lease payments

 Less: Current portion

 -

 Non-current portion

 $

 10.
 Issuance of Common Stock

 Issuance of common stock in accordance with SAFE
Agreements

the first quarter of 2024, the Company received $ 4,097 in gross proceeds from three significant stockholders of the Company, D&D,
Union Square Park Partners LP, and John J. Bello, the Company's former Chairman, pursuant to Simple Agreements for Future Equity
("SAFE") investments. The SAFE investments were to convert into the next equity financing of Reed's on the same terms
and conditions as investors in Reed's next equity financing at the lesser of $ 1.50 per share or the per share price in the financing.
D&D was given the right to designate a second independent director nominee to the board of directors of Reed's and the company
agreed to limit the size of its board of directors to nine (9) for so long as D&D owns 25% or more of the equity securities of the
Company. The Company initially recorded the SAFE investments as a liability at $ 5,490 which was reflected on its June 30, 2024 balance
sheet, and reflected a loss from change in fair value of SAFE investments of $ 1,393.

 On September 9, 2024, as part of a Securities Purchase
Agreement described below, the Company issued 2,731,205 shares of its common stock valued at $ 4,096 upon conversion of the SAFEs. Upon
conversion of the SAFE instruments, the Company recorded a gain from change in fair value of SAFE investments of $ 1,393 during the year
ended December 31, 2024.

 Other issuances of common stock for cash

 On September 9, 2024, the Company entered into
a Securities Purchase Agreement with various purchasers for the issuance of 4,000,000 common shares for total consideration of $ 6,000.
The various purchasers also held the investment in the Company's SAFEs as described above. In addition to the issuance of the 2,731,205
shares of common stock valued at $ 4,096 upon conversion of the SAFE described above, the Company issued an additional 1,268,795 common
shares to D&D for consideration of $ 1,903.

 On December 30, 2024, the Company entered into a Securities
Purchase Agreement with accredited investors. The Company issues 14,705,882 shares of common stock for aggregate gross proceeds of $ 10
million. The average price per share was $ 0.68.

 On May 25, 2023, the Company entered into a Securities
Purchase Agreement with D&D, as the lead investor, and certain of Reed's affiliates pursuant to which the investors agreed to
purchase an aggregate of 1,566,732 shares of Reed's common stock and warrants to purchase 313,346 shares of Common Stock. The purchase
price was $ 2.585 per share of Common Stock with the associated warrant. The net proceeds to the Company, after deducting offering expenses,
was $ 4,016. The warrants are exercisable for a term of three years at an exercise price of $ 2.50 per share.

 Common shares issued upon conversion of Notes Payable

 On November 19, 2024, the Company issued 22,478,048
shares of its Common stock with a fair value of $ 20,232
to D&D upon conversion of Convertible Notes Payable and accrued interest of $ 22,478.
The excess of the converted value of the convertible notes and accrued interest over the fair value of the shares issued of
$ 2,248
was treated as a capital contribution.

 Common stock repurchases

 During the year ended December 31, 2023, the Company repurchased 274 shares of common stock from an officer for $ 1
based on the market value of share on the date repurchased. The Company retired the shares.

 11.
 Series A Convertible Preferred Stock

 Series
A Convertible Preferred Stock (the "Preferred Stock") consists of $ 10 par value, 5 % non-cumulative, non-voting, participating
preferred stock, with a liquidation preference of $ 10.00 per share. 500,000 shares are authorized. As of December 31, 2024, and 2023,
there were 9,411 shares outstanding. Each share of Preferred Stock can be converted into 0.08 shares of the Company's common stock.

 Dividends
are payable at the rate of 5 % annually, pro-rata and non-cumulative. The dividend can be paid in cash or, at the discretion of our board
of directors, in shares of common stock based on its then fair market value. The Company cannot declare or pay any dividend on shares
of our common stock until the holders of the Preferred Stock have received their annual dividend. In addition, the holders of the Preferred
Stock are entitled to receive pro rata distributions of dividends on an "as converted" basis with the holders of our common
stock.

 F- 18

 In
the event of any liquidation, dissolution or winding up of the Company, or if there is a change of control event as defined, the holders
of the Preferred Stock are entitled to receive, prior to distributions to the holders of common stock, $ 10.00 per share plus all accrued
and unpaid dividends. Thereafter, all remaining assets are distributed pro rata among all security holders. Since June 30, 2008, the
Company has the right, but not the obligation, to redeem all or any portion of the Preferred Stock at $ 10.00 per share, the original
issue price, plus all accrued and unpaid dividends.

 The
Preferred Stock may be converted at any time, at the option of the holder, into 0.08 shares of common stock, subject to adjustment in
the event of stock splits, reverse stock splits, stock dividends, recapitalization, reclassification, and similar transactions. The Company
is obligated to reserve authorized but unissued shares of common stock sufficient to affect the conversion of all outstanding shares
of Preferred Stock.

 Except
as provided by law, the holders of the Preferred Stock do not have the right to vote on any matters, including the election of directors.
However, so long as any shares of Preferred Stock are outstanding, the Company shall not, without the approval of a majority of the preferred
stockholders, authorize or issue any equity security having a preference over the Preferred Stock with respect to dividends, liquidation,
redemption or voting, including any other security convertible into or exercisable for any senior preferred stock.

the years ended December 31, 2024 and 2023, the Company accrued dividends on the Preferred Stock of $ 5 which is included in accrued expenses
in the accompanying balance sheets. No shares of Series A preferred stock were converted into common stock in 2024 and 2023.

 F- 19

 12.
 Share-Based Payments

 Management
believes that the ability to issue equity compensation, in order to incentivize performance by employees, directors, and consultants,
is essential to the Company's growth strategy.

 On
December 21, 2020, the 2020 Equity Incentive Plan (the "2020 Plan") was approved by our shareholders. The 2020 Plan provides
for the issuance of up to 300,000 shares. Options issued and forfeited under the 2020 plan contain an Evergreen provision and cannot
be re-priced without shareholder approval. As of December 31, 2024, shares issuable under the 2020 Plan were 209,656.

 The
2020 Plan permits the grant of options and stock awards to our employees, directors and consultants. The options may constitute
either "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code or "non-qualified
stock options". The Plan is currently administered by the board of directors. The
exercise price of an option granted under the plan cannot be less than 100% of the fair market value per share of common stock on
the date of the grant of the option. Options may not be granted under the plan on or after the tenth anniversary of the adoption of
the plan. Incentive stock options granted to a person owning more than 10% of the combined voting power of the common stock cannot
be exercisable for more than five years. When an option is exercised, the exercise is received
in cash, except that the plan administrator may permit the exercise price to be paid in any combination of cash, shares of stock
having a fair market value equal to the exercise price, or as otherwise determined by the plan administrator.

 On
April 29, 2024, the 2024 Inducement Plan (the "2024 Plan") was approved by the compensation committee of our board of directors. The 2024 Plan provides for the issuance
of up to 250,000 shares. Options issued and forfeited under the 2024 plan contain an Evergreen provision and cannot be re-priced without
shareholder approval. As of December 31, 2024, shares issuable under the 2024 Plan were 44,007.

 The
2024 Plan permits the grant of options and stock awards to our employees, directors and consultants. The options may constitute
either "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code or "non-qualified
stock options". The Plan is currently administered by the board of directors. The
exercise price of an option granted under the plan cannot be less than 100% of the fair market value per share of common stock on
the date of the grant of the option. Options may not be granted under the plan on or after the tenth anniversary of the adoption of
the plan. Incentive stock options granted to a person owning more than 10% of the combined voting power of the common stock cannot
be exercisable for more than five years. When an option is exercised, the excise price is received
in cash, except that the plan administrator may permit the exercise price to be paid in any combination of cash, shares of stock
having a fair market value equal to the exercise price, or as otherwise determined by the plan administrator.

 Stock

 As
of December 31, 2024, the Company has issued stock options to purchase an aggregate of 239,651 shares of common stock. The Company's
stock option activity during the years ended December 31, 2024, and 2023 is as follows:

of Stock Option Activity

 Weighted-

 Exercise Price

 Weighted-

 Remaining

 Contractual
 Terms (Years)

 Aggregate

 Intrinsic
 Value

 Outstanding at December 31, 2022

 164,423

 $
 48.90

 7.58

 $
 -

 Granted

 10,037

 4.50

 Exercised

 -

 -

 Unvested forfeited or expired

 ( 10,497
)

 48.74

 Vested forfeited or expired

 ( 18,951
)

 54.59

 Outstanding at December 31, 2023

 145,012

 $
 45.09

 6.75

 $
 -

 Granted

 205,669

 1.30

 Exercised

 -

 -

 Unvested forfeited or expired

 ( 8,846
)

 16.61

 Vested forfeited or expired

 ( 17,957
)

 44.98

 Outstanding at December 31, 2024

 323,878

 $
 17.47

 8.03

 $
 -

 Exercisable at December 31, 2024

 239,651

 $
 20.45

 7.82

 $
 -

 F- 20

the year ended December 31, 2024, the Company approved options exercisable into 205,669
 shares to be issued pursuant to the 2024 Plan.
 205,669
 options were issued to employees, 148,714
 vested immediately, 25,059
 options vest annually over two to four -year
vesting periods, and 31,896
 options vesting based on performance criteria
to be established by the board of directors.

 The
stock options are exercisable at a price of $ 1.30 per share and expire in ten years. The total fair value of these options at grant date
was approximately $ 229, which was determined using a Black-Scholes-Merton option pricing model with the following average assumption:
stock price of $ 1.30 share, expected term of six years, volatility of 92 %, dividend rate of 0 %, and weighted average risk-free interest
rate of 4.65 %. The expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding
giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical
volatility of the Company's common stock; the expected dividend yield is based on the fact that the Company has not paid dividends
in the past and does not expect to pay dividends in the future; and the risk-free interest rate is based on the U.S. Treasury yield curve
in effect at the time of measurement corresponding with the expected term of the share option award.

the year ended December 31, 2023, the Company approved options exercisable into 10,037 shares to be issued pursuant to the 2020
Plan. 10,037 options were issued to employees, of which, 5,016 options vest annually over a four -year vesting period,
and 5,021 options vest based on performance criteria to be established by the board of directors.

 The
stock options are exercisable at a price of $ 4.50 per share and expire in ten years. The total fair value of these options at grant date
was approximately $ 32, which was determined using a Black-Scholes-Merton option pricing model with the following average assumption:
stock price of $ 4.50 share, expected term of six years, volatility of 82 %, dividend rate of 0 %, and weighted average risk-free interest
rate of 3.59 %. The expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding
giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical
volatility of the Company's common stock; the expected dividend yield is based on the fact that the Company has not paid dividends
in the past and does not expect to pay dividends in the future; and the risk-free interest rate is based on the U.S. Treasury yield curve
in effect at the time of measurement corresponding with the expected term of the share option award.

the year ended December 31, 2024 and 2023, the Company recognized $ 528
and $ 490
of compensation expense relating to vested stock options. As of December 31, 2024, the aggregate amount of unvested compensation
related to stock options was approximately $ 77
which will be recognized as an expense as the options vest in future periods through March 28, 2027.

 As
of December 31, 2024, the outstanding and exercisable options have no intrinsic value. The aggregate intrinsic value was calculated as
the difference between the closing market price as of December 31, 2024, which was $ 0.63, and the exercise price of the outstanding stock
options.

 Additional
information regarding options outstanding and exercisable as of December 31, 2024, is as follows:

of Information Regarding Stock Options

 Exercisable

 Range
 of Exercise Price

 of

 Price

 Remaining
 Contractual

 Life (years)

 of
 Exercisable

 Price

 $ 1.30
 - $ 4.00

 206,652

 $
 1.31

 9.33

 137,591

 $
 1.31

 $ 4.50
 - $ 6.75

 3,932

 4.50

 8.05

 1,476

 4.50

 $ 12.00
 - $ 18.00

 12,512

 12.00

 7.35

 6,259

 12.00

 $ 25.00
 - $ 37.50

 19,116

 29.66

 5.31

 19,116

 29.66

 $ 44.00
 - $ 66.00

 70,070

 49.28

 5.82

 63,615

 48.84

 $ 80.00
 - $ 120.00

 7,428

 89.34

 3.29

 7,426

 89.34

 $ 122.00
 - $ 183.00

 4,168

 129.52

 4.14

 4,168

 129.52

 323,878

 $
 17.47

 5.83

 239,651

 $
 21.45

 F- 21

 13.
 Stock Warrants

 As
of December 31, 2024, the Company has issued warrants to purchase an aggregate of 549,292 shares of common stock. The Company's
warrant activity during the years ended December 31, 2024, and 2023 is as follows:

of Warrant Activity

 -Average
 Exercise Price

 Weighted-Average
 Remaining Contractual Terms (Years)

 Aggregate
 Intrinsic Value

 Outstanding at December 31, 2022

 235,946

 $
 16.99

 4.45

 $
 -

 Granted

 313,346

 2.59

 2.39

 Exercised

 -

 -

 Forfeited or expired

 -

 -

 Outstanding at December 31, 2023

 8.77

 2.84

 $
 -

 Granted

 -

 -

 Exercised

 -

 -

 Forfeited or expired

 -

 -

 Outstanding at December 31, 2024

 $
 8.77

 1.84

 $
 -

 Exercisable at December 31, 2024

 $
 8.77

 1.84

 $
 -

 On
May 25, 2023, the Company entered into a Securities Purchase Agreement with D&D, as the lead investor,
and certain of Reed's affiliates pursuant to which the investors agreed to purchase an aggregate of 1,566,732 shares of Reed's
common stock and warrants to purchase 313,346 shares of Common Stock. The purchase price per share of Common Stock and associated warrant
was $ 2.585. The warrants are exercisable for a term of three years at a per share exercise price of $ 2.50.

 As
of December 31, 2024, the outstanding and exercisable warrants have no intrinsic value. The aggregate intrinsic value was calculated
as the difference between the closing market price as of December 31, 2024, which was $ 0.64, and the exercise price of the Company's
warrants to purchase common stock.

 Additional
information regarding warrants outstanding and exercisable as of December 31, 2024, is as follows:

of Warrants Outstanding and Exercisable

 Warrants

 Warrants Exercisable

 Range
 of Exercise Price

 of

 Price

 Remaining
 Contractual

 Life (years)

 of
 Exercisable

 Price

 $ 14.39
 - $ 32.20

 8.77

 1.84

 8.77

 $
 8.77

 1.84

 $
 8.77

 F- 22

 14.
 Income Taxes

 For
the years ended December 31, 2024 and 2023, a reconciliation of the effective income tax rate to the U.S. statutory rate is as follows:

 of Reconciliation of Effective Income Tax Rate to U.S. Statutory Rate

 Federal statutory
 tax rate

 ( 21
)%

 ( 21
)%

 State
 rate, net of federal benefit

 ( 5
)%

 ( 5
)%

 Federal and state tax rate

 ( 26
)%

 ( 26
)%

 Effect of change in tax rate

 -
 %

 -
 %

 Valuation
 allowance

 %

 %

 Effective
 tax rate

 $
 -

 $
 -

 As
of December 31, 2024 and 2023, significant components of the Company's deferred tax assets and liabilities are as follows:

of Deferred Income Tax Assets

 Deferred income tax asset:

 Net operating
 loss carryforwards

 $
 25,309

 $
 20,581

 Disqualified corporate interest
 expense

 4,642

 2,886

 Stock-based compensation

 2,256

 2,118

 Accounts receivable allowances

 Inventory reserves

 Operating lease liability

 Other

 -

 ( 9
)

 Asset
 impairment

 Gross deferred tax assets

 33,011

 26,288

 Valuation
 allowance

 ( 32,793
)

 ( 26,098
)

 Total deferred tax assets

 Deferred tax liabilities:

 Operating lease right-of-use
 asset

 ( 218
)

 ( 190
)

 Deferred
 finance costs

 -

 Total
 deferred tax liabilities

 ( 218
)

 ( 190
)

 Net
 deferred tax asset (liability)

 $
 -

 $
 -

 At
December 31, 2024 and 2023, the Company had available Federal and state net operating loss carryforwards ("NOL"s) to reduce
future taxable income. For Federal purposes the amounts available were approximately $ 104,000
 and $ 97,000,
respectively. For state purposes approximately $ 66,000
 and $ 53,000
 was available at December 31, 2024 and 2023,
respectively. The Federal carryforward for NOLs arising in years prior to 2018 is approximately $ 31,000,
which expires on various dates through 2037. NOLs originating after 2017 of approximately $ 73,000,
can be carried forward indefinitely, but are only able to offset 80% of taxable income in future years. The state carryforward expires
on various dates through 2044. Given the Company's history of net operating losses, management has determined that it is more likely
than not that the Company will not be able to realize the tax benefit of the carryforwards. Accordingly, the Company has not recognized
a deferred tax asset for this benefit.

 Due
to restrictions imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with loss carryforwards,
the utilization of the Company's NOL may be limited as a result of changes in stock ownership. NOLs incurred subsequent to the
latest change in control are not subject to the limitation.

 F- 23

 The
Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial
statements from such a position is measured based on the largest benefit that has a greater than fifty percent likelihood of being realized
upon ultimate settlement. As of December 31, 2024 and 2023, the Company did not have a liability for unrecognized tax benefits.

 The
Company recognizes as income tax expense, interest and penalties on uncertain tax provisions. As of December 31, 2024 and 2023, the Company
has not accrued interest or penalties related to uncertain tax positions. As of the year ended December 31, 2024, the tax returns for
2021 through 2024 remain open to examination by the Internal Revenue Service and for 2020 to 2024 for various state taxing jurisdictions
to which the Company is subject.

 Upon
the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the
use of the NOLs and will recognize the appropriate deferred tax asset at that time.

 15.
 Transactions with California Custom Beverage, LLC, former related party

 In
December 2018, the Company signed a co-packing agreement with California Custom Beverage, LLC's ("CCB"), an entity
owned by Christopher J. Reed, a former related party, pursuant to which CCB agreed to produce certain products for the Company for agreed
fees. The co-packing agreement, as amended, includes certain provisions for product inputs, shrinkage, and quality assurance. Also beginning
in 2019, CCB agreed to pay the Company a 5 %
royalty through 2021 on certain private label sales made by CCB.

 At
December 31, 2024 and 2023, accounts receivable due from and accounts payable due to CCB were as follows:

of Related Parties

 31,
 2024

 31,
 2023

 Accounts receivable,
 net of provision of $ 1,238
 and $ 1,123
 at December 31, 2024 and 2023, respectively

 payable

 ( 144
)

 ( 259
)

 Net
 (payable) receivable

 -

 -

 In
addition, on April 19, 2023, the Company received a letter from CCB demanding payment of various amounts outstanding at December 31,
2024 and 2023. The Company has determined that the probability of realizing any loss on the demand from CCB is remote and therefore has
not recorded any additional accruals related to the demand.

 During 2024, the Company
commenced arbitration proceedings with CCB in order to reach a settlement agreement, the arbitration is pending final judgement.

 16.
 Commitments and Contingencies

 On
May 1, 2023, the Company engaged an investment bank to explore financing options. Subject to services provided by the investment bank,
we may have a remaining obligation not expected to exceed $ 1,500
 related to this engagement. Management believes it has provided an adequate provision for any amounts
due, if any, in the accompanying financial statements.

 From
time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our
exposure to these claims and proceedings individually and in the aggregate and provides for potential losses on such litigation if the
amount of the loss is estimable and the loss is probable.

 We
believe that there are no material litigation matters at the current time. Although the results of such litigation matters and claims
cannot be predicted with certainty, we believe that the final outcome of such claims and proceedings will not have a material adverse
impact on our financial position, liquidity, or results of operations.

 F- 24

 17.
 Segment Information

 The
Company operates and manages its business as one
 reportable and operating segment as a manufacturer
of carbonated beverages under Reed's and Virgil's brand names. The measure of segment assets is reported on the balance sheet
as total assets.

 The
Company's CODM reviews financial information presented and decides how to allocate resources based on net income (loss). Net income
(loss) is used for evaluating financial performance.

 Significant
segment expenses include research and development, salaries, insurance, and stock-based compensation. Operating expenses include
all remaining costs necessary to operate our business, which primarily include external professional services and other administrative
expenses. The following table presents the significant segment expenses and other segment items regularly reviewed by our CODM.

of Segment Information

 Operating
 expenses

 Salaries

 3,740

 3,136

 Insurance

 Stock-based compensation

 Selling and marketing

 4,405

 4,865

 Freight and delivery

 4,544

 5,520

 Warehousing

 1,320

 2,041

 Other
 operating expenses

 4,425

 2,518

 Total
 operating expenses

 19,492

 19,129

 Interest
 and other expenses, net

 5,036

 6,106

 Net
 loss

 $
)

 $
)

 18.
 Subsequent Events

 On February 4, 2025, the Company formed a new subsidiary, Reed's
(Asia) Limited (BVI). The new subsidiary ("Reed's Asia") was formed as an early part of the Company's expansion
into new geographic markets in the Asia Pacific region. On February 20, 2025, Reed's Asia reached an agreement to acquire
 100 % of the outstanding common stock of Roci Labo Inc., a Japanese corporation (the "Reed's Japan Transaction").
On March 18, 2025, Reed's Asia received Japanese government approval for the Reed's Japan Transaction. The new subsidiary,
operating as Reed's Japan Co., Ltd ("Reed's Japan"), was acquired as an early part of the Company's strategic
expansion into new geographic markets in Japan. The acquisition price for the Reed's Japan Transaction was not material.

 F- 25

 Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 None.

 Item
9A. Controls and Procedures

 Evaluation
of Disclosure Controls and Procedures

 Under
the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer,
we conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, our Chief Executive Officer and our Chief
Financial Officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2024 to provide
reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosures.

 Management's
Annual Report on Internal Control over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act). Our management, with the participation of our Chief Executive Officer and Chief Financial Officer
and the oversight of our audit committee, has evaluated the effectiveness of our internal control over financial reporting as of December
31, 2024. In assessing the effectiveness of our internal control over financial reporting, our management used the framework established
in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on that evaluation, our management has concluded that our internal control over financial reporting was effective as of
December 31, 2024.

 This
Annual Report does not contain an attestation report of our independent registered public accounting firm related to internal control
over financial reporting because the rules for smaller reporting companies provide an exemption from the attestation requirement.

 Changes
in Internal Control over Financial Reporting

 There
were no changes in our internal control over financial reporting during the three months ended December 31, 2024, that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.

 Item
9B. Other Information

 10b5-1
Trading Arrangements

the 16 weeks ended December 31, 2024, none of our directors or executive officers adopted,
 modified
 or t erminated
 a "Rule 10b5-1 trading arrangement"
or a "non-Rule 10b5-1 trading arrangement" as such terms are defined under Item 408 of Regulation S-K.

 Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Not
applicable.

 PART
III

 Item
10. Directors, Executive Officers, and Corporate Governance

 General

current directors have terms which will end at the next annual meeting of the stockholders and until each of their successors is elected
and qualified. The following table sets forth certain information with respect to our current directors and executive officers as of
date of this Annual Report.

 Name

 Position

 Age

 Chief
 Executive Officer, Director

 Douglas
 W. McCurdy

 Chief
 Financial Officer, Secretary

 Joann
 Tinnelly

 Chief
 Accounting Officer

 Christopher
 Burleson

 Chief
 Commercial Officer

 Yumin
 Dai

 Chief
 Executive Officer, Director of Reed's (Asia) Limited (BVI)

 Shufen
 Deng

 Chairperson
 of the Board, Chairperson of Asian Operations, Chair of the Compensation Committee

 Lewis
 Jaffe (1)

 Director,
 Chair of Governance Committee, Member of Audit and Compensation Committees

 Sam
 Van

 Director,
 Chair of the Audit Committee, Member of Governance and Compensation Committees

 Randle
 Lee Edwards

 Director,
 Member of Audit, Compensation and Governance Committees

 (1) Mr. Jaffe submitted his resignation from the
Board, which will be effective March 31, 2025.

 Business
Experience of Directors and Executive Officers

E. Snyder, Jr. was appointed as Chief Executive Officer and director of Reed's effective March 1, 2020. Prior to his promotion,
Mr. Snyder served as Chief Operating Officer of Reed's from September 2019 through February 29, 2020. Prior to joining Reed's,
Mr. Snyder served as President and Chief Executive Office for Avitae USA, LLC, an emerging premium new age beverage company that markets
and sells a line of ready-to-drink caffeinated waters. Prior to Avitae, he served as the President and Chief Operating Officer for Adina
For Life, Inc., President and Chief Executive Officer of High Falls Brewing Company, and Chief Financial Officer, and later Chief Operating
Officer of South Beach Beverage Company, known as SoBe. In prior experience, Mr. Snyder served as Controller for National Football League
Properties, Inc., and in various roles at PriceWaterhouseCoopers during an eight-year tenure. Mr. Snyder earned a B.S. in Accounting
from the State University of New York at Albany.

 Douglas W. McCurdy was appointed
as Chief Financial Officer effective February 10, 2025. Prior to joining Reed's, from December 2023 to January 2025, Mr. McCurdy
served as Director for Roberts & Ryan, Inc., a veteran-owned investment bank. Previously, he served as Chief Financial Officer and
Chief Operating Officer for three early-stage growth companies: REZI from November 2019 to May 2023; Torrential from January 2013 to
February 2019; and BBE from March 2006 to December 2012. He also has significant corporate finance and strategic advisory experience
serving as Principal for Banc of America Securities' investment banking division. Mr. McCurdy started his career as a Lieutenant
in the US Navy. He holds a Master of Business Administration in Accounting and Finance from the University of Chicago Booth School of
Business and a Bachelor of Science in Mechanical Engineering from Worcester Polytechnic Institute.

 Joann Tinnelly
 was appointed Chief Accounting Officer effective February 10, 2025. She previously served as Chief Financial Officer from October
19, 2023 through February 10, 2025, and as Interim Chief Financial Officer of Reed's, from March 31, 2023 through October 18, 2023
and from November 22, 2019, through December 1, 2019. She has over 30 years of finance and accounting experience in global public and
private equity company environments. She is a Certified Public Accountant and has served as Vice President and Corporate Controller of
Reed's since July 2018. Prior to joining Reed's, from May 2014 to May 2017, she served as Assistant Controller of Steel Excel,
Inc., a subsidiary of Steel Partners Holdings, a global diversified holding company. Prior to 2014, Ms. Tinnelly served as Vice President
Financial Planning & Analysis and as Assistant Corporate Controller at USI Insurance Services, Assistant Vice President of Royal
Bank of Scotland (RBS) Group, multiple financial roles at Momentive Performance Materials and General Electric and financial auditing
at PriceWaterhouseCoopers. Ms. Tinnelly holds a Master of Business Administration in Finance and a Bachelor of Business Administration
in Public Accounting both from Pace University.

 Christopher
Burleson was appointed Chief Commercial Officer effective February 1, 2023. In this role, Mr. Burleson leads the sales organization
as well as partners with the operations department to streamline supply chain and cost reduction initiatives. He also focuses on strategic
partnerships and growth opportunities. From April 25, 2022, to January 31, 2023, Mr. Burleson served as Chief Commercial Officer of Kin
Social Tonics. From March 19, 2018, through April 22, 2022, Mr. Burleson was a Vice President and General Manager of Fever Tree, USA.
Mr. Burleson also served as a director of Fever Tree USA.

 Yumin Dai was appointed Chief Executive Officer of the Company's newly formed
wholly owned subsidiary Reed's (Asia) Limited (BVI) on February 4, 2025. Prior, from 2020 to 2024, Mr. Dai served as consultant
for the overseas business of Baolingbao Biology Co., Ltd, a Chinese A-share listed company. Previously, he served in numerous executive
roles, including as Chairman of Greater China for OBAGI Group, a cosmeceuticals company, from 2017 to 2020.

 Lewis
Jaffe has served as a director since October 19, 2016, is Chairman of the Governance Committee and a member of the Audit and
Compensation Committees. Since August 2014, Mr. Jaffe is an Executive-in-Residence and Clinical Faculty at the Fred Kiesner Center for
Entrepreneurship, Loyola Marymount University. He is also a technology futurist, Executive Coach and Public Speaker. Since January 2010,
Mr. Jaffe has served on the board of FitLife Brands Inc. (FTLF:OTCBB) and serves on its audit, compensation and governance committees.
Since 2006 he has served on the board of directors of York Telecom, a private company, and serves on its compensation and governance
committees. From 2006 to 2008 Mr. Jaffe was Interim Chief Executive Officer and President of Oxford Media, Inc. Mr. Jaffe has also served
in executive management positions with Verso Technologies, Inc., Wireone Technologies, Inc., Picturetel Corporation, and he was also
previously a Managing Director of Arthur Andersen. Mr. Jaffe was the co-founder of MovieMe Network. Mr. Jaffe also served on the board
of directors of Benihana, Inc. as its lead independent director from 2004 to 2012. Mr. Jaffe is a graduate of the Stanford Business School
Executive Program, holds a Bachelor of Science from LaSalle University and holds a Master's Professional Director Certification
from the American College of Corporate Directors, a public company director education and credentialing program.

 Sam Van was appointed to the board
effective October 21, 2024. Mr. Van is the founder and Chief Executive Officer of SRO Partners. Prior, from June 2023 through May 2024,
he served as Senior Vice President, Head of Advisory Services at Freedom U.S. Markets. From March 2017 through May 2023, he was the President
and a Director of Deltec Investment Advisor Limited. Mr. Van brings extensive expertise in capital markets, business development, and
regulatory compliance, having held leadership roles at the New York Stock Exchange, FINRA, and Global Markets Advisory Group, among others.
Mr. Van served as a director and member of audit and nominating committees of Phoenix Motor Inc. (Nasdaq: PEV) from 2022 through 2024.
Mr. Van currently serves on the board of directors of Relm Insurance Ltd Relm Insurance, a private company based in the Bermuda. He also
serves as a Senior Board Advisor at RKtech, a prominent international software company in Vietnam. Mr. Van holds an MBA from Cornell
University and a Bachelor of Science in Finance from St. John's University. Mr. Van is an independent
director designee of D&D.

 Shufen
Deng has served as a director since July 7, 2023. She was appointed Chairperson of the Board on November 1, 2024. Prior, she
served as Vice Chairperson of the Board from February 8, 2024 through November 1, 2024. She was also appointed Chairperson of Asian
Operations on February 8, 2024. Mrs. Deng was the sole shareholder of D&D Source of Life Holding Ltd. ("D&D"),
the Company's largest shareholder, from February 2023 through December 31, 2024. Ms. Deng is D&D's non-independent
designee. From April 2017 through March 2021, Ms. Deng served as Chairman and General Manager of Baolingbao Biology Co., Ltd.
(China), and she continues to serve as a member of its board of directors and as a member of its compensation committee. Prior, she
served for seven years as a judge in China.

 Randle
Lee Edwards was appointed to the board on December 12, 2023. He is a corporate attorney with over 25 years of experience practicing
in New York and China. He has advised Chinese, U.S., and European companies on a broad range of public and private M&A transactions,
including public mergers, stock and asset acquisitions and dispositions, venture capital and private equity deals, as well as the establishment
or dissolution of joint ventures. He has served as a member of the supervisory board of Whirlpool (China) Co. Ltd. (Shanghai, China)
since March 2023. Previously, he served as Of Counsel to Sherman & Sterling LLP (Beijing, China), from January 2020 to March 2021.
Mr. Edwards was a partner at Sherman & Sterling, LLP from January 2001 to December 2019. Mr. Edwards is proficient in Mandarin and
is a member of the State Bar of New York. Mr. Edwards holds a J.D. from Columbia University School of Law and a B.A from Columbia College.
Mr. Edwards is D&D's independent designee.

 Legal
Proceedings

 None of our executive
officers or directors are parties to any material proceedings adverse to Reed's, have any material interest adverse to Reed's
or have, during the past ten years been subject to legal or regulatory proceedings required to be disclosed hereunder.

 Family
Relationships

 Shufen
Deng and Yumin Dai are spouses. Otherwise, there are no family relationships between any of our executive officers and directors.

 Corporate
Governance

 Audit
Committee of the Board

 The
Audit Committee was formed in January 2007. The board has determined that each member of our Audit Committee is an "independent
director" as defined by Rule 5605(a)(2) of The NASDAQ Stock Market Rules and that members of the Audit Committee are independent
under the additional requirements of Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 (the "Exchange Act"). The
board has determined Sam Van meets SEC requirements of an "audit committee financial expert" within the meaning of the Sarbanes
Oxley Act of 2002, Section 407(b). In addition, the board determined that (i) none of the Audit Committee members have participated in
the preparation of the financial statements of the Company at any time during the past three years and (2) Audit Committee members are
able to read and understand fundamental financial statements. Additionally, we intend to continue to have at least one member of the
Audit Committee whose experience or background results in the individual's financial sophistication. The Audit Committee charter
is posted on our website at www.reedsinc.com.

 Code
of Ethics

 Our
Chief Executive Officer and all senior financial officers, including the Chief Financial Officer, are bound by a Code of Ethics that
complies with Item 406 of Regulation S-B of the Exchange Act. Our Code of Ethics is posted on our website www.drinkreeds.com at
We will satisfy the disclosure requirement of Item 5.05 of Form 8-K (which requires disclosure on Form 8-K or the Company website of
certain waivers or amendments of the Company's code of ethics) by posting information at this location on the Company website.

 We
undertake to provide a copy of our Code of Ethics to anyone without charge. To request a copy, please contact our investor relations
via telephone, email or mail, as follows:

 Investor
Relations at Reed's Inc.

Merritt 7 Corporate Park

 Norwalk,
Connecticut 06851

 ir@reedsinc.com

 (800)
997-3337 Ext. 2

 Compliance
with Section 16(a) of the Exchange Act

 Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires our directors and executive officers
and beneficial holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes
in ownership of our equity securities.

 To our knowledge,
based solely upon a review of Forms 3 and 4 and amendments thereto furnished to Reed's under 17 CFR 240.16a-3(e) during our fiscal
year ended December 31, 2024, the following individuals each filed one late Form 4 representing one transaction (unless otherwise noted):
John J. Bello (2 Forms), Shufen Deng, Joann Tinnelly, Norman E. Snyder, Jr., and Christopher Burleson. Jerry Lewin and Sam Van each filed
one late Form 3. None of our officers or directors filed Form 5.

 Stockholder
Director Nomination Procedures

 There
have not been any material changes to the procedures by which stockholders may recommend nominees to our board of directors.

 Insider
Trading Policy

has adopted an insider trading policy and procedures governing the purchase, sale and/or other dispositions of its securities by directors,
officers and employees that are reasonably designed to promote compliance with insider trading laws, rules and regulations and any applicable
listing standards.

 Policy
on Timing of Equity Award Grants

 The
Compensation Committee and the Board have not established written policies regarding the timing of option grants or other awards in relation
to the release of material nonpublic information ("MNPI") They do however as a matter of practice take MNPI into account
when determining the timing and terms of stock option or other equity awards to executive officers. The Company does not time
the disclosure of MNPI, whether positive or negative, for the purpose of affecting the value of executive compensation. During 2024, the timing of grant of stock options did not trigger disclosures hereunder.

 Item
11. Executive Compensation

 The
following table summarizes all compensation for fiscal years 2024 and 2023 earned by our "Named Executive Officers" during fiscal 2024:

 Name
 and Principal Position

 Year

 Salary

 Bonus

 Stock
 Awards (1)

 All
 Other Compensation (2)

 Total

 2024

 $
 428,942

 $

 $
 -

 $
 14,416

 $
 493,358

 Chief Executive Officer

 2023

 $
 310,083

 $
 -

 $
 -

 $
 14,172

 $
 324,255

 -

 $
 -

 -

 $
 -

 $
 -

 $

 $
 -

 $

 $

 $
 -

 $

 $

 $
 -

 $

 Joann Tinnelly(3)

 2024

 $
 378,125

 $
 -

 $
 7,015

 $
 385,140

 Former Chief
 Financial Officer

 2023

 $
 179,375

 $
 -

 $
 6,765

 $
 186,140

 Christopher Burleson

 2024

 $
 315,000

 $
 -

 $
 12,695

 $
 327,695

 Chief Commercial Officer

 2023

 $
 275,000

 $
 -

 36,864

 $
 11,711

 $
 323,575

 (1)
The amounts represent the fair value for share-based payment awards issued during the year. The award is calculated on the date of grant
in accordance with Financial Accounting Standards.

 (2)
Other compensation includes both cash payments and the estimated value of the use of Company assets.

 (3)
Joann Tinnelly resigned from her position as Chief Financial Officer and assumed the role of Chief Accounting Officer on February 10,
2025.

 Employment
Arrangements

 On June 24,
2020, we entered into an amended and restated employment agreement with Norman E. Snyder, Jr. The term of the agreement continued through
March 1, 2024. Under the agreement, Mr. Snyder was eligible to receive a performance-based cash bonus at a target amount of 50% of his
base salary in effect. He was also eligible to participate in Reed's other benefit plans available to its executive officers. The
agreement provided for acceleration of equity grants triggered by a "change of control", as defined in the agreement, and
contained customary, non-competition, confidentiality, invention assignment and non-solicitation covenants. Mr. Snyder was also entitled
to six months' severance benefits in the event of termination without cause by Reed's or for good reason by Mr. Snyder, subject
to execution of a release. The Company and Mr. Snyder are in the process of renegotiating the terms of his employment. Mr. Snyder's
current base salary is $378,525 per year.

 Joann
Tinnelly receives a salary of $300,000 and is eligible for an annual performance bonus based on a target of 35% of her annual salary
(to be determined by the Company in its sole discretion).

 Christopher
Burleson receives a salary of $315,000 and is eligible for an annual performance bonus based on a target of 35% of his annual salary
(to be determined by the Company in its sole discretion).

 Termination
of Employment/Retirement

 None
of our Named Executive Officers have any arrangement that provides for retirement benefits, or benefits that will be paid primarily following
retirement.

 None of the Named Executive Officers for the 2024
fiscal year, as defined in this Item 11, has a contract, agreement, plan or arrangement that is currently in effect, whether written
or unwritten, that provides for payment to him or her following, or in connection with resignation, retirement or other termination,
or a change in control of the Company or a change in the Named Executive Officer's responsibilities following a change in control.

 The
Compensation Committee of the board retains discretion to determine the treatment of outstanding stock option awards in connection with
a change in control of the Company, subject to the terms of contractual agreements.

 Recovery
of Erroneously Awarded Compensation

 None.

Equity Awards at Year-End

 The
following table sets forth information regarding unexercised options and equity incentive plan awards for each Named Executive Officer
outstanding as of December 31, 2024:

 Name
 and Position

 of
 Underlying
 Unexercised
 Options (#)
 Exercisable

 of
 Underlying
 Unexercised
 Options (#) Unexercisable

 Incentive Plan Awards:
 Number of Securities
 Underlying
 Unexercised
 Unearned

 Option

 Price

 Option

 Expiration
 Date

 of Shares or Units of Stock That Have Not Vested (#)

 Market
 Value of Shares or Units of Stock That Have Not Vested ($)

 Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)

 Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)

 Norman E. Snyder,
 Jr.
 (Chief Executive Officer)

 7,685

 $
 44.00

 2/25/2030

 -

 -

 $
 25.00

 3/25/2030

 4,322

 $
 35.00

 5/20/2030

 13,905

 -

 $
 47.50

 9/16/2030

 37,640

 -

 1,980

 $
 1.30

 4/29/2034

 Joann Tinnelly
(Former
 Chief Financial Officer)

 2,500

 1,501

 -

 $
 124.500

 2/4/2029

 -

 -

 $
 25.00

 3/25/2030

 6,230

 -

 $
 47.50

 9/16/2030

 18,236

 -

 7,425

 $
 1.30

 4/29/2034

 Christopher J. Burleson (Chief
 Commercial Officer)

 5,208

 -

 16,610

 $
 1.3 0

Compensation

 The
following table summarizes the compensation paid to our non-employee directors for the year ended December 31, 2024:

 Name

 Fees
 Earned or Paid in Cash

 Stock
 Awards

 Option
 Awards

 Non-Equity
 Incentive Plan Compensation

 All Other
 Compensation

 Total

 Shufen Deng (1)

 $
 -

 -

 -

 -

 -

 $
 -

 Lewis Jaffe

 $

 -

 -

 -

 $

 Randle Lee Edwards

 $

 -

 -

 -

 -

 $

 Sam Van (2)

 $
 12,500

 -

 -

 -

 -

 $
 12,500

 John J. Bello (3)

 $

 -

 -

 -

 $

 Louis Imbrogno, Jr. (4)

 $

 -

 -

 -

 $

 Thomas W. Kosler (5)

 $

 -

 -

 -

 $

 Jerry Lewin (6)

 $
 -

 -

 -

 -

 $
 -

 (1)

 Shufen Deng elected to waive
 non-employee director compensation due to her position at the time as the principal and director designee of D&D Source of Life
 Holding, Ltd.

 (2)

 Sam
 Van was appointed to the board effective October 21, 2024.

 (3)

 John J. Bello resigned from
 the board effective October 28, 2024.

 (4)

 Louis Imbrogno, Jr. resigned
 from the board effective October 28, 2024.

 (5)

 Thomas W. Kosler resigned
 from the board effective October 29, 2024.

 (6)

 Jerry Lewin's tenure
 was brief, from July 12, 2024 through August 2, 2024

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The
following table sets forth certain information regarding our shares of common stock beneficially owned as of March 19, 2025 for (i) each
Named Executive Officer and director, and (ii) all Named Executive officers and directors as a group (iii) each stockholder known to
be the beneficial owner of 5% or more of our outstanding shares of common stock. A person is considered to beneficially own any shares
(i) over which such person, directly or indirectly, exercises sole or shared voting or investment power or (ii) of which such person
has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants or otherwise.
Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers
is exercised solely by the beneficial owner or shared by the owner and the owner's spouse or children.

 For
purposes of this table, a person or group of persons is deemed to have "beneficial ownership" of any shares of common stock
that such person has the right to acquire within 60 days of March 19, 2025. For purposes of computing the percentage of outstanding shares
of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire
within 60 days of March 19, 2025 is deemed to be outstanding but is not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial
ownership. Except as otherwise indicated below, the persons named in the table have sole voting and investment power with respect to
all shares of common stock held by them. Unless otherwise indicated, the principal address of each listed executive officer and director
is 501 Merritt 7 Corporate Park, Norwalk, Connecticut 06851.

 Named
 Beneficial Owner Directors and Named Executive Officers

 of Shares
 Beneficially Owned

 Percentage
 of
 Shares Beneficially

 Owned(1)

 Norman E. Snyder,
 Jr. (2)

 86,071

 0.2
 %

 Joann Tinnelly (3)

 31,293

 0.1
 %

 Chris Burleson (4)

 29,368

 0.1
 %

 Lewis Jaffe (5)

 7,395

 0.0
 %

 Shufen Deng

 0.0
 %

 Randle Lee Edwards

 0.0
 %

 Sam Van

 0.0
 %

 Directors and Named Executive
 Officers as a group (7 persons)

 154,327

 0.3
 %

 5% or greater stockholders

 D&D Source of Life Holding
 LTD / Era Regenerative Medicine (6)

 27,139,520

 59.5
 %

 *
Less than 1%

 (1) Based on 45,371,247
shares outstanding as of March 19, 2025.

 (2) Includes 64,052
shares underlying options and 2,856 shares underlying warrants.

 (3) Includes 27,926
shares underlying options.

 (4) Includes 5,208
shares underlying options.

 (5) Includes 1,000
shares underlying options and 5,859 RSAs awarded as board compensation.

 (6) Era Regenerative
Medicine Ltd. is the sole shareholder of D&D Source of Life Holding Ltd and Qi Meng, sole principal of Era Regenerative Medicine
Ltd. exercises sole voting and dispositive and dispositive control over the shares of the Company's common stock held indirectly

Authorized for Issuance under Equity Compensation Plans

 As of December 31, 2024, our 2024 Inducement Plan and our Amended and Restated
2020 Plan were in effect. Our Second Amended and Restated 2017 Incentive Compensation Plan was discontinued, although outstanding awards
granted per its terms remain in effect.

 The
following table provides information, as of December 31, 2024, with respect to equity securities authorized for issuance under our equity
compensation plans:

 Number of Securities
 to be Issued Upon Exercise of Outstanding Options,
 Warrants and Rights

 Weighted-

 Average Exercise Price of Outstanding Options,
 Warrants and Rights

 Number of Securities
 Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities
 reflected in

 Plan
 Category

 (a)

 (b)

 Column
 (a)

 Equity compensation
 plans approved board of directors

 118,878

 $
 45.64

 Equity compensation plans
 not approved board of directors

 205,669

 $
 1.30

 44,007

 TOTAL

 323,878

 $
 17.47

 44,007

 Item
13. Certain Relationships and Related Transactions, and Director Independence

Relationships and Related Transactions

 Our
board of directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship between
Reed's and one of our executive officers, directors, director nominees or 5% or greater stockholders (or their immediate family
members), each of whom we refer to as a "related person," in which such related person has a direct or indirect material
interest.

 Our
Audit Committee comprised of our three independent directors reviews and approves in advance any proposed related person transactions.

 For
purposes of these procedures, "related person" and "transaction" have the meanings contained in Item 404 of Regulation
S-K. The individuals and entities that are considered "related persons" include:

Directors and executive officers of Reed's;

Any person known to be the beneficial owner of five percent or more of Reed's common stock (a "5% Stockholder"); and

Any immediate family member, as defined in Item 404(a) of Regulation S-K, of a director, executive officer or 5% Stockholder.

 In
assessing a related party transaction brought before it for approval the independent directors consider, among other factors it deems
appropriate, whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party
under the same or similar circumstances and the extent of the related person's interest in the transaction. The independent directors
may then approve or disapprove the transaction in its discretion.

 Any
related party transaction will be disclosed in the applicable SEC filing as required by the rules of the SEC. There are no transactions
required to be reported under Item 404(b) of Regulation S-K since the beginning of our last fiscal year where the policies and procedures
did not require review, approval or ratification or were not followed.

 The
following includes a summary of transactions since the beginning of fiscal 2024 or any currently proposed transaction, in which we were
or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total
assets at year-end for the last two completed fiscal years and in which any related person had or will have a direct or indirect material
interest (other than compensation described under "Executive Compensation"). We believe the terms obtained or consideration
that we paid or received, as applicable, in connection with the transactions described below were comparable to or better than terms
available or the amounts that would be paid or received, as applicable, in arm's-length transactions.

 D&D
Source of Life Holding, Ltd., "D&D"/ Era Regenerative Medicie Ltd.

 On
February 28, 2024, D&D invested $3,000,000 in the Company's SAFE vehicles. Pursuant to its SAFE, (i) D&D's director
designation rights were reaffirmed and expanded to include one additional independent director, (ii) Shufen Deng was named Vice-Chairperson
of the Board and (iii) Randle Lee Edwards was designated as an independent director designee. D&D's director designation rights
continue so long as D&D beneficially owns 25% or more of the company's issued and outstanding common stock and the size of
the Board was limited to 9 members.

 On
September 10, 2024, D&D subscribed for an aggregate of 3,268,795 shares of common stock in the company's PIPE. D&D's
subscription in the PIPE was paid through automatic conversion of its SAFE in the principal amount of $3,000,000 with the balance of
$1,903,192 paid in cash.

 On
October 10, 2024, certain funds affiliated with Whitebox Advisors, LLC (referred to herein as "Whitebox") sold and assigned
their entire interest in eight secured promissory notes of the company to D&D for a total purchase price of $17,878,248.17. The notes
contained customary affirmative and negative covenants and events of default. The Notes were secured by substantially all of the company's
assets, including all intellectual property. Certain of the notes were not convertible and certain of the notes were convertible, subject
to certain limitations, including a beneficial ownership limitation of 9.9% of the number of shares of common stock outstanding.

 On
November 14, 2024, the company entered into a new secured one-year term loan with a principal amount of $10 million with Whitebox.
The term loan is secured by substantially all of the Company's assets, including all intellectual property. The company used part
of the proceeds to pay off and close its then existing revolving line of credit. In order to facilitate the term loan transaction, D&D
and the company amended the Notes. D&D released all collateral under the Notes, deferred cash payments thereunder and extended the
maturity dates of all of the Notes to 181 days after the maturity of the revolving credit facility, which was November 14, 2025 (with
the maturity dates of the notes extended to May 14, 2026). D&D and its agent further waived certain events of default under the Notes
through the maturity date. Further, as part of the term loan transaction, D&D subordinated its notes to Whitebox. The company further
pledged collateral and granted security interests in all of its intellectual property Whitebox.

 On
November 19, 2024, the company and D&D entered into an exchange agreement, whereby D&D equitized the Notes, in full, for an aggregate
of 22,478,074 shares of common stock of the company.

 On
January 24, 2025, the Company and D&D entered into an amendment to the Shareholders Agreement dated
May 25, 2023,, updating the agreement to incorporate the following previously agreed terms: so long as D&D owns 25% or more of Reed's
issued and outstanding common stock, (1) D&D shall have the right to designate three individuals for appointment to the board of
directors of Reed's, two of which shall be "independent directors" as defined in the rules of the Nasdaq Stock Market,
(2) D&D shall have the right to designate one board observer and (3) the size of the Reed's board of directors will not exceed
nine members without consent of both D&D's independent designated directors.

 On
January 24, 2025, the company and D&D entered into a Board Observer Agreement governing D&D's right to designate the board
observer. Such board observer right permits the observer's attendance at board meetings and participation in discussions at such
meetings. The agreement further provides for indemnification and advancement of expenses from Reed's to the same extent provided
by Reed's to its directors and for reimbursement of reasonable out-of-pocket expenses incurred by the observer in connection with
attending meeting, subject to company policies in effect. Any individual's service as the observer is conditioned on such individual's
execution of an agreement with Reed's that preserves the confidentiality of Reed's information and board discussions. D&D
designated Mr. Yumin Dai to be the board observer.

 Shufen Deng was the sole principal of D&D
and as such exercised sole voting and dispositive control over the shares of common stock held by D&D through December 31, 2024.
On December 31, 2024, all outstanding shares of D&D were assigned by Ms. Deng to Era Regenerative Medicine Ltd, as a holding
company for restructuring purposes without requirement of payment of consideration.

 Ms. Deng is D&D's non-independent director
designee.

 John J. Bello

 John J. Bello is the former Chairman of the board
and was a significant stockholder of the company. In March 2023 he funded $300,000 to the company through a Simple Agreements for Future
Equity ("SAFE") investment. The SAFE investment converted into 300,000 shares of common stock on September 10, 2024 pursuant
to the company's PIPE transaction.

 Union Square Entities

 Union Square Park Capital Management, LLC, Union Square
Park GP and Union Square Park Partners, LP are collectively referred to as the "Union Square Entities". Leon M. Zaltzman may
be deemed to have voting and dispositive control over shares of common stock of the company held by the Union Square Entities. Mr. Zaltzman
served as a board observer as representative of the Union Square Entities from July 7, 2023 through October 31, 2024. The Union Square
Entities were a significant stockholder of our common stock. On February 8, 2024, Union Square Park Partners LP funded $798,808 to the
company through the SAFE investment. The SAFE investment converted into 798,808 shares of common stock on September 10, 2024.

 On
July 26, 2024, Norman E. Snyder Jr, CEO of the Company, provided a personal guaranty for $500,000 over advance on the company's
line of credit with Alterna Capital Solutions, LLC. The over advance was repaid by September 30, 2024.

 Yumin Dai

 Yumin Dai is the spouse of Shufen Deng. On February 4, 2025, he was appointed Chief Executive Officer of the Company's newly formed wholly owned subsidiary, Reed's
(Asia) Limited (BVI). His salary is $300,000 per year. The Company expects to expand Mr. Dai's duties to serve as Chief Executive
Officer and director of a newly formed Japanese subsidiary.

 Mr. Dai is D&D's designated board observer.

Independence

 As of the date of this Annual Report, our board has
five directors; provided, however Lewis Jaffe submitted his resignation from the board, which will be effective March 31, 2025. The
following are the three standing committees of the board: an Audit Committee, a Compensation Committee and a Governance Committee. The
board, upon recommendation from the Compensation Committee, determined each of Lewis Jaffe, Sam Van and Randle Lee Edwards is an "independent
director" as defined by Rule 5605(a)(2) of The NASDAQ Stock Market Rules (the "NASDAQ Rules"). Independence of board
members is re-evaluated by the board annually. We intend to maintain at least a majority of independent directors on our board in the
future and fill the vacancy created by Mr. Jaffe's resignation promptly with an individual that qualifies as an "independent
director".

 Item
14. Principal Accountant Fees and Services

& Company, P.A. ("Weinberg") was our independent registered public accounting firm for the years ended December 31, 2024,
and 2023.

 The
following table shows the fees paid or accrued by us for the audit and other services provided by Weinberg for the years ended December
31, 2024, and 2023:

 2024

 2023

 Audit Fees

 $
 279,804

 $
 215,314

 Tax Fees

 33,928

 47,841

 All Other
 Fees

 8,645

 Total

 $
 314,122

 $
 271,800

 As
defined by the SEC, (i) "audit fees" are fees for professional services rendered by our principal accountant for the audit
of our annual financial statements and review of financial statements included in our Form 10-K, or for services that are normally provided
by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years; (ii) "audit-related
fees" are fees for assurance and related services by our principal accountant that are reasonably related to the performance of
the audit or review of our financial statements and are not reported under "audit fees;" (iii) "tax fees" are
fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning; and (iv) "all
other fees" are fees for products and services provided by our principal accountant, other than the services reported under "audit
fees," "audit-related fees," and "tax fees."

 Audit
Fees

provided services for the audits of our financial statements included in Annual Reports on Form 10-K and limited reviews of the financial
statements included in Quarterly Reports on Form 10-Q.

 Audit
Related Fees

did not provide any professional services which would be considered "audit related fees."

 Tax
Fees

prepared our 2024 and 2023 Federal and state income tax returns.

 All
Other Fees

 Services
provided by Weinberg with respect to the filing of various registration statements made throughout the year are considered "all
other fees."

 Audit
Committee Pre-Approval Policies and Procedures

 Under
the SEC's rules, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent registered
public accounting firm in order to ensure that they do not impair the auditors' independence. The SEC's rules specify the
types of non-audit services that an independent auditor may not provide to its audit client and establish the Audit Committee's
responsibility for administration of the engagement of the independent registered public accounting firm.

 Consistent
with the SEC's rules, the Audit Committee Charter requires that the Audit Committee review and pre-approve all audit services and
permitted non-audit services provided by the independent registered public accounting firm to us or any of our subsidiaries. The Audit
Committee may delegate pre-approval authority to a member of the Audit Committee and if it does, the decisions of that member must be
presented to the full Audit Committee at its next scheduled meeting. Accordingly, 100% of audit services and non-audit services described
in this Item 14 were pre-approved by the Audit Committee.

 There
were no hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent
employees.

 PART
IV

 Item
15. Exhibits and Financial Statement Schedules

 (a)
1. Financial Statements

 See
Index to Financial Statements in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.

 2.
Financial Statement Schedules

 All
other financial statement schedules have been omitted because they are either not applicable or the required information is shown in
the financial statements or notes thereto.

 3.
Exhibits

 See
the Exhibit Index, which follows the signature page of this Annual Report on Form 10-K, which is incorporated herein by reference.

 (b)
Exhibits

 See
Item 15(a) (3) above.

 (c)
Financial Statement Schedules

 See
Item 15(a) (2) above.

 Item
16. Form 10K Summary

 Not
applicable.

 SIGNATURES

 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

 Date:
 March 28, 2025

 INC.

 a
 Delaware corporation

 By:

 /s/
 Norman E. Snyder, Jr.

 Chief
 Executive Officer

 In
accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.(new board members to de added)

 Signature

 Title

 Date

 /s/
 Norman E. Snyder, Jr.

 Chief
 Executive Officer,

 March

 (Principal
 Executive Officer), Director

 /s/
 Douglas W. McCurdy

 Chief
 Financial Officer

 March

 Douglas
 W. McCurdy

 (Principal
 Financial Officer)

 /s/
 Joann Tinnelly

 Chief
 Accounting Officer

 March

 Joann
 Tinnelly

 (Principal
 Accounting Officer)

 /s/ Shufen Deng

 Chairperson of the Board and Chairperson of Asian Operations

 March

 Shufen Deng

 /s/
 Sam Van

 March

 Sam
 Van

 /s/
 Lewis Jaffe

 March

 Lewis
 Jaffe

 /s/
 Randle Lee Edwards

 March

 Randle
 Lee Edwards

TO EXHIBITS

 ITEM
15(a)(3)

 The
following is a list of the exhibits filed as part of this Form 10-K. The documents incorporated by reference can be viewed on the SEC's
website at

 Exhibit

 3(i)

 Certificate of Incorporation of Reed's, Inc.

 3(ii)

 Amended and Restated Bylaws of Reed's, Inc.

 3(vi)

 Description of Securities.

 4.1

 Form of Warrant issued to Raptor/ Harbor Reed's SPV LLC on December 11, 2020 which is incorporated by reference to Exhibit 4.1 to Form 10-K filed with the SEC March 30, 2021.

 4.2

 Form of Warrant issued to Union Square Park Partners, LP which is incorporated by reference to Exhibit 4.1 to Form 8-K filed with the SEC March 21, 2022.

 4.3

 Form of Warrant 2022 PIPE which is incorporated by reference to Exhibit 4.1 to Form 8-K filed with the SEC March 14, 2022.

 4.4

 Form of Secured Convertible Promissory Note issued May 9, 2022 which is incorporated by reference to Exhibit 4.1 to Form 8-K filed with the SEC May 10, 2022.

 4.5

 Form of Warrant issued May 25, 2023 which is incorporated by reference to Exhibit 4.1 to Form 8-K filed with the SEC May 31, 2023.

 4.6

 Form of Option Note in favor of Wilmington Savings Fund Society, FSB dated August 1, 2024, which is incorporated by reference to Exhibit 4.1 to Form 10-Q filed with the SEC August 13, 2024.

 4.7

 Simple Agreement for Future Equity by and between Reed's, Inc. and D&D Source of Life Holding Ltd. dated February 8, 2024 which is incorporated by reference to Exhibit 4.7 to Form 10-K as filed with the SEC April 1, 2024.

 4.8

 Simple Agreement for Future Equity by and between Reed's, Inc. and John J. Bello dated March 7, 2024 which is incorporated by reference to Exhibit 4.8 to Form 10-K as filed with the SEC April 1, 2024.

 4.9

 Simple Agreement for Future Equity by and between Reed's, Inc. and Union Square Park Partners LP dated February 8, 2024 which is incorporated by reference to Exhibit 4.9 to Form 10-K as filed with the SEC April 1, 2024.

 10.1*

 Form of Reed's, Inc. Indemnification Agreement which is incorporated by reference to Exhibit 10.1 to Form 10-K as filed with the SEC April 1, 2024.

 10.2*

 Reed's, Inc. 2020 Equity Incentive Plan, as amended December 30, 2021 which is incorporated by reference to Exhibit 10.2 to Form 10-K as filed with the SEC April 1, 2024.

 10.3*

 Reed's Inc. 2024 Inducement Plan which is incorporated by reference to Exhibit 10.3 to Form 10-K as filed with the SEC April 1, 2024.

 10.4*

 Employment Agreement by and between Reed's, Inc. and Douglas W. McCurdy dated January 31, 2025.

 10.5*

 Amended and Restated Employment Agreement by and between Reed's, Inc. and Norman E. Snyder, Jr. dated June 24, 2020 which is incorporated by reference to Form 10-K filed with the SEC April 15, 2022.

 10.6

 Lease by and between Merritt 7 Venture LLC and Reed's Inc. dated May 10, 2024 which is incorporated by reference to Exhibit 10.2 to Form 10-Q filed with the SEC August 13, 2024.

 10.7

 Form of Securities Purchase Agreement by and among Reed's, Inc, and certain investors dated March 10, 2022 which is incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC March 14, 2022.

 10.8

 Form of Registration Rights Agreement by and among Reed's, Inc, and certain investors dated March 10, 2022 which is incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC March 14, 2022.

 10.98

 Registration Rights Agreement by and between Reed's, Inc. and purchasers dated May 9, 2022 which is incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC May 10, 2022.

 10.10

 Securities Purchase Agreement dated May 25, 2023 by and between Reed's, Inc. and D&D Source of Life Holding Ltd. and certain other investors which is incorporated by reference to Exhibit 10.1.to Form 8-K filed with the SEC May 31 2023.

 10.11

 Shareholders Agreement dated May 25, 2023 by and between Reed's, Inc. and D&D Source of Life Holding Ltd which is incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC May 31, 2023.

 10.12

 Amendment to Shareholders Agreement dated January 24, 2025 by and between Reed's, Inc. and D&D Source of Life Holding Ltd which is incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC January 28, 2025.

 10.13

 Board Observer Agreement dated January 24, 2025 by and between Reed's, Inc. and D&D Source of Life Holding Ltd which is incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC January 28, 2025.

 10.14

 Registration Rights Agreement dated May 25, 2023 by and between Reed's, Inc., and D&D Source of Life Holdings Ltd and certain other investors which is incorporated by reference to Exhibit 10.3 to Form 8-K filed with the SEC May 31, 2023.

 10.15

 Amended Registration Rights Agreement by Reed's, Inc. and the holders of 10% secured convertible notes dated May 30, 2023 which is incorporated by reference to Exhibit 10.4 to Form 8-K filed with the SEC May 31, 2023.

 10.16

 Securities Purchase Agreement dated December 30, 2024 by and between Reed's, Inc. and certain investors which is incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC January 6, 2025.

 10.17

 Registration Rights Agreement dated December 30, 2024 by and between Reed's, Inc. and certain investors which is incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC January 6, 2025.

 10.18

 Senior Secured Loan and Security Agreement among Reed's, Inc., the lenders party thereto, and Cantor Fitzgerald Securities, as administrative agent and collateral agent, dated November 14, 2024 which is incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC November 19, 2024.

 10.19

 Seventh Amendment to the 10% Secured Convertible Notes and 10% Secured Promissory Notes between Reed's, Inc., the holders party thereto, and Wilmington Savings Fund Society, FSB, as holder representative and collateral agent, which is incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC November 19, 2024.

 10.20

 Grant of Security Interest in Copyright Rights by Reed's, Inc. in favor of Cantor Fitzgerald Securities, as collateral agent, dated November 14, 2024 which is incorporated by reference to Exhibit 10.3 to Form 8-K filed with the SEC November 19, 2024.

 10.21

 Grant of Security Interest in Patent Rights by Reed's, Inc. in favor of Cantor Fitzgerald Securities, as collateral agent, dated November 14, 2024 which is incorporated by reference to Exhibit 10.4 to Form 8-K filed with the SEC November 19, 2024.

 10.22

 Grant of Security Interest in Trademark Rights by Reed's, Inc. in favor of Cantor Fitzgerald Securities, as collateral agent, dated November 14, 2024 which is incorporated by reference to Exhibit 10.5 to Form 8-K filed with the SEC November 19, 2024.

 10.23

 Subordination Agreement by and among Reed's, Inc., Wilmington Savings Fund society, FSB, as holder representative and collateral agent, D&D Source of Life Holding Ltd. and Cantor Fitzgerald Securities, as administrative agent and collateral agent, dated November 14, 2024 which is incorporated by reference to Exhibit 10.6 to Form 8-K filed with the SEC November 19, 2024.

 10.24

 Pledge Agreement by Reed's, Inc. in favor of Cantor Fitzgerald Securities, in its capacity as collateral agent, dated November 14, 2024 which is incorporated by reference to Exhibit 10.7 to Form 8-K filed with the SEC November 19, 2024.

 10.25

 Exchange Agreement by and between Reed's, Inc. and D&D Source of Life Holding Ltd. dated November 18, 2024 which is incorporated by reference to Exhibit 10.8 to Form 8-K filed with the SEC November 19, 2024.

 10.26

 Option Exercise and Sixth Amendment to the 10% Secured Convertible Notes by and between Reed's, Inc. and each holder and Wilmington Savings Fund Society, FSB, holder representative and collateral agent dated August 1, 2024, which is incorporated by reference to Exhibit 10.1 to Form 10-Q filed with the SEC August 13, 2024.

 10.27

 Securities Purchase Agreement by and between Reed's, Inc. and investors dated September 9, 2024, which is incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC September 13, 2024.

 10.28

 Registration Rights Agreement by and between Reed's, Inc. and investors dated September 9, 2024, which is incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC September 13, 2024.

 10.29

 Limited Waiver and Deferral Agreement by and between Reed's, Inc. and each holder and Wilmington Savings Fund Society, FSB, holder representative and collateral agent dated May 17, 2024 which is incorporated by reference to Exhibit 10.3 to Form 10-Q filed with the SEC May 20, 2024.

 10.30

 Amendment to Limited Waiver, Deferral, and Amendment and Restatement Agreement by and between Reed's, Inc. and each holder and Wilmington Savings Fund Society, FSB, holder representative and collateral agent dated April 1, 2024 which is incorporated by reference to Exhibit 10.1 to Form 8-K/A filed with the SEC on April 3, 2024.

 10.31

 Limited Waiver, Deferral, and Amendment and Restatement Agreement by and between Reed's, Inc. and each holder and Wilmington Savings Fund Society, FSB, holder representative and collateral agent dated February 12, 2024 which is incorporated by reference to Exhibit 10.3 to Form 8-K filed with the SEC February 13, 2024.

 Code of Ethics, which is incorporated by reference to Form 10-K filed April 1, 2024.

 Insider Trading Policy

 Subsidiaries
of Reed's, Inc.

 Consent of Weinberg & Co., PA.

 Power of Attorney. (included on signature page)

 Certification
 of our Chief Executive Officer and our Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 Certification
 of our Chief Executive Officer and our Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 Reed's, Inc. Clawback Policy for Covered Executives which is incorporated by reference to Exhibit 97 to Form 10-K filed with the SEC on April 1, 2024.

 The
 following materials from Reed's, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 formatted
 of Changes in Stockholders Equity, (iv) the Statements of Cash Flows, and (v) Notes to Financial Statements.

 The
 cover page from the Reed's, Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2023, formatted in Inline

 *
Management contracts and compensatory plans or arrangements required to be filed as exhibits pursuant to Item 15(a)(3) of this report.