Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2022 | May 11, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-32501 | |
Entity Registrant Name | REED’S, INC. | |
Entity Central Index Key | 0001140215 | |
Entity Tax Identification Number | 35-2177773 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 201 Merritt 7 | |
Entity Address, City or Town | Norwalk | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06851 | |
City Area Code | (800) | |
Local Phone Number | 997-3337 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | REED | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 112,652,320 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 122 | $ 49 |
Accounts receivable, net of allowance of $277 and $234, respectively | 5,161 | 5,183 |
Inventory | 20,848 | 17,049 |
Receivable from related party | 1,135 | 933 |
Prepaid expenses and other current assets | 1,561 | 1,491 |
Total current assets | 28,827 | 24,705 |
Property and equipment, net of accumulated depreciation of $613 and $561, respectively | 940 | 992 |
Intangible assets | 624 | 624 |
Total assets | 30,391 | 26,321 |
Current liabilities: | ||
Accounts payable | 16,359 | 10,434 |
Accrued expenses | 689 | 286 |
Revolving line of credit, net of capitalized financing costs of $470 and $0, respectively | 7,475 | 10,229 |
Payable to related party | 735 | 614 |
Current portion of lease liabilities | 167 | 161 |
Total current liabilities | 25,425 | 21,724 |
Lease liabilities, less current portion | 350 | 394 |
Total liabilities | 25,775 | 22,118 |
Stockholders’ equity: | ||
Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 9,411 shares issued and outstanding | 94 | 94 |
Common stock, $.0001 par value, 180,000,000 shares authorized; 112,551,890 and 93,733,975 shares issued and outstanding, respectively | 11 | 9 |
Additional paid in capital | 112,628 | 107,237 |
Accumulated deficit | (108,117) | (103,137) |
Total stockholders’ equity | 4,616 | 4,203 |
Total liabilities and stockholders’ equity | $ 30,391 | $ 26,321 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance | $ 277 | $ 234 |
Property and equipment, accumulated depreciation | 613 | 561 |
Capitalized financing costs | $ 470 | $ 0 |
Series A convertible preferred stock, par value | $ 10 | $ 10 |
Series A convertible preferred stock, shares authorized | 500,000 | 500,000 |
Series A convertible preferred stock, shares issued | 9,411 | 9,411 |
Series A convertible preferred stock, shares outstanding | 9,411 | 9,411 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 112,551,890 | 93,733,975 |
Common stock, shares outstanding | 112,551,890 | 93,733,975 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Net Sales | $ 12,182 | $ 12,146 |
Cost of goods sold | 9,250 | 8,293 |
Gross profit | 2,932 | 3,853 |
Operating expenses: | ||
Delivery and handling expense | 2,812 | 3,286 |
Selling and marketing expense | 2,178 | 2,215 |
General and administrative expense | 2,121 | 2,603 |
Total operating expenses | 7,111 | 8,104 |
Loss from operations | (4,179) | (4,251) |
Other income (expense) | ||
Interest expense | (801) | (256) |
Net loss | $ (4,980) | $ (4,507) |
Net loss per share – basic and diluted | $ (0.05) | $ (0.05) |
Weighted average number of shares outstanding – basic and diluted | 97,377,408 | 86,631,304 |
Condensed Statements of Changes
Condensed Statements of Changes in Stockholders' Equity (Unauditied) - USD ($) $ in Thousands | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 9 | $ 94 | $ 97,031 | $ (86,730) | $ 10,404 |
Beginning balance, shares at Dec. 31, 2020 | 86,317,096 | 9,411 | |||
Fair value of vested options | 300 | 300 | |||
Fair value of vested restricted shares granted to officers | 98 | 98 | |||
Fair value of vested restricted shares granted to officers, shares | 84,809 | ||||
Common shares issued for financing costs | 472 | 472 | |||
Common shares issued for financing costs, shares | 400,000 | ||||
Net loss | (4,507) | (4,507) | |||
Common shares issued on exercise of options | 3 | 3 | |||
Common shares issued on exercise of options, shares | 6,000 | ||||
Ending balance, value at Mar. 31, 2021 | $ 9 | $ 94 | 97,904 | (91,237) | 6,770 |
Ending balance, shares at Mar. 31, 2021 | 86,807,905 | 9,411 | |||
Beginning balance, value at Dec. 31, 2021 | $ 9 | $ 94 | 107,237 | (103,137) | 4,203 |
Beginning balance, shares at Dec. 31, 2021 | 93,733,975 | 9,411 | |||
Fair value of vested options | 225 | 225 | |||
Fair value of vested restricted shares granted to officers | 66 | 66 | |||
Fair value of vested restricted shares granted to officers, shares | 136,594 | ||||
Repurchase of common stock | (2) | (2) | |||
Repurchase of common stock, shares | (13,250) | ||||
Common shares issued for financing costs | 37 | 37 | |||
Common shares issued for financing costs, shares | 100,000 | ||||
Common shares issued for cash, net of offering costs | $ 2 | 5,065 | 5,067 | ||
Common shares issued for cash, net of offering costs, shares | 18,594,571 | ||||
Net loss | (4,980) | (4,980) | |||
Ending balance, value at Mar. 31, 2022 | $ 11 | $ 94 | $ 112,628 | $ (108,117) | $ 4,616 |
Ending balance, shares at Mar. 31, 2022 | 112,551,890 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (4,980) | $ (4,507) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 25 | 32 |
Amortization of debt discount | 65 | 162 |
Amortization of prepaid financing costs | 431 | 25 |
Fair value of vested options | 225 | 292 |
Fair value of vested restricted shares granted to officers | 66 | 106 |
Fair value of common shares issued as financing costs | 37 | |
Change in allowance for doubtful accounts | 62 | (69) |
Inventory write-downs | 10 | (20) |
Gain on termination of leases | (3) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (40) | (244) |
Inventory | (3,810) | (1,306) |
Prepaid expenses and other assets | (617) | (484) |
Decrease in right of use assets | 27 | 24 |
Accounts payable | 5,926 | 1,387 |
Accrued expenses | 403 | (446) |
Lease liability | (37) | (8) |
Net cash used in operating activities | (2,207) | (5,059) |
Cash flows from investing activities: | ||
Patent costs | (2) | |
Purchase of property and equipment | (95) | |
Net cash used in investing activities | (97) | |
Cash flows from financing activities: | ||
Proceeds from line of credit | 14,508 | 16,154 |
Payments on line of credit | (17,212) | (11,898) |
Proceeds from sale of common stock | 5,067 | |
Repurchase of common stock | (2) | |
Amounts from related party, net | (81) | 459 |
Payments on capital lease obligation | (2) | |
Proceeds from exercise of options | 3 | |
Net cash provided by financing activities | 2,280 | 4,716 |
Net increase (decrease) in cash | 73 | (440) |
Cash at beginning of period | 49 | 595 |
Cash at end of period | 122 | 155 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | $ 256 | $ 70 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed financial statements of Reed’s, Inc. (the “Company”, “we”, “us”, or “our”), have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures contained in these condensed financial statements are adequate to make the information presented herein not misleading. These condensed financial statements should be read in conjunction with the financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on April 15, 2022. The accompanying condensed financial statements are unaudited, but in the opinion of management contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2022, and the results of its operations and its cash flows for the three months ended March 31, 2022 and 2021. The balance sheet as of December 31, 2021 is derived from the Company’s audited financial statements. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2022. Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the three months ended March 31, 2022, the Company recorded a net loss of $ 4,980 2,207 As of March 31, 2022, we had a cash balance of $ 122 5,100 4,616 3,402 On May 9, 2022 the Company issued $ 11,250 May 9, 2025 10% 4.1503 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. To alleviate these conditions, management is currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from financial institutions. 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. We have also 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. During the first quarter of 2022, the Company continued to strengthen its supply chain, implement gross margin enhancement initiatives, drive efficiencies in transportation and warehouse costs and reduce operating expenses. The Company remains focused on driving sales growth and improving margin. The sales growth focus is on channel expansion, new product introduction and improved sales execution. The margin enhancement initiative is driven by co-packer upgrades, better leveraged purchasing and improved efficiency. Underpinning these initiatives is a focus on strategically reducing operating costs, particularly delivery and handling expenses. During 2021, the Company experienced elevated transportation costs over the prior year and anticipates these costs to remain elevated for the balance of 2022. Plans have been implemented to mitigate the impact of these costs. COVID-19 Considerations During the period ended March 31, 2022, the COVID-19 pandemic continued to impact our operating results and the Company anticipates a residual effect for the balance of the year. In addition, the pandemic could cause reduced demand for our products if, for example, the pandemic results in a recessionary economic environment which negatively effects the consumers who purchase our products. Based on the recent increase in demand for our products, we believe that over the long term, there will continue to be strong demand for our products. Through March 31, 2022, the Company was able to lower its freight costs despite a higher transportation market as the capacity in the freight market has not kept up with demand. The Company believes these challenges will continue throughout the year. In addition, the Company experienced increases in the pricing of several of its raw materials and delays in procuring several of these items. However, mitigation plans have been implemented to manage this risk. Additionally, the Company was negatively impacted by supply chain challenges impacting 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 and net income. The Company anticipates a continued impact throughout 2022. Our ability to operate without significant incremental negative operational impact from the COVID-19 pandemic will in part depend on our ability to protect our employees and protect our supply chain. The Company has endeavored to follow the recommended actions of government and health authorities to protect our employees. Since the inception of the COVID-19 pandemic and through March 31, 2022, we maintained the consistency of our operations during the onset of the COVID-19 pandemic. We will continue to innovate in managing our business, coordinating with our employees and suppliers to do our part in the infection prevention and remain flexible in responding to our customers and suppliers. However, the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce and supply chain (for example an inability of a key supplier or transportation supplier to source and transport materials) that could negatively impact our operations. We have not observed any material impairments of our assets or a significant change in the fair value of our assets due to the COVID-19 pandemic. 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 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. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers 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. 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, excluding shares of unvested restricted common stock. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. 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. Shares of restricted stock are included in the diluted weighted average number of common shares outstanding from the date they are granted. Potential common shares are excluded from the computation when their effect is antidilutive. For the periods ended March 31, 2022 and 2021, 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: Schedule of Potentially Dilutive Securities March 31, 2022 March 31, 2021 Warrants 13,835,768 3,362,241 Options 10,145,176 11,028,322 Unvested restricted common stock 376,290 309,082 Series A Convertible Preferred stock 37,644 37,644 Total 24,394,878 14,737,289 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 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. Advertising Costs Advertising costs are expensed as incurred and are included in selling and marketing expense. Advertising costs aggregated $ 312 349 Concentrations Net sales. 18% 12% 23% 12% Accounts receivable. 23% 18% Purchases from vendors. 13% 13% 13% Accounts payable. 11% 10% 10% 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. ASC 820 defines the following levels of subjectivity associated with the inputs: 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 based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as 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 maturity of these 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. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-06 “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”).” ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. The diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. For contracts in an entity’s own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. Effective January 1, 2021, the Company early adopted ASU 2020-06 and that adoption did not have an impact on our financial statements and related disclosures. In May 2021, the FASB issued ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted ASU 2021-04 effective January 1, 2022. The adoption of ASU 2021-04 did not have any impact on the Company’s financial statement presentation or disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments Other recent accounting pronouncements 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. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Inventory | 2. Inventory Inventory is valued at the lower of cost (first-in, first-out) or net realizable value, net of write downs, and is comprised of the following (in thousands): Schedule of Inventory March 31, 2022 December 31, 2021 Raw materials and packaging $ 11,853 $ 11,221 Finished products 8,995 5,828 Total $ 20,848 $ 17,049 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 3. Property and Equipment Property and equipment is comprised of the following (in thousands): Schedule of Property and Equipment March 31, 2022 December 31, 2021 Right-of-use assets under operating leases $ 724 $ 724 Computer hardware and software 400 400 Machinery and equipment 429 429 Total cost 1,553 1,553 Accumulated depreciation and amortization (613 ) (561 ) Net book value $ 940 $ 992 Depreciation expense for the three months ended March 31, 2022 and 2021 was $ 25 and $ 32 , respectively, and amortization of right-of-use assets for the three months ended March 31, 2022 and 2021 was $ 27 and $ 24 , respectively. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | 4. Intangible Assets Intangible assets consist of the following (in thousands): Summary of Intangible Assets March 31, 2022 December 31, 2021 Brand names $ 576 $ 576 Trademarks 48 48 Total $ 624 $ 624 |
Line of Credit
Line of Credit | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Line of Credit | 5. Line of Credit Amounts outstanding under the Company’s credit facilities are as follows (in thousands): Schedule of Amount Outstanding Under Credit Facilities March 31, 2022 December 31, 2021 Line of credit – Alterna Capital Solutions $ 7,945 $ - Line of credit – Rosenthal & Rosenthal - 10,229 Total - 10,229 Capitalized financing costs (470 ) - Total $ 7,475 $ 10,229 Alterna Capital Solutions On March 28, 2022, the Company entered into a financing agreement with Alterna Capital Solutions (“ACS”), for a line of credit to replace its existing credit facility. The ACS line of credit is for a term of 3 years 13,000 400 Borrowings based on receivables bears an interest of prime plus 4.75% but not less than 8.0%. Borrowings based on inventory bears an interest of prime plus 5.25% but not less than 8.5%. The additional over advance rider bears a rate of prime plus 12.75%, but not less than 16.00%. Additionally, the line of credit is subject to monthly monitoring fee of $1 with a minimum usage requirement on the credit facility 1,500 1 The Company incurred $ 503 3 33 470 Rosenthal & Rosenthal (paid off in full on March 30, 2022) In 2018, the Company entered into a financing agreement with Rosenthal & Rosenthal, Inc. (“Rosenthal”) that provided a maximum borrowing capacity of $ 13,000 4,000 Borrowings under the Rosenthal financing agreement bore interest at the greater of prime or 4.75% 2.0% 3.5% 4 The line of credit was secured by substantially all of the assets, excluding intellectual property, of the Company. The over-advance was secured by all of Reed’s intellectual property collateral. On March 11, 2021, the Company entered into an amendment to the Rosenthal agreement and replaced a standby letter of credit of $ 1,500 5% 400,000 472 121 The Company annually incurs an additional $ 130 of fees from the bank, which is equal to 1% of the $ 13,000 borrowing limit. Amortization of this debt discount was $ 65 and $ 162 for the three months ended March 31, 2022, and 2021, respectively. At March 31, 2022, there was no remaining unamortized debt discount balance. |
Leases Liabilities
Leases Liabilities | 3 Months Ended |
Mar. 31, 2022 | |
Leases Liabilities | |
Leases Liabilities | 6. Leases Liabilities During the three months ended March 31, 2022 and 2021, lease costs totaled $ 27 24 As of December 31, 2021, operating lease liabilities totaled $ 555 38 518 As of March 31, 2022, the weighted average remaining lease terms for an operating lease are 2.76 12.60% |
Stockholder_s Equity
Stockholder’s Equity | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Stockholder’s Equity | 7. Stockholder’s Equity On March 10, 2022, the Company entered into a securities purchase agreement with certain institutional and accredited investors pursuant to which the investors agreed to purchase 18,594,571 shares of the Company’s common stock and warrants to purchase 9,297,289 shares of common stock in a private placement (including 3,248,142 0.2877 per share for a period of five years commencing six months from the closing date of March 11, 2022. The purchase price per share of common stock and associated warrant was $ 0.28 for certain investors and was $ 0.3502 for investors who are officers and directors of the Company in compliance with the rules of the Nasdaq Stock Market. The net proceeds to the Company, after deducting placement agent fees and other offering expenses, was approximately $ 5.1 million. The officers and directors of the Company purchased approximately $ 1.1 million of the securities in the offering. In January 2022, the Company issued 100,000 37 2,000 5% |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 8. Stock-Based Compensation Restricted common stock The following table summarizes restricted stock activity during the three months ended March 31, 2022: Summary of Non-vested Restricted Stock Activity Unvested Issuable Fair Value Weighted Balance, December 31, 2021 111,164 - $ 54 0.89 Granted 401,720 - 150 0.37 Vested (136,594 ) 136,594 - - Forfeited - - Issued - (136,594 ) (66 ) - Balance, March 31, 2022 376,290 - $ 138 $ 0.51 On January 26, 2022, the board of directors of Reed’s, pursuant to a joint recommendation from its governance and compensation committees, set the cash compensation of its non-employee directors at $ 50,000 for fiscal 2021, payable quarterly in accordance with the company’s policies for non-employee director compensation. In addition, the Company granted 401,720 restricted stock awards to five non-employee directors. 100,430 of these restricted stock awards vested on February1, 2022. The remaining 301,290 restricted stock awards will vest equally on May 1, 2022, August 1, 2022, and November 1, 2022. The aggregate fair value of the stock awards was $ 150 based on the market price of our common stock price which was $ 0.32 per share on the date of grants and is amortized as shares vest. The total fair value of restricted common stock vesting during the three months ended March 31, 2022 and 2021, was $ 66 and $ 98 , respectively, and is included in general and administrative expenses in the accompanying statements of operations. As of March 31, 2022, the amount of unvested compensation related to issuances of restricted common stock was $ 138 , which will be recognized as an expense in future periods as the shares vest. When calculating basic loss per share, these shares are included in weighted average common shares outstanding from the time they vest. When calculating diluted net income per share, these shares are included in weighted average common shares outstanding as of their grant date. Stock options The following table summarizes stock option activity during the three months ended March 31, 2022: Schedule of Stock Option Activity Shares Weighted- Weighted- Aggregate Outstanding at December 31, 2021 10,522,995 $ 1.12 7.88 $ - Granted 60,000 $ 0.29 Exercised - $ - Unvested forfeited (236,818 ) $ 1.81 Vested forfeited (201,001 ) $ 1.61 Outstanding at March 31, 2022 10,145,176 $ 1.09 7.82 $ - Exercisable at March 31, 2022 4,784,540 $ 1.18 7.00 $ - During the three months ended March 31, 2022, the Company approved options exercisable into 60,000 60,000 30,000 four 30,000 The stock options are exercisable at a price of $ 0.29 per share and expire in ten years . The total fair value of these options at grant date was approximately $ 12 , which was determined using a Black-Scholes-Merton option pricing model with the following average assumption: stock price of $ 0.29 share, expected term of six years , volatility of 82 %, dividend rate of 0 %, and weighted average risk-free interest rate of 1.72 %. 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. During the three months ended March 31, 2022 and 2021, the Company recognized $ 225 300 2,398 As of March 31, 2022, 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 March 31, 2022, which was $ 0.30 |
Stock Warrants
Stock Warrants | 3 Months Ended |
Mar. 31, 2022 | |
Stock Warrants | |
Stock Warrants | 9. Stock Warrants As of March 31, 2022, the Company has issued warrants to purchase an aggregate of 13,835,768 Schedule of Warrant Activity Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2021 4,538,479 $ 1.02 2.77 $ - Granted 9,297,289 0.29 5.45 Exercised - - Forfeited - - Outstanding at March 31, 2022 13,835,768 $ 0.53 4.49 $ - Exercisable at March 31, 2022 4,538,479 $ 0.53 4.49 $ - On March 10, 2022, the Company entered into a securities purchase agreement with certain institutional and accredited investors pursuant to which the investors agreed to purchase 18,594,571 9,297,289 0.2877 five years On November 24, 2021, the Company granted John Bello, current Chairman, significant shareholder and former Interim Chief Executive Officer of Reed’s, who is a related party, a 5 1,500,000 0.46 458 310 310 As of March 31, 2022, the outstanding and exercisable warrants have no aggregate intrinsic value. The aggregate intrinsic value was calculated as the difference between the closing market price as of March 31, 2022, which was $ 0.30 |
Related Party Activities
Related Party Activities | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Activities | 10. Related Party Activities In 2018, the Company completed the sale of its Los Angeles manufacturing plant to California Custom Beverage, LLC (“CCB”), an entity owned by Christopher J. Reed, a related party, and CCB assumed the monthly payments on our lease obligation for the Los Angeles manufacturing plant. Our release from the obligation by the lessor, however, is dependent upon CCB’s deposit of $ 1,200 800 363,000 109 Beginning in 2019, we are to receive a 5 5 0 3 At December 31, 2021, the Company had an aggregate receivable balance from CCB of $ 933 8 941 At March 31, 2022 and December 31, 2021, the Company had accounts payable due to CCB of $ 735 614 Lindsay Martin, daughter of a director of the Company, is employed as Vice President of Marketing. Ms. Martin was paid approximately $ 46 87 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events Subsequent to March 31, 2022, the Company issued 100,430 On May 9, 2022, the Company entered into a note purchase agreement and agreed to issue $ 11,250 10,013 May 9, 2025 10 200 The initial conversion rate of the Notes is 4.1503 10 The Company entered into a registration rights agreement with the holders, pursuant to which the Company agreed to register for resale shares issuable under the Notes within 45 days of the closing of Notes. The Company is currently in the process of determining its accounting for the Notes. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed financial statements of Reed’s, Inc. (the “Company”, “we”, “us”, or “our”), have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures contained in these condensed financial statements are adequate to make the information presented herein not misleading. These condensed financial statements should be read in conjunction with the financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on April 15, 2022. The accompanying condensed financial statements are unaudited, but in the opinion of management contain all adjustments, including normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2022, and the results of its operations and its cash flows for the three months ended March 31, 2022 and 2021. The balance sheet as of December 31, 2021 is derived from the Company’s audited financial statements. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2022. |
Going Concern | Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the three months ended March 31, 2022, the Company recorded a net loss of $ 4,980 2,207 As of March 31, 2022, we had a cash balance of $ 122 5,100 4,616 3,402 On May 9, 2022 the Company issued $ 11,250 May 9, 2025 10% 4.1503 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. To alleviate these conditions, management is currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from financial institutions. 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. We have also 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. During the first quarter of 2022, the Company continued to strengthen its supply chain, implement gross margin enhancement initiatives, drive efficiencies in transportation and warehouse costs and reduce operating expenses. The Company remains focused on driving sales growth and improving margin. The sales growth focus is on channel expansion, new product introduction and improved sales execution. The margin enhancement initiative is driven by co-packer upgrades, better leveraged purchasing and improved efficiency. Underpinning these initiatives is a focus on strategically reducing operating costs, particularly delivery and handling expenses. During 2021, the Company experienced elevated transportation costs over the prior year and anticipates these costs to remain elevated for the balance of 2022. Plans have been implemented to mitigate the impact of these costs. |
COVID-19 Considerations | COVID-19 Considerations During the period ended March 31, 2022, the COVID-19 pandemic continued to impact our operating results and the Company anticipates a residual effect for the balance of the year. In addition, the pandemic could cause reduced demand for our products if, for example, the pandemic results in a recessionary economic environment which negatively effects the consumers who purchase our products. Based on the recent increase in demand for our products, we believe that over the long term, there will continue to be strong demand for our products. Through March 31, 2022, the Company was able to lower its freight costs despite a higher transportation market as the capacity in the freight market has not kept up with demand. The Company believes these challenges will continue throughout the year. In addition, the Company experienced increases in the pricing of several of its raw materials and delays in procuring several of these items. However, mitigation plans have been implemented to manage this risk. Additionally, the Company was negatively impacted by supply chain challenges impacting 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 and net income. The Company anticipates a continued impact throughout 2022. Our ability to operate without significant incremental negative operational impact from the COVID-19 pandemic will in part depend on our ability to protect our employees and protect our supply chain. The Company has endeavored to follow the recommended actions of government and health authorities to protect our employees. Since the inception of the COVID-19 pandemic and through March 31, 2022, we maintained the consistency of our operations during the onset of the COVID-19 pandemic. We will continue to innovate in managing our business, coordinating with our employees and suppliers to do our part in the infection prevention and remain flexible in responding to our customers and suppliers. However, the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce and supply chain (for example an inability of a key supplier or transportation supplier to source and transport materials) that could negatively impact our operations. We have not observed any material impairments of our assets or a significant change in the fair value of our assets due to the COVID-19 pandemic. |
Use of Estimates | 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 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. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers 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. |
Loss per Common Share | 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, excluding shares of unvested restricted common stock. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. 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. Shares of restricted stock are included in the diluted weighted average number of common shares outstanding from the date they are granted. Potential common shares are excluded from the computation when their effect is antidilutive. For the periods ended March 31, 2022 and 2021, 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: Schedule of Potentially Dilutive Securities March 31, 2022 March 31, 2021 Warrants 13,835,768 3,362,241 Options 10,145,176 11,028,322 Unvested restricted common stock 376,290 309,082 Series A Convertible Preferred stock 37,644 37,644 Total 24,394,878 14,737,289 |
Stock Compensation Expense | 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 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. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred and are included in selling and marketing expense. Advertising costs aggregated $ 312 349 |
Concentrations | Concentrations Net sales. 18% 12% 23% 12% Accounts receivable. 23% 18% Purchases from vendors. 13% 13% 13% Accounts payable. 11% 10% 10% |
Fair Value of Financial Instruments | 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. ASC 820 defines the following levels of subjectivity associated with the inputs: 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 based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as 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 maturity of these 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-06 “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”).” ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. The diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. For contracts in an entity’s own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. Effective January 1, 2021, the Company early adopted ASU 2020-06 and that adoption did not have an impact on our financial statements and related disclosures. In May 2021, the FASB issued ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted ASU 2021-04 effective January 1, 2022. The adoption of ASU 2021-04 did not have any impact on the Company’s financial statement presentation or disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments Other recent accounting pronouncements 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Potentially Dilutive Securities | Schedule of Potentially Dilutive Securities March 31, 2022 March 31, 2021 Warrants 13,835,768 3,362,241 Options 10,145,176 11,028,322 Unvested restricted common stock 376,290 309,082 Series A Convertible Preferred stock 37,644 37,644 Total 24,394,878 14,737,289 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory is valued at the lower of cost (first-in, first-out) or net realizable value, net of write downs, and is comprised of the following (in thousands): Schedule of Inventory March 31, 2022 December 31, 2021 Raw materials and packaging $ 11,853 $ 11,221 Finished products 8,995 5,828 Total $ 20,848 $ 17,049 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment is comprised of the following (in thousands): Schedule of Property and Equipment March 31, 2022 December 31, 2021 Right-of-use assets under operating leases $ 724 $ 724 Computer hardware and software 400 400 Machinery and equipment 429 429 Total cost 1,553 1,553 Accumulated depreciation and amortization (613 ) (561 ) Net book value $ 940 $ 992 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | Intangible assets consist of the following (in thousands): Summary of Intangible Assets March 31, 2022 December 31, 2021 Brand names $ 576 $ 576 Trademarks 48 48 Total $ 624 $ 624 |
Line of Credit (Tables)
Line of Credit (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Amount Outstanding Under Credit Facilities | Amounts outstanding under the Company’s credit facilities are as follows (in thousands): Schedule of Amount Outstanding Under Credit Facilities March 31, 2022 December 31, 2021 Line of credit – Alterna Capital Solutions $ 7,945 $ - Line of credit – Rosenthal & Rosenthal - 10,229 Total - 10,229 Capitalized financing costs (470 ) - Total $ 7,475 $ 10,229 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of Non-vested Restricted Stock Activity | The following table summarizes restricted stock activity during the three months ended March 31, 2022: Summary of Non-vested Restricted Stock Activity Unvested Issuable Fair Value Weighted Balance, December 31, 2021 111,164 - $ 54 0.89 Granted 401,720 - 150 0.37 Vested (136,594 ) 136,594 - - Forfeited - - Issued - (136,594 ) (66 ) - Balance, March 31, 2022 376,290 - $ 138 $ 0.51 |
Schedule of Stock Option Activity | The following table summarizes stock option activity during the three months ended March 31, 2022: Schedule of Stock Option Activity Shares Weighted- Weighted- Aggregate Outstanding at December 31, 2021 10,522,995 $ 1.12 7.88 $ - Granted 60,000 $ 0.29 Exercised - $ - Unvested forfeited (236,818 ) $ 1.81 Vested forfeited (201,001 ) $ 1.61 Outstanding at March 31, 2022 10,145,176 $ 1.09 7.82 $ - Exercisable at March 31, 2022 4,784,540 $ 1.18 7.00 $ - |
Stock Warrants (Tables)
Stock Warrants (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Stock Warrants | |
Schedule of Warrant Activity | Schedule of Warrant Activity Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2021 4,538,479 $ 1.02 2.77 $ - Granted 9,297,289 0.29 5.45 Exercised - - Forfeited - - Outstanding at March 31, 2022 13,835,768 $ 0.53 4.49 $ - Exercisable at March 31, 2022 4,538,479 $ 0.53 4.49 $ - |
Schedule of Potentially Dilutiv
Schedule of Potentially Dilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 24,394,878 | 14,737,289 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 13,835,768 | 3,362,241 |
Equity Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 10,145,176 | 11,028,322 |
Unvested Restricted Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 376,290 | 309,082 |
Series A Convertible Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total | 37,644 | 37,644 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | May 09, 2022 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Product Information [Line Items] | |||||
Net Income (Loss) Attributable to Parent | $ 4,980,000 | $ 4,507,000 | |||
Net Cash Provided by (Used in) Operating Activities | 2,207,000 | 5,059,000 | |||
Cash | 122,000 | $ 49,000 | |||
Line of credit facility, borrowing capacity | 5,100,000 | ||||
Stockholders equity | 4,616,000 | 6,770,000 | $ 4,203,000 | $ 10,404,000 | |
Working capital | 3,402,000 | ||||
Advertising costs | $ 312,000 | $ 349,000 | |||
Customer One [Member] | Revenue Benchmark [Member] | Product Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk, percentage | 18.00% | 23.00% | |||
Customer One [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk, percentage | 23.00% | 18.00% | |||
Customer Two [Member] | Revenue Benchmark [Member] | Product Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk, percentage | 12.00% | 12.00% | |||
Vendor One [Member] | Revenue Benchmark [Member] | Product Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk, percentage | 13.00% | 13.00% | |||
Vendor One [Member] | Accounts Payable [Member] | Product Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk, percentage | 11.00% | ||||
Vendor Two [Member] | Revenue Benchmark [Member] | Product Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk, percentage | 13.00% | ||||
Vendor Two [Member] | Accounts Payable [Member] | Product Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk, percentage | 10.00% | ||||
No Vendor [Member] | Accounts Payable [Member] | Product Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
Concentration risk, percentage | 10.00% | ||||
Subsequent Event [Member] | Secured Convertible Notes [Member] | Institutional Investors [Member] | |||||
Product Information [Line Items] | |||||
Debt instrument, face amount | $ 11,250 | ||||
Debt instrument, maturity date | May 9, 2025 | ||||
Debt instrument, interest rate | 10.00% | ||||
Debt instrument, conversion price | $ 4.1503 |
Schedule of Inventory (Details)
Schedule of Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials and packaging | $ 11,853 | $ 11,221 |
Finished products | 8,995 | 5,828 |
Total | $ 20,848 | $ 17,049 |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 1,553 | $ 1,553 |
Accumulated depreciation and amortization | (613) | (561) |
Net book value | 940 | 992 |
Right Of Use Assets Under Operating Leases [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 724 | 724 |
Computer Hardware And Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 400 | 400 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 429 | $ 429 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 25 | $ 32 |
Amortization of right-of-use assets | $ 27 | $ 24 |
Summary of Intangible Assets (D
Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Brand names | $ 576 | $ 576 |
Trademarks | 48 | 48 |
Total | $ 624 | $ 624 |
Schedule of Amount Outstanding
Schedule of Amount Outstanding Under Credit Facilities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Line of Credit Facility [Line Items] | ||
Total | $ 7,475 | $ 10,229 |
Capitalized financing costs | (470) | |
Alterna Capital Solutions [Member] | ||
Line of Credit Facility [Line Items] | ||
Total | 7,945 | |
Rosenthal and Rosenthal, Inc. [Member] | ||
Line of Credit Facility [Line Items] | ||
Total | $ 10,229 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) $ in Thousands | Mar. 28, 2022 | Mar. 11, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2018 |
Line of Credit Facility [Line Items] | |||||
Line of credit | $ 13,000 | ||||
Amortization of debt discount | 65 | $ 162 | |||
Letter of credit | 14,508 | 16,154 | |||
Fair value of restricted stock issued | 66 | 98 | |||
Amortization of debt issuance costs | 431 | $ 25 | |||
Debt Instrument, Fee Amount | $ 130 | ||||
Percentage of fees on borrowing capacity | 1.00% | ||||
John J. Bello [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Equity method investment, ownership percentage | 5.00% | ||||
Number of restricted stock issued | 400,000 | ||||
Fair value of restricted stock issued | $ 472 | ||||
Amortization of debt issuance costs | 121 | ||||
Financing Agreement [Member] | Rosenthal and Rosenthal, Inc. [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 13,000 | ||||
Line of credit facility excess of permitted borrwing mount | $ 4,000 | ||||
Line of credit, interest rate | 4.75% | ||||
Minimum monthly fees | $ 4 | ||||
Financing Agreement [Member] | Rosenthal and Rosenthal, Inc. [Member] | Minimum [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit, interest rate | 2.00% | ||||
Financing Agreement [Member] | Rosenthal and Rosenthal, Inc. [Member] | Maximum [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit, interest rate | 3.50% | ||||
Rosenthal Agreement [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit description | On March 11, 2021, the Company entered into an amendment to the Rosenthal agreement and replaced a standby letter of credit of $1,500 by a guarantor with a $2,000 pledge of securities to Rosenthal by John J. Bello and Nancy E. Bello, as Co-Trustees of The John and Nancy Bello Revocable Living Trust. | ||||
Letter of credit | $ 1,500 | ||||
Alterna Capital Solutions [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, term | 3 years | ||||
Line of credit facility, maximum borrowing capacity | $ 13,000 | ||||
Line of credit facility, maximum amount outstanding during period | $ 400 | ||||
Line of credit facility, interest rate description | Borrowings based on receivables bears an interest of prime plus 4.75% but not less than 8.0%. Borrowings based on inventory bears an interest of prime plus 5.25% but not less than 8.5%. The additional over advance rider bears a rate of prime plus 12.75%, but not less than 16.00%. Additionally, the line of credit is subject to monthly monitoring fee of $1 with a minimum usage requirement on the credit facility | ||||
Line of credit | $ 1,500 | ||||
Line of credit monitoring fee | 1 | ||||
Direct operating costs | $ 503 | ||||
Amortization of line of credit period | 3 years | ||||
Amortization of debt discount | 33 | ||||
Remaining unamortized debt discount amount | $ 470 |
Leases Liabilities (Details Nar
Leases Liabilities (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Leases Liabilities | |||
Lease cost | $ 27 | $ 24 | |
Operating leases liability | 518 | $ 555 | |
Payments of operating lease liability | $ 38 | ||
Weighted average remaining lease term for operating lease | 2 years 9 months 3 days | ||
Weighted average discount rate for operating lease | 12.60% |
Stockholder_s Equity (Details N
Stockholder’s Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Mar. 10, 2022 | Jan. 31, 2022 | Mar. 31, 2022 |
Subsidiary, Sale of Stock [Line Items] | |||
Number of shares issued, value | $ 5,067 | ||
John J. Bello and Nancy E. Bello [Member] | |||
Subsidiary, Sale of Stock [Line Items] | |||
Number of shares issued, shares | 100,000 | ||
Number of shares issued, value | $ 37 | ||
Amount for pledge of securities | $ 2,000 | ||
John J. Bello and Nancy E. Bello [Member] | Minimum [Member] | |||
Subsidiary, Sale of Stock [Line Items] | |||
Beneficial ownership percentage | 5.00% | ||
Securities Purchase Agreement [Member] | Private Placement [Member] | |||
Subsidiary, Sale of Stock [Line Items] | |||
Conversion of Stock, Shares Converted | 18,594,571 | ||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 9,297,289 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.2877 | ||
Warrants and Rights Outstanding, Term | 5 years | ||
Share Price | $ 0.28 | ||
Securities Purchase Agreement [Member] | Private Placement [Member] | Officers and Directors [Member] | |||
Subsidiary, Sale of Stock [Line Items] | |||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 3,248,142 | ||
Securities Purchase Agreement [Member] | Private Placement [Member] | Officer and Directors [Member] | |||
Subsidiary, Sale of Stock [Line Items] | |||
Share Price | $ 0.3502 | ||
Proceeds from Issuance of Private Placement | $ 5,100 | ||
Sale of Stock, Consideration Received on Transaction | $ 1,100 |
Summary of Non-vested Restricte
Summary of Non-vested Restricted Stock Activity (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Fair value, vested | $ | $ 12 |
Restricted Stock [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unvested Shares, beginning balance | 111,164 |
Issuable Shares, beginning balance | |
Fair value unvested, beginning balance | $ | $ 54 |
Weighted average grant date fair value, unvested, beginning balance | $ / shares | $ 0.89 |
Unvested shares, granted | 401,720 |
Issuable shares, granted | |
Fair value, granted | $ | $ 150 |
Weighted average grant date fair value, granted | $ / shares | $ 0.37 |
Unvested shares, vested | (136,594) |
Issuable shares, vested | 136,594 |
Fair value, vested | $ | |
Weighted average grant date fair value, vested | $ / shares | |
Unvested shares, forfeited | |
Weighted average grant date fair value, forfeited | $ / shares | |
Unvested shares, issued | |
Issuable shares, issued | (136,594) |
Fair value, issued | $ | $ (66) |
Weighted average grant date fair value, issued | $ / shares | |
Unvested shares, ending balance | 376,290 |
Issuable shares, ending balance | |
Fair value, unvested, ending balance | $ | $ 138 |
Weighted average grant date fair value, unvested, ending balance | $ / shares | $ 0.51 |
Schedule of Stock Option Activi
Schedule of Stock Option Activity (Details) - Equity Option [Member] | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
Offsetting Assets [Line Items] | |
Shares outstanding, beginning balance | shares | 10,522,995 |
Weighted-average exercise price, outstanding, beginning | $ / shares | $ 1.12 |
Weighted-average remaining contractual terms (Years), outstanding beginning | 7 years 10 months 17 days |
Aggregate intrinsic value, shares outstanding, beginning | $ | |
Stock option, granted | shares | 60,000 |
Weighted-average exercise pice, granted | $ / shares | $ 0.29 |
Stock option, exercised | shares | |
Weighted-average exercise pice, exercised | $ / shares | |
Stock option, unvested forfeited or expired | shares | (236,818) |
Weighted-average exercise pice, unvested forfeited or expired | $ / shares | $ 1.81 |
Stock option vested forfeited or expired | shares | (201,001) |
Weighted-average exercise price, vested forfeited or expired | $ / shares | $ 1.61 |
Shares outstanding, ending balance | shares | 10,145,176 |
Weighted-average exercise price, outstanding, ending | $ / shares | $ 1.09 |
Weighted-average remaining contractual terms (Years), outstanding ending | 7 years 9 months 25 days |
Aggregate intrinsic value, shares outstanding, ending | $ | |
Shares exercisable | shares | 4,784,540 |
Weighted-average exercise price, exercisable ending balance | $ / shares | $ 1.18 |
Weighted-average remaining contractual terms (Years), outstanding excerisable | 7 years |
Aggregate intrinsic value, shares outstanding, exercisable | $ |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jan. 26, 2021 | Mar. 31, 2022 | Mar. 31, 2021 |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | $ 66 | $ 98 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Exercise Price | $ 0.29 | ||
Share-Based Payment Arrangement, Option, Exercise Price Range, Lower Range Limit | $ 0.29 | ||
Share-Based Payment Arrangement, Option, Exercise Price Range, Exercisable, Weighted Average Remaining Contractual Term | 10 years | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested in Period, Fair Value | $ 12 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 6 years | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 82.00% | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.72% | ||
2020 Incentive Compensation Plan [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of shares available for grant | 60,000 | ||
Restricted Stock [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Number of Shares | 136,594 | ||
Stock Issued During Period, Value, Restricted Stock Award, Gross | $ 66 | 98 | |
Aggregate value of unvested compensation | $ 138 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested in Period, Fair Value | |||
Share-Based Payment Arrangement, Option [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Aggregate value of unvested compensation | $ 2,398 | ||
Stock option vesting period annually | 30,000 | ||
Stock option vesting period | 4 years | ||
Stock option, vested | 30,000 | ||
Fair value of vested stock option | $ 225 | $ 300 | |
Stock price | $ 0.30 | ||
Non Employee Directors [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Salary and Wage, NonOfficer, Excluding Cost of Good and Service Sold | $ 50,000 | ||
Five Non Employee Directors [Member] | Restricted Stock [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Net of Forfeitures | 401,720 | ||
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures | $ 150 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Exercise Price | $ 0.32 | ||
Five Non Employee Directors [Member] | Restricted Stock [Member] | February 1, 2021 [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Number of Shares | 100,430 | ||
Five Non Employee Directors [Member] | Restricted Stock [Member] | May 1, 2022, August 1, 2022, and November 1, 2022 [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number | 301,290 | ||
Employees [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross | 60,000 |
Schedule of Warrant Activity (D
Schedule of Warrant Activity (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2022USD ($)$ / sharesshares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Shares outstanding, beginning balance | 4,538,479 |
Weighted-average exercise price, outstanding beginning balance | $ / shares | $ 1.02 |
Weighted-average remaining contractual terms (Years), outstanding beginning balance | 2 years 9 months 7 days |
Aggregate intrinsic value shares outstanding beginning | $ | |
Shares, Granted | 9,297,289 |
Weighted-average exercise price, granted | $ / shares | $ 0.29 |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Granted | 5 years 5 months 12 days |
Shares, exercised | |
Weighted-average exercise price, exercised | $ / shares | |
Shares, forfeited or expired | |
Weighted-average exercise price, forfeited | $ / shares | |
Shares outstanding, ending balance | 13,835,768 |
Weighted-average exercise price, outstanding exercisable | $ / shares | $ 0.53 |
Weighted-average remaining contractual terms (Years), outstanding ending balance | 4 years 5 months 26 days |
Aggregate intrinsic value shares outstanding ending | $ | |
Shares exercisable, ending balance | 4,538,479 |
Weighted-average remaining contractual terms (Years), outstanding exercisable | 4 years 5 months 26 days |
Aggregate intrinsic value shares excerisable | $ |
Stock Warrants (Details Narrati
Stock Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Mar. 10, 2022 | Nov. 24, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 |
Fair value of warrant recorded to prepaid expenses | $ 458 | ||||
Amortization of prepaid financing costs | $ 431 | $ 25 | |||
Securities Purchase Agreement [Member] | Private Placement [Member] | |||||
Common stock available for purchase | 9,297,289 | ||||
Common stock and warrants issued for purchase of common stock | 18,594,571 | ||||
Exercise price | $ 0.2877 | ||||
Warrant outstanding term | 5 years | ||||
Share price | $ 0.28 | ||||
Satisfaction Settlement and Release Agreement [Member] | John Bello [Member] | |||||
Exercise price | $ 0.46 | ||||
Warrant outstanding term | 5 years | ||||
Warrant issued | 1,500,000 | ||||
Prepaid financing costs | $ 310 | ||||
Amortization of prepaid financing costs | $ 310 | ||||
Stock Warrants [Member] | |||||
Common stock available for purchase | 13,835,768 | ||||
Share price | $ 0.30 |
Related Party Activities (Detai
Related Party Activities (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2019 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | |||||
Value of common stock paced | $ 5,067 | ||||
Royalty [Member] | |||||
Related Party Transaction [Line Items] | |||||
Royalty expense | 8 | ||||
California Custom Beverage, LLC [Member] | Royalty [Member] | |||||
Related Party Transaction [Line Items] | |||||
Royalty expense | 0 | $ 3 | |||
Chris Reed [Member] | California Custom Beverage, LLC [Member] | |||||
Related Party Transaction [Line Items] | |||||
Deposit of security with lessor | $ 800 | $ 1,200 | |||
Number of common stock value placed | 363,000 | ||||
Value of common stock paced | $ 109 | ||||
Royalty percentage | 5.00% | ||||
Referral fee percentage | 5.00% | ||||
Royalty revenue receivable | 941 | $ 933 | |||
Account payble | 735 | $ 614 | |||
Lindsay Martin [Member] | Vice President [Member] | |||||
Related Party Transaction [Line Items] | |||||
Amount paid for service | $ 46 | $ 87 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Thousands | May 09, 2022 | May 16, 2022 |
Subsequent Event [Line Items] | ||
Number of restricted stock issued | 100,430 | |
Private Placement [Member] | Note Purchase Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Secured debt | $ 11,250 | |
Notes after deducting placement agent fees and other offering expenses | $ 10,013 | |
Debt maturity date | May 9, 2025 | |
Debt interest rate | 10.00% | |
Monthly payment | $ 200 | |
Debt conversion per share | $ 4.1503 | |
Debt interest rate | 10.00% |