Reed’s, Inc. Announces Third Quarter 2010 Financial Results

Company Delivers Record Revenues Driven by Strong Sales in All Product Categories

Los Angeles, California, November 9, 2010 — Reed’s, Inc. (NASDAQ:REED – News) (OTC.BB:REEDP – News), maker of the top-selling sodas in natural food stores nationwide, today announced its financial results for its third fiscal quarter and the nine months ended September 30, 2010.

Financial Highlights:

* Third quarter sales increased 35% to a record $5.4 million. Nine month 2010 sales were $14.3 million, 23% ahead of 2009.
* Gross profit was 20% of sales during the third quarter, as compared to 25% in 2009, reflecting start up costs incurred during the period.
* Operating expenses increased by 3% in the quarter due primarily to some non-recurring charges.
* EBITDA income for the third quarter 2010 was $32,000, as compared to $15,000 in the third quarter of 2009. For the nine month period, EBITDA income was $400,000, as compared to a loss of $140,000 in the prior year period.*
* Net loss for the quarter narrowed slightly to $398,000, or $0.04 per share, from $402,000 a year earlier.
* Working capital at September 30, 2010 was $2.1 million, as compared to $2.0 million at December 31, 2009.
* Cash availability was $1.1 million at September 30, 2010, as compared to $1.3 million at December 31, 2009.

Third Quarter Operational Highlights:

* Introduced new ZERO line of Virgil’s Stevia-sweetened diet sodas and gained authorization into Whole Foods
* Continued expansion into Canada with new distribution and Bulk Barn penetration
* Became first bottling plant in North America to launch swing-top bottles from U.S. factory
* Expanded sales of ‘Reed’s Rx’ Natural Ginger Nausea Relief into Publix Super Markets and Fred Meyer Stores
* Launched first-ever marketing pull campaign utilizing Google AdWords and radio campaign with Clear Channel and Fresh & Easy Neighborhood Markets

“Sales are accelerating for our branded and private label products,” stated Chris Reed, Founder, Chairman and CEO of Reed’s, Inc. “We came in ahead of our revenue estimates. Profit margin on our new private label customers is expected to improve as we digest the start up costs. Our branded business is growing nicely with our private label business expanding faster. Our plan is to use private label to increase gross profits and invest these funds into the growth of our brands. For the record, we are only making non-competitive products for our private label customers.” Mr. Reed added, “Our fourth quarter is going very strong. We see sales acceleration in 2011 for both our brands and private label business.”

James Linesch, Reed’s Chief Financial Officer, said, “Our fiscal quarter results reflect a proof of concept on many levels. Our marketing efforts delivered sales of 23% more cases of branded sodas during the third quarter than last year, without margin erosion. Our Los Angeles plant produced record volumes as we continued to fulfill significant private label orders, with strong backlog, and we are successfully introducing our new ZERO product line with minimal product introduction costs.” Mr. Linesch added, “Our third quarter margins were hit by costs associated with plant upgrades and product introductions, and this will continue in the fourth quarter to some extent. Our margins on our sales of branded sodas, however, have remained as strong as ever and are expected to increase in 2011 with new pricing and promotion plans. Private label margins will increase too, as we move into 2011 contracts. Operating expenses remain steady, despite our high growth, reflecting the scalability of our business.”

*See financial statements and EBITDA schedule at: http://finance.yahoo.com/q/h?s=REED+Headlines

Conference Call

The Company will conduct a conference call at 4:15 p.m. Eastern Standard Time on Tuesday, November 9, 2010 to discuss its third quarter 2010 results. To participate in the call, please dial the following number five to ten minutes prior to the scheduled call time: 888-240-4700. International callers should dial 512-225-9559. The conference ID for this call is 936603#.