Reed's, Inc. (REED) Earnings Call Transcript & Summary

Welcome to the Reed's, Inc. Annual Meeting of Stockholders Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Mr. Norm Snyder, Chief Executive Officer. Please go ahead, sir.

Good morning, ladies and gentlemen. Will the meeting please come to order? I would like to welcome all of you to the 2021 Annual Meeting of Stockholders of Reed's, Inc. I am Norman Snyder, Chief Executive Officer of Reed's, and I will be presiding at this meeting. This annual meeting will be a completely virtual meeting as a result of the COVID-19 pandemic. Also present at the meeting today are John Bello, Chairman of the Board of Reed's; Louis Imbrogno, Board Member; Jim Bass, Board Member; Lew Jaffe, Board Member, Scott Grossman, who I'd like to thank for his service, who will be departing the Board effective today; and Rhonda Kallman, who was a newly appointed Board Member, who I'd like to welcome to the Reed's Board. We also have several members of the Reed's senior staff. Mr. Thomas Spisak, our Chief Financial Officer, will act as Secretary of the meeting. Chuck Garske, a representative of Okapi Partners, has been appointed to act as Inspector of Election. Shares represented by proxy will be voted during this meeting and may be revoked at any time prior to the time at which voting closes during the meeting by voting online. Please note that attending the meeting without casting a vote will not revoke any previously submitted vote or proxy. An agenda and list of rules of conduct for the annual meeting have been posted on the okapivote.com/reed's website. We ask that you abide by these rules to be fair to the other stockholders present and so that we can conduct an orderly meeting. Stockholders should not address the meeting until recognized. If you want to ask your question or speak during the meeting, please wait for the appropriate time in the agenda. After you are recognized, first identify yourself and your status as a stockholder or representative of the stockholder, then make your comment or ask your question. We ask that you restrict remarks or questions to 2 minutes and that they pertain to the items under discussion in the agenda. Thank you for your cooperation with these rules. The Secretary has delivered an affidavit of mailing and establishing that notice of the meeting was duly given in accordance with our bylaws. A copy of the notice of the meeting was mailed to all stockholders of record as of the close of business, December 1, 2021. A copy of the notice of the meeting and the affidavit of mailing will be incorporated into the minutes of the meeting. All stockholders of record at the close of business on November 10, 2021, are entitled to vote at this meeting. Our first order of business is to determine whether the shares represented at the meeting, either in person or by proxy, are sufficient to constitute a quorum for the purpose of transacting business. Tom, do you have a report on quorum?

Yes. The certified stockholders list shows that holders of 93,729,330 shares of common stock of the company are entitled to vote at this meeting. We are informed by Chuck Garske that there are represented in person or by proxy, 65,917,343 shares of common stock or approximately 70% of all the shares entitled to vote at this meeting. Therefore, we have a quorum.

Thank you. Because holders of the majority of the shares entitled to vote at this meeting are present in person or by proxy, I declare this meeting to be duly convened for purposes of transacting such business as may properly come before it. And proceeding with the meeting, we will introduce all proposals. After all proposals have been presented, we will open the floor to questions on specific proposals. I ask you to hold out questions on the agenda items until we actually open the floor, and please direct your questions only to me. The next order of business is a description of the matters to be voted on at today's meeting. The first proposal to be voted on is the election of 6 directors to serve a 1-year term until their respective successors are duly elected and qualified or until their death, resignation, removal or disqualification. The nominee's qualifications are described in this year's proxy statement. Based on the recommendation of the Governance Committee, the Board has nominated for election the following 6 directors as directors of the company: John J. Bello, Norman E. Snyder, Jr., Lewis Jaffe, James C. Bass, Louis Imbrogno, Jr.; Rhonda Kallman. The second proposal to be voted on is the amendment of Reed's, Inc. 2020 Equity Incentive Plan. Our Board recommends a vote for the amendment of the plan. The third proposal is the amendment of Reed's, Inc.'s Certificate of Incorporation to increase the authorized shares of common stock from 120 million to 180 million shares. Our Board recommends a vote for the amendment. The fourth proposal is the ratification of the appointment of Weinberg & Company, P.A. as our independent registered public accounting firm for the fiscal year ending December 31, 2022. Our Board recommends a vote for this proposal. The fifth proposal is to grant the board authority to effect a reverse stock split of our common stock within 1 year and within a range of 1-for-2 and 1-for-5, inclusive, should the board deem such a move to be in the company's best interest. Are there any questions or comments on the above proposals?

[Operator Instructions] And sir, it appears we have no questions or comments at this time.

I now declare the polls open. Please remember that if you've already sent in your proxy card or voted by Internet or telephone, your shares have been voted accordingly. You do not need to vote today unless you are voting for the first time or want to change your previous vote. The ballots and proxies will be held in Tom's possession and by our Inspector of Election. This is consistent with the state law and our corporate bylaws. The list of the stockholders known to us that are entitled to notice of this meeting is available for inspection. [Voting]

Thank you, stockholders for taking the time to share your time with us has everyone voted who wishes to do so.

And pardon me, I do have a question from [ Stephen Davis ], a private investor.

No, I was looking to see how do I vote shares that I have not voted yet. I want to do it right now.

So Chuck?

Sure. If you can just e-mail me your vote instructions, we can take care of that. My e-mail is [email protected].

We have no further comments at this time.

I will ask Tom to close the polls.

The polls for voting on the matters before this meeting are hereby closed. I've been informed by the inspector of election that the proxies and ballots have been counted. Based on the preliminary vote totals, all nominees for election to the Board of Directors have been elected. The amendment to the 2020 Equity Incentive Plan has been approved. The amendment of our certificate of incorporation has been approved. The auditors have been ratified, and the Board has been granted authority to effect the reverse stock split. The final vote will be reported on Form 8-K.

We have concluded the business part of the annual meeting, which is officially adjourned. I will now have a brief question-and-answer period.

[Operator Instructions] And our first question today comes from [ Grant Burns ] at [ GHD ].

Norm, happy holidays and hope you're doing well. I had a question regarding the e-commerce side of the business. Are you planning on either refreshing the website or pushing further into e-commerce in the coming year?

Thank you for the happy holidays wish, and the same to you. The answer is yes. We are both going to revamp the website. We're pushing harder. We've created an infrastructure to support both our Amazon platform and our Shopify platform that we can ship product to virtually any part of the country within 2 days. Now part of the issues that we also face, which we believe we're clear now is the availability of cans, which obviously are much easier to ship than bottles and is our preferred package. So we've cleared that. We have the infrastructure in place, and you'll see a marked change going forward in 2022.

Okay. That's great to hear. And on a slightly different note, I know that you debuted the hard ginger ale products at a trade show a few weeks ago. Can I ask what the response was to those new products?

No, it wasn't the hard ginger ale, it was the RTD mule, and the response has been very, very, very positive. We have just taken over distribution of that product for the entire country. So we're very excited about that opportunity and view that as a significant part of our growth plan moving forward. But -- and we're going to start off with a big launch in Q1 in Florida and obviously utilize the AB network that we partnered with in that location.

All right. I think I'm looking forward to seeing that on shelves here in Los Angeles at some point.

Yes. This is John Bello. Let me just interject for the group. When I first got involved, this company was primarily a ginger beer company, a $100 million business that we owned the largest share of, not a lot of growth opportunity. That's why we cast a broader net with the ginger ale category, which is 10x the size of the ginger beer category. And now as we go take our ginger product into the alcoholic space, that's a $4 billion category. And all we have to do is cut out a little piece in order to really augment our sales and its profitable sales. And over the course of the past 2 years, thanks to our sales force, we've really expanded our quality DSD network with beer guys AB, MillerCoors. And these are the folks that we'll go into not only the large format stores, but also into liquor stores where we see a huge growth opportunity for all of our products. And we think our alcoholic offerings will help lead the way and make that work better for all of us. So we just have a much broader net and a much broader area to play. We just have to get the cans and get the production going. And we're committed to doing that. I think we're in a good place at this point with cans and raw materials.

[Operator Instructions] This concludes our question-and-answer session. I'd like to turn the conference call back over to management for any closing remarks.

I would like to express my sincere appreciation to the stockholders who attended this meeting as well as those who have submitted their proxies but were not able to be present in person. Thank you very much. We are looking forward to a great 2022.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.