SecProbe.io

CORRESP
1
filename1.htm

    reeds_corres-060209.htm

    REED’S,
INC.

    13000
South Spring Street

    Los
Angeles, California 90061

    (310) 217-9400

    June 2,
2009

    John
Reynolds

    Assistant
Director

    Office of
Beverages, Apparel and Healthcare Services

    United
States Securities and Exchange Commission

    Division
of Corporate Finance

              RE:

              Reed’s
      Inc.

                Registration
      Statement on Form S-3/A

                File
      No. 333-156908

                Filed
      May 4, 2009

    Dear Mr.
Reynolds:

    On behalf
of Reed’s, Inc.  (the “Company” or “Reed’s”), set forth below are the
Company’s partial responses to the comments received from the staff (“Staff”) of
the Securities and Exchange Commission in the letter dated May 28,
2009.  We are addressing comments 7-9 concerning the Company’s annual
report on Form 10K for the fiscal year ended December 31, 2008, filed March 27,
2009 ( “2008 10K”) and intend to address the remaining comments under separate
cover. We have reproduced the Staff’s comments in bold type for your convenience
and have followed the comment with the Company’s response.  References
in this letter to “we”, “our”, or “us” mean the Company or its advisors, as the
context may require.

              7.

              We
      note that your Management’s Annual Report on Internal Control over
      Financial Reporting concludes your system of internal control over
      financial reporting was ineffective as of December 31, 2008.
      Throughout  your Management’s Annual Report on Internal
      Control  over Financial Reporting and Management’s Evaluation of
      Disclosure Controls and Procedures, you refer to deficiencies related to
      your “internal control procedures” or your “system of internal
      controls”.  Please clarify what you are referring to when you
      reference these terms.

    Response:  Throughout
our disclosure, the references to “internal control procedures” and “system of
internal controls” refer to our disclosure controls and procedures over
financial reporting as defined in Rules 13a- 15(e) and 15d- 15(e) under the
Exchange Act, and based on the framework in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”).

              8.

              Please
      provide a more detailed description of your remediation efforts to address
      your material weaknesses related to your internal controls over financial
      reporting. Your revised disclosure should also include clear disclosure of
      the current status of these efforts.  We note that your current
      disclosure appears to indicate that certain steps have already been
      completed and others are prospective in
nature.

    Response:
With regard to our remediation efforts to address our material weaknesses
relating to controls over financial reporting:

              ·

              Insufficient
      disaster recovery or backup of core business
      functions.  We have implemented regular backup procedures
      for our data relating to our financial reporting, which include off-site
      storage.  We are planning to also install a remote server
      running the software programs used for our financial reporting processes,
      so that we can quickly recover our backup data and use it at a remote
      location, in the event of a disaster.  We anticipate this
      additional measure to be completed in the next
  quarter.

              ·

              Lack of
      segregation of duties.  We have limited staff in our
      corporate offices and, as such, there is a lack of segregation of
      duties.  With the resignation of our Chief Financial Officer in
      April 2008, our Chief Executive Officer assumed the duties of both
      President and Chief Financial Officer.  Many functions,
      including purchasing, accounts payable, bank reconciliations and month end
      closings, have not been adequately segregated.  In January 2009,
      we hired a Chief Financial Officer, adding to the management oversight of
      financial accounting processes.  We now have separate
      individuals performing purchasing, accounts payable processing, and bank
      reconciliations.  Our Chief Financial Officer supervises and
      reviews the month end closing process.  Our Chief Operating
      Officer oversees the cash disbursements.  Checks are signed by
      the Chief Executive Officer.  At this time, we believe that we
      have established adequate segregation of duties to the extent possible
      with our small staff size.  The close supervision and oversight
      by management also mitigates the remaining weakness in internal controls
      resulting from a lack of segregation of
duties.

              ·

              Lack of
      documented and reviewed system of internal control.  We
      have a material weakness due to the lack of a documented and reviewed
      system of internal controls.  We have determined that to perform
      the processes and remediate this internal control deficiency, we will
      either need to engage an internal control consultant or reassign existing
      personnel.  We have started to enhance some of our key internal
      control systems surrounding inventory purchasing and control, and to
      document those changes; however, this process is on-going and the
      implementation of policies and procedures may take several
      quarters.

              9.

              Please
      advise us why you believe your disclosure controls and procedures are
      effective given that your internal control over financial reporting is
      ineffective.

    Response:  We
believe that our disclosure controls and procedures are effective, despite our
identified weaknesses in internal control procedures.  Due to the
small size of our Company and our financial reporting staff, we are able to
closely supervise the procedures surrounding the compilation of data leading to
our financial reporting.  We believe that material misstatements would
be detected and corrected as they occur.

    We respectfully submit that our
conclusions that our disclosure controls and procedures are effective and our
responses herein do not necessitate that an amendment to our 2008 10K be
filed.

    We hope
that the information contained in this letter satisfactorily addresses comments
7-9 issued by the Staff.  Please do not hesitate to contact Ruba
Qashu, Esq. by telephone at  (949) 355-5405 or by facsimile at (949)
759-7533.

                Sincerely,

                /s/ James Linesch

                James
      Linesch

                Chief
      Financial Officer

                Reed’s,
      Inc.