SecProbe.io

CORRESP
1
filename1.htm

    reeds_corresp-062209.htm

    Reed’s
Inc.

    13000
South Spring

    Los
Angeles, California 90061

    Tel:
310-217-9400 Fax: 310-217-9411

    June 23,
2009

    Via
Edgar

    United
States Securities and Exchange Commission

    Division
of Corporation Finance

    100 F
Street, NE

    Washington,
DC 20549

            Attention:

              John
      Reynolds, Esq.

              Edwin
      Kim, Esq.

              David
      Link, Esq.

            Re:

              Reed’s
      Inc.

              Registration
      Statement on Form S-3

              File
      No. 333-159298

              Filed
      May 15, 2009

    Gentlemen:

    The
following responses address the comments of the Staff (the “Staff”) as set forth
in its letter dated June 5, 2009 (the “Comment Letter”) relating to the
Registration Statement on Form S-3 (the “Registration Statement”) of Reed’s,
Inc. (“Reed’s” or the "Company")  On behalf of the Company, we respond
as set forth below.

    The numbers of the responses in this
letter correspond to the numbers of the Staff’s comments as set forth in the
Comment Letter.

    General

    1.           Please
revise to provide the missing information to comply with Instruction 7 of Form
S-3 regarding IB.6.

    Response:

    We have revised to include the
information required by Instruction 7 of Form S-3 regarding IB.6. See page iv of
the Registration Statement.

    Exhibits, page
39

    2.           Please
file the trust indenture agreement for your debt securities as an exhibit with
your next amendment.

    Response:

    We have revised to include the form of
the trust indenture agreement.

    Form 10-K for the fiscal
year ended December 31, 2008Filed on March 27, 2009 Item 9A.  Controls
and Procedures, page 27

              3.

              We
      note that you have a pending Form S-3 (File no. 333-156908) filed on May
      4, 2009, originally filed as an S-1 on January 23, 2009. We issued a
      comment letter on the Form S-3/A (File no. 333-156908) on May 28, 2009 to
      address your Controls and Procedures disclosure in your Form 10-K filed on
      March 27, 2009. We issued the following comments on that
      filing:

        1

              A.

              We
      note that your Management's Annual Report on Internal Control over
      Financial Reporting concludes that your system of internal control over
      financial reporting was ineffective as of December 31, 2008. Throughout
      both 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 those
  terms.

              B.

              Please
      provide a more detailed description of your remediation effects 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.

              C.

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

              4.

              We
      note that you filed a response letter on June 2, 2009 for your File no.
      333­156908 Form S-3/A to address the Controls and Procedures listed
      above in Comment three. We specifically note your response to comment 3A
      (comment 7 in our May 28, 2009 letter). We do not understand your response
      given the disclosure in your Form 10-K. We reissue our prior
      comment.

              Response:
      We have revised the disclosure in Item 9A to clearly differentiate between
      internal control over financial reporting and disclosure controls and
      procedures. Please see the attached proposed revised Item 9A. Subject to
      the Staff’s approval, we intend to file an amendment to the Company’s Form
      10-K to include the revised Item
9A.

              5

              We
      note your response to comment 3B (comment 8 in our May 28, 2009 letter).
      Please incorporate your response to comment 3B in an amendment to the Form
      10-K or tell us why you believe an amendment is not
    necessary.

    Response:
We intend to file an amendment to the Company’s Form 10-K to provide expanded
disclosure in Item 9A of the remediation efforts by the Company to address
material weaknesses related to its internal control over financial
reporting.

              6

              We
      note your response to comment 3C (comment 9 in our May 28, 2009 letter),
      please provide us in greater detail the basis for your belief that your
      disclosure controls and procedures are effective in light of your
      conclusion that your internal controls over financial reporting is not
      effective. Please dearly indicate why your material weaknesses related to
      your internal control over financial reporting would not materially affect
      your disclosure controls and procedures. We may have further
      comment.

              Our
      assessment of our internal control over financial reporting, as covered
      under Item 308, resulted in the determination that we have several
      material weaknesses in our internal control over financial reporting,
      including each of (i) in our disaster or backup of core business
      functions, (ii) our segregation of duties and (iii) our documented and
      reviewed system of internal
control.

              Our disclosure controls and
      procedures include those components of internal control over financial
      reporting that provide reasonable assurances that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting
      principles.  However, our disclosure controls and procedures do
      not include certain components of internal control over financial
      reporting pertaining to the accurate recording of transactions and
      disposition of assets or to the safeguarding of assets. The particular components of
      internal control over financial reporting in which we detected material
      weaknesses; in our disaster or backup of core business functions; our lack
      of segregation of duties; and our lack of documented and reviewed system
      of internal control  are not components included in our
      disclosure controls and
procedures.

    Form S-3/A (File no.
333-156908) Filed on May 4, 2009

              7.

              Please
      resolve the staff’s outstanding comments for your Form S-3/A(File no.
      333-156908) prior to requesting acceleration for the Form S-3 filed on May
      15, 2009 (File no: 333-159298).

        2

              Response:
      We intend to address the remaining comments on the Company’s Form S-3/A
      (File no. 333-156908) in the near
future.

    We trust
that the foregoing appropriately addresses the issues raised by your recent
comment letter.

    Thank you
in advance for your prompt review and assistance.  If you have any
questions, please contact the undersigned or our Special Counsel, Marcelle S.
Balcombe or Gregory Sichenzia at Sichenzia Ross Friedman Ference LLP ((212)
930-9700).

    Very truly yours,

    Reed’s Inc.,

    /s/ James Linesch

    James Linesch

    Chief Financial Officer

        3

    Item
9A.   Controls and Procedures

    Disclosure
Controls and Procedures

    As of
December 31, 2008, the end of the period covered by this Annual Report on Form
10-K, we conducted an evaluation, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e))
under the Exchange Act). Based on this evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that, as of December 31, 2008, our
disclosure controls and procedures were effective.

    Disclosure
controls are procedures that are designed with the objective of ensuring that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, as amended, such as this report, is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms. Disclosure controls are also designed with the objective of ensuring that
such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. Internal controls are
procedures which are designed with the objective of providing reasonable
assurance that our transactions are properly authorized, recorded and reported
and our assets are safeguarded against unauthorized or improper use, to permit
the preparation of our financial statements in conformity with generally
accepted accounting principles.

    We
identified certain matters that constitute material weakness (as defined under
the Public Company Accounting Oversight Board Auditing Standard No. 2) in our
internal control over financial reporting as discussed on Management’s Report on
Internal Control Over Financial Reporting below.

    Management’s
Report on Internal Control over Financial Reporting

    Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting.  Our internal control over financial
reporting is a process, under the supervision of our Chief Executive Officer and
Chief Financial Officer, designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of our financial
statements for external purposes in accordance with accounting principles
generally accepted in the United States of America.

    Our
internal control over financial reporting include those policies and procedures
that:

              ·

              pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect our transactions and dispositions of our
      assets;

              ·

              provide
      reasonable assurance that our transactions are recorded as necessary to
      permit preparation of our financial statements in accordance with
      accounting principles generally accepted in the United States of America,
      and that our receipts and expenditures are being made only in accordance
      with authorizations of our management and our directors;
    and

              ·

              provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of our assets that could
      have a material effect on the financial
  statements.

    Because
of its inherent limitations, internal control over financial reporting can
provide only reasonable assurance and may not prevent or detect misstatements.
Further, because of changes in conditions, effectiveness of internal control
over financial reporting may vary over time. Our system contains self monitoring
mechanisms, and actions are taken to correct deficiencies as they are
identified.

    Our CEO
and CFO conducted an assessment of the effectiveness of our internal control
over financial reporting as of December 31, 2008 based on the framework in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”). A material weakness is a
deficiency or a combination of deficiencies in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of the Company’s annual or interim financial statements will not be
prevented or detected on a timely basis.

    Based
upon that assessment, we have identified the following material
weaknesses:

    Insufficient
disaster recovery or backup of core business functions

    Inadequate
backup or our critical data and software used by our business could cause loss
of financial data and business interruptions, should a disaster
occur.  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.

        4

    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
an internal control 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.

    As a
result of the material weaknesses described above, management concluded that, as
of December 31, 2008, we did not maintain effective internal control over
financial reporting based on the criteria established in Internal Control – Integrated
Framework, issued by COSO.

    This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.

    Changes in Internal Controls Over Financial
Reporting

    During
the year ended December 31, 2008, there were no changes in our internal control
over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act)
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.

    5