Reed's (REED) 10-Q 15 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 10, 2017
Document And Entity Information
Entity Registrant Name	REED'S, INC.
Entity Central Index Key	1,140,215
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		13,982,230
Trading Symbol	REED
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,017

Condensed Balance Sheets

Condensed Balance Sheets - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash	$ 197,000	$ 451,000
Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $282,000 and $256,000, respectively	2,414,000	2,485,000
Inventory, net of reserve for obsolescence of $165,000 and $115,000, respectively	5,516,000	6,885,000
Prepaid and other current assets	377,000	500,000
Total Current Assets	8,504,000	10,321,000
Property and equipment, net of accumulated depreciation of $4,984,000 and $4,719,000, respectively	7,934,000	7,726,000
Total assets	17,243,000	18,852,000
Current liabilities:
Accounts payable	6,617,000	5,959,000
Accrued expenses	191,000	215,000
Advances from officers	380,000
Line of credit	3,530,000	4,384,000
Current portion of long term financing obligations	197,000	190,000
Current portion of capital leases payable	187,000	183,000
Current portion of bank notes	953,000	953,000
Total current liabilities	12,055,000	11,884,000
Other liabilities	129,000	130,000
Long term financing obligation, less current portion, net of discount of $797,000 and $825,000, respectively	1,337,000	1,363,000
Capital leases payable, less current portion	389,000	438,000
Bank notes, net of discount $32,000 and $78,000, respectively	6,077,000	5,919,000
Warrant liability	766,000	775,000
Total Liabilities	20,753,000	20,509,000
Stockholders' Deficiency
Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 9,411 shares issued and outstanding	94,000	94,000
Common stock, $.0001 par value, 19,500,000 shares authorized, 13,982,230 outstanding	1,000	1,000
Additional paid in capital	30,111,000	29,971,000
Accumulated deficit	(33,716,000)	(31,723,000)
Total stockholders' deficiency	(3,510,000)	(1,657,000)
Total liabilities and stockholders' deficiency	$ 17,243,000	$ 18,852,000

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Trade accounts receivable, allowance for doubtful accounts and returns and discounts	$ 282,000	$ 256,000
Inventory, reserve for obsolescence net	165,000	115,000
Property and equipment, accumulated depreciation	4,984,000	4,719,000
Long term financing obligation, discount	797,000	825,000
Bank notes, discount	$ 32,000	$ 78,000
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	$ .0001	$ 0.0001
Common stock, shares authorized	19,500,000	19,500,000
Common stock, shares outstanding	13,982,230	13,982,230

Condensed Statements of Operati

Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Net Sales	$ 8,295,000	$ 10,004,000
Cost of goods sold	7,239,000	8,111,000
Gross profit	1,056,000	1,893,000
Operating expenses:
Delivery and handling expenses	743,000	849,000
Selling and marketing expense	788,000	1,041,000
General and administrative expense	1,111,000	1,205,000
Total operating expenses	2,642,000	3,095,000
Loss from operations	(1,586,000)	(1,202,000)
Interest expense	(416,000)	(378,000)
Change in fair value of warrant liability	(192,000)
Net loss attributable to common stockholders	$ (1,993,000)	$ (1,580,000)
Loss per share - basic and diluted	$ (0.14)	$ (0.12)
Weighted average number of shares outstanding - basic and diluted	13,982,230	13,184,000

Condensed Statement of Changes

Condensed Statement of Changes in Stockholders' Deficiency (Unaudited)	3 Months Ended
	Mar. 31, 2017USD ($)shares
Common Stock [Member]
Balance	$ 1,000
Balance, Shares | shares	13,982,230
Fair value of vesting of options to employees and directors
Balance	$ 1,000
Balance, Shares | shares	13,982,230
Preferred Stock [Member]
Balance	$ 94,000
Balance, Shares | shares	9,411
Fair value of vesting of options to employees and directors
Balance	$ 94,000
Balance, Shares | shares	9,411
Additional Paid In Capital [Member]
Balance	$ 29,971,000
Fair value of vesting of options to employees and directors	140,000
Balance	30,111,000
Accumulated Deficit [Member]
Balance	(31,723,000)
Fair value of vesting of options to employees and directors
Balance	(33,716,000)
Balance	(1,657,000)
Fair value of vesting of options to employees and directors	140,000
Net Loss	(1,993,000)
Balance	$ (3,510,000)

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net loss	$ (1,993,000)	$ (1,580,000)
Adjustments to reconcile net loss to net cash provided (used) in operating activities:
Depreciation and amortization	194,000	261,000
Fair value of vested stock options issued to employees and directors	140,000	169,000
Increase (decrease) in allowance for doubtful accounts	26,000	(93,000)
Increase in reserve for inventory	50,000
Change in fair value of warrant liability	192,000
Changes in operating assets and liabilities:
Accounts receivable	45,000	313,000
Inventory	1,319,000	(415,000)
Prepaid expenses and other assets	124,000	312,000
Accounts payable	656,000	263,000
Accrued expenses	6,000	15,000
Increase in other long term obligations		0
Net cash provided (used) by operating activities	527,000	(755,000)
Cash flows from investing activities:
Purchase of property and equipment	(41,000)	(186,000)
Net cash used in investing activities	(41,000)	(186,000)
Cash flows from financing activities:
Advances from officers	380,000	0
Proceeds from stock option and warrant exercises		45,000
Principal payments on capital expansion loan	(177,000)
Principal repayments on long term financial obligation	(44,000)	(37,000)
Principal repayments on capital lease obligation	(45,000)	(42,000)
Net repayments on existing line of credit	(854,000)	(193,000)
Net cash provided by financing activities	(740,000)	(227,000)
Net decrease in cash	(254,000)	(1,168,000)
Cash at beginning of period	451,000	1,816,000
Cash at end of period	197,000	648,000
Supplemental disclosures of cash flow information:
Interest	400,000	364,000
Non Cash Investing and Financing Activities
Property and equipment acquired through capital expansion loan	288,000	354,000
Property and equipment acquired through capital lease obligations		$ 86,000

Basis of Presentation and Liqui

Basis of Presentation and Liquidity	3 Months Ended
	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation and Liquidity	1. Basis of Presentation and Liquidity The accompanying interim condensed financial statements are unaudited, but in the opinion of management of Reed’s, Inc. (the “Company”), contain all adjustments, which include normal recurring adjustments necessary to present fairly the financial position at March 31, 2017 and the results of operations and cash flows for the three months ended March 31, 2017 and 2016. The balance sheet as of December 31, 2016 is derived from the Company’s audited financial statements. Certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although management of the Company believes that the disclosures contained in these condensed financial statements are adequate to make the information presented herein not misleading. For further information, refer to the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on April 24, 2017. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2017. Liquidity The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the three months ended March 31, 2017 the Company recorded a net loss of $1,993,000 and provided cash from operations of $527,000. As of March 31, 2017, we had a stockholder’s deficit of $3,510,000 and working capital deficit of $3,551,000 compared to stockholder’s deficit of $1,657,000 and working capital deficit of $1,565,000 at December 31, 2016. As of March 31, 2017, the Company had a cash balance of $197,000 and had available borrowing on our existing line of credit of $191,000. On April 21, 2017, the Company issued a convertible note resulting in net proceeds of $3,240,000. Furthermore, during the year ended December 31, 2016, we were able to extend the maturity date of our operating line of credit and our other bank loans through October 2018. We believe that the Company currently has the necessary working capital to support existing operations until the PMC loans mature on October 1, 2018. Consistent with past refinancing practices regarding the Line of Credit, the Company believes that we will be successful in renewing the debt for another time frame similar to the past. There are no assurances that this refinancing will be completed. We anticipate that our primary capital source will be positive cash flow from operations. If our sales goals do not materialize as planned, or we do not accomplish cost reductions in cost of goods sold as planned, we believe that the Company can reduce its operating costs and can be managed to maintain positive cash flow from operations. Historically, we have financed our operations primarily through private sales of common stock, preferred stock, convertible debt, a line of credit from a financial institution and cash generated from operations. We may not generate sufficient revenues from product sales in the future to achieve profitable operations. If we are not able to achieve profitable operations at some point in the future, we will continue to have insufficient working capital to maintain our operations as we presently intend to conduct them or to fund our expansion and marketing and product development plans. In addition, our losses may increase in the future as we expand our manufacturing capabilities and fund our marketing plans and product development. These losses, among other things, have had and may continue to have an adverse effect on our working capital, total assets and stockholders’ equity. If we are unable to achieve profitability, the market value of our common stock would decline and there would be a material adverse effect on our financial condition. If we suffer losses from operations, our working capital may be insufficient to support our ability to expand our business operations as rapidly as we would deem necessary at any time, unless we are able to obtain additional financing. There can be no assurance that we will be able to obtain such financing on acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to pursue our business objectives and would be required to reduce our level of operations, including reducing infrastructure, promotions, personnel and other operating expenses. These events could adversely affect our business, results of operations and financial condition. If adequate funds are not available or if they are not available on acceptable terms, our ability to fund the growth of our operations, take advantage of opportunities, develop products or services or otherwise respond to competitive pressures could be significantly limited.

Significant Accounting Policies

Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Significant Accounting Policies	2. Significant Accounting Policies Income (Loss) per Common Share Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stock holders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing the net income applicable to common stock holders 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. Potential common shares are excluded from the computation when their effect is antidilutive. The Company had potentially dilutive securities that consisted of: March 31, 2017 2016 Warrants 803,909 325,000 Series A Preferred Stock 37,644 37,644 Options 1,026,834 965,000 Total 1,868,387 1,327,644 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 and 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 intangibles, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20 all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company will adopt the provisions of this statement in the first quarter of fiscal 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB, including 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 consolidated financial statements. Concentrations During the three months ended March 31, 2017, the Company had one customer that accounted for 21% of gross sales. During the months ended March 31, 2016, the company had two customers that accounted for 25% and 10% of sales respectively. As of March 31, 2017, the Company had accounts receivable due from one customer who comprised 23% of its total accounts receivable and as of December 31, 2016 the Company had accounts receivable due from two customers who comprised 23% and 11% of its total accounts receivable. No other customer exceeded 10% of either sales or accounts receivable for the months ended March 31, 2017. During the three months ended March 31, 2017, the Company had one vendor which accounted for approximately 18% of all purchases, and in the three months ended March 31, 2016 one vendor who accounted for approximately 17% of all purchases. No other vendor accounted for more than 10% of all purchases in either period. As of March 31, 2017, the Company had two vendors which accounted for approximately 10% each of the total accounts payable and as of December 31, 2016, the Company had two vendors which accounted for approximately 20% and 10% of total accounts payable. Fair Value of Financial Instruments The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: 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 due to the fact that the interest rates on these obligations are based on prevailing market interest rates. As of March 31, 2017 and December 31, 2016, the Company’s balance sheets included the fair value of derivative liabilities of $766,000 and $775,000 respectively, which were based on Level 2 measurements.

Inventory

Inventory	3 Months Ended
	Mar. 31, 2017
Inventory Disclosure [Abstract]
Inventory	3. Inventory Inventory is valued at the lower of cost (first-in, first-out or market) and, net of reserves, is comprised of the following as of: March 31, 2017 December 31, 2016 Raw Materials and Packaging $ 3,660,000 $ 3,874,000 Finished Goods 1,856,000 3,011,000 $ 5,516,000 $ 6,885,000

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2017
Property, Plant and Equipment [Abstract]
Property and Equipment	4. Property and Equipment Property and equipment are comprised of the following as of: March 31, 2017 December 31, 2016 Land $ 1,107,000 $ 1,107,000 Building 1,875,000 1,875,000 Vehicles 651,000 666,000 Machinery and equipment 3,686,000 3,686,000 Equipment under capital leases 226,000 226,000 Office equipment 480,000 475,000 Construction In Progress 4,893,000 4,554,000 12,918,000 12,589,000 Accumulated depreciation (4,984,000 ) (4,863,000 ) $ 7,934,000 $ 7,726,000 Depreciation expense for the three months ended March 31, 2017 and 2016 was $121,000 and $200,000, respectively.

Intangible Assets and Impairmen

Intangible Assets and Impairment Policy	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets and Impairment Policy	4. Property and Equipment Property and equipment are comprised of the following as of: March 31, 2017 December 31, 2016 Land $ 1,107,000 $ 1,107,000 Building 1,875,000 1,875,000 Vehicles 651,000 666,000 Machinery and equipment 3,686,000 3,686,000 Equipment under capital leases 226,000 226,000 Office equipment 480,000 475,000 Construction In Progress 4,893,000 4,554,000 12,918,000 12,589,000 Accumulated depreciation (4,984,000 ) (4,863,000 ) $ 7,934,000 $ 7,726,000 Depreciation expense for the three months ended March 31, 2017 and 2016 was $121,000 and $200,000, respectively.

Advances from Officers

Advances from Officers	3 Months Ended
	Mar. 31, 2017
Advances From Officers
Advances from Officers	6. Advances from Officers During the period ended March 31,2017, Chris Reed (the former CEO) and Daniel Miles (CFO) advanced working capital funds of $260,000 and $120,000 respectively to the Company for working capital uses. As of March 31, 2017, the aggregate amount advanced totaled $380,000. Chris Reed was repaid $141,000 in April 2017 and the remainder for both Chris Reed and Daniel Miles will be repaid by the end of this year.

Notes Payable

Notes Payable	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Notes Payable	7. Notes Payable The Company has a Loan and Security Agreement with PMC Financial Services Group, LLC (PMC) that provides a $6,000,000 revolving line of credit, a $3,000,000 term loan, and a Capital Expansion loan up to $4,700,000. The loans are secured by substantially all the assets of the Company and become due on October 1, 2018. The notes are as follows: Revolving Line of Credit The agreement provides a $6,000,000 revolving line of credit. At March 31, 2017 and December 31, 2016, the aggregate amount outstanding under the line of credit was $3,530,000 and $4,384,000, respectively. The interest rate on the Revolving Loan was the prime rate plus .35% but was modified on December 7, 2016, such that the rate charge will be calculated on a sliding scale based on the trailing 6 month Earnings Before Interest Taxes and Depreciation (“EBITDA”). If the EBITDA measuring point stays below $1,000,000 where it is now, the rate will rise to 12% from the current rate of 9%. If EBITDA rises to $1,500,000 then the rate will be reduced to 9%. As of March 31, 2017, our effective rate under the revolving line was 9.5%. The monthly management fee is .45% of the average monthly loan balance. The revolving line of credit is based on 85% of accounts receivable and 60% of eligible inventory and is secured by substantially all of the Company’s assets. As of March 31, 2017, the Company had $192,000 borrowing availability under the line of credit agreement. The line of credit matures on October 21, 2018 and is subject to a 1% prepayment penalty for prepayment prior to the first anniversary of the effective date. Bank Notes Bank notes consist of the following as of March 31, 2017 and December 31, 2016: March 31, 2017 December 31, 2016 (A) Term Loans $ 3,000,000 $ 3,000,000 (B) Capex loan 4,062,000 3,950,000 (C) Valuation discount (32,000 ) (78,000 ) Net 7,030,000 6,872,000 Current portion (953,000 ) (953,000 ) Long term portion $ 6,077,000 $ 5,919,000 (A) Term Loans In connection with the Loan and Security Agreement with PMC, the Company entered into two Term Loans of $1,500,000 each, for an aggregate borrowing of $3,000,000. The term loans are secured by all of the unencumbered assets of the Company and are due on October 1, 2018. The annual interest rate on the first loan was prime plus 5.75% (currently 9.5%), and the rate on the second loan was prime plus 11.60% (currently 14.85%) but was modified on December 7, 2016 such that the new rate will be based on the trailing 6 month EBITDA. If the EBITDA measuring point stays below $1,000,000 where it is now, the rate will rise to 12% from the current rate of 9%. If EBITDA rises to $1,500,000 then the rate will be reduced to 9%. As of March 31, 2017, and December 31, 2016, the amount outstanding was $3,000,000 and $3,000,000 respectively. (B) Capital Expansion (“CAPEX”) Loan In connection with the Loan and Security Agreement with PMC, the Company entered into a Capital expansion loan which, after amendment allows a total borrowing of $4,700,000. The loans are secured by all of the property and equipment purchased under the loan. The interest rate on the CAPEX loan is the prime rate plus 5.75% (9.5% at March 31, 2017). Interest only is payable on CAPEX Loans through January 31, 2017, at which time principal and interest will be aggregated and repaid in equal monthly payments of principal and interest based on 48 month amortization. Currently and until the second tranche has been closed, the estimated amount that will become due in a the next twelve months is $953,000. At March 31, 2017 and December 31, 2016, the balance on the CAPEX loan balance was $4,062,000 and $3,950,000 respectively, and as of March 31, 2017 and December 31, 2016, the Company had future borrowing availability of $638,000 and $750,000, respectively. In addition, Reed’s agreed to pre-pay the CAPEX Loan by at least $300,000 from the proceeds of the sale of idle equipment, if such sale were to occur. In conjunction with this loan the Company placed equipment with a cost of $250,000 at a co-packing facility to enable the co-packer to manufacture our products. Should the Company be unable to secure access to the equipment in the event of failure of the co-packer, the amount will become due and payable by the Company immediately. (C) Issuance of Warrants upon Amendments On November 9, 2015, as part of restructuring of the Term Loans with PMC, the Company granted PMC 125,000 warrants at an exercise price of $4.50 per share for five years and six months. The 125,000 warrants were valued at $141,000 using the Black Scholes Merton option pricing model and were recorded as a valuation discount. The following assumptions were made in valuing the 125,000 warrants; term of 5.5 years, volatility of 56.04%, expected dividends 0% and discount rate of 0.68%. The value of the warrants of $141,000 was recorded as a valuation discount and is being amortized over the remaining 16 months of the term loans. On May 13, 2016, as part of a further restructuring of the loans with PMC, the Company granted PMC 50,000 warrants at an exercise price of $4.50 per share with a term of five years and six months. The 50,000 warrants were valued at $38,000 using the Black Scholes Merton option pricing model and were recorded as a valuation discount. The following assumptions were made in valuing the 50,000 warrants; term of 5.5 years, volatility of 54.17%, expected dividends of 0% and discount rate of 1.49%. The value of the warrants of $38,000 was recorded as a valuation discount and is being amortized over the remaining term of the loans. On December 7, 2016, the Company agreed to reprice the exercise price of 50,000 common stock purchase warrants granted under Amendment Twelve from $4.50 to $4.10 and to reprice the exercise price of 125,000 common stock purchase warrants granted under Amendment Ten from $5.01 to $4.10. The following assumptions were made in repricing the warrants; term of 3.5 years, volatility of 49.52%, expected dividends 0% and discount rate of 0.74%. The incremental value of the warrants before and after the modification of $38,000 will be amortized over the remaining 24 months of the term loans. Reed’s also agreed to pay a one-time fee of $35,000. During the quarter ended March 31, 2017 and the year ended December 31, 2016 the amortization of the discount was $46,000 and $130,000 respectively, and the unamortized discount was $32,000 and $78,000 as of March 31, 2017 and December 31, 2016 respectively. (D) Interest Rates Notwithstanding the other borrowing terms above, if Excess Borrowing Availability under the $6 million Revolving line of credit remains more than $1,500,000 at all times during the preceding month (currently Reed’s Borrowing Availability is zero) the additional interest rate for all loans will be eliminated. The following chart summarizes the loans as of March 31, 2017, Description Base Interest Rate Increase in Prime Original rate Additional Interest Current rate Term A 9.00 % 0.50 % 9.50 % 3.00 % 12.50 % Term B 11.60 % 0.50 % 12.10 % 3.00 % 15.10 % Line of Credit (Prime Plus) 0.35 % 3.75 % 4.10 % 3.00 % 7.10 % Capital Loans 9.00 % 0.50 % 9.50 % 3.00 % 12.50 %

Obligations Under Capital Lease

Obligations Under Capital Leases	3 Months Ended
	Mar. 31, 2017
Leases [Abstract]
Obligations Under Capital Leases	8. Obligations under Capital Leases The Company leases equipment for its brewery operations with an aggregate value of $944,000 under six non-cancelable capital leases. Monthly payments range from $341 to $10,441 per month, including interest, at interest rates ranging from 6.51% to 17.31% per annum. At March 31, 2017, monthly payments under these leases aggregated $19,000. The leases expire at various dates through 2020. Future minimum lease payments under capital leases are as follows: Years Ending March 31, 2017 $ 230,000 2018 228,000 2019 155,000 2020 48,000 2021 1,000 Total payments $ 662,000 Less: Amount representing interest (86,000 ) Present value of net minimum lease payments $ 576,000 Less: Current portion (187,000 ) Non-current portion $ 389,000

Long term Financing Obligation

Long term Financing Obligation	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Long term Financing Obligation	9. Long-term Financing Obligation Long term financing obligation is comprised of the following as of: March 31, 2017 December 31, 2016 Financing obligation $ 2,331,000 $ 2,378,000 Valuation discount (797,000 ) (825,000 ) Net long term financing obligation $ 1,534,000 $ 1,553,000 Less current portion (197,000 ) (190,000 ) Long term financing obligation $ 1,337,000 $ 1,363,000 On June 15, 2009, the Company closed escrow on the sale of its two buildings and its brewery equipment and concurrently entered into a long-term lease agreement for the same property and equipment. In connection with the lease the Company has the option to repurchase the buildings and brewery equipment from 12 months after the commencement date to the end of the lease term at the greater of the fair market value or an agreed upon amount. Since the lease contains a buyback provision and other related terms, the Company determined it had continuing involvement that did not warrant the recognition of a sale; therefore, the transaction has been accounted for as a long-term financing. The proceeds from the sale, net of transaction costs, have been recorded as a financing obligation in the amount of $3,056,000. Monthly payments under the financing agreement are recorded as interest expense and a reduction in the financing obligation at an implicit rate of 9.9%. The financing obligation was personally guaranteed up to a limit of $150,000 by the principal shareholder and Chief Executive Officer, Christopher J. Reed. In connection with the financing obligation, the Company issued an aggregate of 400,000 warrants to purchase its common stock at $1.20 per share for five years. The 400,000 warrants were valued at $752,000 and reflected as a debt discount, using the Black Scholes Merton option pricing model. The following assumptions were utilized in valuing the 400,000 warrants: strike price of $2.10 to $2.25; term of 5 years; volatility of 91.36% to 110.9%; expected dividends 0%; and discount rate of 2.15% to 2.20%. The 400,000 warrants were recorded as valuation discount and are being amortized over 15 years, the term of the purchase option. Effective October 1, 2014, the Company executed Amendment #1 to the Long-term Financing Obligation. In exchange for a release from the $150,000 personal guarantee by the principal shareholder and Chief Executive Office, and a release of the brewery equipment which was collateral for the lease agreement, the Company issued 200,000 warrants to purchase its common stock for $5.60 per share with a term of five years. The 200,000 warrants were valued at $584,000 using the Black Scholes Merton option pricing model and were recorded as a valuation discount. The following assumptions were made in valuing the 200,000 warrants; term of 5 years, volatility of 59.53%, expected dividends 0% and discount rate of 1.25%. The warrants value of $584,000 is being amortized over the remaining term of the purchase option. Amortization of valuation discount was $27,000 and $28,000 during the three months ended March 31, 2017 and 2016.

Warrant Liability

Warrant Liability	3 Months Ended
	Mar. 31, 2017
Warrant Liability
Warrant Liability	9. Warrant Liability The Company issued warrants to investors and a placement agent as part of our June 2, 2016 financing transaction. In accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), the fair value of these warrants are classified as a liability on the Company’s balance sheet as according to the warrant terms, a fundamental transaction could give rise to an obligation of the Company to pay cash to such warrant holders. Corresponding changes to the fair value of the warrants are recognized in earnings on the Company’s statements of operations in each subsequent period. March 31, 2016 December 31, 2016 Stock Price $ 4.15 $ 4.10 Risk free interest rate 1.48 % 1.58 % Expected Volatility 54.71 % 55.81 % Expected life in years 4.17 4.42 Expected dividend yield 0 % 0 % Fair Value – Warrants $ 766,000 $ 775,000 The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the warrant was determined by the remaining contractual life of the warrant instrument. The expected dividend yield was based on the fact that the Company has not paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future.

Stock Based Activity

Stock Based Activity	3 Months Ended
	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Based Activity	10. Stock Based Activity Stock Options Stock options granted under our equity incentive plans generally vest over 3 years from the date of grant, at 33% per year or over 4 years at 25% per year and expire 5 years from the date of grant. The following table summarizes stock option activity for the three months ended March 31, 2017: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2016 1,048,500 4.68 3.8 $ 61,000 Granted Exercised Forfeited or expired (21,666 ) 4.79 4.65 Outstanding at March 31, 2017 1,026,834 4.68 3.50 $ 72,000 Exercisable at March 31, 2017 601,368 4.65 3.04 $ 47,000 During the three months ended March 31, 2017, the Company did not grant any stock options to any employee or other party. The aggregate intrinsic value was calculated as the difference between the closing market price, which was $4.15, and the exercise price of the Company’s stock options as of March 31, 2017. Stock-based compensation recognized on the Company’s statement of operations for the three months ended March 31, 2017 and 2016 was $140,000 and $169,000, respectively. Stock Warrants Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2016 803,909 $ 4.50 4.00 $ 26,000 Granted Exercised Forfeited or expired Outstanding at March 31, 2017 803,909 $ 4.50 3.75 $ 41,058 Exercisable at March 31, 2017 803,909 $ 4.54 3.95 $ 41,058 The intrinsic value was calculated as the difference between the closing market price, which was $4.15 and the exercise price of the Company’s warrants common stock, as of March 31, 2017.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2017
Subsequent Events [Abstract]
Subsequent Events	11. Subsequent Events In April 2017, Robert Reed, brother of Chris Reed, Chief Innovation Officer advanced working capital funds of $100,000 to the Company for working capital uses. This amount has been repaid from operational funds. On April 21, 2017 (“Closing Date”), pursuant to a Securities Purchase the Company sold and issued a convertible subordinated note in the principal amount of $3,400,000 (“Note”) and warrants to purchase 1,416,667 shares of common stock (“Warrant Shares”) to Raptor/ Harbor Reeds SPV, LLC. The Note bears interest at a rate of 12% per annum, compounded monthly on a 365-day year/ 30-day month basis. The Note is secured by a second priority security interest in the Company’s assets, which is subordinate to the first priority security interest of PMC Financial Services Group, LLC. The Note matures on the two-year anniversary of the Closing date and may not be prepaid. After 180 days, the Note may be converted, at any time and from time to time, into 1,133,333 shares of common stock of the Company (“Conversion Shares”). The Warrants will expire on the fifth (5th) anniversary of the Closing Date and have an exercise price equal to $4.00. Warrants will not be exercisable until 180 days after the Closing date. The Note and Warrant contain customary anti-dilution provisions and the Conversion Shares and Warrant Shares are subject to a registration rights agreement. The fair value of the warrants and conversion feature was determined to be $3,400,000 and will be recorded as a valuation discount and amortized as interest expense over the term of the note. In addition, the investor was granted a right to participate in future financing transactions of the Company for a term of two years. To facilitate the close of the agreement between Reed’s Inc. and Raptor/ Harbor Reeds SPV LLC, Reed’s Inc. granted an acceleration of the maturity of existing indebtedness with PMC from January 1, 2019 to October 21, 2018. On April 19, 2017, three accredited investors that are party to that certain Securities Purchase Agreement dated May 26, 2016 and hold participation rights in the Company’s financing transactions agreed to waive their participation rights with regard to the April 21, 2017 financing. In consideration, these investors’ participation rights, expiring in May 2017, were extended for a period of two years. In addition, the Company increased the terms of their outstanding warrants by one year and reduced the exercise price from $4.25 to $3.00 and also issued five-year warrants to purchase an aggregate of 210,111 shares of common stock at the exercise price of $3.00 to these investors. The newly issued warrants contain customary anti-dilution provisions.

Significant Accounting Polici19

Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Income (Loss) per Common Share	Income (Loss) per Common Share Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stock holders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing the net income applicable to common stock holders 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. Potential common shares are excluded from the computation when their effect is antidilutive. The Company had potentially dilutive securities that consisted of: March 31, 2017 2016 Warrants 803,909 325,000 Series A Preferred Stock 37,644 37,644 Options 1,026,834 965,000 Total 1,868,387 1,327,644
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 and 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 intangibles, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20 all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company will adopt the provisions of this statement in the first quarter of fiscal 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB, including 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 consolidated financial statements.
Concentrations	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20 all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company will adopt the provisions of this statement in the first quarter of fiscal 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB, including 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 consolidated financial statements.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: 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 due to the fact that the interest rates on these obligations are based on prevailing market interest rates. As of March 31, 2017 and December 31, 2016, the Company’s balance sheets included the fair value of derivative liabilities of $766,000 and $775,000 respectively, which were based on Level 2 measurements.

Significant Accounting Polici20

Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Schedule of Potentially Dilutive Securities	The Company had potentially dilutive securities that consisted of: March 31, 2017 2016 Warrants 803,909 325,000 Series A Preferred Stock 37,644 37,644 Options 1,026,834 965,000 Total 1,868,387 1,327,644

Inventory (Tables)

Inventory (Tables)	3 Months Ended
	Mar. 31, 2017
Inventory Disclosure [Abstract]
Schedule of Inventory	Inventory is valued at the lower of cost (first-in, first-out or market) and, net of reserves, is comprised of the following as of: March 31, 2017 December 31, 2016 Raw Materials and Packaging $ 3,660,000 $ 3,874,000 Finished Goods 1,856,000 3,011,000 $ 5,516,000 $ 6,885,000

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2017
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment	Property and equipment are comprised of the following as of: March 31, 2017 December 31, 2016 Land $ 1,107,000 $ 1,107,000 Building 1,875,000 1,875,000 Vehicles 651,000 666,000 Machinery and equipment 3,686,000 3,686,000 Equipment under capital leases 226,000 226,000 Office equipment 480,000 475,000 Construction In Progress 4,893,000 4,554,000 12,918,000 12,589,000 Accumulated depreciation (4,984,000 ) (4,863,000 ) $ 7,934,000 $ 7,726,000

Intangible Assets and Impairm23

Intangible Assets and Impairment Policy (Tables)	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Intangible Assets Trademarks	Based on management’s measurement, there were no indications of impairment at March 31, 2017. March 31, 2017 December 31, 2016 Virgil’s $ 576,000 $ 576,000 Sonoma Sparkler 229,000 229,000 Brand names $ 805,000 $ 805,000

Notes Payable (Tables)

Notes Payable (Tables)	3 Months Ended
	Mar. 31, 2017
Notes Payable [Abstract]
Schedule of Bank Notes	Bank notes consist of the following as of March 31, 2017 and December 31, 2016: March 31, 2017 December 31, 2016 (A) Term Loans $ 3,000,000 $ 3,000,000 (B) Capex loan 4,062,000 3,950,000 (C) Valuation discount (32,000 ) (78,000 ) Net 7,030,000 6,872,000 Current portion (953,000 ) (953,000 ) Long term portion $ 6,077,000 $ 5,919,000
Schedule of Interest Rates of Loans	The following chart summarizes the loans as of March 31, 2017, Description Base Interest Rate Increase in Prime Original rate Additional Interest Current rate Term A 9.00 % 0.50 % 9.50 % 3.00 % 12.50 % Term B 11.60 % 0.50 % 12.10 % 3.00 % 15.10 % Line of Credit (Prime Plus) 0.35 % 3.75 % 4.10 % 3.00 % 7.10 % Capital Loans 9.00 % 0.50 % 9.50 % 3.00 % 12.50 %

Obligations Under Capital Lea25

Obligations Under Capital Leases (Tables)	3 Months Ended
	Mar. 31, 2017
Leases [Abstract]
Schedule of Future Minimum Lease Payments Under Capital Leases	Future minimum lease payments under capital leases are as follows: Years Ending March 31, 2017 $ 230,000 2018 228,000 2019 155,000 2020 48,000 2021 1,000 Total payments $ 662,000 Less: Amount representing interest (86,000 ) Present value of net minimum lease payments $ 576,000 Less: Current portion (187,000 ) Non-current portion $ 389,000

Long Term Financing Obligation

Long Term Financing Obligation (Tables)	3 Months Ended
	Mar. 31, 2017
Debt Disclosure [Abstract]
Schedule of Long Term Financing Obligation	Long term financing obligation is comprised of the following as of: March 31, 2017 December 31, 2016 Financing obligation $ 2,331,000 $ 2,378,000 Valuation discount (797,000 ) (825,000 ) Net long term financing obligation $ 1,534,000 $ 1,553,000 Less current portion (197,000 ) (190,000 ) Long term financing obligation $ 1,337,000 $ 1,363,000

Warrant Liability (Tables)

Warrant Liability (Tables)	3 Months Ended
	Mar. 31, 2017
Warrant Liability
Schedule of Warrant Liability Using Assumptions	Corresponding changes to the fair value of the warrants are recognized in earnings on the Company’s statements of operations in each subsequent period. March 31, 2016 December 31, 2016 Stock Price $ 4.15 $ 4.10 Risk free interest rate 1.48 % 1.58 % Expected Volatility 54.71 % 55.81 % Expected life in years 4.17 4.42 Expected dividend yield 0 % 0 % Fair Value – Warrants $ 766,000 $ 775,000

Stock Based Activity (Tables)

Stock Based Activity (Tables)	3 Months Ended
	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Stock Option Activity	The following table summarizes stock option activity for the three months ended March 31, 2017: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2016 1,048,500 4.68 3.8 $ 61,000 Granted Exercised Forfeited or expired (21,666 ) 4.79 4.65 Outstanding at March 31, 2017 1,026,834 4.68 3.50 $ 72,000 Exercisable at March 31, 2017 601,368 4.65 3.04 $ 47,000
Schedule of Stock Warrants Activity	Stock Warrants Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2016 803,909 $ 4.50 4.00 $ 26,000 Granted Exercised Forfeited or expired Outstanding at March 31, 2017 803,909 $ 4.50 3.75 $ 41,058 Exercisable at March 31, 2017 803,909 $ 4.54 3.95 $ 41,058

Basis of Presentation and Liq29

Basis of Presentation and Liquidity (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2015
Net loss	$ 1,993,000	$ 1,580,000
Net cash provided by (used in) operating activities	527,000	(755,000)
Stockholders' deficit	3,510,000		$ 1,657,000
Working capital deficiency	3,551,000		1,565,000
Cash balance	197,000	$ 648,000	451,000	$ 1,816,000
Line of credit	$ 3,530,000		4,384,000
April 21, 2017 [Member]
Net proceeds			$ 3,240,000

Significant Accounting Polici30

Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Customer One [Member] | Sales Revenue, Net [Member]
Percentage of sale accounted to customer	21.00%	25.00%
Fair value of derivative liabilities	$ 766,000		$ 775,000
Customer One [Member] | Accounts Receivable [Member]
Percentage of sale accounted to customer	23.00%		23.00%
Customer Two [Member] | Sales Revenue, Net [Member]
Percentage of sale accounted to customer		10.00%
Customer Two [Member] | Accounts Receivable [Member]
Percentage of sale accounted to customer			11.00%
Vendor One [Member]
Percentage of sale accounted to customer	18.00%	17.00%
Vendor One [Member] | Accounts Payable [Member]
Percentage of sale accounted to customer	10.00%		20.00%
Vendor Two [Member] | Accounts Payable [Member]
Percentage of sale accounted to customer	10.00%		10.00%

Significant Accounting Polici31

Significant Accounting Policies - Schedule of Potentially Dilutive Securities (Details) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Potentially dilutive securities	1,868,387	1,327,644
Warrants [Member]
Potentially dilutive securities	803,909	325,000
Series A Preferred Stock [Member]
Potentially dilutive securities	37,644	37,644
Options [Member]
Potentially dilutive securities	1,026,834	965,000

Inventory - Schedule of Invento

Inventory - Schedule of Inventory (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw Materials and Packaging	$ 3,660,000	$ 3,874,000
Finished Goods	1,856,000	3,011,000
Inventory, total	$ 5,516,000	$ 6,885,000

Property and Equipment (Details

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 121,000	$ 200,000

Property and Equipment - Schedu

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
Land	$ 1,107,000	$ 1,107,000
Building	1,875,000	1,875,000
Vehicles	651,000	600,000
Machinery and equipment	3,686,000	3,696,000
Equipment under capital leases	226,000	226,000
Office equipment	480,000	475,000
Construction in progress	4,893,000	4,610,000
Property and equipment, gross	12,918,000	12,589,000
Accumulated depreciation	(4,984,000)	(4,719,000)
Property and equipment, net	$ 7,934,000	$ 7,726,000

Intangible Assets and Impairm35

Intangible Assets and Impairment Policy - Schedule of Intangible Assets Trademarks (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Purchased Brands	$ 805,000	$ 805,000
Virgil's [Member]
Purchased Brands	576,000	576,000
Sonoma Sparkler [Member]
Purchased Brands	$ 229,000	$ 229,000

Advances from Officers (Details

Advances from Officers (Details Narrative)	3 Months Ended
	Mar. 31, 2017USD ($)
Working capital funds advanced by related party	$ 380,000
Chris Reed (Former CEO) [Member]
Working capital funds advanced by related party	260,000
Repayment of related party debt	141,000
Daniel Miles (CFO) [Member]
Working capital funds advanced by related party	$ 120,000

Notes Payable (Details Narrativ

Notes Payable (Details Narrative)	Dec. 07, 2016USD ($)$ / shares	May 13, 2016USD ($)$ / sharesshares	Apr. 25, 2016USD ($)$ / sharesshares	Nov. 09, 2015USD ($)$ / sharesshares	Mar. 31, 2017USD ($)	Dec. 31, 2016USD ($)Installments	Dec. 31, 2015USD ($)
Line of credit					$ 3,530,000	$ 4,384,000
Percentage of borrowing based on accounts receivable					85.00%
Percentage of borrowing based on eligible inventory					60.00%
Change in fair value of warrant liability					$ 192,000
Percentage of prepayment penalty for prepayment prior to the first anniversary					1.00%
Term loan amount							$ 1,500,000
Line of credit borrowing availability						6,000,000
Valuation discount amortized during the period					$ 130,000		9,000
Unamortized balance						78,000
Capex Loan [Member]
Line of credit borrowing availability						$ 750,000
Capex loan interest rate						9.50%
Loan due amount						$ 953,000
Number of monthly installments | Installments						48
Loan balance amount						$ 3,950,000	$ 1,883,000
Equipment loan cost						250,000
Warrants [Member]
Change in fair value of warrant liability						775,000
Valuation discount amortized during the period						584,000
Revolving Loan [Member]
Loan bears interest, description					If EBITDA rises to $1,500,000 then the rate will be reduced to 9%. As of March 31, 2017, our effective rate under the revolving line was 9.5%. The monthly management fee is .45% of the average monthly loan balance.
Revolving loan, effective interest rate					9.50%
Term Loans [Member]
Loan bears interest, description					If the EBITDA measuring point stays below $1,000,000 where it is now, the rate will rise to 12% from the current rate of 9%. If EBITDA rises to $1,500,000 then the rate will be reduced to 9%.
Term loan outstanding principal balance					$ 3,000,000	$ 3,000,000
Prime Rate [Member]
Revolving loan, effective interest rate					0.35%
Prime Rate [Member] | Capex Loan [Member]
Capex loan interest rate						5.75%
Minimum [Member] | Capex Loan [Member]
Repayments of Debt						$ 300,000
Below $1,000,000 [Member] | Revolving Loan [Member]
Revolving loan, effective interest rate					12.00%
Term loan outstanding principal balance					$ 1,000,000
Below $1,000,000 [Member] | Term Loans [Member]
Revolving loan, effective interest rate					12.00%
Term loan outstanding principal balance					$ 1,000,000
Rises To $1,500,000 [Member] | Revolving Loan [Member]
Revolving loan, effective interest rate					9.00%
Term loan outstanding principal balance					$ 1,500,000
Rises To $1,500,000 [Member] | Term Loans [Member]
Revolving loan, effective interest rate					9.00%
Term loan outstanding principal balance					$ 1,500,000
PMC Financial Services Group, LLC [Member]
Change in fair value of warrant liability		$ 38,000
Warrants granted | shares		50,000
Discount rate	0.74%	1.49%
Expected dividends	0.00%	0.00%
Volatility rate	49.52%	54.17%
Warrants term	3 years 6 months	5 years 6 months
Valuation discount amortized during the period	$ 38,000	$ 38,000
Valuation of discount amortized period	24 months
Warrants exercise price per share | $ / shares		$ 4.50
one-time fee	$ 35,000
PMC Financial Services Group, LLC [Member] | Amendment Twelve [Member]
common stock purchase warrants	50,000
PMC Financial Services Group, LLC [Member] | Amendment Ten [Member]
common stock purchase warrants	$ 125,000
PMC Financial Services Group, LLC [Member] | Warrants [Member]
Loan maturity date			Dec. 31, 2016
Number of warrants issued during period | shares			10,000
Change in fair value of warrant liability			$ 15,000
Percentage of prepayment penalty for prepayment prior to the first anniversary			1.00%
Line of credit maturity date			Jan. 1, 2019
Warrants granted | shares			10,000
Discount rate			1.50%
Expected dividends			0.00%
Volatility rate			56.35%
Warrants term			5 years 6 months
Warrants exercise price per share | $ / shares			$ 3.90
PMC Financial Services Group, LLC [Member] | One Term Loans [Member]
Loan maturity date						Jan. 1, 2019
Revolving loan, effective interest rate						9.50%
Term loan amount						$ 1,500,000
Line of credit borrowing availability						3,000,000
PMC Financial Services Group, LLC [Member] | Two Term Loans [Member]
Loan maturity date					Jan. 1, 2019
Revolving loan, effective interest rate					14.85%
Term loan amount					$ 1,500,000
Line of credit borrowing availability						$ 3,000,000
PMC Financial Services Group, LLC [Member] | Term Loans [Member]
Loan bears interest, description						The annual interest rate on the first loan was prime plus 5.75% (currently 9.5%), and the rate on the second loan was prime plus 11.60% (currently 14.85%) but was modified on December 7, 2016 such that the new rate will be based on the trailing 6 month EBITDA. If the EBITDA measuring point stays below $1,000,000 where it is now, the rate will rise to 12% from the current rate of 9%. If EBITDA rises to $1,500,000 then the rate will be reduced to 9%.
Change in fair value of warrant liability				$ 141,000
Warrants granted | shares				125,000
Discount rate				0.68%
Expected dividends				0.00%
Volatility rate				56.04%
Warrants term				5 years 6 months
Warrants amortized period				16 months
Valuation discount amortized during the period				$ 141,000
Warrants exercise price per share | $ / shares				$ 4.50
PMC Financial Services Group, LLC [Member] | Prime Rate [Member] | One Term Loans [Member]
Revolving loan, effective interest rate						5.75%
PMC Financial Services Group, LLC [Member] | Prime Rate [Member] | Two Term Loans [Member]
Revolving loan, effective interest rate					11.60%
PMC Financial Services Group, LLC [Member] | Maximum [Member] | Amendment Twelve [Member]
Warrants exercise price per share | $ / shares	$ 4.50
PMC Financial Services Group, LLC [Member] | Maximum [Member] | Amendment Ten [Member]
Warrants exercise price per share | $ / shares	4.10
PMC Financial Services Group, LLC [Member] | Minimum [Member] | Amendment Twelve [Member]
Warrants exercise price per share | $ / shares	4.10
PMC Financial Services Group, LLC [Member] | Minimum [Member] | Amendment Ten [Member]
Warrants exercise price per share | $ / shares	$ 5.01
PMC Financial Services Group, LLC [Member] | Loan and Security Agreement [Member]
Line of credit					$ 6,000,000
Term Loan					$ 3,000,000
Loan maturity date					Oct. 1, 2018
PMC Financial Services Group, LLC [Member] | Loan and Security Agreement [Member] | Capex Loan [Member]
Term Loan						$ 4,700,000
PMC Financial Services Group, LLC [Member] | Loan and Security Agreement [Member] | Maximum [Member]
Capital Expansion loan					$ 4,700,000

Notes Payable - Schedule of Ban

Notes Payable - Schedule of Bank Notes (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Valuation discount		$ (78,000)
Bank Notes [Member]
Term Loans	$ 3,000,000	3,000,000
Capital expansion loan	4,062,000	3,950,000
Valuation discount	(32,000)	(78,000)
Net	7,030,000	6,872,000
Current portion	(953,000)	(953,000)
Long-term portion	$ 6,077,000	$ 5,919,000

Notes Payable - Schedule of Int

Notes Payable - Schedule of Interest Rates of Loans (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Term A [Member]
Original Rate	9.50%
Additional Interest	3.00%
Current rate	12.50%
Term B [Member]
Original Rate		12.10%
Additional Interest		3.00%
Current rate		15.10%
Base Interest Rate [Member] | Term A [Member]
Original Rate	900.00%
Base Interest Rate [Member] | Term B [Member]
Original Rate	11.60%
Increase in Prime [Member] | Term A [Member]
Original Rate	0.50%
Increase in Prime [Member] | Term B [Member]
Original Rate	0.50%

Obligations Under Capital Lea40

Obligations Under Capital Leases (Details Narrative)	3 Months Ended
	Mar. 31, 2017USD ($)	Dec. 31, 2016USD ($)Installments
Equipment held under capital leases	$ 944,000	$ 903,000
Number of non-cancelable capital leases | Installments		6
Payment of lease amount	$ 19,000
Lease expire year	2,020
Minimum [Member]
Payment of lease range per month	$ 341
Percentage of interest for lease amount	6.51%
Maximum [Member]
Payment of lease range per month	$ 10,441
Percentage of interest for lease amount	17.31%

Obligations Under Capital Lea41

Obligations Under Capital Leases - Schedule of Future Minimum Lease Payments Under Capital Leases (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Leases [Abstract]
2,017	$ 230,000
2,018	228,000
2,019	155,000
2,020	48,000
2,021	1,000
Total payments	662,000
Less: Amount representing interest	(86,000)
Present value of net minimum lease payments	576,000
Less: Current portion	(187,000)	$ (183,000)
Non-current portion	$ 389,000	$ 438,000

Long Term Financing Obligatio42

Long Term Financing Obligation (Details Narrative) - USD ($)	Oct. 02, 2014	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Proceeds from sale of transaction cost		$ 3,056,000
Percentage of interest expense and reduction in the financing obligation at implicit rate		9.90%
Change in fair value of warrant liability		$ 192,000
Amortization of valuation discount		$ 130,000		$ 9,000
Aggregate amount due under financing obligation			$ 2,377,000	2,538,000
Chief Executive Officer [Member]
Proceeds financial obligation limit guaranteed by related party	$ 150,000
Warrants [Member]
Change in fair value of warrant liability			775,000
Amortization of valuation discount			$ 584,000
Warrants [Member] | Financing Obligation [Member]
Number of warrants issued to purchase of common stock	200,000	400,000
Warrants exercise price per share	$ 5.60	$ 1.20
Warrants term	5 years	5 years
Change in fair value of warrant liability	$ 584,000	$ 752,000
Warrants expected term	5 years	5 years
Warrants volatility rate	59.53%
Warrants expected dividends	0.00%	0.00%
Warrants discount rate	1.25%
Amortization of warrant, term		15 years
Amortization of valuation discount		$ 50,000		$ 50,000
Warrants [Member] | Financing Obligation [Member] | Minimum [Member]
Warrants strike price		$ 2.10
Warrants volatility rate		91.36%
Warrants discount rate		2.15%
Warrants [Member] | Financing Obligation [Member] | Maximum [Member]
Warrants strike price		$ 2.25
Warrants volatility rate		110.90%
Warrants discount rate		2.20%
Christopher J. Reed [Member]
Proceeds financial obligation limit guaranteed by related party		$ 150,000

Long Term Financing Obligatio43

Long Term Financing Obligation - Schedule of Long Term Financing Obligation (Details) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Valuation discount	$ (797,000)	$ (825,000)
Less current portion	197,000	190,000
Long term financing obligation	1,337,000	1,363,000
Long Term Financing Obligation [Member]
Financing obligation	2,331,000	2,378,000
Valuation discount	(797,000)	(825,000)
Net long term financing obligation	1,534,000	1,553,000
Less current portion	(197,000)	(190,000)
Long term financing obligation	$ 1,337,000	$ 1,363,000

Warrant Liability - Schedule of

Warrant Liability - Schedule of Warrant Liability (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016
Fair Value - Warrants	$ 192,000
Warrants [Member]
Stock Price		$ 4.10
Risk free interest rate		1.58%
Expected Volatility		55.81%
Expected life in years		4 years 5 months 1 day
Expected dividend yield		0.00%
Fair Value - Warrants		$ 775,000
Issuance Date [Member
Stock Price			$ 4.15
Risk free interest rate	1.48%
Expected Volatility	54.71%
Expected life in years	4 years 2 months 1 day
Expected dividend yield	0.00%
Fair Value - Warrants	$ 766,000

Stock Based Activity (Details N

Stock Based Activity (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Equity incentive plans vesting period	3 years
Stock option vesting percentage description	Stock options granted under our equity incentive plans generally vest over 3 years from the date of grant, at 33% per year or over 4 years at 25% per year and expire 5 years from the date of grant.
Stock based compensation cost	$ 140,000	$ 169,000

Stock Based Activity - Schedule

Stock Based Activity - Schedule of Stock Option Activity (Details)	3 Months Ended
	Mar. 31, 2017USD ($)$ / sharesshares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares Outstanding, Beginning balance	1,048,500
Shares, Granted
Shares, Exercised
Shares, Forfeited or expired	(21,666)
Shares Outstanding, Ending balance	1,026,834
Shares Exercisable	601,368
Weighted-Average Exercise Price, Outstanding, Beginning | $ / shares	$ 4.68
Weighted-Average Exercise Price, Forfeited or expired | $ / shares	4.79
Weighted-Average Exercise Price, Outstanding, Ending | $ / shares	4.68
Weighted-Average Exercise Price, Exercisable | $ / shares	$ 4.65
Weighted-Average Remaining Contractual Terms (Years), Outstanding Beginning	3 years 9 months 18 days
Weighted-Average Remaining Contractual Terms (Years), Forfeited or expired	4 years 9 months 15 days
Weighted-Average Remaining Contractual Terms (Years), Outstanding Ending	4 years 8 months 5 days
Weighted-Average Remaining Contractual Terms (Years), Exercisable	4 years 7 months 24 days
Aggregate Intrinsic Value, Share Outstanding, Beginning | $	$ 61,000
Aggregate Intrinsic Value, Share Outstanding, Ending | $	72,000
Aggregate Intrinsic Value, Share Exercisable | $	$ 47,000

Stock Based Activity - Schedu47

Stock Based Activity - Schedule of Stock Warrants Activity (Details) - Warrants [Member]	3 Months Ended
	Mar. 31, 2017USD ($)$ / sharesshares
Shares Outstanding, Beginning Balance	803,909
Shares, Granted
Shares, Exercised
Shares, Forfeited or expired
Shares Outstanding, Ending Balance	803,909
Shares Exercisable, Ending Balance	803,909
Weighted-Average Exercise Price, Outstanding Beginning Balance | $ / shares	$ 4.50
Weighted-Average Exercise Price, Outstanding Ending Balance | $ / shares	4.50
Weighted-Average Exercise Price, Exercisable Ending Balance | $ / shares	$ 4.54
Weighted-Average Remaining Contractual Terms (Years), Outstanding Beginning Balance	4 years
Weighted-Average Remaining Contractual Terms (Years), Outstanding Ending Balance	3 years 9 months
Weighted-Average Remaining Contractual Terms (Years), Exercisable Ending Balance	3 years 11 months 12 days
Aggregate Intrinsic Value Shares Outstanding Beginning | $	$ 26,000
Aggregate Intrinsic Value Shares Outstanding Ending | $	41,058
Aggregate Intrinsic Value Shares Exercisable | $	$ 41,058

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - USD ($)	Apr. 21, 2017	Apr. 19, 2017	Mar. 31, 2017	Dec. 31, 2016
Fair value of the warrants and conversion feature			$ 192,000
Subsequent Event [Member]
Fair value of the warrants and conversion feature				$ 3,400,000
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Harbor Reeds SPV LLC [Member]
Note bears interest rate	12.00%
Warrant to purchase shares of common stock	1,416,667
Subsequent Event [Member] | Securities Purchase Agreement [Member] | PMC Financial Services Group, LLC [Member]
Number of converted shares of common stock	1,133,333
Note maturity term	2 years
Warrant exercise price	$ 4
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Note [Member]
Working capital funds	$ 100,000
Convertible principal amount	$ 3,400,000
Subsequent Event [Member] | Investors [Member]
Warrant to purchase shares of common stock		210,111
Warrant term		5 years
Warrant exercise price		$ 3
Subsequent Event [Member] | Investors [Member] | Minimum [Member]
Warrant exercise price		3
Subsequent Event [Member] | Investors [Member] | Maximum [Member]
Warrant exercise price		$ 4.25