Reed's, Inc. (NASDAQ: REED), maker of the top-selling sodas in
natural food stores nationwide, today announced its financial
results for the first quarter ended March 31, 2009.
First Quarter 2009 Highlights:
-- Gross Profit increases 63% over 2008 to $847,000
-- Gross Margin expands 1000 basis points to 25%
-- Net Sales decreased 4% to $3,417,000 compared to Q1 2008
-- Operating expenses (OPEX) reduced 49% from $2.45 million in Q1 2008 to
$1.26 million
-- EBITDA improved to a proforma negative $157,000 for the first quarter
2009, compared with a negative $1,881,000 in 2008. (See EBITDA table at end
of this release)
-- Loss per share decreases from (0.23) to (0.06)
-- Expanded product lines, including the new Virgil's Orange Cream Soda
-- Announced two significant distribution relationships in the Pacific
Northwest and two major supermarket chain relationships
-- Initiated social media marketing and outreach campaign
"In 2008, we began transforming Reed's by realigning our sales
strategy, expanding our product lines, reducing our operating costs
and increasing prices on select products. In 2009 this has yielded
improvements in our gross margins of approximately 10% over the
2008 period. We have initiatives underway to further reduce our
cost of sales, by obtaining better glass costs as well as
additional reductions in co-packing costs," stated Mr. Chris Reed.
"We believe that with the sales from our new products, which
include Virgil's Orange Cream Soda and Reed's Natural Energy
Elixir, Reed's will operate at profitable levels in 2009."
Mr. Reed continued, "Historically and seasonally, Q1 is our
slowest quarter, and although some people would not be excited
about a 4% decrease in revenues, we are actually extremely pleased
with our results. In the first quarter of 2008 our sales were
impacted by a number of one-time promotions and were driven by a
price increase we implemented April 1, 2008, with many customers
buying heavy before its implementation. We trended against that
this year and a bad economy; so, when you remove those one-time
factors our results look good."
"Looking ahead, we will continue to build upon the momentum that
we've carried over from our 2008 initiatives. We'll do this by
growing our presence in mainstream grocery store accounts,
expanding our revenues through new products like our Virgil's
Orange Cream Soda and Reed's Natural Energy Elixir, and adding
additional high-volume distribution to position Reed's for
continued market share growth in 2009," concluded Mr. Reed."
Reed's Chief Financial Officer, Mr. James Linesch, commented,
"We expect further gross margin expansion in future quarters and we
are anticipating additional improvement in our overall 2009 gross
profit by 20% - 40%. Under our current cost structure, we believe
that gross profits generated over the next few quarters will enable
us to realize positive cash flow so that we can expand our
promotional efforts, product offerings and business development
activities."
About Reed's, Inc.
Reed's, Inc. makes the top selling sodas in natural food markets
nationwide and is currently selling in 10,500 supermarkets in
natural foods and mainstream. Its six award-winning non-alcoholic
Ginger Brews are unique in the beverage industry, being brewed, not
manufactured and using fresh ginger, spices and fruits in a brewing
process that predates commercial soft drinks. In addition, the
Company owns the top selling root beer line in natural foods, the
Virgil's Root Beer product line, and the top selling cola line in
natural foods, the China Cola product line. Other product lines
include: Reed's Ginger Candies and Reed's Ginger Ice Creams.
Reed's products are sold through specialty gourmet and natural
food stores, mainstream supermarket chains, retail stores and
restaurants nationwide, and in Canada. For more information about
Reed's, please visit the company's website at:
http://www.reedsgingerbrew.com or call 800-99-REEDS.
Follow Reed's on Twitter at:
http://www.twitter.com/reedsgingerbrew
View Reed's YouTube channel at:
http://www.youtube.com/reedsgingerbrew
Review Reed's Delicious bookmarks at:
http://www.delicious.com/reedsinc
Join Reed's Facebook Fan Page at:
http://www.facebook.com/pages/Reeds-Ginger-Brew-and-Virgils-Natural-Sodas/57143529039?ref=nf
Subscribe to Reed's RSS feed at:
http://www.irthcommunications.com/REED_rss.xml
More information can be found at:
http://www.irthcommunications.com/clients_REED.php
SAFE HARBOR STATEMENT
Some portions of this press release, particularly those
describing Reed's goals and strategies, contain "forward-looking
statements." These forward-looking statements can generally be
identified as such because the context of the statement will
include words, such as "expects," "should," "believes,"
"anticipates" or words of similar import. Similarly, statements
that describe future plans, objectives or goals are also
forward-looking statements. While Reed's is working to achieve
those goals and strategies, actual results could differ materially
from those projected in the forward-looking statements as a result
of a number of risks and uncertainties. These risks and
uncertainties include difficulty in marketing its products and
services, maintaining and protecting brand recognition, the need
for significant capital, dependence on third party distributors,
dependence on third party brewers, increasing costs of fuel and
freight, protection of intellectual property, competition and other
factors, any of which could have an adverse effect on the business
plans of Reed's, its reputation in the industry or its expected
financial return from operations and results of operations. In
light of significant risks and uncertainties inherent in
forward-looking statements included herein, the inclusion of such
statements should not be regarded as a representation by Reed's
that they will achieve such forward-looking statements. For further
details and a discussion of these and other risks and
uncertainties, please see our most recent reports on Form 10-KSB
and Form 10-Q, as filed with the Securities and Exchange
Commission, as they may be amended from time to time. Reed's
undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
REED'S, INC.
CONDENSED BALANCE SHEETS
March 31, December 31,
2009 2008
----------- -----------
ASSETS (unaudited)
Current assets:
Cash $ 108,000 $ 229,000
Inventory 2,873,000 2,837,000
Trade accounts receivable, net of allowance
for doubtful accounts and returns and
discounts of $97,000 as of March 31, 2009
and December 31, 2008 1,050,000 897,000
Prepaid and other current assets 187,000 68,000
----------- -----------
Total Current Assets 4,218,000 4,031,000
Property and equipment, net 4,056,000 4,133,000
Brand names 800,000 800,000
Deferred offering costs 86,000 62,000
Deferred financing fees 45,000 77,000
----------- -----------
Total assets $ 9,199,000 $ 9,103,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,301,000 $ 1,929,000
Lines of credit 1,274,000 1,354,000
Current portion of long term debt 16,000 16,000
Accrued interest 16,000 -
Accrued expenses 96,000 96,000
----------- -----------
Total current liabilities 3,703,000 3,395,000
Long term debt, less current portion 1,743,000 1,747,000
----------- -----------
Total Liabilities 5,446,000 5,142,000
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $10 par value, 500,000
shares authorized, 47,121 shares
outstanding at March 31, 2009 and December
31, 2008 471,000 471,000
Common stock, $.0001 par value, 19,500,000
shares authorized, 9,107,177 shares issued
and outstanding at March 31, 2009 and
8,979,341 shares issued and outstanding at
December 31, 2008 1,000 1,000
Additional paid in capital 18,698,000 18,408,000
Accumulated deficit (15,417,000) (14,919,000)
----------- -----------
Total stockholders' equity 3,753,000 3,961,000
----------- -----------
Total liabilities and stockholders'
equity $ 9,199,000 $ 9,103,000
=========== ===========
REED'S, INC.
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2009 and 2008
(Unaudited)
2009 2008
------------ ------------
Sales $ 3,417,000 $ 3,564,000
Cost of sales 2,570,000 3,044,000
------------ ------------
Gross profit 847,000 520,000
------------ ------------
Operating expenses:
Selling and marketing expense 659,000 1,124,000
General and administrative expense 603,000 1,330,000
Total operating expenses 1,262,000 2,454,000
------------ ------------
Loss from operations (415,000) (1,934,000)
Interest income - 1,000
Interest expense (83,000) (57,000)
------------ ------------
Net loss $ (498,000) $ (1,990,000)
============ ============
Loss per share - basic and diluted $ (0.06) $ (0.23)
============ ============
Weighted average number of shares outstanding -
basic and diluted 9,041,483 8,764,683
============ ============
Reed's, Inc.
Calculation EBITDA
For the three months ended
March 31, 2009 and 2008
2009 2008
------------ ------------
Net Loss $ (498,000) $ (1,990,000)
Provision for Income Taxes 1,000 2,000
Interest Expense (Income), net 83,000 56,000
Depreciation and Amortization 109,000 79,000
Stock Compensation 147,000 (28,000)
------------ ------------
EBITDA $ (157,000) $ (1,881,000)
============ ============
The Company defines EBITDA as net loss before interest, taxes,
depreciation and amortization, and non-cash expense for securities.
Other companies may calculate EBITDA differently. Management
believes that the presentation of EBITDA provides a meaningful
measure of performance that approximates cash flow before interest
expense, and is meaningful to investors.
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Contact IRTH Communications, LLC Mark B. Moline Managing Partner
760-458-4899 Email Contact http://www.irthcommunications.com
http://www.twitter.com/irthcomm
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