Reed's, Inc. (NASDAQ:REED) (“Reed’s” or the “Company”), maker of
the top-selling sodas in natural food stores nationwide, today
announced its financial results for the fourth quarter and fiscal
year ended December 31, 2009. Significant highlights of the results
include:
- Fourth quarter 2009 sales
increased 21%, over the prior year, to a record $3.5 million.
- Sales for the year ended
December 31, 2009, were $15.2 million, which did not decrease from
2008.
- Gross profit for the year ended
December 31, 2009, increased to $3,612,000, a 7% increase from
fiscal 2008.
- Operating expenses before asset
impairment charges decreased by 27% in fiscal 2009.
- The Company’s EBITDA loss for
2009 was $542,000, as compared to $3,073,000 in 2008, a $2.5
million improvement (See EBITDA table at end of this release for
further non-GAAP information).
- Cash balance plus unused
revolving line of credit was approximately $1.5 million at December
31, 2009.
- Working capital increased to
$2.0 million at December 31, 2009, from $636,000 at 2008
year-end.
- Long-term debt, aside from
capitalized lease financing, decreased to $71,000 at year-end, from
$1.7 million in 2008.
Operating expenses before asset impairment charges decreased by
$1.9 million in fiscal 2009, over the prior year, with a 37%
decrease in selling and marketing costs and a 16% decrease in
general administrative costs. Asset impairment charges are a
non-cash expense recorded in connection with the sale-leaseback
transaction completed in June, 2009. The reduction in selling and
marketing expenses of 37%, or $1.4 million, is primarily a result
of re-focusing of our core sales efforts toward increasing grocery
chain business.
Long-term debt includes $130,000 in capitalized equipment leases
and $2.2 million of capitalized facilities lease. The Company is
required to capitalize a long-term lease obligation, due to certain
terms. This liability is diminished by the monthly lease payments
for the facilities, in a pro-rata amortization computation, and
does not represent a separate debt of the Company that must be
repaid.
Reed’s reported a net loss attributable to common shareholders
in fiscal 2009 of $2,582,000, or $0.28 per share, versus a net loss
of $3,838,000 in 2008, or $0.43 per share.
“Our results reflect successful execution of our strategy for
2009,” said Mr. Chris Reed, Founder and Chief Executive Officer of
Reed’s, Inc. “We reduced our expenses, improved our margins and
developed a number of new customer relationships that will have an
increasing positive impact on our sales. While our sales were flat
in 2009, we weathered the recession of 2008-2009 without decreases,
which is far ahead of our competitors. The carbonated soft drink
category of beverages declined by over 2% last year, after
declining 3% in the prior year. Specialty categories declined by
higher rates. However, Reed’s is now on a sales uptick, and we are
out-pacing our peers in the industry.”
Mr. Jim Linesch, Chief Financial Officer of Reed's, Inc.,
stated, “As a result of our efforts, Reed’s is well-capitalized
going into 2010, with a minimal amount of debt. We have the working
capital we need to continue our expansion and to introduce new
products that are in high demand.”
Added Mr. Reed, “We are excited about the prospects for our
business in 2010 and believe we have the right team in place to
execute on our growth strategy and create substantial value for our
shareholders. We achieved a number of milestones in 2009 that we
that we are building on this year. These include the launch of our
private label business, where we hope to increase the number of
private label accounts to a total of 7 to 10 by the end of 2010,
and the launch of our new ‘Reed’s Rx’ product line for the drug
store market. This represents an exciting new avenue of growth as
we begin to roll out the product in major drug stores and groceries
nationwide.”
Concluded Mr. Reed, “In 2010, we expect to continue to
experience strong organic growth from our existing brands, new
product lines, and increasing number of private label agreements.
Our business is healthy and picking up momentum as we successfully
execute on the initiatives we have defined. Therefore, we are
reiterating our guidance for double-digit growth in 2010 as we
explore new opportunities to build the Company and increase
shareholder value.”
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.
Recently, Reed's added the Sonoma Sparkler brands to its line, a
celebration drink with an established customer base. 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
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.
– FINANCIAL TABLES FOLLOW –
REED’S, INC.
STATEMENTS OF
OPERATIONS
For the Years Ended December 31,
2009 and 2008
2009 2008
Sales
$ 15,178,000 $ 15,277,000 Cost of sales 11,566,000
11,891,000 Gross profit 3,612,000
3,386,000 Operating expenses: Selling
and marketing expense 2,412,000 3,817,000 General and
administrative expense 2,632,000 3,140,000 Impairment of assets
641,000 - Total operating expenses
5,685,000 6,957,000 Loss from
operations (2,073,000 ) (3,571,000 ) Interest income - 1,000
Interest expense (486,000 ) (244,000 ) Net
loss (2,559,000 ) (3,814,000 ) Preferred stock dividend
(23,000 ) (24,000 ) Net loss attributable to
common stockholders $ (2,582,000 ) $ (3,838,000 ) Loss per
share available to common stockholders - basic and diluted $ (0.28
) $ (0.43 ) Weighted average number of shares outstanding - basic
and diluted 9,238,002 8,884,338
REED’S, INC.
BALANCE SHEETS
December 31,
2009
December 31,
2008
ASSETS Current assets: Cash
$
1,306,000
$
229,000
Inventory 2,884,000 2,837,000 Trade accounts receivable, net of
allowance for doubtful accounts and returns and discounts of
$90,000 and $97,000, respectively
866,000
897,000
Prepaid and other current assets 99,000 68,000
Total Current Assets 5,155,000 4,031,000 Property and
equipment, net of accumulated depreciation of $727,000 and
$1,150,000, respectively
3,655,000
4,133,000
Brand names 1,029,000 800,000 Deferred offering costs - 62,000
Deferred financing fees, net of amortization of $10,000 and
$40,000, respectively
131,000
77,000
Total assets
$
9,970,000
$
9,103,000
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
Liabilities: Accounts payable $ 954,000 $ 1,592,000 Accrued
expenses 127,000 96,000 Recycling fees payable 456,000 337,000 Line
of credit 1,415,000 1,354,000 Current portion of long term debt -
16,000 Current portion of long term financing obligation 40,000 -
Current portion capital leases 24,000 - Current portion note
payable 102,000 - Total current
liabilities 3,118,000 3,395,000 Long term financing
obligation, less current portion, net of discount of $726,000
2,274,000 - Capital leases payable, less current portion 130,000 -
Note payable, less current portion 71,000 - Long term debt, less
current portion - 1,747,000 Total
Liabilities 5,593,000 5,142,000
Commitments and contingencies Stockholders’ equity:
Series A Convertible Preferred
stock, $10 par value, 500,000 shares authorized, 46,621 and 47,121
shares issued and outstanding, respectively
466,000
471,000
Series B Convertible Preferred
stock, $10 par value, 500,000 shares authorized, 120,820 shares
issued and outstanding at December 31, 2009
1,208,000 -
Common stock, $.0001 par value,
19,500,000 shares authorized, 9,606,127 and 8,979,341 shares issued
and outstanding, respectively
1,000 1,000
Additional paid in capital
20,203,000 18,408,000 Accumulated deficit (17,501,000 )
(14,919,000 ) Total stockholders’ equity 4,377,000
3,961,000
Total liabilities and
stockholders’ equity
$
9,970,000
$
9,103,000
REED’S, INC.
EBITDA SCHEDULE
(Unaudited)
Year ended December 31, 2009
2008 Net loss
$
(2,559,000
)
$ (3,814,000 ) EBITDA adjustments: Depreciation and
amortization 469,000 355,000 Interest expense 486,000 244,000 Stock
option compensation 421,000 142,000 Impairment of assets
641,000 - Total EBITDA adjustments
2,017,000 742,000 EBITDA income (loss)
from operations
$
(542,000
)
$
(3,073,000
)
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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