Reed's, Inc. (NASDAQ:REED) (OTCBB:REEDP), maker of the
top-selling sodas in natural food stores nationwide, today
announced its financial results for the first quarter ended March
31, 2010.
First Quarter 2010 Highlights:
- First quarter sales increased
17% to a record $4.0 million.
- Gross profit in the first
quarter increased 26% to $1.1 million.
- Gross margin in the first
quarter increased by 200 basis points to 27%.
- Operating expenses in the first
quarter decreased by $86,000, or 7% to $1.2 million.
- EBITDA for the first quarter was
$172,000, as compared to an EBITDA loss of $159,000 in the first
quarter of 2009 (See EBITDA table at end of this release for
further non-GAAP information).
- Cash plus revolving LOC
availability was $1.3 million at March 31, 2010, as compared to
$1.5 million at December 31, 2009.
- Working capital increased by
approximately $500,000 during the quarter, to $2.5 million
- Ramped up private label business
with the addition of third private label customer.
- Began production/shipment of new
‘Reed’s Rx’ Remedy for Nausea and Motion Sickness.
- ‘Reed’s Rx’ Natural Ginger
Nausea Relief gained placements in over 7,000 CVS/Pharmacy
locations nationwide.
- Expanded relationship with
Kroger’s and Woodman’s Food Market; and established new
relationship with Associated Wholesale Grocers (AWG).
“The first quarter is usually the weakest, but the fact that the
Company was EBITDA positive makes it clear to us that we have moved
into profitability,” said Chris Reed, Founder and CEO of Reed’s,
Inc. “Our strategic plans are unfolding and are boosted by the
improving economy. In the first quarter, revenues from our existing
brands provided a solid base while our new branded products and
private label sales took us to a 17% sales increase over last year,
with higher margins. As we go into the second quarter, sales of all
of our brands continue to outpace last year, and we anticipate
substantial increases in private-label product sales throughout
2010. Gross profits from private-label sales will fuel our
promotions of branded products. We project 20%-plus overall revenue
increases for 2010.”
Reed's Chief Financial Officer, Jim Linesch, commented, "We
currently have $1.3 million cash available and we are cash flow
positive. Our ability to run lean has helped us weather the
economic downturn in 2009 and to reach profitability faster in
2010. Reed’s is nimble and quick, enabling us to seize
opportunities that others cannot.”
See financial statements and EBITDA schedule at the end of this
release.
Conference Call
Jim Linesch and Chris Reed will review the Company’s first
quarter financial report in a conference call following the close
of the market today. Time and dial-in information for the Company’s
conference call will be available later in the day.
About Reed's, Inc.
Reed's, Inc. makes the top selling natural sodas in the natural
foods industry sold in over 10,500 natural food markets and
supermarkets nationwide. In 2009, Reed’s started producing Private
Label natural beverages for select national chains. 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. 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 introduced its ‘Reed’s Rx’ line of ginger-based
nausea relief products for the drug store market and acquired the
Sonoma Sparkler brand, a sparkling juice 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, as well as through private
label relationships with major supermarket chains. 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.
REEDS, INC.
CONDENSED STATEMENTS OF
OPERATIONS
For the Three Months Ended
March 31, 2010 and 2009
(Unaudited)
Three months ended March 31, 2010
2009
Sales
$ 4,012,000 $ 3,417,000 Cost of sales 2,946,000
2,570,000 Gross profit 1,066,000
847,000 Operating expenses: Selling and
marketing expense 524,000 659,000 General and administrative
expense 652,000 603,000 Total operating
expenses 1,176,000 1,262,000
Loss from operations (110,000 ) (415,000 ) Interest expense
(149,000 ) (83,000 ) Net loss (259,000 )
(498,000 ) Preferred stock dividend (14,000 )
- Net loss attributable to common stockholders $
(273,000 ) $ (498,000 ) Loss per share available to common
stockholders - basic and diluted $ (0.03 ) $ (0.06 ) Weighted
average number of shares outstanding - basic and diluted
9,834,696 9,041,483
REED’S, INC.
EBITDA SCHEDULE
(Unaudited)
Three Months Ended March 31, 2010
2009 Net loss $ (259,000 ) $ (498,000 )
EBITDA adjustments: Depreciation and amortization 148,000 109,000
Interest expense 149,000 83,000 Stock option compensation 421,000
142,000 Impairment of assets 134,000 147,000
Total EBITDA adjustments
431,000 339,000 EBITDA income
(loss) from operations $ 172,000 $ (159,000 )
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.
REED’S, INC.
CONDENSED BALANCE
SHEETS
March 31,
2010
December 31,
2009
ASSETS (unaudited) Current assets: Cash $ 235,000 $
1,306,000 Inventory 3,177,000 2,884,000 Trade accounts receivable,
net of allowance for doubtful accounts and returns and discounts of
$90,000 1,197,000 866,000 Prepaid and other current assets
534,000 99,000 Total Current Assets 5,143,000
5,155,000 Property and equipment, net of accumulated
depreciation of $833,000 and $727,000, respectively
3,602,000
3,655,000
Brand names 1,029,000 1,029,000 Deferred financing fees, net of
amortization of $41,000 and $10,000, respectively
100,000
131,000
Total assets $ 9,874,000 $ 9 ,970,000
LIABILITIES AND STOCKHOLDERS’ EQUITY Current
Liabilities: Accounts payable $ 946,000 $ 954,000 Accrued expenses
137,000 127,000 Dividends payable 14,000 - Recycling fees payable
467,000 456,000 Lines of credit 881,000 1,415,000 Current portion
of long term financing obligation 44,000 40,000 Current portion of
capital leases payable 25,000 24,000 Current portion of note
payable 103,000 102,000 Total current
liabilities 2,617,000 3,118,000 Long term financing
obligation, less current portion, net of discount of $714,000 and
$726,000, respectively
2,274,000
2,274,000
Capital leases payable, less current portion 123,000 130,000 Note
payable, less current portion 45,000 71,000
Total liabilities 5,059,000 5,593,000
Commitments and contingencies Stockholders’
equity:
Preferred stock, $10 par value,
500,000 shares authorized, 46,621 shares outstanding
466,000
466,000
Series B Convertible Preferred
stock, $10 par value, 500,000 shares authorized, 110,794 and
120,820 shares issued and outstanding, respectively
1,108,000 1,208,000
Common stock, $.0001 par value,
19,500,000 shares authorized, 10,128,206 and 9,606,127 shares
issued and outstanding, respectively
1,000 1,000
Additional paid in capital
21,014,000 20,203,000 Accumulated deficit (17,774,000 )
(17,501,000 ) Total stockholders’ equity 4,815,000
4,377,000
Total liabilities and
stockholders’ equity $ 9,874,000 $ 9,970,000
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