Reed’s, Inc. Announces Operating Results for 2009

Company Realizes Record Fourth Quarter Sales Growth,

Margin Improvement and Significant Cost Reductions in 2009

Los Angeles, California, March xx, 2010 — Reed’s, Inc. (NASDAQ:REEDNews) (“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.”