Reed's, Inc. Announces Second Quarter 2009 Financial Results

LOS ANGELES, CA--(Marketwire - August 14, 2009) - Reed's, Inc. (NASDAQ: REED), maker of the top-selling sodas in natural food stores nationwide, today announced its financial results for the second quarter ended June 30, 2009.

Second Quarter and Six Month 2009 Highlights:

-- Sale-leaseback agreement reduced long-term mortgage debt by $1.8
million and netted proceeds of $1 million to the Company;
-- Positive EBITDA of $134,000 in Q2 2009 versus a EBITDA loss of
$397,000 in Q2 2008 (see EBITDA schedule attached);
-- Gross profit margin increased to 26% of sales during the six months
ended June 30, 2009 from 22% in the same period of 2008;
-- Cash and cash equivalents increased to $421,000 as of June 30, 2009,
compared to $229,000 as of December 31, 2008;
-- Working capital increased to $1.8 million as of June 30, 2009, a $1.2
million improvement from December 31, 2008;
-- Continued to maintain a much lower cost structure in the first six
months of 2009, than in 2008, covering both operating expenses and per-unit
cost of sales;
-- Q2 2009 Net Sales decreased 8% to $4.2 million compared to Q2 2008 due
to a non-repeat specialty program in 2008. Sales from primary product
lines increased by 15% in Q2 2009 over Q2 2008;
-- Loss from operations of $752,000 in Q2 2009 was primarily due to non-
cash impairment write downs on fixed assets of $641,000. Before impairment
losses, the net loss from operations in Q2 2009 was $118,000, an
improvement from the loss of $441,000 in Q2 2008.

Additional Highlights:

-- Began shipments of all new Natural Energy Elixir;
-- Announced expanded relationship with 1,400 Kroger-owned (NYSE: KR)
supermarkets, and a number of other regional and nationwide chains;
-- Announced significant new distribution relationships on both coasts.

"We're pleased with our overall performance in Q2. Although our revenues and gross profits were down slightly, we feel fortunate that our solid brand identity and loyal customer base carried us through," commented Mr. Chris Reed, Founder, Chairman and CEO of Reed's, Inc.

"Some of our peers experienced significant erosion in sales, with many high-end brands declining 30% or more during one of the worst economic times of our generation. Meanwhile, our core product line sales and volume increased by over 15%, representing expansion of our sales channels. We believe that our targeted promotional activities are producing good results, and we plan to continue with these over the next year."

Mr. Reed continued, "The results for Q2 reflect a continued reduction in our costs of goods sold, along with a decrease in our operating costs, as compared to the prior year period. Price discounting eroded our gross margins a bit this quarter, but our year-to-date gross margins are ahead of the prior year period."

"In the last quarter we launched our all new Natural Energy Elixir, a product that we feel is in a class by itself. We also expanded with some key distribution agreements on both coasts. Our presence in Kroger stores nationwide increased to over 1,400 stores, and we are making significant inroads with getting our products displayed in the mainstream beverage aisles of major chains," stated Mr. Reed.

"Looking ahead, we are launching our private label business initiative, which is complementary to our branded lines and is expected to increase overall revenues and margins. The funding from our completed sale-leaseback transaction has improved our working capital position, while we proceed on a path toward healthy income from operations. Also, early in the third quarter we retained Pacific Capital Growth Advisors, a strategic advisory firm focused on the natural products and healthy living space. We feel that Reed's has reached a critical size where larger players look for strategic relationships, and we are receiving a pretty healthy turnout of national and international players looking at us. It's too soon to tell what this will produce, but we are encouraged by the early feedback," concluded Mr. Reed.

See financial statements and EBITDA schedule at www.sec.gov

About Reed's, Inc.

Reed's, Inc. makes the top-selling sodas sold in natural food markets nationwide, and is currently selling in more than 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.

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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.

Source: Reed’s, Inc.

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