Reed's reports 2013 net loss of US$1.5M, compared to year-ago loss of US$524,000; net revenues rise 24% to US$37.3M

LOS ANGELES , March 25, 2014 (press release) – Reed's, Inc. (NYSE MKT: REED), maker of the top-selling sodas in natural food stores nationwide, today announced the financial results for its fiscal year ending December 31, 2013.

Financial Highlights for the Year:

Gross revenues increased 28% to $42.2 million in 2013, compared to 2012. Net revenues increased 24% to $37.3 million in 2013.

Gross profit increased 18% to $10.8 million in 2013.

Earnings before non-cash items and finance costs (modified EBITDA) decreased $1 million during 2013 to $13,000. (See modified EBITDA schedule at end of this release for further non-GAAP information).

Net loss for the 2013 fiscal year was $1,520,000 compared to a loss of $524,000 a year earlier.

Working capital at December 31, 2013 was $1.3 million, as compared to $2.3 million at December 31, 2012.

Increased the credit limit on our revolving line of credit from $4 million to $4.5 million

Operational Highlights:

Began production/shipment of four new flavors of Reed's Culture Club Kombucha: Coconut Water Lime, Cabernet Grape, Pomegranate Ginger and Mango Passion Ginger

Opened up kombucha markets with mainstream DSD distributors in the Midwest, NY Metro Market, Maryland, San Francisco, Pacific Northwest and Southeast markets

Gained kombucha distribution in Kroger, Wegmans, Fresh Market, Giant Eagle, and JewelOsco Supermarket Chains

Started selling Reed's and Virgil's to WinCo Foods

Established a distribution relationship with Lassonde, one of Canada's largest food companies

Moved to the NYSE MKT from NASDAQ

Continued Los Angeles plant upgrades designed to increase capacity and efficiency

Announced that all of Reed's, Inc. products are GMO free

Promoted Reed's Ginger Brews through MindGardens organic gardening for inner city youth project with Snoop Dogg and his 22 million Facebook followers

Partnered with Life is Good company as a sponsor at their annual fundraising concert series attended by 30,000

"Another solid year of growth here at Reed's," stated Chris Reed, Founder and CEO at Reed's, Inc. "Our Reed's Culture Club Kombucha became the number two Kombucha line in the country in its first full year and we launched four more flavors to great response. We also expanded sales and distribution channels for our Reed's Ginger Brew and Virgil's branded products. We continue to fine tune our production model for our products which should continue to improve the economics of making our products. We have initiated programs to evaluate the performance of our different marketing efforts and expect to see smarter, more focused marketing spends with less top line discounting. We expect 2014 to be another great year."

David Williams, Interim Chief Financial Officer, stated, "We are focused on driving improved results in key areas. Our beverage products continued to achieve strong organic growth rates and led to an 18% increase in gross margin dollars. During 2013, our direct gross margin percentage, before promotional discounts, improved by an average of 150 basis points. Driven by economies of scale, general & administrative costs were 9.4% of net revenue -- a 140 basis point improvement from 10.8% in the prior year. Sales and marketing costs in 2013 were approximately 11.2% of net revenues, an increase from 10.5% in 2012 as we focused on additional distribution channels and increased distribution of our Kombucha product line. Our organizational structure is healthy and we have excellent brands that we are promoting in effective ways."

Mr. Williams continued, "Working capital was $1,347,000 at year-end, a decrease of nearly $1 million from 2012. This decrease in working capital is attributable to net losses, pay downs on long-term debt and increases to our inventory levels. Currently, we have ample capital for operations. Our forecasts show that by the end of the year we will have significantly replenished our working capital. Another important way we are increasing our working capital is by reducing the trade spend that erodes our top line. In 2013, nearly $5 million was spent out of gross sales for trade discounts in the aggressive launch of our new Kombucha line. In 2014, we are focusing on reducing this spend and evaluating which programs are more effective at building our brands and stimulating growth. We made significant advances to reduce our production costs by 2% in 2013, which offset our 3% top line margin erosion and resulted in a 1% gross margin loss over 2012. Through managing inventory levels and marketing discounts, we believe the business will achieve an increase to its working capital of over $2 million in 2014. We believe there is no current necessity to approach the capital markets to improve our liquidity."

The Company will conduct a conference call at 4:30 PM EDT on March 25th to discuss its 2013 fiscal year end results and outlook for the future. To participate in the call, please dial the following number 5 to 10 minutes prior to the scheduled call time: (866) 578-1005. International callers should dial (713) 481-0091.

A replay will be available within a few days after the meeting in the investor relations section of the Company's website at: http://www.reedsinc.com/investors/.

About Reed's, Inc.

Reed's, Inc. makes the top-selling natural sodas in the natural foods industry sold in over 13,000 natural food and mainstream supermarkets nationwide. In addition, Reed's products can be found in convenience stores, bars, restaurants and gourmet retailers. The company's products can also be found in Canada, Mexico and other international markets. 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 a top-selling cola line in natural foods, the China Cola product line. In 2012, the Company launched Reed's Culture Club Kombucha line of organic live beverages. Other product lines include: Reed's Ginger Candies and Reed's Ginger Ice Creams. In 2009, Reed's started producing private label natural beverages for select national chains.

For more information about Reed's, please visit the Company's website at: http://www.reedsinc.com or call 800-99-REEDS.

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