LOS ANGELES, CA--(Marketwire - Aug 13, 2012) - Reed's, Inc. (NASDAQ: [ REED ]) maker of the top-selling sodas in natural food stores nationwide, today announced the financial results for its second fiscal quarter ending June 30, 2012.

Financial Highlights for the Quarter:

Revenues increased 27% to $7.8 million in 2012, compared to 2011.
Gross profit increased to $2.7 million in 2012, an increase of 39% from 2011. The gross profit percentage increased to 34% of sales, an increase from 31% in 2011.
Earnings before non-cash items and finance costs (modified EBITDA) increased to $831,000 during 2012, as compared to $395,000 in the prior year period. (See EBITDA table at end of this release for further non-GAAP information).
Net income for the 2012 second quarter was $444,000, or $0.04 per share, compared to a loss of $55,000 a year earlier.
Reduced inventory levels by over $1 million.
Working capital at June 30, 2012 was $3.1 million, as compared to $2.7 million at December 31, 2011.

Operational Highlights:

Developed and launched new Reed's Culture Club Kombucha in four flavors.
Launched Reed's Chocolate Crystallized Ginger candy.
New distribution partners in, South Carolina, Michigan, Utah and Tennessee.
Started shipping a new Private Label project for large national supermarket chain.
Increased sales team, adding new, experienced players in key markets to meet increased demand of our brands and to maintain and grow solid relationships with distributor and retail partners.

"This is our 11th quarter of double-digit revenue growth and has resulted in the company moving into a profitable position," stated Chris Reed, Founder and CEO of Reed's, Inc. "The second quarter results are confirmation that our 2012 business plan remains on track. Our branded and private label categories continue expand. We believe our momentum will continue in the second half of the year. Our new Kombucha line continues to roll out nationally. Early results are positive."

James Linesch, Chief Financial Officer stated, "We have reached a profitable sales velocity and margin contribution by holding down costs and by investing in effective promotions. Our gross margins have increased mostly through higher effective prices and lower production and raw material costs overall, while also making a higher investment in promotions and discounts this year. We gained more liquidity by reducing our inventory levels and improving turnover through careful production scheduling and timing of raw materials purchases. We have aggressive plans for expansion on several fronts this year, and we believe that our company is well-capitalized to carry out our plans."

The Company will conduct a conference call @ 4:15PM EDT today, August 13^th, to discuss its 2012 second quarter 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) 240-5139. 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/investor-relations/ ]

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 markets and supermarkets nationwide. 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. 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. 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.reedsinc.com ] or call 800-99-REEDS.

Follow Reed's on Twitter at [ http://twitter.com/reedsgingerbrew ]

Reed's Facebook Fan Page at [ https://www.facebook.com/ReedsGingerBrew ]

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-K 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.

REED'S, INC.
CONDENSED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2012 and 2011
(Unaudited)

			Three months ended June 30,						Six months ended June 30,
			2012			2011			2012			2011
Sales			$	7,831,000		$	6,191,000		$	14,370,000		$	11,331,000
Cost of tangible goods sold				4,696,000			3,762,000			8,881,000			7,083,000
Cost of goods sold - idle capacity				438,000			493,000			807,000			895,000

		Gross profit		2,697,000			1,936,000			4,682,000			3,353,000

Operating expenses:
Delivery and handling expenses				585,000			544,000			1,064,000			932,000
Selling and marketing expense				699,000			601,000			1,421,000			1,181,000
General and administrative expense				805,000			676,000			1,545,000			1,331,000
	Total operating expenses			2,089,000			1,821,000			4,030,000			3,444,000

		Income (loss) from operations		608,000			115,000			652,000			(91,000	)

Interest expense				(164,000	)		(170,000	)		(332,000	)		(329,000	)

Net income (loss)				444,000			(55,000	)		320,000			(420,000	)

Preferred stock dividends				(23,000	)		(33,000	)		(32,000	)		(44,000	)
Net income (loss) attributable to common stockholders			$	421,000		$	(88,000	)	$	288,000		$	(464,000	)

Income (loss) per share available to common stockholders, basic			$	0.04		$	(0.01	)	$	0.03		$	(0.04	)
Weighted average number of shares outstanding - basic				11,041,558			10,818,170			10,981,317			10,719,256
Income (loss) per share available to common stockholders, diluted			$	0.04		$	(0.01	)	$	0.02		$	(0.04	)
Weighted average number of shares outstanding - diluted				11,940,343			10,818,170			11,647,148			10,719,256


Reed's Inc.
MODIFIED EBITDA SCHEDULE

		Three months ended June 30,					Six months ended June 30,
		2012		2011			2012		2011
Net loss		$	444,000	$	(55,000	)	$	320,000	$	(420,000	)

Modified EBITDA adjustments:
Depreciation and amortization			189,000		165,000			372,000		308,000
Interest expense			164,000		170,000			332,000		329,000
Stock option and warrant compensation			29,000		80,000			55,000		129,000
Other stock compensation for services			5,000		35,000			20,000		77,000
	Total EBITDA adjustments		387,000		450,000			779,000		843,000

Modified EBITDA		$	831,000	$	395,000		$	1,099,000	$	423,000

The Company defines modified EBITDA (a non-GAAP measurement) as net loss before interest, taxes, depreciation and amortization, and non-cash expense for securities. Other companies may calculate modified EBITDA differently. Management believes that the presentation of modified EBITDA provides a measure of performance that approximates cash flow before interest expense, and is meaningful to investors.



REED'S, INC.
CONDENSED BALANCE SHEETS

			June 30, 2012			December 31, 2011
ASSETS			(unaudited)
Current assets:
	Cash		$	1,391,000		$	713,000
	Inventory			5,046,000			6,099,000
	Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $195,000 and $135,000, respectively			2,543,000			1,626,000
	Prepaid inventory			241,000			168,000
	Prepaid and other current assets			148,000			123,000
		Total Current Assets		9,369,000			8,729,000

Property and equipment, net of accumulated depreciation of $2,048,000 and $1,739,000, respectively				3,418,000			3,512,000
Brand names				1,029,000			1,029,000
Deferred financing fees, net of amortization of $88,000 and $50,000, respectively				52,000			85,000
		Total assets	$	13,868,000		$	13,355,000

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Accounts payable		$	2,648,000		$	2,310,000
	Accrued expenses			208,000			196,000
	Dividends payable			85,000			83,000
	Recycling fees payable			99,000			111,000
	Line of credit			2,951,000			3,095,000
	Current portion of long term financing obligation			80,000			71,000
	Current portion of capital leases payable			61,000			56,000
	Current portion of term loan			163,000			152,000
		Total current liabilities		6,295,000			6,074,000

Long term financing obligation, less current portion, net of discount of $614,000 and $626,000, respectively				2,231,000			2,247,000
Capital leases payable, less current portion				121,000			153,000
Term loan, less current portion				490,000			576,000
		Total Liabilities		9,137,000			9,050,000

Commitments and contingencies

Stockholders' equity:
	Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 32,941 and 46,621 shares issued and outstanding, respectively			329,000			466,000
	Series B Convertible Preferred stock, $10 par value, 500,000 shares authorized, 52,507 and 80,415 shares issued and outstanding, respectively			525,000			804,000
	Common stock, $.0001 par value, 19,500,000 shares authorized, 11,207,769 and 10,885,833 shares issued and outstanding, respectively			1,000			1,000
	Additional paid in capital			23,478,000			22,924,000
	Accumulated deficit			(19,602,000	)		(19,890,000	)
		Total stockholders' equity		4,731,000			4,305,000
		Total liabilities and stockholders' equity	$	13,868,000		$	13,355,000

N@N

Reed's Inc. Reports Second Quarter 2012 First Profitable Quarter

Reed's Inc. Reports Second Quarter 2012 First Profitable Quarter