LOS ANGELES, CA--(Marketwire - Nov 14, 2012) - Reed's, Inc. (NASDAQ: [ REED ]), maker of the top-selling sodas in natural food stores nationwide, today announced the financial results for its third fiscal quarter ending September 30, 2012.

Financial Highlights for the Quarter:

Revenues increased 23% to $7.9 million in 2012, compared to 2011.
Gross profit increased to $2.5 million in 2012, an increase of 21% from 2011.
Earnings before non-cash items and finance costs (modified EBITDA) increased to $395,000 during 2012, as compared to $269,000 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 $22,000 compared to a loss of $175,000 a year earlier.
Working capital at June 30, 2012 was $3.2 million, as compared to $2.7 million at December 31, 2011.

Operational Highlights:

Volume of branded Reed's and Virgil's products shipped grew at a rate of 16% versus same quarter prior year and is up over 20% YTD over last year.
New distribution partnership with Central Beverage of Chicago.
New distribution arrangement with Geyser Beverage of the Greater San Francisco Bay area market.
Expanded Reed's and Virgil's into Tops Friendly Markets located upstate NY and PA.
New distribution agreement with Zip Beverage of Montana.
Secured three new private label brand contracts with some of the largest retailers in the US.
Introduced Reed's and Virgil's products to the Asian market attending the Natural Products Expo Asia show for first time.
Reed's introduces Culture Club Kombucha in Baltimore, MD, becoming a title sponsor of Natural Products Show Expo East and sampling more than 10,000 retailers, distributors and attendees.
Gained Culture Club Kombucha distribution into a minimum of 800+ new retailers throughout the US and into select Whole Foods regions with more to come.
Snoop Lion Partners With Reed's Ginger Brew and Causes.com to Raise Awareness for the Mind Gardens Project in Jamaica.
Continued Los Angeles plant upgrades designed to increase capacity and efficiency, including doubling tank capacity to accommodate fast expansion of the new Kombucha line.

"We have now expanded our business at over 20% for the last twelve quarters. Brand growth continues to be the main driver for this expansion. Our recent launch of Reed's Culture Club Kombucha has taken off and could possibly be our biggest growth driver for 2013 and beyond. We have set our goal at being the number one or two in this $250-300 million fast growing Kombucha category," stated Chris Reed, Founder and CEO at Reed's Inc.

Chris Reed further commented, "Additionally, our private label business is accelerating as we become more accepted as a reliable supplier. Revenues from private label brands grew twofold over same quarter prior year due to the development of two new partnerships with national retail chains."

James Linesch, Chief Financial Officer, stated, "Our business has continued its healthy organic expansion in the third quarter. Gross margins on our branded products improved slightly over last year and gross margins on our private label products are running about 5% higher than last year. Our kombucha launch has involved an increase in production costs as well as promotional costs, both of which affected our overall margins and profitability in the quarter. As our kombucha rollout progresses, however, these start-up costs will come down. We anticipate that all of our product lines will contribute strong net margins in 2013."

The Company will conduct a conference call @ 4:15PM EST today, November 14^th, to discuss its 2012 third 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.

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 Nine Months Ended September 30, 2012 and 2011
(Unaudited)

		Three months ended September 30,						Nine months ended September 30,
		2012			2011			2012			2011
Sales		$	7,888,000		$	6,400,000		$	22,258,000		$	17,731,000
Cost of tangible goods sold			4,810,000			3,970,000			13,691,000			11,053,000
Cost of goods sold - idle capacity			621,000			405,000			1,428,000			1,300,000

	Gross profit		2,457,000			2,025,000			7,139,000			5,378,000

Operating expenses:
Delivery and handling expenses			763,000			587,000			1,827,000			1,519,000
Selling and marketing expense			818,000			570,000			2,239,000			1,751,000
General and administrative expense			693,000			867,000			2,238,000			2,198,000
	Total operating expenses		2,274,000			2,024,000			6,304,000			5,468,000

	Income (loss) from operations		183,000			1,000			835,000			(90,000	)

Interest expense			(161,000	)		(175,000	)		(493,000	)		(504,000	)

Net income (loss)			22,000			(174,000	)		342,000			(594,000	)

Preferred stock dividends			(8,000	)		(11,000	)		(39,000	)		(55,000	)
Net income (loss) attributable to common stockholders		$	14,000		$	(185,000	)	$	303,000		$	(649,000	)

Income (loss) per share available to common stockholders, basic			-		$	(0.02	)	$	0.03		$	(0.06	)
Weighted average number of shares outstanding - basic			11,501,152			10,835,858			11,155,860			10,758,529
Income (loss) per share available to common stockholders, diluted			-		$	(0.02	)	$	0.03		$	(0.06	)
Weighted average number of shares outstanding - diluted			12,288,503			10,835,858			11,706,186			10,758,529


Reed's Inc.
MODIFIED EBITDA SCHEDULE

			Three months ended September 30,					Nine months ended September 30,
			2012		2011			2012		2011
	Net loss		$	22,000	$	(174,000	)	$	342,000	$	(594,000	)

Modified EBITDA adjustments:
	Depreciation and amortization			184,000		164,000			556,000		472,000
	Interest expense			161,000		175,000			493,000		504,000
	Stock option and warrant compensation			26,000		59,000			81,000		189,000
	Other stock compensation for services			2,000		45,000			23,000		123,000
		Total EBITDA adjustments		373,000		443,000			1,153,000		1,288,000

	Modified EBITDA		$	395,000	$	269,000		$	1,495,000	$	694,000

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

			September 30, 2012			December 31, 2011
ASSETS			(unaudited)
Current assets:
	Cash		$	1,429,000		$	713,000
	Inventory			5,963,000			6,099,000
	Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $200,000 and $135,000, respectively			2,899,000			1,626,000
	Prepaid inventory			314,000			168,000
	Prepaid and other current assets			159,000			123,000
		Total Current Assets		10,764,000			8,729,000

Property and equipment, net of accumulated depreciation of $2,199,000 and $1,739,000, respectively				3,385,000			3,512,000
Brand names				1,029,000			1,029,000
Deferred financing fees, net of amortization of $78,000 and $50,000, respectively				32,000			85,000
		Total assets	$	15,210,000		$	13,355,000

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Accounts payable		$	3,354,000		$	2,310,000
	Accrued expenses			204,000			196,000
	Dividends payable			71,000			83,000
	Recycling fees payable			21,000			111,000
	Line of credit			3,574,000			3,095,000
	Current portion of long term financing obligation			85,000			71,000
	Current portion of capital leases payable			64,000			56,000
	Current portion of term loan			170,000			152,000
		Total current liabilities		7,543,000			6,074,000

Long term financing obligation, less current portion, net of discount of $589,000 and $626,000, respectively				2,219,000			2,247,000
Capital leases payable, less current portion				104,000			153,000
Term loan, less current portion				445,000			576,000
		Total Liabilities		10,311,000			9,050,000

Commitments and contingencies
Stockholders' equity:
	Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 25,411 and 46,621 shares issued and outstanding, respectively			254,000			466,000
	Series B Convertible Preferred stock, $10 par value, 500,000 shares authorized, 48,985 and 80,415 shares issued and outstanding, respectively			490,000			804,000
	Common stock, $.0001 par value, 19,500,000 shares authorized, 11,821,319 and 10,885,833 shares issued and outstanding, respectively			1,000			1,000
	Additional paid in capital			23,741,000			22,924,000
	Accumulated deficit			(19,587,000	)		(19,890,000	)
		Total stockholders' equity		4,899,000			4,305,000
		Total liabilities and stockholders' equity	$	15,210,000		$	13,355,000

N@N

Reed's Inc. Continues Profitable Growth

Reed's Inc. Continues Profitable Growth