WILTON, Conn., Dec. 20, 2010 (GLOBE NEWSWIRE) -- Drinks Americas Holdings, Ltd. (OTCBB:DKAM); a leading developer and marketer of beverage products, today announced earnings for the three and six months quarters ended October 31, 2010.
Three Months
Drinks Americas, whose second fiscal quarter net sales of approximately $144,000 for the three months ended October 31, 2010, were up 839% over sales of approximately $15,000 for the same fiscal quarter of 2009, which sales decline was due to the termination of the Company's bank credit facility.
This improvement is the result of Drinks Americas focused effort to continue growing each of its brands case volumes, increased Olifant Vodka sales and the launch of Rheingold Beer, while successfully lowering its ongoing operating costs and debt.
The Company launched the sale of Rheingold Beer in the second quarter ended October 31, 2010, which sales accounted for over $106,000 or 73% of the total three-month sales and 43% of the total six month year to date sales.
Selling, general and administrative expenses for our second fiscal quarter were reduced by $900,000, a 57% overall reduction over the same fiscal quarter of 2009, as the Company aggressively reduced operating expenses.
For the three-month fiscal quarter ended October 31, 2010, Drinks Americas net loss of approximately $850,000 was reduced 48% or approximately $790,000 from $1,640,000 for the three months ended October 31, 2009.
The net loss per share (basic and diluted) for the three-month fiscal quarter ended October 31, 2010 of $0.03 per share reflects a $0.21 per share improvement over the $0.24 per share loss for the same period in 2009.
Six Months
Sales for the six months ended October 31, 2010, were approximately $246,000, a $203,000 decrease from a year ago due to the previously noted working capital credit crunch.
The continuing positive effects of Drinks Americas cost-reduction initiatives significantly contributed to lowering our losses in the first six months ended October 31, 2010, primarily through maintaining our strategic commitment to lower our operating expenses. Selling, general and administrative expenses were reduced 59% over the same period of the prior year or approximately $1,884,000 to $1,326,000 from approximately $3,210,000 for the same period of the prior year.
Drinks Americas net loss for the six months ended October 31, 2010 was reduced by approximately $1,768,000 (or 50%) to approximately $1,749,000 from $3,516,000 for the six months ended October 31, 2009.
Our net loss per share (basic and diluted) for the six months ended October 31, 2010 was reduced to $0.08 per share from $0.55 cents per share for the same six-month period one year ago.
Debt Reduction
We have and will continue to systematically and judiciously reduce the Company's outstanding debt. As of October 31, 2010, we have reduced debt approximately $2,156,000 or 27% to $5,896,000 from approximately $8,052,000 at October 31, 2009. This decrease in our outstanding debt is attributable to a decrease in our notes and loans payable of approximately $495,000; a reduction of our outstanding accrued expenses and accounts payable of approximately $1,932,000; the addition of $450,000 from the return of collateral by an investor previously treated as a reduction in our loan balance and the re-payment of $200,000 of our long-term debt. We anticipate continuing to negotiate and manage the reduction of our debt.
Liquidity and Capital Resources
Our consolidated financial statements have been prepared assuming that we will continue as a going concern. Our working capital and stockholders' deficits as of October 31, 2010 indicate that we will need additional financing which may take the form of equity or debt as we have converted certain liabilities into equity. We anticipate that increased sales revenues from Rheingold Beer and our sales agreement with Mexcor will continue to grow our revenues. In the event we are not able to increase our working capital, we will not be able to implement or may be required to delay all or part of our business plan. Our ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand our business may be materially adversely affected. Our consolidated financial statements do not include any adjustments relating to the classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence.
Continuing Growth
Drinks Americas brand portfolio continues to increase sales under contract with Mexcor for national sales and distribution. Old Whiskey River grew at 196% over the past six months, Damiana grew at 428% the past six months, Trump Vodka grew at 64% the past six months and Olifant Vodka grew at 641% over the past three months. Olifant Vodka continues to expand with six containers being ordered by distributors for shipment through the holidays.
The Company's launch of Rheingold Beer has been vigorous. The Company is currently selling the historic brand in Metro New York, New Jersey, Connecticut and Pennsylvania with plans to expand rapidly into Michigan, Ohio, Illinois, Kentucky, Florida, Georgia, West Virginia, Maryland, District of Colombia, Massachusetts, Oklahoma and New Hampshire. In many of these states, particularly Florida, there is a rich history of Rheingold sales preference and consumer acceptance.
Currently we sell Rheingold only in 12 pack, 12-ounce cans. We intend to expand our portfolio with 12 oz. bottles, 18 pack cans and plastic non-returnable kegs. In the near term, we are placing a substantial amount of signage in the way of tin signs in the market and will follow up with neon signs.
The majority of our distributors have placed repeat orders. Our projected new orders in hand for our planned expansion markets in 2011 now total approximately $300,000.
About Drinks Americas
Drinks Americas develops, owns, markets, and nationally distributes premium alcoholic beverages including Willie Nelson's Old Whiskey River Bourbon and Trump Super Premium Vodka. Other products owned by Drinks Americas include Olifant Vodka, Damiana Liqueur, Aguila Tequila and Rheingold Beer. The Company has recently developed and assisted in the launch of Kid Rock's American Badass Beer selling in Michigan. For further information, please visit our new websites at www.drinksamericas.com/">www.drinksamericas.com and www.rheingoldbrewingCompany.com.
The Drinks Americas Holdings, Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7881
Safe Harbor
Except for the historical information contained herein, the matters set forth in this release, including the description of the Company and its product offerings, are forward-looking statements within the meaning of the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the historical volatility and low trading volume of our stock, the risk and uncertainties inherent in the early stages of growth companies, the Company's need to raise substantial additional capital to proceed with its business, risks associated with competitors, and other risks detailed from time to time in the Company's most recent filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date hereof. The Company disclaims any intent or obligation to update these forward-looking statements.
| DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES | ||
| Consolidated Balance Sheets | ||
| OCTOBER 31, 2010 | APRIL 30, 2010 | |
| (Unaudited) | ||
| Assets | ||
| Current assets: | ||
| Cash and equivalents | $ 17,998 | $ 203,552 |
| Accounts receivable, net of allowance for doubtful accounts of $124,492 and $127,846, respectively. | 131,869 | 66,346 |
| Inventories, net of allowances | 168,645 | 222,608 |
| Other current assets | 65,095 | 19,789 |
| Total current assets | 383,607 | 512,295 |
| Property and equipment, net of accumulated depreciation | 20,555 | 32,309 |
| Investment in equity investees | 73,593 | 73,593 |
| Intangible assets, net of accumulated amortization | 1,887,758 | 1,971,300 |
| Deferred loan costs, net of accumulated amortization | 193,867 | 437,973 |
| Other assets | 55,560 | 85,735 |
| Total assets | $ 2,614,940 | $ 3,113,205 |
| Liabilities and Shareholders' Deficiency | ||
| Accounts payable | $ 2,212,879 | $ 2,199,665 |
| Accrued expenses | 2,313,226 | 2,744,058 |
| Investor note payable | 450,000 | — |
| Notes and loans payable, net of long – term portion | 479,889 | 437,196 |
| Loan payable – related party | 19,135 | 154,670 |
| Deferred revenue | 21,243 | 63,730 |
| Total current liabilities | 5,496,372 | 5,599,319 |
| Notes and loans payable, net of current portion | 400,000 | 400,000 |
| Total liabilities | 5,896,372 | 5,999,319 |
| Commitments and Contingencies | ||
| Shareholders' deficiency: | ||
| Preferred stock, $0.001 par value; 1,000,000 shares authorized: | ||
| Series A Convertible: $0.001 par value; 10,544 shares issued and outstanding at October 31, 2010 and April 30, 2010. | 11 | 11 |
| Series B: $10,000 par value; 13,837 shares issued and outstanding, at October 31, 2010 and April 30, 2010. | 138,370 | 138,370 |
| Series C: $1.00 par value; 635,835 shares issued and outstanding, at October 31, 2010 and -0- at April 30, 2010. | 635,835 | — |
| Common stock, $0.001 par value; 500,000,000 and 100,000,000, respectively, authorized; issued and outstanding 32,017,000 shares and 18,873,000 shares at October 31, 2010 and April 30, 2010 | 32,017 | 18,873 |
| Treasury stock, 738,333 and 1,738,333 common shares held at October 31, 2010 and April 30, 2010 | — | — |
| Additional paid-in capital | 40,828,612 | 40,111,695 |
| Accumulated deficit | (44,966,450) | (43,217,597) |
| Total Drinks Americas Holdings, Ltd. shareholders' deficiency | (3,331,605) | (2,948,648) |
| Equity attributable to non-controlling interests | 50,173 | 62,534 |
| Total shareholders' deficiency | (3,281,432) | (2,886,114) |
| Total liabilities and shareholders' deficiency | $ 2,614,940 | $ 3,113,205 |
| DRINKS AMERICAS HOLDINGS, LTD., AND AFFILIATES | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||
|
Six months ended October 31, |
Three months ended October 31, |
|||
| 2010 | 2009 | 2010 | 2009 | |
| Net sales | $ 245,898 | $ 449,278 | $ 143,642 | $ 15,305 |
| Cost of sales | 211,953 | 321,709 | 114,034 | 15,801 |
| Gross margin | 33,945 | 127,569 | 29,608 | (496) |
| Selling, general & administrative expenses | 1,326,110 | 3,210,057 | 685,940 | 1,586,440 |
| Loss from Operations | (1,292,165) | (3,082,488) | (656,332) | (1,586,936) |
| Other income (expense): | ||||
| Interest | (469,049) | (517,485) | (204,212) | (79,780) |
| Other | — | 83,478 | — | 26,547 |
| Net Other Expense | (469,049) | (434,007) | (204,212) | (53,233) |
| Net loss before allocation to non-controlling interests | $ (1,761,214) | $ (3,516,495) | $ (860,544) | $ (1,640,169) |
| Net loss attributable to non-controlling interests | 12,361 | — | 10,129 | — |
| Net loss attributable to Drinks Americas Holdings, Ltd. | $ (1,748,853) | $ (3,516,495) | $ (850,415) | $ (1,640,169) |
| Net loss per share (basic and diluted) | $ (0.08) | $ (0.55) | $ (0.03) | $ (0.24) |
| Weighted average number of common shares (basic and diluted) | 23,544,905 | 6,408,794 | 27,247,013 | 6,798,710 |