September
30,
2005
|
December
31,
2004
|
||||||
(Unaudited)
|
|||||||
CURRENT
ASSETS
|
|
||||||
Cash
|
$
|
38,928
|
$
|
42,488
|
|||
Inventory
|
1,361,843
|
1,301,025
|
|||||
Trade
accounts receivable, net of allowance for doubtful accounts
and returns
and discounts of $79,431
as of September 30, 2005 and $74,974 as of December 31,
2004
|
653,222
|
797,614
|
|||||
Other
receivables
|
7,683
|
3,163
|
|||||
Prepaid
expenses
|
215,604
|
5,652
|
Total
Current Assets
|
2,277,280
|
2,149,942
|
|||||
|
|||||||
Property
and equipment, net of accumulated depreciation of $462,294
as of September
30, 2005
and $390,363 as of December 31, 2004
|
1,834,361
|
1,821,473
|
|||||
|
|||||||
OTHER
ASSETS
|
|||||||
Brand
names
|
800,201
|
800,201
|
|||||
Other
intangibles, net of accumulated amortization of $3,537
as
of September 30, 2005 and $2,978
as of December 31, 2004
|
15,077
|
15,635
|
|||||
Deferred
stock offering costs
|
443,888
|
219,955
|
|||||
Due
from director
|
120,210
|
91,197
|
|||||
Total
Other Assets
|
1,379,376
|
1,126,988
|
|||||
TOTAL
ASSETS
|
$
|
5,491,017
|
$
|
5,098,403
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT
LIABILITIES
|
|||||||
Accounts
payable
|
$
|
1,968,872
|
$
|
1,412,124
|
|||
Lines
of credit
|
1,381,327
|
1,128,222
|
|||||
Current
portion of long term debt
|
112,166
|
106,113
|
|||||
Note
payable-related party
|
–
|
21,000
|
|||||
Accrued
interest
|
118,563
|
115,581
|
|||||
Accrued
expenses
|
65,900
|
51,549
|
|||||
Total
Current Liabilities
|
3,646,828
|
2,834,589
|
|||||
Loans
payable, related party
|
252,358
|
252,358
|
|||||
Long
term debt, less current portion
|
1,092,427
|
1,041,756
|
|||||
Total
Liabilities
|
4,991,613
|
4,128,703
|
|||||
|
|||||||
COMMITMENTS
AND CONTINGENCIES
|
|||||||
STOCKHOLDERS’
EQUITY
|
|||||||
Preferred
stock, $10.00 par value, 500,000 shares authorized, 58,940
shares issued
and outstanding
|
589,402
|
589,402
|
|||||
Common
stock, $.0001 par value, 11,500,000 shares
authorized,
4,726,091 shares issued and outstanding
|
472
|
472
|
|||||
Common
stock to be issued (269,867 shares)
|
34,720
|
||||||
Additional
paid in capital
|
2,753,994
|
2,783,464
|
|||||
Accumulated
deficit
|
(2,879,184
|
)
|
(2,403,638
|
)
|
|||
Total
stockholders’ equity
|
499,404
|
969,700
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
5,491,017
|
$
|
5,098,403
|
|||
|
|||||||
|
|
|
|
|
|||||||||
Three
months ended (Unaudited)
|
Nine
months ended (Unaudited)
|
||||||||||||
September
30,
|
September
30,
|
September
30,
|
September
30,
|
||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
SALES
|
$
|
2,735,332
|
$
|
2,209,696
|
$
|
7,134,940
|
$
|
6,705,040
|
|||||
COST
OF SALES
|
2,266,327
|
1,759,630
|
5,821,887
|
5,383,397
|
|||||||||
GROSS
PROFIT
|
469,005
|
450,066
|
1,313,053
|
1,321,643
|
|||||||||
|
|||||||||||||
OPERATING
EXPENSES
|
|||||||||||||
Selling
|
318,862
|
194,606
|
839,978
|
530,884
|
|||||||||
General &
Administrative
|
232,938
|
308,414
|
687,413
|
769,989
|
|||||||||
Legal
fees
|
24,040 | 74,539 | 26,166 | 74,539 | |||||||||
575,840
|
577,559
|
1,553,557
|
1,375,412
|
||||||||||
|
|||||||||||||
LOSS
FROM OPERATIONS
|
(106,835
|
)
|
(127,493
|
)
|
(240,504
|
)
|
(53,769
|
)
|
|||||
OTHER
EXPENSES
|
|||||||||||||
Interest
Expense
|
(73,508
|
)
|
(64,466
|
)
|
(235,042
|
)
|
(178,479
|
)
|
|||||
Loss on Extinguishment of Debt |
–
|
(153,000
|
)
|
–
|
(153,000 |
)
|
|||||||
(73,508 |
)
|
(217,466 |
)
|
(235,042 |
)
|
(331,479 |
)
|
||||||
|
|||||||||||||
NET
LOSS
|
|
(180,343
|
)
|
|
(344,959
|
)
|
|
(475,546
|
)
|
|
(385,248
|
)
|
|
Preferred
Stock Dividend
|
–
|
–
|
(29,470 |
)
|
–
|
||||||||
Net
Loss Attributable to Common Stockholders
|
$ | (180,343 | ) | $ | (344,959 | ) | $ | (505,016 | ) | $ | (385,248 | ) | |
|
|||||||||||||
Net Loss Available to Common Stockholders —
Basic and Diluted
|
$
|
(.04
|
)
|
$
|
(.07
|
)
|
$
|
(.10
|
)
|
$
|
(0.08
|
)
|
|
|
|||||||||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED
|
4,995,959
|
4,726,091
|
4,845,909
|
4,726,091
|
|||||||||
|
|||||||||||||
Common
Stock
|
Common
Stock to be
|
Additional
Paid in
|
Preferred
Stock
|
Accumulated
|
|
||||||||||||||||||||
Shares
|
Amount
|
Issued
|
Capital
|
Shares
|
Amount
|
Deficit
|
Total
|
||||||||||||||||||
Balance,
January 1, 2005
|
4,726,091
|
$
|
472
|
$
|
–
|
$
|
2,783,464
|
58,940
|
$
|
589,402
|
$
|
(2,403,638
|
)
|
$
|
969,700
|
||||||||||
Exercise
of warrants
|
5,250
|
5,250
|
|||||||||||||||||||||||
Preferred
Stock Dividend
|
29,470
|
(29,470
|
)
|
||||||||||||||||||||||
Net
Loss for the nine months ended
September 30, 2005
|
(475,546
|
)
|
(475,546
|
)
|
|||||||||||||||||||||
Balance,
September 30, 2005
(unaudited)
|
4,726,091
|
$
|
472
|
$
|
34,720
|
$
|
2,753,994
|
58,940
|
$
|
589,402
|
$
|
(2,879,184
|
)
|
$
|
499,404
|
||||||||||
Nine
Months Ended (Unaudited)
|
|||||||
September
30,
|
September
30,
|
||||||
2005
|
2004
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
||||||
Net
Loss
|
$
|
(475,546
|
)
|
$
|
(385,248
|
)
|
|
Adjustments
to reconcile net loss to net cash provided by (used in)
operating
activities:
|
|||||||
Depreciation
and amortization
|
83,220
|
78,935
|
|||||
Loss on extinguishment of debt |
–
|
153,000 | |||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
144,392
|
(46,308
|
)
|
||||
Inventory
|
(60,817
|
)
|
(322,494
|
)
|
|||
Prepaid
Expenses
|
(220,683
|
)
|
(110,004
|
)
|
|||
Other
receivables
|
(4,520
|
)
|
855
|
||||
Accounts
payable
|
556,748
|
400,336
|
|||||
Accrued
expenses
|
14,351
|
46,311
|
|||||
Accrued
interest
|
8,232
|
37,452
|
|||||
Net
cash provided by (used in) operating activities
|
45,377
|
(147,165
|
)
|
||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchase
of property and equipment
|
(84,819
|
)
|
(74,532
|
)
|
|||
Due
from director
|
(29,013
|
)
|
(23,600
|
)
|
|||
Net
cash used in investing activities
|
(113,832
|
)
|
(98,132
|
)
|
|||
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Principal
borrowings on debt
|
340,000
|
184,132
|
|||||
Principal payments on debt | (283,277 | ) | (178,947 | ) | |||
Proceeds received prior to issuance of preferred stock |
–
|
334,400 | |||||
Net
borrowing on lines of credit
|
253,106
|
89,717
|
|||||
Payments
on debt to related parties
|
(21,000
|
) |
–
|
||||
Payments
for deferred stock offering costs
|
(223,934
|
)
|
(105,662
|
)
|
|||
Net
cash provided by financing activities
|
64,895
|
323,640
|
|||||
|
|||||||
NET
INCREASE (DECREASE) IN CASH
|
(3,560
|
)
|
78,343
|
||||
CASH —
Beginning of period
|
42,488
|
12,930
|
|||||
CASH —
End of period
|
$
|
38,928
|
$
|
91,273
|
|||
|
|||||||
Supplemental
Disclosures of Cash Flow Information
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
226,810
|
$
|
141,626
|
|||
Taxes
|
$
|
–
|
$
|
–
|
|||
|
|||||||
Noncash
Investing and Financing Activities
|
|||||||
Common
stock to be issued in settlement of accrued interest
and exercise of
warrants
|
|
5,250
|
|
–
|
|||
Common
stock to be issued in settlement of preferred stock
dividend
|
|
29,470
|
|
–
|
|||
Beneficial conversion feature |
|
–
|
|
353,640 | |||
1. |
BASIS
OF PRESENTATION
|
2. |
Lines
of credit
|
3. |
Long
term debt
|
4. |
Equipment
line of credit
|
5. |
Related
Party Transactions
|
6. |
Dividend
Distributable
|
7.
|
Inventory
|
Raw Materials | $ | 565,531 | ||
Finished Goods | 796,312 | |||
$ | 1,361,843 |
8. |
Legal
Proceedings
|
· |
Reed’s Ginger Brews
|
· |
Virgil’s Root Beer and Cream Sodas
|
· |
China Colas
|
· |
Reed’s Ginger Juice Brews
|
· |
Reed’s Ginger Candies
|
· |
Reed’s Ginger
Ice
Creams
|
Projects
|
Annual
Savings
per
shift
|
Approximate
Costs
|
Build
Manual Bulk glass depalletizer
|
$20,000
|
$5,000
|
Improve
plant conveyors
|
$20,000
|
$5,000
|
Automatic
soft drink batch machine
|
$10,000
|
$5,000
|
Drop
packer installed
|
$40,000
|
$5,000
|
Bringing
on a Swing shift
|
$40,000
|
$0
|