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Reeds Inc. Reports Operating Results (10-Q)

November 09, 2010 | About:
10qk

10qk

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Reeds Inc. (REED) filed Quarterly Report for the period ended 2010-09-30.

Reeds Inc. has a market cap of $23.6 million; its shares were traded at around $2.3 with and P/S ratio of 1.6.

Highlight of Business Operations:

Selling and marketing expenses consist primarily of direct charges for staff compensation costs, advertising, sales promotion, marketing and trade shows. Selling and marketing costs decreased to $570,000 in the three months ended September 30, 2010 from $646,000 in 2009. The decrease is primarily due to a decrease in advertising promotion and trade shows of $97,000 and a decrease stock option expense of $38,000; offset by an increase in compensation and travel costs of $42,000 and an increase in facilities related costs of $17,000.

General and administrative expenses consist primarily of the cost of executive, administrative, and finance personnel, as well as professional fees. General and administrative expenses increased to $742,000 during the three months ended September 30, 2010 from $623,000 in the same period of 2009. The overall increase of $119,000 in 2010 is primarily due to an increase in compensation costs of $49,000, an increase in amortization expense of $38,000, and an increase in facilities-related costs of $25,000; offset by a decrease in stock option expense of $18,000.

Selling and marketing expenses consist primarily of direct charges for staff compensation costs, advertising, sales promotion, marketing and trade shows. Selling and marketing costs decreased to $1,632,000 in the nine months ended September 30, 2010 from $1,853,000 in 2009, a decrease of $221,000 or 12%. The decrease is primarily due to a decrease stock option expense of $200,000 and a decrease in advertising and trade show costs of $106,000; offset by an increase in facilities related costs of $44,000 and an increase in compensation related expenses of $41,000.

General and administrative expense consists primarily of the cost of executive, administrative, and finance personnel, as well as professional fees. General and administrative expenses increased to $2,066,000 during the nine months ended September 30, 2010 from $1,896,000 in the same period of 2009. The overall increase of $170,000 in 2010 is primarily due to an increase in compensation costs of $128,000, an increase in Depreciation and amortization of $49,000, and an increase in facilities-related costs of $15,000; partially offset by a decrease in stock option expense of $22,000.

As of September 30, 2010, we had stockholders equity of $4,475,000 and we had working capital of $2,142,000, compared to stockholders equity of $4,377,000 and working capital of $2,037,000 at December 31, 2009. Cash and cash equivalents were $958,000 as of September 30, 2010, as compared to $1,306,000 at December 31, 2009. This increase in our working capital of $105,000 was primarily a result of sales of our equity securities. In addition to our cash position on September 30, 2010, we had availability under our line of credit of approximately $187,000.

Net cash provided by financing activities of $530,000 during 2010 was primarily due to proceeds from the sale of our common and preferred stock in the aggregate amount of $549,000, net of offering costs, and to net draws on the revolving line of credit of $103,000; offset by debt repayments of $128,000. On February 5, 2010, the Company completed a standby offering of 12,780 shares of its Series B Preferred Stock at $10.00 per share, for gross proceeds of $127,800. The Company paid legal and broker fees of approximately $11,000 in connection with the offering. On February 18, 2010, the Company sold an aggregate of 277,359 shares of common stock at a price of $1.70 per share for gross proceeds of $472,000. In connection with the sale, the Company paid legal and broker fees of approximately $40,000.

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