Castle Brands Inc (ROX, Financial) filed Quarterly Report for the period ended 2008-12-31.
CASTLE BRANDS INC. is an emerging developer and international marketer of premium branded spirits within five growing categories of the spirits industry: vodka rum tequila whiskey and liqueurs/cordials. Castle Brands? portfolio includes Boru Vodka Gosling?s Rum Sea Wynde Rum Tierras Tequila Knappogue Castle Whiskey Clontarf Irish Whiskey Jefferson?s and Jefferson?s Reserve Bourbon Sam Houston Bourbon Celtic Crossing Liqueur Pallini Limoncello Raspicello and Peachcello and Brady?s Irish Cream. Castle Brands Inc has a market cap of $4.53 million; its shares were traded at around $0.2206 with and P/S ratio of 0.17.
Conversion and/or Amendment of Notes In connection with the Purchase Agreement, substantially all of the holders of CB-USAs 9% senior secured notes, in the principal amount of $10.0 million plus $0.3 million of accrued but unpaid interest, and all holders of our 6% convertible subordinated notes, in the principal amount of $9.0 million plus accrued but unpaid interest, converted their notes into Series A Preferred Stock at a price per preferred share of $12.50 and $23.21, respectively, which is, in effect upon conversion, $0.35 and $0.65 per share, respectively, of our common stock. The remaining unconverted 9% senior secured notes, in the principal amount of $0.3 million, were amended so that, among other things, (i) the maturity date was extended to May 31, 2014, (ii) the interest rate was reduced to 3%, payable at maturity and (iii) the security interest in our collateral was terminated. Upon conversion of the 9% senior secured notes, we issued 0.8 million shares of Series A Preferred Stock, convertible into approximately 28.6 million shares of common stock. Upon conversion of the 6% convertible subordinated notes, we issued 0.4 million shares of Series A Preferred Stock, convertible into approximately 13.9 million shares of common stock. The remaining unamortized balance of $0.2 million in deferred financing costs associated with the 9% senior secured notes was recognized as an expense in the quarter ended December 31, 2008 and is included in interest expense, net in the accompanying condensed consolidated financial statements.
$2,000,000 Promissory Note and Termination of Credit Agreement On October 15, 2008, Frost Gamma Investments Trust advanced $2.0 million to us under a promissory note. The entire amount of this advance and accrued interest thereon was offset against the portion of the purchase price payable by Frost Gamma Investments Trust at the closing of the Purchase Agreement. The promissory note bore interest at a rate equal to 10% per annum. Upon the funding of the $2.0 million promissory note, we terminated the $5.0 million credit agreement we had entered into with Frost Nevada Investments Trust in October 2007 described in Note 11 to the accompanying condensed consolidated financial statements. No amounts were ever borrowed under the October 2007 facility. The remaining unamortized balance of $0.1 million in
Although in the last 12 months we have made significant reductions in our cash-burn, our ability to continue building our current brands and also our ability to attract new agency brands has been frustrated by our capital position. With this infusion of $15.0 million in equity and the conversion of $19.0 million of debt and accrued interest to equity, we believe we have stabilized our company and are in a position to grow our current brands, pursue new agency relationships and acquire additional brands. We believe that this transaction has placed us on firmer footing and allows us to pursue our original vision of building our premium brands and representing other specialty brands which should accrue to the long-term benefit of our stockholders and better position us to achieve our goals.
Dollars were 1.00 = U.S. $1.4097 (equivalent to U.S. $1.00 = 0.7094) for Euros, £1.00 = U.S. $1.4479 (equivalent to U.S. $1.00 = £0.6907) for British Pounds, and CAD $1.00 = U.S. $0.8183 (equivalent to U.S. $1.00 = CAD $1.2220) for Canadian Dollars.
Net sales. Net sales increased $0.5 million, or 8.0%, to $6.9 million in the three months ended December 31, 2008 from $6.4 million in the comparable prior period due to an increase in overall case sales volume when compared to the prior year period, and our continued focus on our more profitable brands and markets and our overall pricing strategy. Included in current period sales is $0.2 million for the one-time sale of substantially our entire inventory of British Royal Navy Imperial Rum. These goods were sold near carrying value as part of our effort to monetize slow-moving assets and reduce working capital needs.
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CASTLE BRANDS INC. is an emerging developer and international marketer of premium branded spirits within five growing categories of the spirits industry: vodka rum tequila whiskey and liqueurs/cordials. Castle Brands? portfolio includes Boru Vodka Gosling?s Rum Sea Wynde Rum Tierras Tequila Knappogue Castle Whiskey Clontarf Irish Whiskey Jefferson?s and Jefferson?s Reserve Bourbon Sam Houston Bourbon Celtic Crossing Liqueur Pallini Limoncello Raspicello and Peachcello and Brady?s Irish Cream. Castle Brands Inc has a market cap of $4.53 million; its shares were traded at around $0.2206 with and P/S ratio of 0.17.
Highlight of Business Operations:
As indicated in Note 9 to the accompanying condensed consolidated financial statements, on October 20, 2008, we completed a private placement under a Series A Preferred Stock Purchase Agreement (Purchase Agreement) with Frost Gamma Investments Trust, Vector Group Ltd., I.L.A.R. S.p.A., Halpryn Group IV, LLC, Lafferty Limited, Jacqueline Simkin Trust As Amended and Restated 12/16/2003, Hsu Gamma Investment, L.P., MZ Trading LLC and Richard J. Lampen (collectively, Purchasers). The Purchasers purchased 1.2 million shares of our Series A Preferred Stock for $12.50 per share, which is, in effect upon conversion, $0.35 per share of our Common Stock. We received gross proceeds of $15.0 million, which we used to pay transaction expenses of approximately $1.8 million, to satisfy outstanding obligations and for general corporate purposes.Conversion and/or Amendment of Notes In connection with the Purchase Agreement, substantially all of the holders of CB-USAs 9% senior secured notes, in the principal amount of $10.0 million plus $0.3 million of accrued but unpaid interest, and all holders of our 6% convertible subordinated notes, in the principal amount of $9.0 million plus accrued but unpaid interest, converted their notes into Series A Preferred Stock at a price per preferred share of $12.50 and $23.21, respectively, which is, in effect upon conversion, $0.35 and $0.65 per share, respectively, of our common stock. The remaining unconverted 9% senior secured notes, in the principal amount of $0.3 million, were amended so that, among other things, (i) the maturity date was extended to May 31, 2014, (ii) the interest rate was reduced to 3%, payable at maturity and (iii) the security interest in our collateral was terminated. Upon conversion of the 9% senior secured notes, we issued 0.8 million shares of Series A Preferred Stock, convertible into approximately 28.6 million shares of common stock. Upon conversion of the 6% convertible subordinated notes, we issued 0.4 million shares of Series A Preferred Stock, convertible into approximately 13.9 million shares of common stock. The remaining unamortized balance of $0.2 million in deferred financing costs associated with the 9% senior secured notes was recognized as an expense in the quarter ended December 31, 2008 and is included in interest expense, net in the accompanying condensed consolidated financial statements.
$2,000,000 Promissory Note and Termination of Credit Agreement On October 15, 2008, Frost Gamma Investments Trust advanced $2.0 million to us under a promissory note. The entire amount of this advance and accrued interest thereon was offset against the portion of the purchase price payable by Frost Gamma Investments Trust at the closing of the Purchase Agreement. The promissory note bore interest at a rate equal to 10% per annum. Upon the funding of the $2.0 million promissory note, we terminated the $5.0 million credit agreement we had entered into with Frost Nevada Investments Trust in October 2007 described in Note 11 to the accompanying condensed consolidated financial statements. No amounts were ever borrowed under the October 2007 facility. The remaining unamortized balance of $0.1 million in
Although in the last 12 months we have made significant reductions in our cash-burn, our ability to continue building our current brands and also our ability to attract new agency brands has been frustrated by our capital position. With this infusion of $15.0 million in equity and the conversion of $19.0 million of debt and accrued interest to equity, we believe we have stabilized our company and are in a position to grow our current brands, pursue new agency relationships and acquire additional brands. We believe that this transaction has placed us on firmer footing and allows us to pursue our original vision of building our premium brands and representing other specialty brands which should accrue to the long-term benefit of our stockholders and better position us to achieve our goals.
Dollars were 1.00 = U.S. $1.4097 (equivalent to U.S. $1.00 = 0.7094) for Euros, £1.00 = U.S. $1.4479 (equivalent to U.S. $1.00 = £0.6907) for British Pounds, and CAD $1.00 = U.S. $0.8183 (equivalent to U.S. $1.00 = CAD $1.2220) for Canadian Dollars.
Net sales. Net sales increased $0.5 million, or 8.0%, to $6.9 million in the three months ended December 31, 2008 from $6.4 million in the comparable prior period due to an increase in overall case sales volume when compared to the prior year period, and our continued focus on our more profitable brands and markets and our overall pricing strategy. Included in current period sales is $0.2 million for the one-time sale of substantially our entire inventory of British Royal Navy Imperial Rum. These goods were sold near carrying value as part of our effort to monetize slow-moving assets and reduce working capital needs.
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