DRINKS AMERICAS HOLDINGS, LTD - FORM 8-K - EX-99.1 - December 20, 2010

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Exhibit 99.1
 
Drinks Americas Announces Second Quarter 2010

Drinks Second Fiscal Quarter Net Sales Up 839% Over Prior Year

WILTON, CT, (December 20, 2010) – 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 and www.rheingoldbrewingCompany.com.

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.
 
Contacts:
  
Charles Davidson
  
Drinks Americas, Inc.
  
203-762-7000
  
   
Dan Schustack
  
CEOcast, Inc.
  
212-732-4300
  

 
 
 
 
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 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     (3,331,60  )     (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
    
Three months ended
  
   
October 31,
    
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
  
 

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