DENVER, March 30, 2016 /PRNewswire/ -- The Pulse Beverage Corporation ("Pulse") OTCQX:PLSB, makers of Natural Cabana® Lemonades/Limeades and Coconut Waters, and PULSE® Heart & Body Health functional beverages, today provided its 2015 Annual Report and Outlook for 2016.
Business Highlights for 2015 and to Date:
- During 2015 Pulse's net loss, before depreciation and amortization, stock-based compensation and one-time charges decreased by $872,000 to $1,278,000 (2014 - $2,150,000). These reductions were due to aligning its cost structure to fit its current growth model that includes concentrating its efforts on chain store listings that utilize warehouse direct distribution systems. Net losses to date, for the most part, continue to be the result of a concentrated effort to establish and increase brand awareness, establish and improve upon our extensive nationwide and international distribution systems and to secure regional, national and international chain store listings. Pulse expects its monthly net losses to turn into monthly net income during the middle of 2016 due to increased net sales and gross profit and reduced expenses discussed further in this report.
- During 2015 Pulse's net sales, after promotional allowances and slotting fees, increased by $121,000 to $3,484,000 (2014 - $3,363,000), a 3.6% growth. This improvement was mainly due to the elimination of some promotional programs leading to a decrease in promotions/slotting of $192,000 to $247,000 (2014 - $439,000). Pulse did not achieve the net sales it planned for in 2015 due to many factors including a delay in receiving its new coconut water from its new Asian manufacturer. The majority of Pulse's existing distributors, including its Mexico distributor, and new retail chains secured in the latter half of 2015 delayed orders to early 2016 so as to receive the new coconut water which was widely taste-tested and paneled and the consensus of opinion was that it better suits the palate of North American coconut water consumers. Pulse recently introduced a smaller 11.2oz six-pack coconut water which some big box retailers find easier to sell. Pulse expects net sales to significantly increase as it expands its brand offerings, introduces new brands and markets these brands domestically and internationally into Mexico, China and Canada.
- During 2015 Pulse's efforts were concentrated on new distributors in untapped geographic areas, improving the quality of distributors in existing geographic areas and in securing regional and national chain stores for its distributors to service. Pulse secured chain stores that would place its brands in the cold box or grocery sections and chain stores that used a warehouse direct distribution system. These efforts have culminated setting the following retail stores in March and April, 2016: 1,855 retail stores for Natural Cabana® Lemonade/Limeade with an additional 617 pending, and 1,466 retail stores for Natural Cabana® Coconut Water (many in both the 16.9oz and 11.2oz sizes) with an additional 1,541 retail stores pending.
- Beverage companies are often compared on a contribution to fixed expense basis which includes gross profit less variable expenses such as freight-out and advertising, samples and displays. This line item is not GAAP and therefore it is not disclosed separately in our consolidated financial statements. During 2015, as a percentage of net sales, contribution to fixed expense increased by 5.5% to 18.3% (2014 – 12.8%). We expect contribution to fixed expenses to increase throughout the remainder of 2016. As contribution to fixed expense increases both in quantum and as a percentage of net sales, Pulse will grow into profitability.
- Pulse's working capital was bolstered by an equity injection of $1 million early in 2015 followed by an asset backed lending arrangement which closed on November 6, 2015. Pulse closed a $3,500,000 senior secured revolving line of credit facility ("Credit Facility"). Under the terms of the agreement, TCA Global Credit Master Fund, L.P. ("Lender") committed to lend Pulse a total of $3,500,000. The initial tranche of $900,000 was funded in November and December, 2015 with an additional $1,000,000 approved in March, 2016 of which Pulse received a first tranche of $500,000. These loans mature November 6, 2016 unless extended by the Lender. The Credit Facility is secured by a senior secured interest in all of Pulse's assets.
- Pulse is in the process of again repackaging PULSE® Heart & Body Health into a more attractive package and re-introducing this brand into the Southern California marketplace and China. Pulse's new China distributor, Nantong Food Company, began ordering Lemonade/Limeade in September, 2015. This international expansion is good for Pulse as we ship to China directly from Portland, Oregon where one of our co-packers is situated and the cost ends at that point with no further freight-out or promotional expenses. They have also expressed interest in ordering PULSE® Heart & Body Health. We are in the process of setting up our Oregon co-packer to run this product.
- Pulse's Mexico distributor, Café El Marino was shipped its first order of 15,000 cases of Natural Cabana® Coconut Water, which sale was recorded in 2015. Due to changes in food laws in Mexico during the process of shipping product from Asia, we must overlay labels with a new information label. This has delayed the reorder in Mexico until the second quarter of 2016. Café El Marino will initially distribute to more than 3,000 stores in Mexico including: Soriana, 7-Eleven, Calimax, Circulo K, Dax, Smart & Final, and Farmacia Roma. We are in the process of expanding our Natural Cabana® Lemonade/Limeade brand for the Mexico marketplace, Natural Cabana® Limonada, which will be packaged in a 16.9oz glass "PULSE bottle".
- During 2015 Pulse has added a number of major beverage brand distributors in new geographic regions as well as replacements for distributors that did not fit our distribution system model. The number of distributors we have did not significantly increase in 2015 but the quality of distributors has. This is just in time for our busy spring/summer ordering season. Pulse has nearly 150 distributors in 47 States, Canada, China and Mexico. Pulse currently distributes its brands through Sysco, The Sygma Network, United Natural Foods Inc. ("UNFI") and distributors for Anheuser Busch, Miller Coors, Pepsi, RC/7-Up and Cadbury Schweppes amongst others. Some of the more notable regional and national grocery and convenience chain stores are: Albertsons/Safeway/Tom Thumb/City Market, Walmart, Kroger/Fred Meyer, Kmart, Circle K, Walgreens, 7-Eleven, Whole Foods, Hy-Vee Supermarket, Food City, Raley's Supermarkets, Price Chopper Supermarkets, WinCo Foods, ShopRite Supermarkets and RaceTrac.
Bob Yates, Chief Executive Officer, said, "We are pleased with the overwhelming success of our new coconut water. We have achieved significant operational progress during 2015 which, together with planned new product offerings, will set us up for a breakout 2016. We have spent four years establishing our domestic and international distribution systems and have secured product listings at some of the top regional and national retail stores in the country. We are confident in the marketing strategies and the delivery/execution of our growth plan for 2016 and are expecting to be profitable towards the middle of 2016. We look forward to communicating with our shareholders as these growth plans unfold during the remainder of 2016."
About The Pulse Beverage Corporation
Pulse Beverage Corporation is an emerging beverage company that offers beverage brands that are great tasting, good-for-you, refreshing, low-calorie natural drinks. Combining all-natural ingredients, essential vitamins and minerals, Pulse's line of beverages provides consumers with high-quality, healthy alternatives at a reasonable price.
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Forward-Looking Statements http://ir.pulsebeverage.com/forward-looking-statements
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SOURCE Pulse Beverage Corporation