DENVER, Nov. 13, 2015 /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 the following update on its third quarter progress and outlook through the first half of 2016.
Business Highlights - Third Quarter 2015 to Date:
- During Q3-2015 Pulse's net loss, after adjustments for depreciation and amortization and one-time charges decreased by 46% to $289,000 (Q3-2014 - $540,000). This decrease was mainly due to a reduction in general and administration expenses.
- During Q3-2015 net sales were down $44,000 or 4.2% over Q3-2014. Net sales for all products were $993,000 (Q3-2014 - $1,037,000). Net sales were down due to the switch-over to Pulse's new coconut water which was widely taste-tested and paneled and the consensus of opinion was that it better suits the palette of North American coconut water consumers. The majority of Pulse's existing distributors, and new retail chains secured based on this new coconut water, delayed ordering until Pulse receives this product due in before the end of November. Additionally, the remainder of new accounts secured during Q3-2015 will not order product until early in 2016 so as to kick off new displays in cold sections leading up to the warmer months. Pulse expects net sales to increase as it expands its markets internationally into Mexico, China and Canada.
- Overall Pulse has rationalized its overhead to align its expenses to a new strategic way of conducting its business utilizing more warehouse direct distribution and utilizing strong international distributors that distribute, market and promote Pulse's brands in their territories. This reduces the amount of overhead Pulse requires to operate its business estimated to lead to positive cash flow more quickly. Many changes are reflected in Q3-2015 and the remainder will be reflected in Q4-2015.
- Beverage companies are often compared on a contribution to fixed expense basis which includes gross profit less variables such as advertising, samples and displays and freight-out. This line item is not GAAP and therefore it is not disclosed separately in our financial statements. During YTD-2015, as a percentage of net sales, contribution to fixed expense increased by 1.6% to 19.8% (YTD-2014 – 18.2%).
- Pulse's working capital has remained healthy at $1 million bolstered by an equity injection of $1 million earlier this year. Additionally, on November 6, 2015, Pulse closed on 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") has committed to lend a total of $3,500,000. The initial tranche of $650,000 was funded on November 6, 2015. Following the initial tranche, Pulse must meet specific requirements to gain access to an additional $250,000 being held in escrow and must meet specific monthly collateral requirements to further draw upon the Credit Facility. The initial tranche matures November 6, 2016. The Credit Facility is secured by a senior secured interest in all of Pulse's assets. In connection with the Credit Facility, Pulse was obligated to pay a $150,000 facility fee. As security for this fee Pulse issued 3,000,000 shares of restricted common stock to the Lender who has the right to sell enough shares to recover its fee. Any excess shares not sold will be returned to Pulse for cancellation. Pulse has the right to buy-back these shares by paying $150,000 to the Lender on or before May 6, 2016. Robert E. Yates, CEO of Pulse, stated, "We are delighted to have this revolving Credit Facility to fund our growth plans in 2016."
- Pulse introduced Natural Cabana® Lemonade in 2012 and since then has added limeades and coconut waters to the brand in 2014 and developed a multi-national comprehensive distribution system through more than 150 distributors in 47 States, Canada, China and Mexico. Pulse currently distributes its brands through Sysco, The Sygma Network, Core-Mark, Snyder's-Lance, 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, Walmart, Kroger/Fred Meyer, Kmart, Circle K, Walgreens, Wegmans, 7-Eleven, Whole Foods, H-E-B, Hy-Vee Supermarket, Save Mart Supermarkets, Hannaford, Food City, Raley's Supermarkets, Price Chopper Supermarkets and WinCo Foods.
- In September Pulse began shipping Natural Cabana Lemonade/Limeade to China through its distributor, Nantong King Food Co. ("Nantong King"), a member of the Beijing Rosa International Trading Company, based out of Nantong City, 50 miles north of the Port of Shanghai. Nantong King received its first container of product and it has cleared all customs and logistics and is now being made available for sale through wholesale, retail and on-line outlets. Tom Wang, President of the Beijing Rosa group, said, "Natural Cabana® Lemonade/Limeade are fantastic tasting and will be quite unique in China. The wealthier Chinese consumers often look to Western products, especially after recent food and product safety scares in China. We will market the Natural Cabana® drinks to this market segment. We received our first container of 1,500 cases which has allowed us to development the market." Nantong King has ordered two more containers for shipment this month. Mr. Yates said, "We have been selective in choosing a partner for the Chinese market and we are confident and excited to have Nantong King as our partner to rollout our products in China. One of our original investors has been instrumental in securing this deal and will be our 'Man on the Ground' in China to ensure everything goes smoothly for both parties."
- Nantong King has recently ordered a container of PULSE® Heart & Body Health functional beverages to meet the needs of the Chinese health food consumers who are paying more attention than ever to their health and they look to Western products. Pulse's product development and quality control team is in the process of working out the labeling logistics in China and will begin to build this product for shipment in early 2016.
- Pulse's Mexico distributor recently received its first order of 15,000 cases of Pulse's new Natural Cabana® Coconut Water which sale will be recorded this month. Pulse negotiated a contract for lower product and shipping costs. Pulse's distributor will initially distribute Natural Cabana® Coconut Water to more than 3,000 stores in Mexico including: Soriana, H-E-B, 7-Eleven, Calimax, Circulo K, Dax, Smart & Final, and Farmacia Roma.
- Pulse continues its plan to produce Natural Cabana® Lemonade/Limeade (known as "Limonada") for the Mexico market in a 16oz glass bottle format. A number of major Mexican supermarkets have agreed to order this product in the first quarter of 2016.
- Pulse's flagship product, PULSE® Heart & Body Health functional beverage, is available for mass distribution through UNFI which also carries Natural Cabana® Lemonades/Limeades and Coconut Water. Natural Grocers will be purchasing Coconut Water for 110 stores through UNFI.
- Pulse has Walmart store manager approval status across the country to sell Natural Cabana® Lemonade/Limeade. The Pulse team has set more than 180 Walmart stores to date. Walmart corporate has approved Natural Cabana® Lemonade/Limeade to be placed into a 500 store set during the first quarter 2016 and is negotiating with Walmart for three of its clusters of stores which potentially represent more than 1,000 additional stores.
- Pulse is in the process of setting an additional 1,000 retail stores in the cold box sections with many more in process or pending. They are all taking on one or both of Natural Cabana® Lemonades/Limeades and new Coconut Water.
Bob Yates, Chief Executive Officer, said, "We are pleased with the overwhelming success of our new coconut water; orders are backed up awaiting its arrival into the US later this month. We have achieved significant operational progress during the first nine months of 2015 to date. We have spent almost 4 years in establishing our domestic, Canada, Mexico and China distribution systems and have secured product listings at some of the top regional and national retail stores. We believe this and the highlights discussed above will lead to a breakout 2016 and profitability in the first half of 2016. With the progress we are making, we are confident in the delivery and execution of our growth and marketing strategies and look forward to communicating more progress on this with our shareholders during 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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